<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only
[X] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2)
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
FOOTHILL INDEPENDENT BANCORP
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
FOOTHILL INDEPENDENT BANCORP
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] Fee not required.
[ ] $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:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
FOOTHILL INDEPENDENT BANCORP
April 3, 1997
Dear Shareholder:
The Board of Directors joins me in extending to you a cordial invitation to
attend the Annual Meeting of Shareholders of Foothill Independent Bancorp which
will be held on Tuesday, May 13, 1997, at 4:30 P.M., at THE GLENDORA COUNTRY
CLUB, 310 S. AMELIA AVENUE, Glendora, California.
In addition to the matters to be acted on at the meeting, which are
described in detail in the attached Notice of Annual Meeting and Proxy
Statement, there will be a discussion of the operations of the Company and its
wholly-owned subsidiary, Foothill Independent Bank. Since your participation in
Company activities is important, I hope you will be able to attend.
Whether or not you plan to attend the meeting, please be sure to complete,
sign, date and return the proxy card enclosed with the Proxy Statement so that
your shares may be voted in accordance with your wishes.
Sincerely,
George E. Langley
President and Chief Executive Officer
================================================================================
510 South Grand Ave. [] Glendora, California 91741
[] (818) 963-8551 [] (714) 599-9351
<PAGE> 3
FOOTHILL INDEPENDENT BANCORP
510 SOUTH GRAND AVENUE
GLENDORA, CALIFORNIA 91741
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 13, 1997
TO THE SHAREHOLDERS OF FOOTHILL INDEPENDENT BANCORP:
The 1997 Annual Meeting of Shareholders of Foothill Independent Bancorp
(the "Company") will be held at THE GLENDORA COUNTRY CLUB, 310 S. AMELIA AVENUE,
Glendora, California, on Tuesday, May 13, 1997, at 4:30 P.M., for the following
purposes as more fully described in the accompanying Proxy Statement:
(1) To elect the four nominees named in the accompanying Proxy
Statement to serve as directors for a term of two years.
(2) To approve and ratify an amendment to the Company's 1993 Stock
Incentive Plan (the "1993 Plan") to increase the authorized number of
shares of common stock that are issuable thereunder by 500,000 shares,
bringing the total number of shares of common stock that may be issued
thereunder to 900,000 shares.
(3) To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
Only shareholders of record at the close of business on March 26, 1997 will
be entitled to vote at the meeting or any adjournment or postponement thereof.
The Bylaws of the Company set forth the following procedures for
nominations to the Board of Directors:
Nominations for election of members of the board of directors may be
made by the board of directors or by any shareholder of any outstanding
class of capital stock of the corporation entitled to vote for the election
of directors. Notice of intention to make any nominations (other than for
persons named in the notice of the meeting at which such nomination is to
be made) shall be made in writing and shall be delivered or mailed to the
president of the corporation by the later of the close of business 21 days
prior to any meeting of shareholders called for the election of directors
or 10 days after the date of mailing of notice of the meeting to
shareholders. Such notification shall contain the following information to
the extent known to the notifying shareholder: (a) the name and address of
each proposed nominee; (b) the principal occupation of each proposed
nominee; (c) the number of shares of capital stock of the corporation owned
by each proposed nominee; (d) the name and residence address of the
notifying shareholder; (e) the number of shares of capital stock of the
corporation owned by the notifying shareholder; (f) the number of shares of
capital stock of any bank, bank holding company, savings and loan
association or other depository institution owned beneficially by the
nominee or by the notifying shareholder and the identities and location of
any such institutions; and (g) whether the proposed nominee has ever been
convicted of or pleaded nolo contendere to any criminal offense involving
dishonesty or breach of trust, filed a petition in bankruptcy or been
adjudged bankrupt. The notice shall be signed by the nominating shareholder
and by the nominee. Nominations not made in accordance herewith shall be
disregarded by the chairman of the meeting, and upon his instructions, the
inspector of elections shall disregard all votes cast for each such
nominee. The restrictions set forth in this paragraph shall not apply to
nomination of a person to replace a proposed nominee who has died or
otherwise become unable to serve as a director between the last day for
giving notice in accordance with this paragraph and the date of election of
directors if the procedure called for in this paragraph was followed with
respect to the nomination of the proposed nominee.
By order of the Board of Directors
George E. Langley
President and Chief Executive Officer
April 3, 1997
YOUR VOTE IS IMPORTANT. THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING YOU SHOULD DATE, SIGN AND RETURN THE ENCLOSED PROXY. IF YOU ATTEND THE
MEETING, YOU WILL BE ENTITLED TO VOTE IN PERSON IF YOU WISH.
<PAGE> 4
PROXY STATEMENT
OF
FOOTHILL INDEPENDENT BANCORP
510 SOUTH GRAND AVENUE
GLENDORA, CALIFORNIA 91741
INTRODUCTION
This Proxy Statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of Foothill Independent Bancorp, a
California corporation (the "Company"), for use at its 1997 Annual Meeting of
Shareholders to be held on Tuesday, May 13, 1997, at 4:30 P.M., at The Glendora
Country Club, 310 S. Amelia Avenue, Glendora, California, and at any adjournment
or postponement thereof (the "meeting"). It is contemplated that this
solicitation of proxies will be made exclusively by mail; however, if it should
appear desirable to do so to ensure adequate representation at the meeting,
directors, officers and employees of the Company or its wholly-owned subsidiary,
Foothill Independent Bank (the "Bank"), may communicate with shareholders,
brokerage houses and others by telephone, telegraph or in person, to request
that proxies be furnished and may reimburse banks, brokerage houses, custodians,
nominees and fiduciaries for their reasonable expenses in forwarding proxy
materials to the beneficial owners of the shares held by them. All expenses
incurred in connection with this solicitation will be borne by the Company.
Holders of shares of common stock of the Company ("shareholders") who
execute proxies retain the right to revoke them at any time before they are
voted. Any proxy given by a shareholder may be revoked or superseded by
executing a later dated proxy, or by giving notice of revocation to the
Secretary of the Company, 510 South Grand Avenue, Glendora, California 91741, in
writing prior to or at the meeting or by attending the meeting and voting in
person. A proxy, when executed and not so revoked, will be voted in accordance
with the instructions given in the proxy. If a choice is not specified in the
proxy, the proxy will be voted "FOR" the nominees for election of directors
named in this Proxy Statement and "FOR" approval and ratification of the
amendment increasing the number of shares of common stock issuable under the
Company's 1993 Stock Incentive Plan. This Proxy Statement is first being mailed
to shareholders on or about April 3, 1997.
VOTING SECURITIES
The shares of common stock constitute the only outstanding class of voting
securities of the Company. Only the shareholders of the Company of record as of
the close of business on March 26, 1997 (the "Record Date"), will be entitled to
vote at the meeting or any adjournment or postponement thereof. As of March 26,
1997, there were 4,549,238 shares of common stock outstanding and entitled to
vote. A majority of the outstanding shares will constitute a quorum at the
Annual Meeting. Shareholders who abstain on any proposal or withhold authority
to vote on the election of directors will be counted in determining the presence
of a quorum; whereas broker non-votes will not be counted in determining the
presence of a quorum. Each shareholder is entitled to one vote for each share
held as of the Record Date, except that in the election of directors each
shareholder may cumulate his or her votes and give any one nominee a number of
votes equal to the number of directors to be elected multiplied by the number of
shares which the shareholder is entitled to vote at the meeting, or to
distribute the votes on the same principle among as many candidates as the
shareholder may choose, if (i) the name of the candidate for whom such votes are
cast has been properly placed in nomination prior to the voting, and (ii) any
shareholder has given notice at the meeting prior to voting of that
shareholder's intention to cumulate his or her votes.
<PAGE> 5
PRINCIPAL SHAREHOLDERS
Set forth below is certain information as of March 26, 1997 regarding the
number of shares of the Company's common stock owned by any person who was known
by the Company to own more than 5% of the voting securities of the Company, by
each of the executive officers of the Company named in the Summary Compensation
Table (the "Named Officers") and by all directors and executive officers as a
group:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- --------------------------- ----------------------------- ---------- --------
<S> <C> <C> <C>
Common Stock, no par value Basswood Partners, L.P.(1) 311,608 6.85%
Matthew Lindenbaum
Bennett Lindenbaum
52 Forest Avenue
Paramus, NJ 07652
Common Stock, no par value William V. Landecena(2) 290,705 (3) 6.30%
510 South Grand Avenue
Glendora, CA 91741
Common Stock, no par value George E. Langley(4) 143,494 (5) 3.11%
510 South Grand Avenue
Glendora, CA 91741
Common Stock, no par value Tom Kramer(6) 87,616 (7) 1.91%
510 South Grand Avenue
Glendora, CA 91741
Common Stock, no par value Donna Miltenberger(8) 49,301 (9) 1.08%
510 South Grand Avenue
Glendora, CA 91741
Common Stock, no par value All Directors and Executive 1,132,570 (10) 22.57%
Officers of the Company
as a group (10 in number)
</TABLE>
- ---------------
(1) Based on information set forth in a Schedule 13D, filed with the Securities
and Exchange Commission on February 13, 1997.
(2) Mr. Landecena is Chairman of the Board of Directors and is a director of
the Company and the Bank.
(3) Includes 61,561 shares of common stock subject to outstanding stock options
exercisable during the 60-day period ending May 26, 1997.
(4) Mr. Langley is President, Chief Executive Officer and a Director of the
Company and the Bank.
(5) Includes 57,344 shares of common stock subject to outstanding stock options
exercisable during the 60-day period ending May 26, 1997.
(6) Mr. Kramer is Executive Vice President and Secretary of the Company and the
Bank.
(7) Includes 41,817 shares of common stock subject to outstanding options
exercisable during the 60-day period ending May 26, 1997.
(8) Ms. Miltenberger is Executive Vice President and Chief Administrative
Officer of the Company and the Bank.
(9) Includes 35,464 shares of common stock subject to outstanding stock options
exercisable during the 60-day period ending May 26, 1997.
(10) Includes an aggregate of 468,541 shares of common stock subject to
outstanding stock options exercisable during the 60-day period ending May
26, 1997.
2
<PAGE> 6
ELECTION OF DIRECTORS
At the 1997 Annual Meeting, shareholders will vote on the election of four
Class II directors to serve on the Board of Directors for a two-year term ending
in 1999 and until their successors are elected and have been qualified. The
enclosed proxy will be voted in favor of the election to the Board of Directors
of all of the four nominees named below, unless a contrary instruction is given
in the proxy. All four of the nominees named below are incumbent directors of
the Company that were elected by the shareholders of the Company for terms that
expire in 1997. Each of the nominees named below also serve as a director of the
Bank, a wholly-owned subsidiary of the Company.
Under California law, the four nominees receiving the highest number of
votes will be elected as directors at the Annual Meeting. As a result, proxies
voted to "Withhold Authority," which will be counted, and broker non-votes,
which will not be counted, will have no practical effect. Discretionary
authority to cumulate votes represented by proxies is solicited by the Board of
Directors because, in the event nominations are made in opposition to the
nominees of the Board of Directors, it is the intention of the persons named as
proxy holders in the enclosed Proxy to cumulate votes represented by proxies for
individual nominees in accordance with their best judgment in order to assure
the election of as many of the nominees named below to the Board of Directors as
possible.
If any nominee becomes unavailable to serve on the Board of Directors of
the Company for any reason before the election, then the enclosed proxy will be
voted for the election of such substitute nominee or nominees, if any, as shall
be designated by the Board of Directors. The Board of Directors has no reason to
believe that any of the nominees will be unavailable to serve.
The names and certain information concerning the four (4) nominees for
election as directors are set forth below. YOUR BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE "FOR" THE ELECTION OF EACH OF THE NOMINEES NAMED BELOW. Also set
forth below is information concerning each of the other current directors with
unexpired terms who will continue in office.
DIRECTORS AND NOMINEES
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
DIRECTOR BENEFICIALLY
OF THE OWNED AS OF
COMPANY MARCH 26, PERCENT PRINCIPAL OCCUPATION
NAME AND POSITIONS AGE SINCE(1) 1997 OF CLASS AND BUSINESS EXPERIENCE
- --------------------------- ---- ------- ------------- -------- -------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS II DIRECTORS -- NOMINEES
Richard H. Barker 62 1993 83,772(2) 1.80% For 24 years, until his retirement in
Director of the Company June 1992, Mr. Barker held various
and the Bank management positions with City
National Bank in Beverly Hills,
California. His most recent position
was Senior Vice President in charge
of sales and trading in the
Investment Department.
Charles G. Boone 74 1973 172,436(3) 3.74% Mr. Boone is, and for more than the
Director of the Company past five years has been, a private
and the Bank engineering consultant in the area of
cryogenic engineering. Prior to 1984,
Mr. Boone was affiliated with the
engineering firm of Linhardt &
Associates.
William V. Landecena 72 1973 290,705(4) 6.30% Prior to his retirement in 1981, Mr.
Chairman of the Board Landecena had been a partner for a
of Directors and a number of years in the Arrow Meat
Director of the Company Company.
and the Bank
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
DIRECTOR BENEFICIALLY
OF THE OWNED AS OF
COMPANY MARCH 26, PERCENT PRINCIPAL OCCUPATION
NAME AND POSITIONS AGE SINCE(1) 1997 OF CLASS AND BUSINESS EXPERIENCE
- --------------------------- ---- ------- ------------- -------- -------------------------------------
<S> <C> <C> <C> <C> <C>
O.L. Mestad 74 1973 200,121(4) 4.34% Dr. Mestad is a private investor.
Director of the Company Prior to his retirement in 1983, Dr.
and the Bank Mestad had been engaged in the
private practice of dentistry for
more than twenty years. From May 1987
until May 1992, Dr. Mestad served as
Chairman of the Board of Directors of
the Company and the Bank, having been
elected to that position by the other
members of the Board of Directors.
CLASS I DIRECTORS
George E. Langley 56 1980 143,494(5) 3.11% Mr. Langley was elected President and
President, Chief Chief Executive Officer of the
Executive Officer and a Company and the Bank effective April
Director of the Company 1, 1992. For more than the prior five
and the Bank years, Mr. Langley served as an
Executive Vice President, the Chief
Financial Officer and Secretary of
the Company and the Bank.
Douglas F. Tessitor 52 1995 44,350(6) * Mr. Tessitor is, and since 1976 has
Director of the Company been, engaged in the insurance and
and the Bank financial planning business,
marketing insurance products and
providing financial planning services
to individuals and closely held
businesses. Prior to 1976, he held
management positions with Union Bank
in Los Angeles, California and with
Chase Manhattan Bank in New York.
Max E. Williams 52 1995 49,870(7) 1.09% Mr. Williams is a licensed architect
Director of the Company with a Bachelor's degree in
and the Bank Architecture and a Master's degree in
Urban and Regional Planning. He is,
and since 1979 has been, the owner
and president of his own architec-
tural firm. Prior to 1979, Mr.
Williams was employed as an architect
by independent real estate
development and architectural firms,
including Lewis Development Company
and William L. Pereira Associates.
Mr. Williams also is a member, and
past president of the Inland
California Chapter, of the American
Institute of Architects.
</TABLE>
- ---------------
* Less than 1%.
(1) All dates are the dates when the named individuals first became directors of
the Bank, the Company's predecessor and wholly-owned subsidiary.
(2) Includes 60,072 shares subject to outstanding options exercisable during the
60-day period ending May 26, 1997.
(3) Includes 56,261 shares subject to outstanding options exercisable during the
60-day period ending May 26, 1997.
(4) Includes 61,561 shares subject to outstanding options exercisable during the
60-day period ending May 26, 1997.
(5) Includes 57,344 shares subject to outstanding options exercisable during the
60-day period ending May 26, 1997.
(6) Includes 43,250 shares subject to outstanding options exercisable during the
60-day period ending May 26, 1997.
(7) Includes 45,250 shares subject to outstanding options exercisable during the
60-day period ending May 26, 1997.
4
<PAGE> 8
The Board of Directors of the Company held fourteen meetings during the
year ended December 31, 1996. Each incumbent Director attended at least 75% of
the aggregate of the number of meetings of the Board and the number of meetings
held by all committees of the Board on which he served.
There are no family relationships among any of the directors or executive
officers of the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based upon information made available to the Company, the Company believes
that all filing requirements under Section 16(a) of the Securities Exchange Act
of 1934 applicable to its directors, officers and any persons holding 10 percent
or more of the Company's common stock were satisfied with respect to the
Company's fiscal year ended December 31, 1996.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Bank has established an Examining and Audit
Committee and a Personnel Committee (which functions essentially as a
compensation committee). The Board of Directors of the Company has not
established any such committees.
The Examining and Audit Committee is comprised of five directors selected
by the Board of Directors of the Bank. The members of the Examining and Audit
Committee are O. L. Mestad, Richard H. Baker, William V. Landecena, Douglas F.
Tessitor and Max E. Williams. The Examining and Audit Committee is authorized to
handle all matters which it deems appropriate regarding the independent
accountants for the Company and the Bank and to otherwise communicate and act
upon matters relating to the review and audit of their books and records,
including the scope of the annual audit and the accounting methods and systems
to be utilized by the Company and the Bank. In addition, the Examining and Audit
Committee also makes recommendations to the Board of Directors with respect to
the selection of the independent accountants for the Company and the Bank. The
Examining and Audit Committee held eight meetings during the year ended December
31, 1996.
The Personnel Committee is comprised of five directors selected by the
Board of Directors of the Bank. The members of the Committee are William V.
Landecena, O. L. Mestad, Richard H. Barker, Douglas F. Tessitor and Charles G.
Boone. The Personnel Committee makes determinations with respect to compensation
to be paid to the officers and other key employees of the Bank and is
responsible for establishing compensation and fringe benefit programs for the
employees of the Bank. The Personnel Committee held three meetings during the
year ended December 31, 1996.
The Company does not have a nominating committee. Instead, the Board of
Directors, as a whole, identifies and screens candidates for membership on the
Boards of Directors of the Company and the Bank.
5
<PAGE> 9
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth compensation received for the three fiscal
years ended December 31, 1996 by the Company's and the Bank's executive officers
(the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------------------------
PAYOUTS
ANNUAL COMPENSATION AWARDS --------------
------------------------------ ------------- LONG-TERM
NAME AND BONUS STOCK OPTIONS INCENTIVE PLAN ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) ($)(1) (SHARES) PAYMENTS COMPENSATION
- ---------------------------- ---- --------- -------- ------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
George E. Langley 1996 $ 224,048(2) $111,740 12,000 N/A $ 17,966(3)
President and Chief 1995 220,983(2) 74,720 15,000 16,713(3)
Executive Officer 1994 208,297(2) 82,306 -0- 12,648(3)
of Company & Bank
Tom Kramer 1996 154,103 86,097 12,000 N/A 13,689(4)
Executive Vice President, 1995 149,936 57,573 10,000 12,081(4)
Chief Credit Officer 1994 142,387 64,010 -0- 9,855(4)
and Secretary of
Company & Bank
Donna Miltenberger 1996 141,292 79,126 12,000 N/A 3,750(5)
Executive Vice President 1995 134,458 51,790 10,000 3,607(5)
and Chief Administrative 1994 124,594 57,135 -0- 3,262(5)
Officer of the Company &
Bank
</TABLE>
- ---------------
(1) Bonuses paid to the Named Officers are pursuant to annual incentive
compensation programs established each year for all employees of the Bank,
including the Bank's executive officers. Under this program, performance
goals, relating to such matters as deposit and loan growth, improvements in
loan quality and profitability were established each year. Incentive
compensation, in the form of cash bonuses, was awarded based on the extent
to which the Bank achieved or exceeded the performance goals.
(2) Salary figures for Mr. Langley include directors' fees paid to him by the
Company and the Bank in each year presented.
(3) Includes $14,216 in above-market earnings accrued in 1996, $13,186 in 1995
and $9,273 in 1994, on compensation deferred in the years 1985 through 1988
under a deferred compensation plan in effect during that period designed to
provide retirement benefits for officers and other key management employees
(the "1985 Deferred Compensation Plan") and employer contributions to the
Company's 401(k) Plan (the "401k Plan") of $3,750 in 1996, $3,527 in 1995
and $3,375 in 1994.
(4) Includes $9,939 in above-market earnings accrued in 1996, $8,766 in 1995 and
$6,480 accrued in 1994, on compensation deferred in 1985 through 1989 by Mr.
Kramer under the 1985 Deferred Compensation Plan and employer contributions
to the 401k Plan of $3,750 in 1996, $3,315 in 1995 and $3,375 in 1994.
(5) Includes employer contributions to the 401k Plan of $3,750 in 1996, $3,607
in 1995 and $3,262 in 1994.
6
<PAGE> 10
OPTION GRANTS
The following table provides information on option grants in fiscal 1996 to
the Named Officers.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE OF OPTIONS
PERCENT OF AT ASSUMED ANNUAL
TOTAL OPTIONS RATES OF STOCK
GRANTED TO PRICE APPRECIATION
OPTIONS ALL EMPLOYEES EXERCISE FOR OPTION TERM(5)
GRANTED IN IN FISCAL PRICE EXPIRATION --------------------
NAME 1996 1996(3) ($/SHARE)(4) DATES 5% 10%
- ------------------------ ---------- ------------- ------------ ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
George E. Langley....... 12,000(1) 16.67% $ 8.50 7/22/06 $64,080 $162,600
Tom Kramer.............. 12,000(2) 16.67% $ 8.50 7/22/06 $64,080 $162,600
Donna Miltenberger...... 12,000(2) 16.67% $ 8.50 7/22/06 $64,080 $162,600
</TABLE>
- ---------------
(1) Shares become exercisable in 2 annual installments of 8,975 shares on July
23, 1996 and 3,025 shares on July 23, 1997.
(2) Shares become exercisable in 2 annual installments of 11,760 shares on July
23, 1996 and 240 shares on July 23, 1997.
(3) Options to purchase an aggregate of 72,000 shares were granted to all
employees in fiscal 1996, including the Named Officers.
(4) The exercise price may be paid by delivery of already-owned shares.
(5) There is no assurance that the values that may be realized by an executive
on exercise of his options will be at or near the value estimated in the
table, which utilizes arbitrary compounded rates of growth of stock price of
5% and 10% per year.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table provides information on option exercises in fiscal 1996
by the Named Officers and the value of unexercised in-the-money options held by
the Named Officers as of December 31, 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT FY-END(#) OPTIONS AT FY-END($)(2)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
George E. Langley.... 19,057 $ 105,488(1) 50,885 3,025 $ 207,028 $ 8,697
Tom Kramer........... 12,705 $ 70,329 41,817 240 $ 163,958 $ 690
Donna Miltenberger... -- -- 41,816 240 $ 182,447 $ 690
</TABLE>
- ---------------
(1) The average of the high and low prices of the Company's common stock on
November 25, 1996 (the exercise date) on the NASDAQ National Market was
$10.75.
(2) The average of the high and low prices of the Company's common stock on
December 31, 1996 on the NASDAQ National Market was $11.375.
Employment Agreements. Under an employment agreement which became effective
April 1, 1995 and replaces a prior employment agreement that expired on March
31, 1995, Mr. Langley is employed as the Bank's President and Chief Executive
Officer for a three-year term expiring March 31, 1998. Under that agreement, Mr.
Langley receives a base annual salary of $200,000 and is entitled to participate
in any bonus or incentive compensation programs and other employee benefit plans
generally made available to executives and key employees of the Bank. The Bank
also has agreed to furnish Mr. Langley with the use of an automobile and to
provide him with certain supplemental insurance benefits. Under the employment
agreement, the Bank may terminate Mr. Langley's employment at any time without
cause. In the event of such a termination, or a termination by Mr. Langley of
his employment due to a reduction in his compensation or the scope of his
authority or duties following a merger or consolidation of the Company or the
Bank with another bank or other entity in which the Company or the Bank is not
the surviving entity or the sale of substantially all of the assets of the
Company or the Bank, Mr. Langley's salary, bonuses and other benefits would be
continued for a period
7
<PAGE> 11
of three years measured from the March 31 immediately preceding such
termination. If, on the other hand, Mr. Langley voluntarily resigns his
employment within 12 months following such a change in ownership, although there
has been no change in his compensation or scope of this authority or duties, his
salary, bonuses and benefits would be continued for a period of twelve months
following such resignation. In the event of Mr. Langley's death while employed
as the Bank's President and Chief Executive Officer, salary and bonuses shall
cease, but the Bank will be obligated to continue the dependent health and
dental insurance coverage for Mr. Langley's wife and children for a period of
three years thereafter. If Mr. Langley's employment is terminated due to a
medical disability, all life, medical, dental and disability insurance programs
in which Mr. Langley was participating at that time will be continued for a
period of one year from the date of such termination of employment or until
March 31, 1998, whichever period is shorter.
The Bank also has an agreement with Mr. Kramer and Ms. Miltenberger which
entitles them each to receive two full years' compensation if they are
terminated or their compensation or job responsibilities are reduced following a
merger or consolidation of the Company or the Bank with another bank or other
entity in which the Company or the Bank is not the surviving entity or the sale
of substantially all of the assets of the Company or the Bank.
Directors' Fees. During fiscal 1996 the Bank paid the Chairman of the Board
of Directors $1,950 per month and each other director, including Mr. Langley,
$1,550 per month in directors' fees for services and attendance at Board and
committee meetings, and each director received $454 per month as reimbursement
for health insurance premiums.
Deferred Compensation Plans. Effective January 1, 1985, the Bank adopted
the 1985 Deferred Compensation Plan, a voluntary unfunded deferred compensation
plan, which permitted selected key, salaried employees of the Bank to defer
receipt of a portion of their annual salaries and bonuses that would otherwise
have been paid during a four-year period ended December 31, 1988. The 1985
Deferred Compensation Plan was established to attract and retain key employees
and directors by providing them with a supplemental retirement benefit in an
amount determined on the basis of the amount of salary deferred annually over
that four-year period and the participant's age at the time of participation.
The supplemental retirement benefits will be payable over ten years commencing
on the participant's retirement date, except that if the participant dies prior
thereto, his or her beneficiaries would receive a death benefit, in lieu of the
retirement benefit, over a ten year period. The benefit payments are not subject
to any reduction for Social Security benefits or other offset amounts. A total
of 19 employees, including Messrs. Langley and Kramer participated in the 1985
Deferred Compensation Plan. The 1985 Deferred Compensation Plan is administered
by a committee of the Board of Directors of the Bank.
The Bank has purchased life insurance on employees participating in the
1985 Deferred Compensation Plan in amounts that, in the aggregate, are expected,
on an actuarial basis, to fund all of its future obligations under this plan.
The Bank is the owner and sole beneficiary of all such life insurance. Thus, no
direct allocation of cost is made to any one employee and no amount attributable
to the expenses of the 1985 Deferred Compensation Plan is included in the
Summary Compensation Table set forth above. Earnings on amounts in each
participant's account accrue at an annual fixed rate. It is estimated that,
under this Plan, Mr. Langley will receive approximately $127,500 per year over
the ten-year period following his retirement and Mr. Kramer will receive
approximately $140,000 per year for ten years following his retirement.
Under a deferred compensation plan presently in effect, officers and other
key employees are entitled, prior to the beginning of each fiscal year, to elect
to defer a portion of their annual salary in the upcoming year under annually
established unfunded deferred compensation programs designed to provide for each
participating employee a supplemental retirement benefit in an amount based on
the salary deferred and earnings thereon.
Certain Transactions. The Bank has had, and in the future may have, banking
transactions in the ordinary course of its business with directors, principal
shareholders and their associates, including the making of loans to directors
and their associates. Such loans and other banking transactions are made on the
same terms, including interest rates and collateral securing the loans, as those
prevailing at the time for comparable transactions with unaffiliated persons. In
addition, such loans are made only if they do not involve more than the normal
risk of collectibility and do not present other unfavorable features.
8
<PAGE> 12
REPORT OF PERSONNEL COMMITTEE
The Personnel Committee is responsible for approving, and evaluating the
efficacy of, compensation policies and programs for the Bank, which employs all
of the Company's executive officers, and for making determinations regarding the
compensation of the Company's executive officers, subject to review by the full
Board of Directors. In fiscal 1996 the members of the Personnel Committee were
William V. Landecena, O.L. Mestad, Richard H. Barker, Douglas F. Tessitor, and
Charles G. Boone, all of whom are non-employee Directors of the Company and the
Bank.
The following report is submitted by the Personnel Committee members with
respect to the executive compensation policies established by the Personnel
Committee and approved by the Board of Directors of the Bank and the
compensation of executive officers in fiscal 1996.
COMPENSATION POLICIES AND OBJECTIVES
In adopting, and also evaluating the effectiveness of, compensation
programs for executive officers, as well as other employees of the Bank, the
Personnel Committee is guided by three basic principles:
- The Company and the Bank must be able to attract and retain
highly-qualified and experienced banking professionals with proven
performance records.
- A substantial portion of annual executive compensation should be tied to
the Bank's performance, measured in terms of profitability, asset growth
and asset quality.
- The financial interests of the Company's senior executives should be
aligned with the financial interests of the shareholders, primarily
through stock option grants which reward executives for improvements in
the market performance of the Company's common stock.
Attracting and Retaining Executives and Other Key Employees. There is
substantial competition among banks and other financial institutions and service
organizations for qualified banking professionals. In order to retain executives
and other key employees, and to attract additional well-qualified banking
professionals when the need arises, the Company strives to offer salaries and
health care, retirement and other employee benefit programs to its executives
and other key employees which are competitive with those offered by other
financial institutions and service organizations in California.
In establishing salaries for executive officers, the Personnel Committee
reviews (i) the historical performance of the executives; and (ii) available
information regarding prevailing salaries and compensation programs at banks and
other financial organizations which are comparable, in terms of asset-size,
capitalization and performance, to the Bank. Another factor which is considered
in establishing salaries of executive officers is the cost of living in Southern
California, which generally is higher than in other parts of the country. During
1996, the salary of Ms. Miltenberger was increased by 2.9% to bring her salary
in line with prevailing salaries of executive officers at comparable banking
institutions and to adjust for increases that had occurred in the consumer price
index in Southern California.
In addition, the Bank has followed the practice of entering into multi-year
employment agreements with its Chief Executive Officer. Such agreements serve to
assure continuity in that position and to deter competing banks from attempting
to hire away the Bank's Chief Executive Officer.
In March 1995, the Bank entered into a new three year employment agreement
with George Langley, the Company's Chief Executive Officer, which extends his
employment for three years to March 31, 1998. Under that employment agreement,
Mr. Langley's base annual salary is $200,000. The decision to enter into a three
year employment agreement with Mr. Langley was based on a number of factors,
including the Bank's performance during his tenure as Chief Executive Officer,
Mr. Langley's long tenure with the Bank for which he has served as an executive
officer since 1976, and the continuity and stability of management that Mr.
Langley's retention as Chief Executive Officer provides to both the Company and
the Bank.
9
<PAGE> 13
Performance-Based Compensation. The Personnel Committee believes that
payment of compensation in excess of a senior executive's base salary should be
made dependent on the level of profitability achieved by the Bank and its
comparative performance as measured against the performance of other banking
institutions of comparable size in Northern and Southern California ("Peer-Group
Banks").
The Personnel Committee has identified several performance factors which
affect a bank's profitability and which the Personnel Committee believes are
important to the enhancement of shareholder values. These include asset growth;
the quality and collectibility of the Bank's assets, which consist primarily of
loans and investment securities; the volume and mix of deposits, which affect
the Company's net interest margin or "spread" and also its fee income; and the
level of non-interest expense. On the basis of evaluations of the prior year's
operations, economic and market conditions in the Bank's service areas and
management and outside consultant reports, at the beginning of each fiscal year
the Board of Directors establishes annual performance goals for the Bank in each
of these areas, and weights these performance factors in terms of their
anticipated impact on the Bank's earnings, and also establishes an earnings goal
for the year. As a general rule, the performance goals that are established
require that the Bank achieve a level of profitability in excess of at least the
average profitability achieved by the Peer-Group Banks as a condition to the
payment of any bonuses to senior executives. If that condition is satisfied, a
percentage (determined by the Personnel Committee at the beginning of the fiscal
year) of the higher-than-average earnings achieved by the Bank are set aside as
a pool from which bonuses are paid. The amount of the bonuses that are paid from
that pool, in turn, is based on the extent to which the Bank has achieved or
exceeded the goals in each of the performance areas described above.
As a result of these performance-based bonus programs, as a general rule
executive compensation will be higher and the proportion of each executive's
total cash compensation that is represented by incentive or bonus compensation
will increase in those years when performance goals are exceeded. In 1996, the
Bank's performance, in terms of several measures, exceeded the Bank's
performance in 1995. As a result, in 1996 bonus compensation represented 33.3%
of Mr. Langley's total cash compensation, as compared to 25.3% in 1995, 35.8% of
Mr. Kramer's total compensation as compared to 27.7% in 1995 and 35.9% of Ms.
Miltenberger's total cash compensation as compared to 27.8% in 1995.
Stock Programs. In order to align the financial interests of senior
executives and other key employees with those of the shareholders, the Company
grants stock options to its senior executives and other key employees on a
periodic basis. Stock option grants reward senior executives and other key
employees for performance that results in improved market performance of the
Company's stock, which directly benefits all shareholders. Generally, the number
of shares included in each stock option grant is determined based on an
evaluation of the executive's importance to the future performance of the Bank.
As a result, as a general rule, the more senior the executive, the greater the
number of option shares that are awarded. In addition, in 1993 the Bank
established a 401(k) Plan in which all employees, including executive officers,
may participate. Under this plan, employees may make contributions which they
may elect to have invested in Company common stock. In addition, the Company
makes matching contributions of up to 4% of amounts contributed by participants,
with shares of Company common stock. Each of the named officers participated in
this plan in 1996.
Charles G. Boone
William V. Landecena
O.L. Mestad
Richard H. Barker
Douglas F. Tessitor
Notwithstanding anything to the contrary set forth in the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the foregoing Report, and
the performance graph on page 11 shall not be incorporated by reference into any
such filings.
10
<PAGE> 14
COMPANY PERFORMANCE
The following graph shows a five-year comparison of cumulative total
returns for the Company, the S&P 500 composite index and an index of peer group
companies published in the Montgomery Securities Western Bank Monitor.
COMPARISON OF CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
FOOTHILL SOUTHERN
MEASUREMENT PERIOD INDEPENDENT CALIFORNIA
(FISCAL YEAR COVERED) BANCORP S&P 500 PROXY
<S> <C> <C> <C>
12/31/91 100.00 100.00 100.00
12/31/92 121.48 107.62 99.53
12/31/93 177.52 118.47 121.69
12/31/94 175.94 120.03 138.83
12/31/95 179.18 165.13 176.08
12/31/96 283.32 202.89 265.81
</TABLE>
SOURCE: SNL SECURITIES, L.P.
The total cumulative return on investment (change in the period-end stock
price plus reinvested dividends) for each of the periods for the Company, the
S&P composite index and the peer group companies is based on the stock price or
composite index at the end of fiscal 1991.
The graph above compares the performance of the Company with that of (i)
the S&P 500 composite index and (ii) an index, published in the Montgomery
Securities Western Bank Monitor, which is made up of 13 independent banks and
bank holding companies, including the Company, that are based and conduct
business entirely or primarily in Southern California.
11
<PAGE> 15
PROPOSAL TWO
AMENDMENT TO THE 1993 STOCK INCENTIVE PLAN
TO INCREASE THE TOTAL NUMBER OF SHARES
ISSUABLE UNDER THAT PLAN FROM 400,000 TO 900,000 SHARES
Subject to approval by the Company's shareholders, the Board of Directors
amended the 1993 Stock Incentive Plan ("1993 Plan") in February 1997, to
increase the authorized number of shares of Common Stock issuable under the 1993
Plan by 500,000 shares, and to reserve such additional shares for issuance under
the 1993 Plan, bringing the total number of shares of Common Stock subject to
the 1993 Plan to 900,000.
Approval of the addition of 500,000 shares of Common Stock to the number of
shares reserved for issuance under the 1993 Plan will require the affirmative
vote of the holders of a majority of the outstanding shares of Common Stock
present or represented, and entitled to vote, at the Annual Meeting. Proxies
solicited by management for which no specific direction is included will be
voted "FOR" the amendment to the 1993 Plan to add 500,000 shares of Common Stock
to the number of shares reserved for issuance thereunder.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO AMEND
THE 1993 PLAN TO INCREASE THE TOTAL NUMBER OF SHARES OF COMMON STOCK ISSUABLE
THEREUNDER FROM 400,000 TO 900,000.
The essential features of the 1993 Plan are summarized below. The summary
does not purport to be a complete description of the 1993 Plan. The Company's
shareholders may obtain a copy of the 1993 Plan by writing the Secretary,
Foothill Independent Bancorp, 510 South Grand Avenue, Glendora, California
91741.
GENERAL NATURE AND PURPOSE
The 1993 Plan provides for the granting of incentive stock options
("incentive options") within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), options that do not qualify as incentive
stock options ("nonqualified options") and rights to purchase Common Stock
subject to restrictions as more fully described in the 1993 Plan ("restricted
stock"), to officers and other key employees and to directors of the Company and
its subsidiary. The number of shares available for issuance under the 1993 Plan
is currently 400,000 and, if the amendment is approved, that number will be
increased to 900,000 shares. The aggregate number and kind of shares covered by
the 1993 Plan, and the number and kind of shares and the exercise price per
share covered by outstanding stock options, are subject to adjustment in the
event of any changes in the character or number of outstanding shares of Common
Stock by reason of stock splits, reverse stock splits, stock dividends,
reclassification or similar changes in the capital structure of the Company. At
March 26, 1997, options to purchase an aggregate of 628,120 shares of Common
Stock had been issued and were outstanding under, and 4 executive officers, 6
non-employee directors and approximately 175 employees of the Company and its
subsidiary were eligible to participate in, the 1993 Plan.
The 1993 Plan was adopted by the Board of Directors in January 1993 and
approved by the Company's Shareholders in May 1993. Pursuant to the terms of the
1993 Plan, options may be granted or rights of purchase may be offered on or
prior to December 31, 2002. Options outstanding at that time or at the time the
1993 Plan is otherwise terminated will remain outstanding and will continue to
be exercisable within the period specified in stock option agreements between
the optionees and the Company.
The 1993 Plan has been designed to be exempt from the provisions of the
Employment Retirement Income Security Act of 1974 ("ERISA") and is not a
qualified deferred compensation plan under Section 401(a) of the Code.
ELIGIBILITY
Incentive Options. In general, any officer or other key employee of the
Company or its subsidiary, including any director who is also an employee, is
eligible to receive incentive options under the 1993 Plan, subject to the
following limitations imposed by the Code. An incentive option may not be
granted under the 1993 Plan to any person who, at the time the option is
granted, owns more than 10% of the total combined voting power of all classes of
stock of the Company or any parent or subsidiary corporation (a "ten-percent
shareholder"), unless the exercise price of the shares of Common Stock covered
by the option is at least 110%
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<PAGE> 16
of the fair market value of the shares as of the date of grant, and such
incentive option by its terms is not exercisable after the expiration of five
years from the date such option is granted. In addition, the aggregate fair
market value (determined as of the date of grant) of the Common Stock with
respect to which incentive options become exercisable for the first time under
all incentive options held by any ten-percent shareholder may not exceed
$100,000 in any calendar year.
Nonqualified Options and Restricted Stock. Nonqualified options and/or
rights to purchase restricted stock may be granted under the 1993 Plan to
officers, key employees and directors (whether or not employed by the Company)
of the Company.
Subject to the foregoing limitations applicable to incentive options and
the total number of shares reserved for issuance under the 1993 Plan, there is
no maximum or minimum number of shares for which stock options may be granted or
offered to any one person under the 1993 Plan.
ADMINISTRATION
The 1993 Plan is administered by the Company's Stock Option Committee of
the Board of Directors (the "Committee"), the members of which are non-employee
directors of the Company. Subject to the limitations on eligibility discussed
above and the specific provisions of the 1993 Plan, the Committee has authority
to determine which persons are to receive incentive options, nonqualified
options and rights to purchase restricted stock under the 1993 Plan, the number
of shares of Common Stock to be covered by each option or right to purchase
restricted stock, the exercise price, form of consideration and all other terms
and conditions on which each option or share of restricted stock are granted,
and, generally, to take all actions and make all determinations necessary or
appropriate to administer the 1993 Plan. Determinations of the Committee as to
all matters of interpretation of the 1993 Plan are final and binding upon all
participants and prospective participants.
AMENDMENT AND TERMINATION OF THE 1993 PLAN
Except with respect to formula grants of stock options to non-employee
directors of the Company, the 1993 Plan may be modified, amended, suspended or
terminated by the Company's Board of Directors at any time without shareholder
approval. In addition, to the extent necessary and desirable to comply with
Section 422 of the Code (or any other applicable law or regulation), the Company
shall obtain shareholder approval of any amendment or modification to the 1993
Plan. No amendment, modification or termination of the 1993 Plan shall affect or
impair any rights or obligations under any option or right to purchase
restricted stock granted prior to the date of such amendment, modification or
termination without the consent of the holder of such option or right to
purchase restricted stock. Unless previously terminated by the Company's Board
of Directors, the 1993 Plan will terminate on December 31, 2002.
TERMS AND CONDITIONS OF OPTIONS AND RESTRICTED STOCK
Exercise or Purchase Price. The purchase price of a share of Common Stock
payable upon the exercise of an option granted under the 1993 Plan may not be
less than the fair market value per share on the date the option is granted;
except that with respect to an incentive option granted to a ten-percent
shareholder, the exercise price may not be less than 110% of the fair market
value on the date of grant.
The purchase price of restricted stock shall be fixed by the Committee and
may be issued for no monetary consideration.
Vesting of Options. Each option granted under the 1993 Plan shall vest
(i.e., become exercisable) in one or more installments as determined by the
Committee. Vesting may be based upon tenure of employment or affiliation with
the Company, or any parent or subsidiary of the Company, upon achievement of
specified goals, or upon such other events as the Committee determines. The
Committee also may accelerate any optionee's right to exercise options granted
under the 1993 Plan.
Term of Options. The term of each option granted under the 1993 Plan is
determined by the Committee at the time the option is granted; provided,
however, that no option granted under the 1993 Plan may have a term in excess of
ten years from the date of grant. Further, with respect to an incentive option
granted to a ten-percent shareholder, the term may not be in excess of five
years from the date of grant.
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<PAGE> 17
Transferability. Options granted under the 1993 Plan are not assignable or
transferable except by will or under the laws of descent and distribution and,
during the lifetime of an optionee, are exercisable only by such optionee;
provided, however, that a nonqualified option may be transferred pursuant to a
"qualified domestic relations order" as defined in the Code.
Restrictions, Repurchase and Forfeiture of Restricted Stock. Restricted
stock may not be sold, assigned, transferred, pledged, hypothecated or otherwise
encumbered or disposed of until the restrictions thereon are removed or expire.
The Committee may require that the certificates representing restricted stock
remain in the physical custody of an escrow holder or the Company until all
restrictions are removed or expire. Each certificate representing restricted
stock will bear such legend or legends making reference to the restrictions
imposed upon such restricted stock as the Committee in its discretion deems
necessary or appropriate to enforce such restrictions. The Committee may impose
such other conditions on restricted stock as it may deem appropriate including,
without limitation, restrictions under federal and state securities laws.
Restrictions imposed upon restricted stock will lapse in accordance with
such conditions as are determined by the Committee. Until all of the
restrictions have lapsed, the shares of restricted stock will be held by the
Company and may not be sold or otherwise transferred by the purchaser, but the
purchaser will retain the right to vote the shares and all other rights incident
to the ownership of the shares, subject to the restrictions imposed by the
Committee. In addition, the Committee may at any time, in its sole discretion,
accelerate the time at which all restrictions with respect to any restricted
stock will lapse or remove any and all such restrictions.
Payment. The form of consideration payable upon exercise of an option or
upon issuance of restricted stock, including the method of payment, shall,
except as provided below, be determined in the sole discretion of the Committee
(and, in the case of an incentive option, shall be determined at the time of
grant). In the case of options, such consideration may consist of: (i) cash;
(ii) check; (iii) with the consent of the Company's Board of Directors, other
shares of Common Stock of the Company owned by the optionee having a fair market
value on the date of exercise equal to the aggregate exercise price of the
shares as to which such option is exercised; (iv) with the consent of the
Company's Board of Directors, cancellation of indebtedness of the Company to the
optionee; (v) provided that a public market for the Common Stock exists, through
a "same day sale" commitment from the optionee and a broker-dealer that is a
member of the National Association of Securities Dealers (a "NASD Dealer")
whereby the optionee irrevocably elects to exercise the Option and to sell a
portion of the shares so purchased to pay for the exercise price and whereby the
NASD Dealer irrevocably commits upon receipt of such shares to forward the
exercise price directly to the Company; (vi) provided that a public market for
the Common Stock exists, through a "margin" commitment from the optionee and a
NASD Dealer whereby the optionee irrevocably elects to exercise the Option and
to pledge the shares so purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount of the exercise price,
and whereby the NASD Dealer irrevocably commits upon receipt of such shares to
forward the exercise price directly to the Company; or (vii) any combination of
the foregoing methods of payment as shall be permitted by the Board of Directors
or the Committee and applicable corporate law. Consideration payable for
restricted stock shall be determined by the Committee in its sole discretion.
With the approval of the Company's Board of Directors, such consideration may,
at the discretion of the Committee, consist of secured or unsecured promissory
notes.
FORMULA GRANTS TO NON-EMPLOYEE DIRECTORS
Under the 1993 Plan, each director of the Company who is neither an
employee or an executive officer of the Company (a "non-employee director"),
shall be automatically granted options to purchase 2,000 shares of Common Stock
on May 1 of each year during his or her tenure as a non-employee director of the
Company, except that on the date any individual, who was not formerly an officer
or employee of the Company or any parent or subsidiary of the Company, becomes a
non-employee director of the Company for the first time, he or she shall
automatically be granted nonqualified options to purchase 5,000 shares of Common
Stock of the Company. These nonqualified options have an exercise price equal to
100% of the fair market value of the Common Stock on the date of grant and have
a ten-year term. The options granted on commencement of service vest in two
equal installments of 50% on each anniversary date of the date of grant, until
fully vested, and options granted on May 1 of each year to incumbent directors
vest in full on the following April 30.
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<PAGE> 18
SUMMARY OF FEDERAL TAX CONSEQUENCES
The following is a brief summary of certain federal income tax consequences
of participation in the 1993 Plan.
Incentive Options
No taxable income will be recognized by an optionee upon either the grant
or the exercise of an incentive option under the 1993 Plan. Instead, a taxable
event will occur upon the sale or other disposition of the shares acquired upon
exercise of an incentive option, and the tax treatment of the gain or loss
realized will depend upon how long the shares were held before their sale or
disposition.
If a sale or other disposition of the shares received upon the exercise of
an incentive option occurs more than (i) one year after the date of exercise of
the option and (ii) two years after the date of grant of the option, the holder
will recognize a long-term capital gain or loss at such time equal to the full
amount of the difference between the proceeds realized and the exercise price
paid. However, a sale, exchange, gift or other transfer of legal title of such
stock before the expiration of either the one-year or two-year period described
above will constitute a "disqualifying disposition." A disqualifying disposition
involving a sale or exchange will result in ordinary income to the optionee in
an amount equal to the lesser of (i) the fair market value of the stock on the
date of exercise minus the exercise price, or (ii) the amount realized on
disposition minus the exercise price. If the amount realized in a disqualifying
disposition exceeds the fair market value of the stock on the date of exercise,
the gain realized, in excess of that taxed as ordinary income as indicated
above, will be taxed as a capital gain. A disqualifying disposition as a result
of a gift will result in ordinary income to the optionee in an amount equal to
the difference between the exercise price and the fair market value of the stock
on the date of exercise. Any loss realized upon a disqualifying disposition will
be treated as a capital loss. Capital gains and losses resulting from
disqualifying dispositions will be treated as long-term or short-term depending
upon whether the shares were held for more or less than the applicable statutory
holding period (currently one year). The Company will be entitled to a tax
deduction in an amount equal to the ordinary income recognized by the optionee
as a result of the disqualifying disposition.
If legal title to any shares acquired upon exercise of an incentive option
is transferred by sale, gift or exchange, such transfer will be treated as a
disposition for purposes of determining whether a "disqualifying disposition"
has occurred. However, certain transfers will not be treated as dispositions for
such purposes, such as transfers to an estate or by inheritance upon an
optionee's death, a mere pledge or hypothecation, or a transfer into the name of
the optionee and another person as joint tenants.
Nonqualified Options
No taxable income is recognized by an optionee upon the grant of a
nonqualified option. Upon exercise, however, the optionee will recognize
ordinary income in the amount by which the fair market value of the shares
purchased exceeds, as of the date of exercise, the exercise price paid for such
shares. The income recognized by the optionee will be subject to income tax
withholding by the Company out of the optionee's current compensation. If such
compensation is insufficient to pay the taxes due, the optionee will be required
to make a direct payment to the Company for the balance of the tax withholding
obligation. The Company will be entitled to a tax deduction equal to the amount
of ordinary income recognized by the optionee, provided the applicable
withholding requirements are satisfied.
Restricted Stock
The receipt of restricted stock will not result in a taxable event until
the expiration of any repurchase rights retained by the Company with respect to
such stock, unless the participant makes an election under Section 83(b) of the
Code to be taxed as of the date of purchase. If no repurchase rights are
retained or if a Section 83(b) election is made, the participant will recognize
ordinary income in an amount equal to the excess of the fair market value of
such shares on the date of purchase over the purchase price paid for such
shares. Even if the purchase price and the fair market value of the shares are
the same (and, therefore, no ordinary income is received by the participant), a
Section 83(b) election must be made to avoid deferral of the date ordinary
income is recognized. The election must be filed with the Internal Revenue
Service not later
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<PAGE> 19
than 30 days after the date of purchase, or in the case of restricted stock
granted for no monetary consideration, the date of grant.
If no Section 83(b) election is made or if no repurchase rights are
retained, a taxable event will occur on each date the participant's ownership
rights vest (i.e., when the Company's repurchase rights expire) as to the number
of shares that vest on that date, and the holding period for long-term capital
gain purposes will not commence until the date the shares vest. The participant
will recognize ordinary income on each date shares vest in an amount equal to
the excess of the fair market value of such shares on that date over the
purchase price paid for such shares. However, if the participant is subject to
Section 16(b) of the Exchange Act, and if no Section 83(b) election was made at
the time of purchase, the recognition date for ordinary income for shares that
vest within six months of purchase shall be subject to deferral to the date that
is six months from the date of purchase.
INDEPENDENT PUBLIC ACCOUNTANTS
Vavrinek, Trine, Day & Company, who were the Company's independent
accountants for the fiscal year ended December 31, 1996, have been selected by
the Board of Directors as the Company's independent accountants for the fiscal
year ending December 31, 1997. A representative of Vavrinek, Trine, Day &
Company will attend the meeting, will have an opportunity to make a statement
and will be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS
Any shareholder desiring to submit a proposal for action at the 1997 Annual
Meeting of Shareholders and presentation in the Company's Proxy Statement with
respect to such meeting should arrange for such proposal to be delivered to the
Company at its principal place of business no later than December 4, 1997.
Matters pertaining to such proposals, including the number and length thereof,
eligibility of persons entitled to have such proposals included and other
aspects are regulated by the Securities Exchange Act of 1934, Rules and
Regulations of the Securities and Exchange Commission and other laws and
regulations to which interested persons should refer.
OTHER MATTERS
Management is not aware of any other matters to come before the meeting. If
any other matter not mentioned in this Proxy Statement is brought before the
meeting, the proxy holders named in the enclosed Proxy will have discretionary
authority to vote all proxies with respect thereto in accordance with their
judgment.
By Order of the Board of Directors
George E. Langley
President
April 3, 1997
The Annual Report to Shareholders of the Company for the fiscal year ended
December 31, 1996 is being mailed to all shareholders of record as of March 26,
1997 concurrently with this Proxy Statement. The Annual Report is not to be
regarded as proxy soliciting material or as a communication by means of which
any solicitation is to be made.
COPIES OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 WILL BE
PROVIDED TO SHAREHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO THE SECRETARY,
FOOTHILL INDEPENDENT BANCORP, 510 SOUTH GRAND AVENUE, GLENDORA, CALIFORNIA
91741.
16
<PAGE> 20
Please mark
your votes /X/
as this
THE DIRECTORS RECOMMEND A VOTE "FOR" ITEMS 1 AND 2
1. ELECTION OF DIRECTORS
Election of the following nominees as Class II directors for a two year
term: Richard H. Barker, Charles G. Boone, William V. Landecena and
O. L. Mestad
FOR all
nominees WITHHOLD
listed below AUTHORITY
(except as to vote for
marked to the all nominees
contrary below) listed below
/ / / /
(INSTRUCTIONS: To withhold authority to vote for any nominee, print that
nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
2. INCREASE THE NUMBER OF SHARES ISSUABLE UNDER THE 1993 STOCK INCENTIVE PLAN
TO 900,000 SHARES.
FOR AGAINST ABSTAIN
/ / / / / /
3. IN THEIR DISCRETION, ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF.
I will attend meeting / /
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
SHAREHOLDER ON THIS PROXY. WHERE NO DIRECTION IS GIVEN, SUCH SHARES WILL BE
VOTED "FOR" THE ELECTION OF THE DIRECTORS NAMED ABOVE ON THIS PROXY AND "FOR"
THE INCREASE IN THE NUMBER OF SHARES ISSUABLE UNDER THE 1993 STOCK INCENTIVE
PLAN. THIS PROXY CONFERS DISCRETIONARY AUTHORITY TO CUMULATE VOTES FOR ANY AND
ALL OF THE NOMINEES FOR ELECTION OF DIRECTORS FOR WHICH AUTHORITY TO VOTE HAS
NOT BEEN WITHHELD.
Date , 1997
------------------------------------------
- ----------------------------------------------------
(Signature of shareholder)
Please sign your name exactly as it appears hereon. Executors, administrators,
guardians, officers of corporations, and others signing in a fiduciary capacity
should state their full titles as such.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE> 21
PROXY
FOOTHILL INDEPENDENT BANCORP
PROXY SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF THE SHAREHOLDERS
MAY 13, 1997
The undersigned hereby nominates, constitutes and appoints George E. Langley,
Douglas F. Tessitor and Max E. Williams, and each of them individually, the
attorney, agent and proxy of the undersigned, with full power of substitution,
to vote all stock of FOOTHILL INDEPENDENT BANCORP which the undersigned is
entitled to represent and vote at the 1997 Annual Meeting of Shareholders of the
Company to be held at The Glendora Country Club, 310 So. Amelia Avenue,
Glendora, California, on May 13, 1997, at 4:30 p.m., and at any and all
adjournments thereof, as fully as if the undersigned were present and voting at
the meeting, as follows:
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE URGED TO SIGN AND RETURN
THIS PROXY, WHICH MAY BE REVOKED AT ANY TIME PRIOR TO ITS USE.
IMPORTANT - PLEASE SIGN AND DATE ON OTHER SIDE AND RETURN PROMPTLY
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
