<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
SILICON VALLEY BANCSHARES
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(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.:
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(3) Filing Party:
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(4) Date Filed:
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SILICON VALLEY BANCSHARES
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, APRIL 16, 1998
4:00 P.M.
TO THE SHAREHOLDERS:
I am pleased to invite you to attend the 1998 Annual Meeting of Shareholders
of Silicon Valley Bancshares, which will be held at the Network Meeting Center
at Techmart, Silicon Valley Room, 5201 Great America Parkway, Santa Clara,
California 95054, on Thursday, April 16, 1998, 4:00 p.m., local time. The
purposes of the meeting are to:
1. Elect eight (8) Directors to serve for the ensuing year and until their
successors are elected.
2. Ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors.
3. Transact such other business as may properly come before the meeting.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. TO ASSURE YOUR REPRESENTATION AT THE
MEETING, YOU ARE ENCOURAGED TO MARK YOUR VOTES, SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. Any shareholder attending the meeting may vote in person even if such
shareholder has previously returned a proxy card.
Only shareholders of record on February 20, 1998 will be entitled to vote at
the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/S/ DANIEL J. KELLEHER
Daniel J. Kelleher
CHAIRMAN OF THE BOARD
Santa Clara, California
March 13, 1998
ALTHOUGH YOU MAY PRESENTLY PLAN TO ATTEND THE MEETING, PLEASE INDICATE ON THE
ENCLOSED PROXY CARD YOUR VOTE ON THE MATTERS PRESENTED AND SIGN, DATE AND RETURN
THE PROXY CARD. IF YOU DO ATTEND THE MEETING AND WISH TO VOTE IN PERSON, YOU MAY
WITHDRAW YOUR PROXY AT THAT TIME. WE ENCOURAGE YOU TO VOTE FOR THE ELECTION OF
ALL EIGHT (8) NOMINEES FOR DIRECTORS AND FOR RATIFICATION OF THE SELECTION OF
KPMG PEAT MARWICK LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
<PAGE>
PROXY STATEMENT -- TABLE OF CONTENTS
<TABLE>
<CAPTION>
MATTER PAGE
- ----------------------------------------------------------------------------------------------------------- -----
<S> <C>
Information Concerning the Proxy Solicitation.............................................................. 1
Proposal No. 1 -- Election of Directors*................................................................... 3
Security Ownership of Directors and Executive Officers..................................................... 5
Information on Executive Officers.......................................................................... 6
Report of the Executive Committee of the Board on Executive Compensation................................... 7
Return to Shareholders Performance Graph................................................................... 12
Table 1 -- Summary Compensation............................................................................ 13
Table 2 -- Option Grants in Last Fiscal Year............................................................... 14
Table 3 -- Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values............... 15
Termination Arrangements................................................................................... 16
Board Committees and Meeting Attendance.................................................................... 19
Corporate Governance Guidelines............................................................................ 21
Director Compensation...................................................................................... 21
Security Ownership of Principal Shareholders............................................................... 22
Section 16(a) Beneficial Ownership Reporting Compliance.................................................... 23
Certain Relationships and Related Transactions............................................................. 23
Proposal No. 2 -- Ratification of Appointment of Independent Auditors*..................................... 23
Shareholder Proposals -- 1999 Annual Meeting............................................................... 24
1997 Annual Report......................................................................................... 24
Other Matters.............................................................................................. 24
</TABLE>
- ------------------------
*Denotes Items to be Voted on at the Meeting
i
<PAGE>
Mailed to shareholders on or about March 13, 1998
------------------------
PROXY STATEMENT
OF
SILICON VALLEY BANCSHARES
3003 TASMAN DRIVE
SANTA CLARA, CALIFORNIA 95054
------------------------
INFORMATION CONCERNING THE PROXY SOLICITATION
GENERAL
This Proxy Statement is furnished in connection with the solicitation of the
enclosed Proxy by, and on behalf of, the Board of Directors of Silicon Valley
Bancshares, a California corporation and bank holding company (the "Company")
for Silicon Valley Bank (the "Bank"), for use at the 1998 Annual Meeting of
Shareholders of the Company to be held in the Silicon Valley Room at the Network
Meeting Center at Techmart, 5201 Great America Parkway, Santa Clara, California
95054, ON THURSDAY, APRIL 16, 1998 AT 4:00 P.M., local time and at all
postponements or adjournments thereof (the "Meeting"). Only shareholders of
record on February 20, 1998 (the "Record Date") will be entitled to vote at the
Meeting and any postponements or adjournments thereof. At the close of business
on the Record Date, the Company had 10,237,634 outstanding shares of its no par
value Common Stock (the "Common Stock") held by 653 shareholders of record.
The Company's principal executive offices are located at 3003 Tasman Drive,
Santa Clara, CA 95054 and its telephone number at that location is (408)
654-7400.
VOTING
Shareholders of the Company's Common Stock are entitled to one vote for each
share held, except that in the election of directors, each shareholder has the
right to invoke cumulative voting which entitles each shareholder to as many
votes as shall equal the number of shares held by such shareholder multiplied by
the number of directors to be elected. A shareholder may cast all of his or her
votes for a single candidate or distribute such votes among as many of the
candidates he or she chooses (up to a maximum of the number of directors to be
elected). However, no shareholder shall be entitled to cumulate votes (in other
words, cast for any candidate a number of votes greater than the number of
shares of stock held by such shareholder) for a candidate unless such
candidate's or candidates' names have been properly placed in nomination prior
to the voting in accordance with Section 2.11 of the Bylaws of the Company and
the shareholder (or any other shareholder) has given notice at the meeting prior
to the voting of the shareholder's intention to cumulate votes. If any
shareholder has given such notice, all shareholders may cumulate their votes for
candidates properly placed in nomination. If cumulative voting is properly
invoked, the Proxy Holders are given discretionary authority under the terms of
the Proxy to cumulate votes represented by shares for which they are named Proxy
Holders as they see fit among management's nominees in order to assure the
election of as many of such nominees as possible.
Section 2.11 of the Bylaws of the Company governs nominations for election
of members of the Board of Directors, as follows: nominations for election of
members of the Company's Board of Directors may be made by the Board of
Directors or by any shareholder of any outstanding class of capital stock of the
Company entitled to vote for the election of directors. Notice of intention to
make any nominations shall be made in writing and shall be delivered or mailed
to the Secretary of the Company by the later of the close of business twenty-one
(21) days prior to any meeting of shareholders called for the election of
directors, or ten (10) days after the date of mailing notice of the meeting to
shareholders. Such notification
1
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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
Common Stock of the Company owned by each proposed nominee; (d) the name and
residence address of the notifying shareholder; and (e) the number of shares of
Common Stock of the Company owned by the notifying shareholder. Nominations not
made in accordance herewith may, at the discretion of the Chairman of the
meeting, be disregarded and upon the Chairman's instructions, the Inspector of
Election can disregard all votes cast for each such nominee.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The required quorum for the transaction of business at the Annual Meeting is
a majority of the shares of Common Stock issued and outstanding on the Record
Date. Shares that are voted "FOR", "AGAINST" or "WITHHELD FROM" a matter are
treated as being present at the meeting for purposes of establishing a quorum
and are also treated as shares "represented and voting" at the Annual Meeting
(the "Votes Cast") with respect to such matter.
While there is no definitive statutory or case law authority in California
as to the proper treatment of abstentions, the Company believes that abstentions
should be counted for purposes of determining the presence or absence of a
quorum for the transaction of business, but should not be counted as Votes Cast
with respect to a proposal, since the shareholder has expressly declined to vote
on such proposal. In the absence of controlling precedent to the contrary, the
Company intends to treat abstentions in this manner.
Similarly, broker non-votes will be counted for purposes of determining the
presence or absence of a quorum for the transaction of business, but will not be
counted for purposes of determining the number of Votes Cast with respect to the
proposal on which the broker has expressly not voted.
Accordingly, abstentions and broker non-votes will not affect the outcome of
the voting on any proposal set forth in this Proxy Statement.
REVOCABILITY OF PROXIES
Any person giving a Proxy in the form accompanying this Proxy Statement has
the power to revoke the Proxy at any time prior to its use. A Proxy is revocable
prior to the Meeting by delivering either a written instrument revoking it or a
duly executed Proxy bearing a later date to the Secretary of the Company or to
the Company's transfer agent. Such Proxy is also automatically revoked if the
shareholder is present at the Meeting and votes in person.
SOLICITATION
This solicitation of Proxies is made by, and on behalf of, the Board of
Directors of the Company. The Company will bear the entire cost of preparing,
assembling, printing, and mailing Proxy materials furnished by the Board of
Directors to shareholders. Copies of Proxy materials will be furnished to
brokerage houses, fiduciaries and custodians to be forwarded to the beneficial
owners of the Company's Common Stock. In addition to the solicitation of Proxies
by use of the mail, some of the officers, directors and regular employees of the
Company and the Bank may (without additional compensation) solicit Proxies by
telephone or personal interview, the costs of which the Company will bear.
Unless otherwise instructed, each valid returned Proxy that is not revoked
will be voted in the election of directors "FOR" the nominees to the Board of
Directors, "FOR" ratification of the appointment of KPMG Peat Marwick LLP as the
Company's independent auditors, and at the Proxy Holders' discretion on such
other matters, if any, as may properly come before the Meeting or any
postponement or adjournment thereof (including any proposal to adjourn the
Meeting).
2
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES
The Company's Bylaws currently provide for a range of from eight (8) to
fifteen (15) directors and permit the exact number to be fixed by the Board of
Directors. Effective as of April 16, 1998, the Board of Directors has fixed the
exact number of directors at eight (8).
NOMINEES FOR DIRECTOR
All Proxies will be voted "FOR" the election of the following eight (8)
nominees recommended by the Board of Directors, all of whom are currently
directors, unless authority to vote for the election of directors (or for any
particular nominee) is withheld. All of the nominees have served as directors of
the Company since the last Annual Meeting of Shareholders. All incumbent
directors are nominees for re-election to the Board, except Michael Roster,
Esq., who is not standing for re-election. If any of the nominees should
unexpectedly decline or be unable to act as a director, the Proxies may be voted
for a substitute nominee designated by the Board of Directors. The Board of
Directors has no reason to believe that any nominee will become unavailable and
has no present intention to nominate persons in addition to or in lieu of those
listed below. Directors of the Company serve until the next annual meeting of
shareholders or until their successors are elected and qualified.
The names and certain information about each of the Company's nominees for
director as of the Record Date are set forth below.
<TABLE>
<CAPTION>
(1)
-- PRINCIPAL OCCUPATION OR EMPLOYMENT
(2) ----------------------------------------------------------------- DIRECTOR
NAME OF DIRECTOR NOMINEE AGE -- OTHER BUSINESS AFFILIATIONS AND PUBLIC COMPANY DIRECTORSHIPS SINCE
- ------------------------- --- ----------------------------------------------------------------- -----------
<S> <C> <C> <C> <C>
Gary K. Barr 53 (1) President and Chief Executive Officer, Pacific Coast Capital (a 1982
real estate investment and management company), Carbondale,
Colorado since August 1992.
(2) Chief Financial Officer, Import/Export Time Advisor (an
information software company), since April 1997. President and
Chief Executive Officer, Landsing Pacific Fund (a California real
estate investment and management company) from 1984 to August
1992. Interim Acting Chief Executive Officer of the Company and
the Bank from January 1993 to May 1993.
James F. Burns, Jr. 60 (1) Trustee of CBR Liquidating Trust since October 1996, and 1994
formerly, Executive Vice President and Chief Financial Officer,
CBR Information Group (a credit and mortgage reporting company),
Houston, Texas from September 1993 to October 1996.
(2) Executive Vice President and Chief Financial Officer, Integratec,
Inc. (a company providing credit origination, servicing and
collection services, and the parent company of CBR Information
Group prior to spin-off of CBR in 1993) from 1988 to 1993.
John C. Dean 50 (1) President and Chief Executive Officer of the Company and the Bank 1993
since May 1993. Also, see "Information on Executive Officers"
below.
(2) Advisory Member of Board of Directors, American Central Gas
Companies, Inc., Tulsa, Oklahoma since August 1994.
David M. deWilde 57 (1) Managing Partner, L.A.I. (an executive search firm) since January 1995
1998.
(2) Founder and Chief Executive Officer, Chartwell Partners
International, Inc. (an executive search firm) from 1989 to
January 1998. Director, Berkshire Realty Company, Inc. (a real
estate investment trust), Boston, Massachusetts since 1993.
Clarence J. Ferrari, Jr., 63 (1) Founder and Principal, Ferrari, Olsen, Ottoboni & Bebb 1983
Esq. (Attorneys-at-Law), San Jose, California since 1981.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
(1)
-- PRINCIPAL OCCUPATION OR EMPLOYMENT
(2) ----------------------------------------------------------------- DIRECTOR
NAME OF DIRECTOR NOMINEE AGE -- OTHER BUSINESS AFFILIATIONS AND PUBLIC COMPANY DIRECTORSHIPS SINCE
- ------------------------- --- ----------------------------------------------------------------- -----------
<S> <C> <C> <C> <C>
Daniel J. Kelleher (1) 55 (1) Private Investor, Los Altos Hills, California. 1986
James R. Porter 62 (1) Chairman, CCI/Triad (a computer services company) since February 1994
1997.
(2) President, Chief Executive Officer and Director, Triad Systems
Corporation (a computer software company), Livermore, California
from September 1985 to February 1997. Member of Board of
Directors, Firstwave Technologies (a sales automation company),
Atlanta, Georgia since April 1993. Member of Board of Directors,
Cellular Technical Services (a cellular device company), Seattle,
Washington since July 1997.
Ann R. Wells 54 (1) President, Ann Wells Personnel Services Division, Personnel Group 1986
of America (a personnel agency) since January 1998.
(2) Chief Executive Officer, Ann Wells Personnel Services, Inc. (a
personnel agency), Sunnyvale, California from January 1980 to
January 1998.
</TABLE>
Henry M. Gay resigned from the Board of Directors on April 17, 1997. Mr. Gay
continues to serve as an advisory (non-voting) member of the Company Board and
the Bank Board.
VOTE REQUIRED
The eight (8) nominees for director receiving the highest number of
affirmative votes of the shares entitled to be voted for them shall be elected
as directors. Votes withheld from any director are counted for purposes of
determining the presence or absence of a quorum, but have no other legal effect
under California law.
- ------------------------
(1) Chair of the Company Board and the Bank Board.
4
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information regarding beneficial ownership as
of the Record Date of the Company's Common Stock by each of the Company's
directors, by each of the executive officers named in the Summary Compensation
Table and by all current directors and executive officers as a group. Unless
otherwise noted, the respective nominees have sole voting and investment power
with respect to the shares shown in the table as beneficially owned.
<TABLE>
<CAPTION>
AGGREGATE NUMBER OF SHARES PERCENT OF
NAME BENEFICIALLY OWNED OUTSTANDING SHARES
- ------------------------------------------------------------------ --------------------------- ---------------------
<S> <C> <C>
DIRECTORS
Gary K. Barr...................................................... 40,000(a) 0.39%
James F. Burns, Jr................................................ 13,500(a) 0.13%
John C. Dean *.................................................... 140,271(b),(g) 1.35%
David M. deWilde.................................................. 16,734(a) 0.16%
Clarence J. Ferrari, Jr., Esq..................................... 57,514(a) 0.55%
Daniel J. Kelleher................................................ 70,881(a) 0.68%
James R. Porter................................................... 13,875(a) 0.13%
Michael Roster, Esq............................................... 12,500 0.12%
Ann R. Wells...................................................... 57,430(a) 0.55%
EXECUTIVE OFFICERS **
John C. Dean...................................................... (See listing above under "Directors")
James F. Forrester................................................ 52,718(c),(h) 0.51%
Barbara B. Kamm................................................... 21,796(d),(i) 0.21%
Harry W. Kellogg, Jr.............................................. 63,913(e),(j) 0.62%
Kenneth P. Wilcox................................................. 35,506(f),(k) 0.34%
All current directors and executive officers as a group (15
persons)......................................................... 601,636*** 5.80%
</TABLE>
- ------------------------------
Share numbers shown in the table include (1) the following number of shares
subject to options where the options are exercisable within 60 days after the
Record Date and (2) the following number of shares under the Company's employee
retirement plans:
<TABLE>
<S> <C> <C> <C> <C> <C>
(1) (2)
(a) 6,000 shares (g) 47,962
shares
(b) 6,250 shares (h) 10,620
shares
(c) 10,845 (i) 5,099 shares
shares
(d) 12,114 (j) 10,626
shares shares
(e) 33,750 (k) 7,033 shares
shares
(f) 19,020
shares
</TABLE>
* Share ownership shown does not include 3,500 shares held in a trust for
which Mr. Dean's brother serves as trustee for the benefit of Mr. Dean's
youngest daughter, as to which shares Mr. Dean disclaims beneficial
ownership. Shares under a similar trust for the benefit of Mr. Dean's oldest
daughter were distributed to such daughter (upon attaining the age of 21) in
March 1997.
** Ownership shown includes dispositive share equivalents beneficially owned by
executive officers under the Company's employee retirement plans. Actual
voting shares will be slightly less due to cash liquidity in such retirement
plans. The difference between dispositive share equivalents and actual
voting shares is not deemed material.
*** Includes (i) 126,979 shares subject to options where the options are
exercisable within 60 days after the Record Date and (ii) 82,829 shares held
for the benefit of current executive officers under the Company's employee
retirement plans.
5
<PAGE>
INFORMATION ON EXECUTIVE OFFICERS (1)
The positions and ages as of the Record Date of the executive officers of
the Company are as set forth below. There are no family relationships among
directors or executive officers of the Company.
<TABLE>
<CAPTION>
EMPLOYEE
NAME AND POSITION AGE BUSINESS EXPERIENCE SINCE
- ------------------------------ --- ------------------------------------------------------------------------------------- --------
<S> <C> <C> <C>
JOHN C. DEAN 50 Prior to joining the Company and the Bank in May 1993, Mr. Dean served as President 1993
President, Chief Executive and Chief Executive Officer of Pacific First Bank, a $6.5 billion federal savings
Officer and Director of the bank headquartered in Seattle, Washington from December 1991 until April 1993. From
Company and the Bank 1990 to 1991, Mr. Dean served as Chairman and Chief Executive Officer of First
Interstate Bank of Washington and from 1986 to 1990, Chairman and Chief Executive
Officer of First Interstate Bank of Oklahoma.
JAMES F. FORRESTER 54 Mr. Forrester joined the Bank in 1987 as Senior Vice President of Operations and 1987
Executive Vice President of Administration. In 1990, Mr. Forrester founded the Bank's Southern California office
the Company and the Bank and and managed that office until August 1993. From August 1993 to December 1995, Mr.
Manager of the Bank's Forrester managed the Bank's Special Industries Group and Northern California
Corporate Finance Group Technology Group, and from January 1996 to December 1997, managed the Bank's
Strategic Financial Services Group. Mr. Forrester was named Manager of the Corporate
Finance Group in December 1997.
DAVID A. JONES 40 Mr. Jones joined the Bank in August 1997 as Executive Vice President and Chief Credit 1997
Executive Vice President and Officer. Prior to joining the Bank, Mr. Jones served as Senior Vice President of
Chief Credit Officer of the Wells Fargo Bank in Portland, Oregon from April 1996 to August 1997. From January
Bank 1982 to April 1996, Mr. Jones was a Senior Vice President with First Interstate Bank
in Oklahoma, Texas, and Oregon.
BARBARA B. KAMM 46 Ms. Kamm joined the Bank in January 1991 as Vice President and Senior Loan Officer of 1991
Executive Vice President and the Bank's Southern California Technology Group. Prior to being appointed Executive
Chief Administrative Officer Vice President and Chief Administrative Officer in September 1996, Ms. Kamm served as
of the Company and the Bank Senior Vice President and Manager of the Bank's Southern California Group from August
1993 to September 1996 (having been promoted to Executive Vice President in November
1995).
HARRY W. KELLOGG, JR. 54 Mr. Kellogg joined the Bank in October 1986 as Senior Vice President of the Bank's 1986
Executive Vice President of Technology Division. Mr. Kellogg served as Executive Vice President and Chief
the Company and the Bank and Marketing Officer from September 1993 to April 1994 (when he left the Bank for ten
Manager of the Bank's months, during which time, he served as Executive Vice President for the Emerging
Products and Services Group Growth Industries Division of Cupertino Bank). Mr. Kellogg returned to the Bank in
February 1995 as Executive Vice President and Chief Marketing Officer. He was named
Manager of the Bank's Products and Services Group in December 1997.
SCOTT H. RAY 33 Mr. Ray joined the Bank in September 1994 as Vice President and Manager of the 1994
Executive Vice President and Treasury Division. Mr. Ray was appointed Executive Vice President and Chief Financial
Chief Financial Officer of Officer in September 1996. Prior to joining the Bank, Mr. Ray served as a Senior
the Company and the Bank Manager in the Financial Advisory Services Group of Coopers & Lybrand LLP from 1993
to 1994. From 1987 to 1993, Mr. Ray held increasingly responsible positions with both
Coopers & Lybrand LLP and Price Waterhouse LLP.
KENNETH P. WILCOX 49 Mr. Wilcox joined the Bank in April 1990 as Regional Vice President of the Bank's 1990
Executive Vice President of East Coast Technology Group. Prior to becoming Executive Vice President and Manager
the Company and the Bank and of the East Coast Technology Group in November 1995, Mr. Wilcox held increasingly
Chief Banking Officer of the responsible positions with the Bank (having served as Manager of the East Coast
Bank Technology Group since June 1993). Mr. Wilcox was appointed Chief Banking Officer in
December 1997.
</TABLE>
- ------------------------------
(1) Executive Officers include members of the Bank's Executive Committee and
any other officer who performs a policy-making function for the Company
within the meaning of the Securities and Exchange Commission's rules.
6
<PAGE>
REPORT OF THE EXECUTIVE COMMITTEE OF THE BOARD
ON EXECUTIVE COMPENSATION
THE REPORT OF THE EXECUTIVE COMMITTEE (THE "COMMITTEE") SHALL NOT BE DEEMED
INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT INCORPORATING BY REFERENCE
THIS PROXY STATEMENT INTO ANY FILING UNDER THE SECURITIES ACT OF 1933 OR UNDER
THE SECURITIES EXCHANGE ACT OF 1934 (THE "EXCHANGE ACT"), EXCEPT TO THE EXTENT
THAT THE COMPANY SPECIFICALLY INCORPORATES THE INFORMATION CONTAINED IN THE
REPORT BY REFERENCE, AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.
Decisions regarding compensation of the Company's executive officers,
including those related to stock and stock options, are considered by the full
Board of Directors, based upon the recommendations and analysis performed by the
Executive Committee (the "Committee"), currently composed of Mr. Kelleher,
Chair, and Directors Burns, Dean, Roster, and Wells. See "Executive Committee
Interlocks and Insider Participation" below regarding the Executive Committee's
assumption of duties previously held by the Personnel and Compensation Committee
in September 1997. Since the Committee is responsible for setting the Chief
Executive Officer's compensation (subject to approval by the full Board), Mr.
Dean refrains from participating in any discussions of the Committee relating to
his performance or compensation. The full Board of Directors is also responsible
for all option and stock grants to those individuals within the Bank who are
subject to Section 16(b) of the Exchange Act. During 1997, the Board of
Directors did not modify or reject in any material way any action or
recommendation by the Committee.
KEY PRINCIPLES
The Committee has adopted the following principles to use for guidance in
setting compensation:
- PAY COMPETITIVELY
-The Committee maintains a philosophy that executive compensation levels
should be competitive relative to those found in other financial
institutions of comparable asset size. In that way, the Company can
attract and retain highly-qualified executives critical to the Company's
long-term success.
-Consistent with this philosophy, the Committee regularly obtains
information regarding executive salary levels in the financial
institutions industry through various sources, including compensation
surveys conducted by banking industry associations and independent
compensation consultants.
-The Committee attempts to set (a) base compensation at the midpoint of
the range and (b) total compensation (including incentive compensation)
in the 75th to 100th percentile range (subject to the Company's
financial performance being in the top quartile of the Company's
competitive group).
-The Committee strives to reward performance that creates value for the
Company's shareholders.
- TIE INCENTIVE COMPENSATION TO COMPANY FINANCIAL PERFORMANCE
-Total incentive compensation (the "incentive compensation pool") paid to
the Company's officers under the 1997 incentive compensation program, as
in the prior year, was calculated using a financial model called
Economic Value Added-Registered Trademark-, or
EVA-Registered Trademark-(1). EVA-Registered Trademark- is a more
accurate measure of true economic profit than net income, as it takes
into account how effectively capital is being used to produce the
profit. By using EVA-Registered Trademark- to calculate the incentive
compensation pool, sustained, continuous improvement in the Company's
financial
- ------------------------
(1) EVA-Registered Trademark- is a registered trademark of Stern Stewart & Co.
7
<PAGE>
performance is rewarded, as the incentive compensation pool increases
with improvement in the Company's performance from the prior year to the
then-current year.
-Once the amount in the incentive compensation pool was determined (based
on the Company's 1997 EVA-Registered Trademark- performance), the
Company allocated such amount among eligible officers in the Company.
The method for allocation involved:
(1) determining a "target" incentive amount (based on the Company's
1997 EVA-Registered Trademark- performance), tied to officer
level in the Company, with 50% of this "target" amount being a
guaranteed incentive amount (subject to the officer's attaining a
satisfactory performance rating),
(2) determining any additional "discretionary" amount that should be
paid to each officer, and
(3) ensuring on a Company-wide basis, that the aggregate of all
bonuses paid to eligible officers does not exceed the incentive
compensation pool amount.
-Individual performance ratings are based on attainment of goals set at
the beginning of the year. Generally, the goals of officers in the
Company are tied to their respective divisions' results, including
generation of income (for the lending divisions) and client service
levels (for the support divisions).
1997 AND 1998 MARKET SURVEYS
- EXECUTIVE OFFICERS
-A review of the Company's executive compensation was completed by an
independent compensation consultant (Sibson & Company) in July 1997. In
reviewing the 1997 compensation programs (including 1997 base salary and
"target" bonus for 1997 performance), the compensation consultant
reviewed market data (based on surveys published in 1996) for the Bank's
competitive group. The Bank's competitive group included banks with $1
billion to $15 billion in assets. Of the 18 banks included in the
competitive group, 10 are included in the "Nasdaq Banks" index used in
the "Return to Shareholders Performance Graph" below. Specific Bank
officers were "matched" as closely as possible with officers from the
competitive group with similar functional responsibilities. The
competitive market data was updated to reflect projected 1997
compensation levels, assuming a 5% annualized increase for base salary
and 7% annualized increase for total cash compensation. The compensation
consultant concluded that the Bank's executive officers were paid
competitively, with most of the Bank's executive officers' 1997 target
total compensation within 10% of the 75th percentile range.
- CHIEF EXECUTIVE OFFICER
-In January 1997, the former Personnel and Compensation Committee
reviewed Mr. Dean's salary, with input from an independent compensation
consultant (Sibson & Company). The committee (with Board concurrence)
approved a salary increase for Mr. Dean to $349,998 (from $325,004), to
bring Mr. Dean's salary more in line with base salaries paid to other
chief executive officers in the Bank's competitive group.
-The July 1997 review completed by the independent compensation
consultant (described immediately above) reflected that Mr. Dean's 1997
base salary was below the 75th percentile of base salaries paid to chief
executive officers in the Bank's competitive group. Further, Mr. Dean's
aggregated 1997 base salary and bonus (based on Mr. Dean's "target"
bonus for 1997 performance) ranked significantly below the 75th
percentile (by more than 10%) for the aggregated base salaries and
bonuses in the competitive group. However, no change in
8
<PAGE>
Mr. Dean's base salary or total compensation was made at that time. The
Committee agreed to defer consideration of any compensation adjustments
to the following year.
-In February 1998, the Executive Committee reviewed market surveys
(prepared by independent compensation consultants) on chief executive
officer compensation for banks with under $15 billion in assets. The
compensation data in the surveys ("1997 Competitive Cash Compensation"
from Sibson & Company and "1997 Financial Services Executive Database"
from Towers Perrin) were not updated to reflect the typical 7%
annualized increase in total cash compensation. Both surveys reflected
that Mr. Dean's total cash compensation in 1997 was below the 75th
percentile for total cash compensation paid to chief executive officers
in the competitive group. Following review of these market surveys, the
Committee granted Mr. Dean a $100,000 interest in the venture capital
incentive pool (described below in "Actual Incentive Compensation
Payments"), to place Mr. Dean's total compensation package more in line
with that of chief executive officers in the survey group. The Committee
agreed to review Mr. Dean's salary, as well as the salaries of the other
executive officers, in the first half of 1998.
INCENTIVE COMPENSATION PAID BASED ON 1997 COMPANY PERFORMANCE
- ACTUAL INCENTIVE COMPENSATION PAYMENTS
-EXECUTIVE OFFICERS. In allocating the incentive compensation pool among
eligible officers in the Company, the Committee reviewed actual
performance for such officers in 1997, and in particular, as against
performance plans set for such officers in the first quarter of 1997. As
to Messrs. Forrester, Kellogg and Wilcox, the Committee reviewed their
respective line divisions' financial performance, as well as other
significant contributions made by such divisions (such as development of
new financial products or expansion into other geographic regions). In
regard to setting Ms. Kamm's cash incentive amount, the Committee
recognized her leadership in managing the Company's administrative
groups, including on several key corporate initiatives. The Committee
reviewed her groups' progress on these initiatives in 1997, including on
the Company's data warehouse project.
In addition to cash incentive payments made to executive officers for
1997 performance, in the first quarter of 1998, the Company allocated as
to each of Messrs. Forrester, Kellogg and Wilcox, and Ms. Kamm, a
$45,000 interest in the Company's venture capital investment program
(under which the Company invests in venture capital funds for its own
account). The executive officers' interests are not in the venture
capital funds themselves, but rather, in future distributions to the
Company from such funds. The Company's original investment in the
subject funds (the distributions from which the executive officers have
an interest) generally have been made in the last couple of years.
Accordingly, and given historical data (where distributions from funds
typically are made in the fifth to tenth years after origination of the
funds), the Committee views the venture capital incentive program as a
long-term incentive program for executives. Together with other
compensation benefits that vest over a stated period of time (such as
Company stock options), the Committee believes this venture capital
incentive program will serve to retain key executives, while at the same
time will serve to provide some diversification to executives'
investment portfolios.
-CHIEF EXECUTIVE OFFICER. In determining Mr. Dean's 1997 cash incentive
compensation, the Committee reviewed his actual performance in 1997 in
comparison to his performance plan set in the first quarter of 1997. The
Committee reviewed the Company's strong financial performance in 1997
(exceeding target goals set in the first quarter of 1997), and also
recognized Mr. Dean for his leadership in initiating several key
strategic initiatives (in 1997) for the Company (including the Company's
data warehouse project).
9
<PAGE>
In addition to cash incentive payments made to Mr. Dean for his 1997
performance, in the first quarter of 1998, the Company allocated to Mr.
Dean a $100,000 interest in the Company's venture capital investment
program described above.
- EMPLOYEE STOCK OWNERSHIP PLAN
-The Company also made payments to employees under its employee
retirement plans, including to executive officers. See discussion in
"Retirement Plans" below regarding payments to executives under the
Company's qualified defined contribution plans.
TAX CONSEQUENCES
To the extent determinable and as one of the factors in its consideration of
compensation matters, the Committee considers the anticipated tax treatment to
the Company and to the executives of various payments and benefits. The
Committee will consider various alternatives to preserving the deductibility of
compensation payments (in particular, pursuant to Section 162(m) of the Internal
Revenue Code) to the extent reasonably practicable and to the extent consistent
with its other compensation objectives. The Committee does not expect that any
executive officer will receive cash compensation in excess of $1 million during
1998. The Committee adopted limitations on the number of shares that may be
subject to awards granted under the 1989 Stock Option Plan and the 1997 Equity
Incentive Plan during any one calendar year to an individual so that
compensation derived from stock options granted under such plans would qualify
as "performance-based" compensation within the meaning of Section 162(m) and
would therefore be deductible by the Company without regard to the $1 million
limitation.
EXECUTIVE COMMITTEE
DANIEL J. KELLEHER, CHAIR
JAMES F. BURNS, JR.
JOHN C. DEAN
MICHAEL ROSTER
ANN R. WELLS
FORMER PERSONNEL AND COMPENSATION COMMITTEE
ANN R. WELLS, CHAIR (CURRENTLY A MEMBER OF THE EXECUTIVE COMMITTEE)
GARY K. BARR (UNTIL SEPTEMBER 1997)
DAVID M. DEWILDE (UNTIL SEPTEMBER 1997)
MICHAEL ROSTER (CURRENTLY A MEMBER OF THE EXECUTIVE COMMITTEE)
EXECUTIVE COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In September 1997, the Executive Committee assumed the duties of the
Personnel and Compensation Committee and Stock Committee (while still retaining
the Executive Committee's other ongoing responsibilities). The Personnel and
Compensation Committee and Stock Committee were then disbanded. Since September
1997, the Executive Committee has performed all compensation functions of the
Board of Directors, including administration of the Company's stock-based
employee benefit plans. However, individual option and stock grants under the
1989 Stock Option Plan and the 1997 Equity Incentive Plan to individuals subject
to Section 16(b) of the Exchange Act remain the responsibility of the full Board
of Directors. (See discussion below under "Board Committees and Meeting
Attendance" for additional information on the Executive Committee.) The
Executive Committee is currently chaired by
10
<PAGE>
Mr. Daniel J. Kelleher, with Directors Wells, Burns, Dean, and Roster serving as
members. With the exception of Mr. Dean, none of the aforementioned persons has
ever been an officer or employee of the Company or the Bank. Mr. Dean refrains
from participating in any Committee discussions related to his performance or
compensation.
From January to September 1997, the Personnel and Compensation Committee
performed all compensation functions of the Board of Directors. With regard to
stock-based compensation (including under the Company's employee benefit plans),
the Personnel and Compensation Committee worked with the Stock Committee, which
had primary responsibility for reviewing and approving the Company's stock-based
compensation plans. (See discussion below under "Board Committees and Meeting
Attendance" for additional information on the Personnel and Compensation
Committee and the Stock Committee.) The Personnel and Compensation Committee and
the Stock Committee were chaired by Ms. Ann R. Wells, with Messrs. Barr,
deWilde, Gay, and Roster serving as members. With the exception of Mr. Barr, who
served as Interim Acting Chief Executive Officer of the Bank during the period
January 1993 through May 1993, none of the aforementioned persons had ever been
an officer or employee of the Company or the Bank.
Until January 1998, Ann R. Wells held the position of Chief Executive
Officer of Ann Wells Personnel Services, Inc., which provided temporary
employment and recruiting services to the Bank in 1997. In January 1998, the
company was sold to Personnel Group of America. Ms. Wells now serves as the
President of the Ann Wells Personnel Service Division of the Personnel Group of
America, which is expected to provide temporary employment and recruiting
services to the Bank in 1998. Also, Daniel J. Kelleher, a director of the
Company, held a forty-nine (49) percent interest in Ann Wells Personnel
Services, Inc. The fees paid to Ann Wells Personnel Services by the Bank did not
exceed five (5) percent of that company's gross revenues for its last full
fiscal year and are comparable to those charged by unrelated parties for similar
services.
11
<PAGE>
RETURN TO SHAREHOLDERS PERFORMANCE GRAPH
The following graph compares, for the period from December 31, 1992 through
December 31, 1997, the cumulative total shareholder return on the Common Stock
of the Company with (i) the cumulative total return of the Standard and Poor's
500 ("S&P 500") market index, (ii) the cumulative total return of the Nasdaq
Stock Market-U.S. index, and (iii) the cumulative total return of the Nasdaq
Banks index. The graph assumes an initial investment of $100 and reinvestment of
dividends. The graph is not necessarily indicative of future stock price
performance.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG
SILICON VALLEY BANCSHARES, S&P 500,
NASDAQ STOCK MARKET - U.S., AND NASDAQ BANKS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SILICON VALLEY
BANCSHARES S&P 500 NASDAQ STOCK MARKET -U.S. NASDAQ BANKS
<S> <C> <C> <C> <C>
1992 $100.00 $100.00 $100.00 $100.00
1993 $122.73 $110.08 $114.80 $114.04
1994 $163.64 $111.53 $112.21 $113.63
1995 $290.91 $153.45 $158.70 $169.22
1996 $390.91 $188.68 $195.19 $223.41
1997 $681.82 $251.64 $239.53 $377.44
</TABLE>
12
<PAGE>
TABLE 1 -- SUMMARY COMPENSATION TABLE
The following table sets forth certain information for each of the last
three (3) fiscal years concerning the compensation of the Chief Executive
Officer and the four other most highly compensated executive officers of the
Company and of the Bank ("Named Officers") (based on salary plus bonus for
1997):
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------------------- -----------------------------------------------------
AWARDS PAYOUTS
OTHER ------------------------ --------------------------
ANNUAL RESTRICTED SECURITIES ALL OTHER
COMPEN- STOCK UNDERLYING LTIP COMPEN-
NAME AND PRINCIPAL SALARY (1) BONUS SATION (2) AWARDS (3) OPTIONS (4) PAYOUTS SATION (5)
POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
- -------------------------- ---- ---------- ----------- ----------- ---------- ----------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
JOHN C. DEAN 1997 $349,998 $ 250,000 $-- $ -- 25,000 -- $125,000
President and Chief 1996 $325,004 $ 375,124(6) $-- $107,500 -- -- $ 23,080
Executive Officer 1995 $254,200 $ 152,321(7) $-- $ -- -- -- $ 23,500
JAMES F. FORRESTER 1997 $185,000 $ 100,000 $-- $ -- 15,000 -- $ 70,000
Executive Vice President 1996 $185,000 $ 150,000(6) $-- $ -- -- -- $ 23,080
and Manager of Corporate 1995 $160,000 $ 75,703(7) $-- $ -- 21,500 -- $ 23,500
Finance Group
BARBARA B. KAMM 1997 $170,000 $ 100,000 $-- $ -- 7,500 -- $ 70,000
Executive Vice President 1996 $145,937 $ 110,000(6) $43,869 $ -- 25,000 -- $ 21,225
and Chief Administrative 1995 $127,250 $ 62,787(7) $-- $ -- 21,000 -- $ 20,088
Officer
HARRY W. KELLOGG, JR. (8) 1997 $170,000 $ 100,000 $-- $ -- 15,000 -- $ 70,000
Executive Vice President 1996 $163,125 $ 125,275(6) $-- $ -- -- -- $ 23,080
and Manager of Products 1995 $126,888 $ 65,211(7) $-- $ -- 30,000 -- $ 20,033
and Services Group
KENNETH P. WILCOX 1997 $147,349 $ 100,000 $-- $ -- 20,000 -- $ 66,659
Executive Vice President 1996 $135,000 $ 110,000(6) $-- $ -- -- -- $ 19,600
and Chief Banking 1995 $125,417 $ 53,697(7) $-- $ -- 12,000 -- $ 19,813
Officer
</TABLE>
- ------------------------------
(1) Includes amounts deferred at the election of the executive officer.
(2) Amounts in this column represent (a) relocation costs incurred by the
executive officer and reimbursed by the Bank, as well as (b) premiums for
supplemental long-term disability coverage provided by the Bank. Amounts for
the years shown are not reflected if the total value of perquisites paid to
the executive officer during a fiscal year did not exceed, in the aggregate,
the lesser of $50,000 or 10% of the individual's salary plus bonus in the
subject year. Amount reflected for Ms. Kamm in 1996 includes relocation
costs in the amount of $42,532 and premiums in the amount of $1,337.
(3) As of December 31, 1997, Mr. Dean held 5,000 restricted shares of the
Company's Common Stock (granted on January 18, 1996), with a market value of
$281,250. Market value is based on the $56.25 per share closing market price
of the Company's Common Stock on the National Association of Securities
Dealers Automated Quotation/National Market on December 31, 1997, the last
trading day of 1997. Holders of restricted stock have rights equivalent to
those of other shareholders, including voting rights and rights to
dividends. All of Mr. Dean's shares will vest on January 17, 2000 or earlier
upon a "Change in Control" (as defined). See "Termination Agreements" below.
(4) The numbers in this column reflect shares of Common Stock underlying
options. No Stock Appreciation Rights ("SARs") were awarded during the years
1995 through 1997.
(5) Amounts in this column represent employer contributions to the Bank's
combined 401(k) and Employee Stock Ownership Plan, and Money Purchase
Pension Plan (see discussion under "Retirement Plans"). Amounts for 1997 for
Mr. Dean also include a $100,000 interest in the Company's venture capital
investment program (under which the Company invests in venture capital funds
for its own account). Additionally, amounts for 1997 for each of executive
officers Forrester, Kamm, Kellogg, and Wilcox include a $45,000 interest in
such venture capital investment program. Interests are not in the venture
capital funds themselves, but rather, in future distributions from such
funds. Mr. Dean's $100,000 interest represents an 11.8% interest in the
$850,000 pool of venture capital investments earmarked for the 1998 venture
capital incentive program for the Company's officers. Also, each other Named
Officer's $45,000 interest represents 5.3% of such $850,000 pool.
(6) A portion of the executive officers' 1996 bonuses were deferred by the
Company. Amounts deferred for executive officers Dean, Forrester, Kamm,
Kellogg, and Wilcox were $57,000, $40,600, $23,022, $33,205, and $27,133,
respectively. These amounts were paid to such executive officers in August
1997 (and are included in the bonus amounts for 1996 only).
(7) Deferred 1995 bonus amounts (20% of the respective executive officers' 1995
bonuses) were actually paid in February 1997. These deferred amounts are
included in the 1995 bonus amounts.
(8) Mr. Kellogg left the Bank in April 1994, but returned in February 1995.
13
<PAGE>
TABLE 2 -- OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning the grant of options
to purchase the Company's Common Stock to the Named Officers during 1997:
INDIVIDUAL GRANTS IN 1997 (1)
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
PERCENT OF ANNUAL RATES OF
NUMBER OF TOTAL OPTIONS STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES IN EXERCISE OPTION TERM (4)
OPTIONS FISCAL PRICE EXPIRATION --------------------
NAME GRANTED (#)(2) YEAR (3) ($/SHARE) DATE 5% ($) 10% ($)
- ------------------------------------- -------------- ------------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
John C. Dean......................... 25,000 6.78% $33.00 01/07/2007 $518,838 $1,314,838
James F. Forrester................... 15,000 4.07% $33.00 01/07/2007 $311,303 $ 788,903
Barbara B. Kamm...................... 7,500 2.03% $33.00 01/07/2007 $155,651 $ 394,451
Harry W. Kellogg, Jr................. 15,000 4.07% $33.00 01/07/2007 $311,303 $ 788,903
Kenneth P. Wilcox.................... 20,000 5.42% $33.00 01/07/2007 $415,070 $1,051,870
</TABLE>
- ------------------------------
(1) Consists entirely of options granted pursuant to the Company's 1997 Equity
Incentive Plan (the "Plan"). The Plan provides for administration of the
Plan by the Board of Directors of the Company, or by a committee thereof to
which the Board of Directors has delegated authority to administer the Plan
(the "Administrator"). The Administrator designates the persons to be
granted options, the type of option, the number of underlying shares, the
exercise price, the date of grant and the date options become exercisable.
The Administrator also has broad discretion to amend outstanding options or
to effect repricings. These options were granted at 100% of the fair market
value of the Company's Common Stock on the date of grant. The option grants
vest ratably over four years and expire ten years from the date of grant.
Upon a "Change in Control" of the Company or the Bank, the options will
become fully exercisable. See "Termination Agreements" below. In October
1997, the Board of Directors voted to permit assignability of non-qualified
stock options granted under the Plan to immediate family members, family
trusts, and similar entities. Any options so assigned will continue to be
reported in this table and in the option exercises table (see "Table 3"
below) as if still held by the Named Officer.
(2) Represents grants made in January 1997 constituting both allotted options
for 1997, as well as options that otherwise would be granted in 1998.
Accordingly, the Company does not currently expect to grant options to the
Named Officers until January 1999.
(3) Based on options to purchase an aggregate of 369,000 shares of the
Company's Common Stock granted to certain employees during 1997 under the
1997 Equity Incentive Plan and 1989 Stock Option Plan.
(4) Represents the potential net realizable dollar value of the option grants,
i.e., the market price of the underlying shares (adjusted for the assumed
annual stock appreciation rates of 5% and 10%, respectively, with the
assumed rates compounded annually over the ten-year term of the options),
minus the aggregate exercise price of the options. The stock price
appreciation rates are mandated by SEC rules and do not represent the
Company's estimate of future stock prices.
14
<PAGE>
TABLE 3 -- AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES (1)
The following table sets forth information concerning the exercise of
options during 1997 and the options held at 1997 fiscal year-end by Named
Officers:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END (3)
ACQUIRED ON VALUE (#) ($)
EXERCISE REALIZED (2) --------------------------- ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John C. Dean................... 28,896 $1,228,080 71,104 25,000 $3,380,112 $ 581,250
James F. Forrester............. 24,723 $ 726,931 -- 22,095 -- $ 651,139
Barbara B. Kamm................ -- -- 21,620 35,880 $ 818,107 $1,154,218
Harry W. Kellogg, Jr........... -- -- 20,100 24,900 $ 846,612 $ 765,738
Kenneth P. Wilcox.............. 12,000 $ 483,940 10,060 25,940 $ 438,922 $ 708,778
</TABLE>
- ------------------------------
(1) Consists entirely of stock options. No stock appreciation rights ("SARs")
have been awarded to date. In October 1997, the Board of Directors voted to
permit assignability of non-qualified stock options granted under the 1997
Equity Incentive Plan to immediate family members, family trusts and similar
entities. Any options so assigned will continue to be reported in this table
as if still held by the Named Officer, and exercises by or on behalf of such
assignees are also reflected as exercises by the Named Officer.
(2) Represents the market price of the underlying securities on the date of the
option exercise, minus the exercise price.
(3) Represents the market value of the underlying securities at 1997 fiscal
year-end, based on the $56.25 per share closing market price of the
Company's Common Stock on the National Association of Securities Dealers
Automated Quotation/National Market on December 31, 1997, less the exercise
price.
RETIREMENT PLANS
The Bank has two defined contribution plans: (1) the Silicon Valley Bank
401(k) and Employee Stock Ownership Plan (the "401(k)" and "ESOP") (a qualified
profit sharing plan under the Internal Revenue Code [the "IRC"]) and (2) the
Silicon Valley Bank Money Purchase Pension Plan (the "MPP") (a qualified money
purchase pension plan under the IRC). The Company matches 100% of employee-
deferred salary contributions to the 401(k), up to a maximum contribution of
$1,000 per year per employee. The Company makes contributions to the ESOP and
MPP using a compensation-based formula (subject to certain limitations on
compensation under the IRC). ESOP contributions are discretionary based on the
profitability of the Company, are invested primarily in the Company's Common
Stock and may not exceed 10% of eligible employees' base compensation. In 1997,
the ESOP contribution was 10% of eligible compensation as a result of the
Company's nearly attaining its stretch performance goal. MPP contributions are
guaranteed at 5% of eligible compensation and are invested at the participant's
direction. Prior to 1995, these guaranteed contributions were made to the ESOP
and invested primarily in Company Common Stock; however, in 1996, the MPP was
established retroactive to January 1, 1995 for the guaranteed contributions and,
in May 1996, the investments (under the MPP) formerly in Company Common Stock
became participant-directed. The assets of both retirement plans are held in
trust for the exclusive benefit of the employee-participants.
15
<PAGE>
TERMINATION ARRANGEMENTS
The Bank entered into Termination Agreements ("Termination Agreements") with
certain executive officers, including Named Officers Dean, Forrester, Kamm,
Kellogg, and Wilcox in 1996. These Termination Agreements renewed (with some
modifications) other agreements then in effect (which otherwise would have
expired in 1996). The Termination Agreements provide for severance pay and
continuation of certain benefits if the executive's employment is terminated
following a "Change in Control" (defined below). The Termination Agreements were
approved by disinterested members of the Boards of Directors of the Company and
the Bank during 1996.
TERMINATION FOLLOWING A CHANGE IN CONTROL. In order for an executive to
receive benefits under the Termination Agreements following a Change in Control,
the executive must be terminated involuntarily without cause or constructively
terminated within 24 months following the Change in Control. Also, benefits will
be given to executives only following a Change in Control that involves payments
to shareholders in excess of the then book value of the Company.
Under the Termination Agreements, a "Change in Control" will be deemed to
have occurred in any of the following circumstances:
(1) the acquisition of 50% or more of the outstanding voting stock of
the Company by any person or entity, with certain exceptions for employee
benefit plans of the Company or the Bank;
(2) the acquisition of 25% or more of the outstanding voting stock of
the Company by any person or entity and a change in the composition of the
Board during the following 12 months such that those persons serving as
directors immediately prior to the share acquisition, and those new
directors elected by a vote of at least two-thirds of the directors of the
Company, cease to make up at least 60% of the directors of the Company;
(3) a merger or consolidation of the Company with any other corporation,
other than a merger or consolidation in which the shareholders of the
Company immediately prior thereto continue to own more than 50% of the
outstanding voting stock of the surviving entity; or
(4) the complete liquidation of the Company or the Bank, or disposition
of all or substantially all of the Company's or the Bank's assets.
A constructive termination is deemed to have occurred if the executive
resigns in writing following a reduction in the executive's then annual base
salary, upon a 15% reduction in the executive's annual compensation (base salary
plus bonus), upon a material reduction in the executive's responsibilities, or
upon a relocation by more than 50 miles of the principal place at which the
executive works.
Under the Termination Agreements, the amount of severance benefits payable
to an executive whose employment is terminated during the 24 months following a
Change in Control is dependent upon the "transaction price multiple" of the then
book value of the Company or the Bank. As the transaction price multiple of book
value increases above 1.0, the severance benefit (the "Severance Benefit")
(represented as a multiple of the executive's annual compensation [base salary
plus bonus]) increases. The multiples of annual compensation (for respective
sales percentages received in excess of book value) for the Bank's Executive
Committee members (executive officers Dean, Forrester, Kamm, Kellogg, and
Wilcox) are higher than for non-Executive Committee executives (such as Mr.
Jones). Further, the percentage payout of the Severance Benefit is on a sliding
scale tied to termination date. If the termination date is within 12 months
following the Change in Control, then 100% of the Severance Benefit will be
paid. However, between 12 months and 24 months following a Change in Control, a
declining percentage will be paid, with 75% of the Severance Benefit being
payable for terminations 15 months following a Change in Control and 0% being
payable for terminations 24 months following a Change in Control. Finally, upon
a Change in Control, all outstanding options (representing interests in the
Company's Common Stock) will become immediately and fully vested (and may be
exercised) and all restrictions upon any restricted Company
16
<PAGE>
stock will lapse immediately and all such shares will become fully vested
(unless the Board of Directors determines otherwise at the time of grant).
In linking the amount of termination payments within 24 months following a
Change in Control to the transaction price multiple of book value, the Boards of
Directors of the Company and the Bank underscored their view that management
should be rewarded correspondingly for increased shareholder value. Therefore,
the amount of severance payments to executives under the Termination Agreements
increases in direct proportion to increases in value realized through a Change
in Control of the Company or the Bank. Conversely, sale of the Company or the
Bank for less than book value would result in no cash payout to executives under
the Termination Agreements, although they would still be entitled to
acceleration of vesting.
The severance program approved by the Boards of Directors of the Company and
the Bank includes certain non-executive Bank officers as well. The amount of
severance benefits payable to officers below the executive level is likewise
dependent upon the "transaction price multiple" described above. Under the
program for non-executive officers, as the grade level of the officer in the
Bank increases, the multiple of the officer's base salary used in determining
the severance benefit increases.
In August 1997, the Board of Directors approved a change in the Termination
Agreements. Effective August 12, 1998 (when the current Termination Agreements
expire), the multiples used for determining Severance Benefits have been
reduced. Accordingly, the Severance Benefits payable for respective transaction
price multiples of book value correspondingly have been reduced (effective
August 12, 1998).
LIMITATION ON SEVERANCE PAYMENTS. To the extent that the severance payments
otherwise called for by the Termination Agreements would trigger "golden
parachute" tax treatment pursuant to Section 280(g) and/or Section 4999 of the
Internal Revenue Code, the payments will be reduced to the largest amount that
the employee determines would result in maximizing the employee's net proceeds
(after taking into account the payment of any applicable taxes, including excise
taxes).
DEAN EMPLOYMENT AGREEMENT
Mr. Dean entered into an employment agreement with the Company and the Bank,
effective April 12, 1993. The agreement provided for a one-year term of
employment, renewable annually thereafter by mutual agreement. Pursuant to his
employment agreement, Mr. Dean received a grant of 50,000 shares of restricted
stock in 1993, of which 25% were originally scheduled to vest on each of March
31, 1993, 1994, 1995, and 1996. Such shares were originally subject to a
restriction on resale for two years following vesting. This stock grant was
amended in the last quarter of 1993 to provide that no shares would vest until
March 31, 1996, at which time 100% of the shares vested. The agreement was
further amended in 1995 to delete the two-year resale restriction. (The resale
restriction was deleted to provide Mr. Dean with sufficient liquidity to pay the
income taxes on the 50,000 shares vesting in 1996.) Additionally, under Mr.
Dean's employment agreement, the Company granted Mr. Dean options to purchase
50,000 shares of the Company's Common Stock pursuant to the Company's 1989 Stock
Option Plan (with the agreement providing for options to purchase an additional
50,000 shares under the terms of the agreement). The options vest as to 25% each
year, beginning in 1994 (with the final 25% having vested in 1997). With the
adoption of the above-described Termination Agreements and with the exception of
above-described terms in Mr. Dean's employment agreement, most key provisions of
Mr. Dean's employment agreement have been superseded.
SMITH EMPLOYMENT AGREEMENT
Roger V. Smith resigned as a member of the Company Board of Directors,
effective October 24, 1995. Pursuant to an Employment Agreement, Mr. Smith was
employed by the Bank through October 31, 1997. During the employment term, Mr.
Smith received a monthly salary of $8,333. Also, during the employment
17
<PAGE>
term, all options held by Mr. Smith continued to be outstanding and vested in
accordance with their respective terms.
WOODWARD CONSULTING AGREEMENT
Allyn C. Woodward resigned as Senior Executive Vice President and Chief
Operating Officer of the Bank, effective April 1, 1995. The Bank and Mr.
Woodward entered into a consulting agreement, effective April 1, 1995, pursuant
to which Mr. Woodward continued to serve as a consultant to the Bank until
October 1996. Under the consulting agreement, the Bank paid Mr. Woodward
$214,200 over the 19-month period from April 1995 to October 1996, for Mr.
Woodward's services as a consultant. Until October 1996, all stock options held
by Mr. Woodward continued to be outstanding and vested in accordance with their
respective terms. Additionally, the Company and the Bank granted Mr. Woodward
25,000 shares of the Company's Common Stock, which vested as to 1/3 of such
number of shares on each of January 5, 1996, January 5, 1997 and January 5, 1998
(on account of Mr. Woodward's non-competition with the Bank through and
including such respective dates).(1)
- ------------------------
(1) As reported in the Company's 1995, 1996 and 1997 Proxy Statements, Mr.
Woodward's 25,000 restricted shares of the Company's Common Stock held at
December 31, 1994 were forfeited to the Company. The grant described in this
paragraph constituted a new grant to Mr. Woodward.
18
<PAGE>
BOARD COMMITTEES AND MEETING ATTENDANCE (1)
The Company and the Bank have Audit and Finance, Executive, and Loan
Committees of their respective Boards of Directors. Members as of the Record
Date were as follows:
<TABLE>
<CAPTION>
AUDIT AND FINANCE EXECUTIVE LOAN
- ------------------------------------ ------------------------------------ ------------------------------------
<S> <C> <C>
James F. Burns, Jr., Chair Daniel J. Kelleher, Chair Gary K. Barr, Chair
Clarence J. Ferrari, Jr., Vice-Chair James F. Burns, Jr. David M. deWilde
Gary K. Barr John C. Dean Clarence J. Ferrari, Jr.
David M. deWilde Michael Roster Daniel J. Kelleher
James Porter Ann R. Wells James Porter
Michael Roster Ann R. Wells
</TABLE>
AUDIT AND FINANCE COMMITTEE (JOINT COMPANY/BANK COMMITTEE) 3 meetings in fiscal
year 1997
- Approves the selection and termination of the Company's independent
auditors;
- Reviews the scope and results of the audit plans of the independent
auditors;
- Reviews the adequacy of the Company's internal accounting controls;
- Reviews with management and with the independent auditors, reports filed
with banking regulatory agencies and the Securities and Exchange
Commission;
- Evaluates the activities and utilization of the Company's and the Bank's
internal audit relationship;
- Oversees the Bank's investment and funds management policies, which
include the following five policies: investment policy, liquidity
management policy, interest rate risk management policy, hedging policy,
and capital management policy;
- Reviews and approves the Company's and the Bank's insurance policies; and
- Oversees management's efforts in ensuring that the Company is complying
with accounting standards and with federal and state banking laws.
EXECUTIVE COMMITTEE (SEPARATE COMPANY/BANK COMMITTEES)
3 meetings (Company Executive
Committee) in fiscal year 1997
3 meetings (Bank Executive
Committee) in fiscal year 1997
- Works with management in developing long-term strategic plans;
- Has the authority of the Board between Board meetings, except as otherwise
provided by California law;
- Serves as the nominating committee for directors as well as Board and
Board committee chairs. (The Executive Committee will consider nominees
for director who are recommended by shareholders. Shareholders that wish
to submit names of prospective director-nominees for consideration by the
Executive Committee should do so in writing to the Secretary of Silicon
Valley Bancshares, 3003 Tasman Drive, Santa Clara, CA 95054.);
- ------------------------
(1) Prior to the restructuring of the Board Committees in September 1997 (see
discussion below), there were 8 Audit Committee meetings, 8 Finance
Committee meetings, 5 Executive Committee meetings (for the Company's, as
well as the Bank's, Executive Committee), and 27 Directors' Loan Committee
meetings from January to September 1997.
19
<PAGE>
- Works with management in ensuring that the Bank's long-term and short-term
compensation programs are competitive and effective in attracting,
retaining, and motivating highly-skilled personnel;
- Reviews and recommends the Chief Executive Officer's compensation (with
the Chief Executive Officer refraining from participating in any Committee
discussions related to the Chief Executive Officer's performance or
compensation); and
- Reviews and approves compensation and administers stock-based employee
benefit plans (individual option and stock grants under the 1989 Option
Plan and the 1997 Equity Incentive Plan to individuals subject to Section
16(b) of the Exchange Act remain the responsibility of the full Board of
Directors).
LOAN COMMITTEE (BANK COMMITTEE) 18 meetings in fiscal year 1997
- Works with management in seeking to ensure that the Bank maintains and
enforces the Bank's credit policy and credit procedures;
- Works with management in ensuring compliance with lending limit
restrictions and with established portfolio constraints and limitations;
- Works with management in ensuring problem credits are identified on a
timely basis;
- Has lending authority and establishes lending authority levels for Bank
committees and respective officer levels in the Bank;
- Reviews the Bank's community delineations to ensure that they meet the
purposes of the Community Reinvestment Act; and
- Works with management in monitoring the loan portfolio, including
reviewing proposed corrective action plans when pre-determined portfolio
credit quality levels are reached.
From January to September 1997, the Company and Bank maintained Audit, Loan,
Executive, Finance, and Personnel and Compensation/Stock Committees of their
respective Boards of Directors. In August 1997, the Board of Directors approved
the Executive Committee's assumption of the duties previously performed by the
Personnel and Compensation Committee and Stock Committee (in addition to
retaining the Executive Committee's original duties) and approved merging the
Audit and Finance Committees (with the newly-formed committee assuming the
responsibilities of the previously separate Audit and Finance Committees).
Members at the time of the committee restructure were as follows:
<TABLE>
<CAPTION>
AUDIT LOAN EXECUTIVE
- ------------------------------------ ------------------------------------ ------------------------------------
<S> <C> <C>
Clarence J. Ferrari, Jr., Chair Gary K. Barr, Chair Daniel J. Kelleher, Chair
James F. Burns, Jr. John C. Dean (alternate member) James F. Burns, Jr.
James R. Porter David M. deWilde John C. Dean
Daniel J. Kelleher Michael Roster
Ann R. Wells
<CAPTION>
PERSONNEL AND
FINANCE COMPENSATION/STOCK
- ------------------------------------ ------------------------------------
<S> <C> <C>
James F. Burns, Jr., Chair Ann R. Wells, Chair
John C. Dean Gary K. Barr
Clarence J. Ferrari, Jr. David M. deWilde
James R. Porter Michael Roster
</TABLE>
Actions taken by the above-described Board Committees are reported to the
Company or Bank Board of Directors, as appropriate, following the Committee
meetings.
20
<PAGE>
During fiscal year 1997 (ended December 31, 1997), the Company Board of
Directors met 8 times: 6 regular meetings and 2 special meetings. During fiscal
year 1997 (ended December 31, 1997), the Bank Board of Directors met 12 times:
12 regular meetings and no special meetings. All Company directors attended at
least 75% of the aggregate of all Company Board meetings and meetings held by
Committees of the Company's Board of which they were members.
CORPORATE GOVERNANCE GUIDELINES
In August 1997, the Board of Directors approved Corporate Governance
Guidelines for the directors of the Company and Bank. Issues addressed in the
guidelines include:
- Board membership criteria, including members' complementary expertise.
- Director commitment, including willingness to serve on a minimum of two
Board committees.
- Selection of the Chairman and Chief Executive Officer.
- Board composition, including the size of the Board, mix of inside and
independent directors, term limits, and retirement age for directors.
- Meeting procedures, including the opportunity for executive sessions (for
independent directors only).
The Board believes that the guidelines should contribute to the creation of
long-term shareholder value by providing for a well-balanced Board of Directors
that is capable of making the critical strategic decisions facing the Company.
DIRECTOR COMPENSATION
Each outside director selected one of two alternative compensation programs
offered for 1997-1998 service, as well as 1998-1999 service, on the Board. The
first program provides for a grant to the outside director of options to
purchase 6,000 shares of the Company's Common Stock (made on January 7, 1997),
with the first 3,000 shares having vested on the date that immediately followed
the Company's 1997 Annual Meeting (the "First Vesting Date") and the remaining
3,000 shares subject to the option scheduled to vest on the date immediately
following the Company's 1998 Annual Meeting (subject to the director's re-
election to the Board) (the "Second Vesting Date"). The second program provides
for a grant of an option to purchase 3,000 shares of the Company's Common Stock
(made on January 7, 1997), and payment of $30,000 in cash, with the first 1,500
shares having vested (and the first $15,000 paid) on the First Vesting Date and
the final 1,500 shares subject to the option scheduled to vest (and the balance
of $15,000 becoming payable) on the Second Vesting Date (subject to the
director's re-election to the Board). Outside directors Barr, Burns, deWilde,
Ferrari, Kelleher, Porter, and Wells, have selected the first program
(consisting of options only). Mr. Roster has selected the second program
(consisting of a combination of options and cash).
Each outside director received an award of 2,500 shares of the Company's
Common Stock on April 19, 1996 in recognition of 1996-97 service on the Board.
Mr. Gay, a former director, will remain an advisory director to the Board.
In recognition of this advisory role, the Company will pay Mr. Gay $15,000 for
his advisory services during the 1998-1999 term.
Additionally, outside directors are reimbursed for travel expenses. Also,
the Chair of the Board (who also serves as the Chair of the Executive Committee)
receives an annual fee of $15,000. The Vice-Chair of the Board receives an
annual fee of $2,500. The Chairs of the respective Board committees each receive
an annual fee of $7,500. Finally, outside directors on the Loan Committee
(including the Chair of this Committee) receive $250 for every Committee meeting
attended after the first one in any calendar month.
21
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS
Information concerning each person known by the Company to own more than 5%
of the outstanding Common Stock of the Company (as of the Record Date) follows.
The Company knows of no persons other than those entities described below who
beneficially own more than 5% of the outstanding Common Stock of the Company.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED
-----------------------
NUMBER OF PERCENT OF
NAME OF BENEFICIAL OWNER SHARES TOTAL
- ------------------------------- --------- ------------
<S> <C> <C>
Entities affiliated with 614,390(1) 6.00%
Franklin Resources, Inc.
777 Mariners Island Boulevard
San Mateo, California 94404
Scudder Kemper Investments, 520,000(2) 5.08%
Inc.
345 Park Avenue
New York, New York 10154
T. Rowe Price Associates, Inc. 666,700(3) 6.51%
100 E. Pratt Street
Baltimore, Maryland 21202
</TABLE>
- ------------------------------
(1) The number of shares in this table and the information in this footnote
have been derived from the Schedule 13G dated as of January 30, 1998 filed
with the Securities and Exchange Commission ("SEC") by Franklin Resources,
Inc. ("FRI"), a parent holding company; Charles B. Johnson and Rupert H.
Johnson, Jr., principal shareholders of FRI (collectively, the "Principal
Shareholders"); and Franklin Advisers, Inc. ("FAI"), an investment adviser
and subsidiary of FRI. Franklin Management, Inc. ("FMI") is a subsidiary of
FRI. The shares are beneficially owned by one or more open or closed-end
investment companies or other managed accounts that are advised by direct
and indirect investment subsidiaries of FRI. The advisory contracts grant to
the adviser subsidiaries all investment and/or voting power over the
securities owned by such advisory clients. FAI has the sole dispositive and
voting power with respect to 611,900 shares. FMI has the sole power to
dispose or direct the disposition of 2,490 shares, but has no power to vote
or direct the vote of any shares. The Principal Shareholders each own in
excess of 10% of the outstanding Common Stock of FRI. With respect to
securities owned by FAI and FMI, their clients have the right to receive
dividends paid with respect to, as well as the proceeds from the sale of,
such securities.
(2) The number of shares in this table and the information in this footnote
have been derived from the Schedule 13G dated as of February 12, 1998 filed
with the SEC by Scudder Kemper Investments, Inc., an investment adviser.
Scudder Kemper Investments, Inc. has sole voting power with respect to
356,700 shares, sole dispositive power with respect to 269,200 shares,
shared voting power with respect to 103,000 shares and shared dispositive
power with respect to 250,800 shares.
(3) The number of shares in this table and the information in this footnote
have been derived from the Schedule 13G dated as of February 12, 1998 filed
with the SEC by T. Rowe Price Associates, Inc. ("TRP Associates"), an
investment adviser, and T. Rowe Price Small Cap Value Fund, Inc. ("TRP
Fund"). TRP Associates has sole voting power with respect to 86,800 shares
and sole dispositive power with respect to 666,700 shares. TRP Fund has sole
voting power with respect to 545,000 shares (which number of shares is
included in the number of shares reported by TRP Associates) and sole
dispositive power as to no shares. The ultimate power to receive dividends
paid with respect to, and the proceeds from the sale of, the shares held by
TRP Associates are vested in the individual and institutional clients to
which TRP Associates serves as an investment adviser. No client has an
interest that relates to more than five (5) percent of the class. With
respect to securities owned by the TRP Fund, only State Street Bank and
Trust Company, as custodian for the TRP Fund, has the right to receive
dividends paid with respect to, and proceeds from the sale of, such
securities. The shareholders of the TRP Fund participate proportionately in
any dividends and distributions so paid. TRP Associates expressly disclaims
beneficial ownership of the shares shown in the table.
22
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company believes that, during fiscal year 1997, its officers (as defined
in the rules under Section 16 of the Exchange Act) and directors have complied
with all Section 16(a) filing requirements in a timely manner, except that
Robert Potts and Susan Walters each made one late filing with regard to the sale
of Company Stock under the Company's defined contribution plans (with such sales
relating to funding of loans under such plans to the two respective officers).
The Company is not aware of any 10% shareholders.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain directors of the Company and Bank and the entities with which they
are affiliated are customers of the Bank and have had banking transactions with
the Bank in the ordinary course of business. The Board of Directors of the Bank
adopted a policy during 1992 to prohibit new loans or the renewal of existing
loans to insiders after December 31, 1993 (other than on an exception basis).
Term loans existing at December 31, 1992 were permitted to remain outstanding
until scheduled maturity. The Company believes that all extensions of credit
included in such transactions were made in compliance with applicable laws and
on substantially the same terms, including interest rates, collateral and
repayment terms, as those prevailing at the time for comparable transactions
with other persons of similar creditworthiness and, in the opinion of the Board
of Directors of the Bank, did not involve more than a normal risk of
collectibility or default or present any other unfavorable features.
In December 1997 and in conjunction with Mr. Wilcox's promotion to Chief
Banking Officer (and corresponding relocation from Massachusetts to California),
the Company agreed to make two interest-free relocation loans to Mr. Wilcox. The
first loan in the amount of $250,000 (funded in December 1997) is payable in
five annual installments, with the final $50,000 installment due on December 1,
2002. The second loan in the amount of $600,000 (funded in January 1998) is due
in full on December 1, 2002. Both loans are secured by a lien on Mr. Wilcox's
principal residence in California. The largest principal amount outstanding
during 1997 (and the principal amount outstanding on December 31, 1997) was
$250,000.
Also, in conjunction with Mr. Wilcox's promotion and pursuant to a separate
agreement (separate from the above-described loan documents), the Bank has
agreed to pay Mr. Wilcox a guaranteed $50,000 annual bonus for the next five
years, with the first such bonus payable in December 1998 and the final bonus
payable in December 2002.
See also "Compensation Committee Interlocks and Insider Participation."
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF AUDITORS
The firm of KPMG Peat Marwick LLP has been approved by the Audit and Finance
Committee and the Board of Directors of the Company to be the independent
auditor of the Company for the 1998 fiscal year. KPMG Peat Marwick LLP has
audited the Company's financial statements since November 1994. KPMG Peat
Marwick LLP has no interest, financial or otherwise, in the Company or the Bank.
The shareholders are being asked to ratify the selection of KPMG Peat Marwick
LLP. If the shareholders do not ratify such selection by the affirmative vote of
a majority of the Votes Cast, the Board will reconsider its selection.
Representatives from the firm of KPMG Peat Marwick LLP will be present at
the Annual Meeting of Shareholders and afforded the opportunity to make a
statement if they desire to do so, and will be available to respond to
shareholders' questions.
23
<PAGE>
SHAREHOLDER PROPOSALS -- 1999 ANNUAL MEETING
Shareholders are entitled to present proposals for action at a forthcoming
Annual Meeting of Shareholders only if they comply with the applicable
requirements of California corporate law, the proxy rules and the Company's
Bylaws. Any shareholder proposal intended to be presented at the 1999 Annual
Meeting of Shareholders of the Company that a shareholder desires to have
included in the Company's Proxy Statement must be received at the Company's
principal executive office on or before November 13, 1998 in order to be
considered for possible inclusion in the Company's Proxy Statement and form of
proxy relating to such annual meeting.
1997 ANNUAL REPORT
Enclosed is a copy of the Company's 1997 Annual Report to Shareholders,
including financial statements for the year ended December 31, 1997. Also
enclosed is a copy of the Company's Annual Report on Form 10-K (without
exhibits) for the year ended December 31, 1997 as filed with the Securities and
Exchange Commission. Shareholders who wish to obtain additional copies of the
Annual Report to Shareholders or the Annual Report on Form 10-K should address a
written request to Shareholder Relations, Silicon Valley Bancshares, 3003 Tasman
Drive, Santa Clara, California 95054.
OTHER MATTERS
As of the date of this Proxy Statement, there are no other matters that
Management intends to present or has reason to believe others will present at
the Annual Meeting. If other matters properly come before the Annual Meeting,
those who act as Proxy Holders will vote in accordance with their best judgment.
THE BOARD OF DIRECTORS
/S/ A. CATHERINE NGO
Santa Clara, California A. Catherine Ngo
March 13, 1998 CORPORATE SECRETARY
24
<PAGE>
SILICON VALLEY BANCSHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, APRIL 16, 1998
The undersigned appoints JOHN C. DEAN and A. CATHERINE NGO, or either of
them, with full power of substitution for himself or herself, as the Proxy
Holder of the undersigned to vote and otherwise represent all of the shares
registered in the name of the undersigned at the Annual Meeting of
Shareholders of Silicon Valley Bancshares to be held on Thursday, April 16,
1998, at 4:00 p.m. at the NETWORK MEETING CENTER AT TECHMART, SILICON VALLEY
ROOM, 5201 GREAT AMERICA PARKWAY, SANTA CLARA, CALIFORNIA 95054 and any
postponements or adjournments thereof, with the same effect as if the
undersigned were present and voting such shares, on the following matters and
in the following manner.
(CONTINUED ON OTHER SIDE)
- ------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE>
Please mark your votes as indicated in this example /X/
1. To elect directors to serve for the ensuing year and until their
successors are elected.
FOR all nominees listed below, with the discretionary authority to cumulate
votes, except votes withheld / /
WITHHOLD AUTHORITY to vote for all nominees listed below / /
IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THAT NOMINEE'S NAME APPEARING IN THE LIST BELOW:
Gary K. Barr, James F. Burns, Jr., John C. Dean, David M. deWilde,
Clarence J. Ferrari, Jr., Daniel J. Kelleher, James R. Porter, and
Ann R. Wells
2. To ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors.
FOR AGAINST ABSTAIN
/ / / / / /
3. To vote or otherwise represent the shares on any other business that may
properly come before the meeting and any postponements or adjournments
thereof, according to the Proxy Holders' decision and in their discretion.
FOR AGAINST ABSTAIN
/ / / / / /
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS MADE. IF NO SPECIFICATIONS ARE MADE, THE SHARES REPRESENTED BY
THIS PROXY WILL BE VOTED FOR EACH OF THE ABOVE NOMINEES AND PROPOSALS, AND
WITH RESPECT TO SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING AND ANY
POSTPONEMENTS OR ADJOURNMENTS THEREOF, AS THE SAID PROXY HOLDERS DEEM
ADVISABLE.
SIGN EXACTLY AS YOUR NAME(S) APPEAR(S) ON YOUR STOCK CERTIFICATE. AN ENTITY
(SUCH AS A CORPORATION OR PARTNERSHIP) IS REQUESTED TO SIGN ITS NAME BY A
DULY AUTHORIZED SIGNATORY, WITH THE CAPACITY IN WHICH SIGNED DESIGNATED.
EXECUTORS, ADMINISTRATORS, TRUSTEES, AND SIMILAR FIDUCIARIES ARE REQUESTED TO
SO INDICATE WHEN SIGNING. IF STOCK IS REGISTERED IN TWO NAMES, BOTH SHOULD
SIGN.
SHAREHOLDERS SHOULD MARK, SIGN AND DATE THIS PROXY PROMPTLY AND RETURN IT IN
THE ENCLOSED ENVELOPE.
YES NO
I PLAN TO ATTEND THE MEETING. / / / /
Shareholder Signature______________________________________
Name typed or printed _____________________________________
Date signed________________, 1998
- ------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
