SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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14a-6(e)(2))
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[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
SJNB Financial Corp.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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<PAGE>
SJNB FINANCIAL CORP.
Notice of Annual Meeting of Shareholders
May 24, 2000
<PAGE>
SJNB FINANCIAL CORP.
April 24, 2000
Dear Shareholder:
You are cordially invited to attend the 2000 Annual Meeting of Shareholders of
SJNB Financial Corp. to be held on May 24, 2000, at 10:00 a.m., in the
Quicksilver Room at The Silicon Valley Capital Club, 50 W. San Fernando, Suite
1700, San Jose, California.
It is important that your shares be represented at the meeting. Whether or not
you plan to attend the meeting, you are requested to complete, date, sign and
return the enclosed proxy in the return envelope provided. The Board of
Directors recommends that you vote "for" each of the proposals described in the
attached proxy statement and on the proxy.
Sincerely yours,
/s/ Robert A. Archer /s/ James R. Kenny
Robert A. Archer James R. Kenny
Chairman of the Board President & Chief Executive Officer
One North Market Street
San Jose, CA 95113
Phone: (408) 947-7562
Fax: (408) 947-0362
<PAGE>
SJNB FINANCIAL CORP.
One North Market Street
San Jose, California 95113 (408) 947-7562
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be Held on May 24, 2000
To the Shareholders of SJNB Financial Corp.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of SJNB Financial
Corp. will be held in the Quicksilver Room at The Silicon Valley Capital Club,
50 W. San Fernando, Suite 1700, San Jose, California on May 24, 2000, at 10:00
a.m., for the following purposes:
1. To elect the following six directors of the Corporation to serve until
the 2003 Annual Meeting of Shareholders and until their respective
successors shall be elected and qualified:
Albert V. Bruno V. Ronald Mancuso
F. Jack Gorry Richard L. Mount
William D. Kron Louis Oneal
2. To ratify the appointment of KPMG LLP as the Corporation's independent
public accountants for the year ending December 31, 2000.
3. To consider and transact such other business as may properly come
before the Annual Meeting.
The close of business on April 10, 2000, is the record date for the
determination of shareholders entitled to notice of and to vote at the Annual
Meeting or any postponements or adjournments thereof.
Whether or not you plan to attend the Annual Meeting, you may vote by
completing, signing and returning the enclosed proxy promptly. Any shareholder
present at the Annual Meeting may vote personally on all matters brought before
the Annual Meeting, in which event your proxy will not be used.
By Order of the Board of Directors,
/s/ Robert A. Archer /s/ James R. Kenny
Robert A. Archer James R. Kenny
Chairman of the Board President & Chief Executive Officer
April 24, 2000
(Approximate mailing date of proxy materials)
<PAGE>
TABLE OF CONTENTS
PAGE
GENERAL INFORMATION 1
Revocability of Proxies 1
Solicitation of Proxies 1
Outstanding Securities and Voting Rights 1
Proposals of Shareholders 2
ELECTION OF DIRECTORS 3
Nominees to the Board of Directors 3
Nominations for Directors 5
Certain Committees of the Board of Directors 5
Compensation of Directors 6
Meetings of the Board of Directors 6
Executive Officers 6
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT 6
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS 8
EXECUTIVE COMPENSATION AND TRANSACTIONS WITH DIRECTORS AND OFFICERS 8
Summary Compensation Table 8
Compensation Committee Report 9
Stock Performance Chart(1) 11
Stock Option Plans 11
Employment Agreements 12
Transactions with Directors and Officers 12
Section 16(a) Beneficial Ownership Reporting Compliance 13
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS 13
Ratification of KPMG LLP 13
Required Approval 13
Recommendation of Management 13
OTHER MATTERS 14
ANNUAL REPORT ON FORM 10-K 14
<PAGE>
PROXY STATEMENT
OF
SJNB FINANCIAL CORP.
One North Market Street
San Jose, California 95113
(408) 947-7562
Annual Meeting of Shareholders
May 24, 2000
INTRODUCTION
These proxy materials are furnished in connection with the solicitation of
proxies by the Board of Directors of SJNB Financial Corp. (the "Corporation"), a
California corporation, for use at the Annual Meeting of Shareholders (the
"Meeting") to be held on May 24, 2000, at 10:00 a.m., in the Quicksilver Room at
The Silicon Valley Capital Club, 50 San Fernando, Suite 1700, San Jose,
California, and any postponements or adjournments thereof. These proxy materials
were mailed to shareholders on or about April 24, 2000.
GENERAL INFORMATION
Revocability of Proxies
A proxy for voting your shares at the Meeting is enclosed. Any shareholder
giving the enclosed proxy has the right to revoke it at any time before it is
exercised by filing with the Corporation's Secretary, James R. Kenny, a written
notice of revocation or a duly executed proxy bearing a later date. A
shareholder may also revoke a proxy by attending the Meeting and advising the
Chairman of his or her election to vote in person.
Solicitation of Proxies
This proxy solicitation is made by the Board of Directors of the Corporation and
the cost of the solicitation is being borne by the Corporation. Solicitation is
being made by this Proxy Statement and may also be made by employees or agents
of the Corporation who may communicate with shareholders or their
representatives in person, by telephone or by additional mailings. The
Corporation may, at its discretion, engage the services of a proxy solicitation
firm to assist in the solicitation of proxies. The total expense of this
solicitation will be borne by the Corporation and will include reimbursement
paid to brokerage firms and others for their expenses in forwarding soliciting
material and such expenses as may be paid to any proxy solicitation firm engaged
by the Corporation.
Outstanding Securities and Voting Rights
Only those shareholders of record of the Corporation's common stock ("Common
Stock") as of the record date, April 10, 2000, will be entitled to notice of and
to vote in person or by proxy at the Meeting or any postponement or adjournment
thereof, unless a new record date is set for a postponed or adjourned meeting.
As of April 10, 2000, the Corporation had one class of securities issued and
outstanding, consisting of 3,661,186 shares of Common Stock. Such shares are
held by approximately 2,600 shareholders. All of the shares are voting shares
and entitled to vote at the Meeting. Each share of Common Stock is entitled to
one vote at the Meeting.
In the election of directors, the six (6) candidates receiving the highest
number of votes will be elected. Approval of each of the other proposals
requires the affirmative vote of a majority of the shares of Common Stock
represented at the Meeting and entitled to vote with respect to each such
matter.
A majority of the shares entitled to vote, represented either in person or by a
properly executed proxy, will constitute a quorum at the Meeting. If, by the
time scheduled for the Meeting, a quorum of shareholders of the Corporation is
not present or if a quorum is present but sufficient votes in favor of any of
the proposals have not been received, the Meeting may be held for purposes of
voting on those proposals for which sufficient votes have been received, and the
persons named as proxies may propose one or more adjournments of the Meeting to
permit further solicitation of proxies with respect to any of the proposals for
which sufficient votes have not been received. If a shareholder withholds
authority to vote for directors on the enclosed proxy, or attends the Meeting,
elects to vote in person, but abstains from voting in the election of directors,
that shareholder's shares will not be counted in determining the candidates
receiving the highest number of votes. For shares present at the Meeting in
person or by proxy, an abstention with respect to Proposal No. 2 is treated the
same as a vote against such matter. Generally broker non-votes (shares as to
which brokerage firms have not received voting instructions from their clients
and therefore do not have the authority to vote the shares at the Meeting) will
be considered in determining if a quorum is present at the Meeting but will be
disregarded in determining votes cast.
If the enclosed proxy is completed in the appropriate spaces, signed, dated and
returned, the proxy will be voted as specified in the proxy. If no specification
is made on an executed proxy, it will be voted FOR the election of directors
nominated by the Board and FOR the ratification of the selection of KPMG LLP as
the Corporation's independent public accountants.
The proxy also confers discretionary authority to vote the shares represented
thereby on any matter that was not known at the time this Proxy Statement was
mailed which may properly be presented for action at the Meeting and may
include: approval of minutes of the prior annual meeting which will not
constitute ratification of the actions taken at such meeting; action with
respect to procedural matters pertaining to the conduct of the Meeting; and
election of any person to any office for which a bona fide nominee is named
herein if such nominee is unable to serve or for good cause will not serve.
Management of the Corporation is not aware of any other matters to come before
the Meeting. If, however, any other matters of which the Board is not now aware
are properly presented for action, it is the intention of the proxy holders
named in the enclosed proxy to vote such proxy on such matters in accordance
with their best business judgment.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE ELECTION OF
THE DIRECTORS NOMINATED BY THE BOARD AND FOR THE RATIFICATION OF THE SELECTION
OF KPMG LLP AS THE CORPORATION'S INDEPENDENT PUBLIC ACCOUNTANTS.
Proposals of Shareholders
Under certain circumstances, shareholders are entitled to present proposals at
shareholder meetings. For any such proposal to be considered for inclusion in
the proxy statement prepared for next year's Annual Meeting, the proposal must
be received at the Corporation's executive offices at One North Market Street,
San Jose, California, 95113 prior to December 9, 2000. Any such proposal
received by the Corporation's principal executive offices after such date will
be considered untimely and may be excluded from the proxy statement and form of
proxy. The deadline for submission of shareholder proposals to be presented at
next year's Annual Meeting, but which will not be included in the proxy
statement and form of proxy relating to such meeting, is March 4, 2001. Any such
proposal received by the Corporation's principal executive offices after such
date will be considered untimely and the persons named in the proxy for such
meeting may exercise their discretionary voting power with respect to such
proposal.
ELECTION OF DIRECTORS
Nominees to the Board of Directors
The Bylaws of the Corporation provide that the number of directors of the
Corporation shall be no less than nine and no more than seventeen, with the
exact number within such range to be fixed by amendment of the Bylaws adopted by
the shareholders or by the Board of Directors. The number of directors is
presently fixed at sixteen.
The Company has three groups of directors, each of whom is elected for a
three-year term. Class I directors will be elected this year. Class II directors
will be elected in 2001 and Group III directors will be elected in 2002. If any
nominee should become unable or unwilling to serve as a director, the proxies
will be voted for such substitute nominee as shall be designated by the Board of
Directors. The Board of Directors presently has no knowledge that any of the
nominees will be unable or unwilling to serve. The six nominees receiving the
highest number of votes at the Meeting shall be elected.
The following persons are the nominees of the Board of Directors for election as
Class I directors to serve for a three-year term until the Annual Meeting of
Shareholders to be held in the year 2003 and until their successors are duly
elected and qualified.
Albert V. Bruno F. Jack Gorry William D. Kron
V. Ronald Mancuso Richard L. Mount Louis Oneal
The following table sets forth certain information with respect to (i) those
persons nominated by the Board of Directors for election as Class I directors;
and (2) the Class II and Class III directors who will continue in office after
the annual meeting until the expiration of their respective terms. The
information below is based on data furnished by each such nominee or director.
Each member of the Corporation's Board of Directors also serves as a director of
San Jose National Bank ("SJNB" or the "Bank").
Nominees for Election as Class I Directors:
<TABLE>
First Elected a Principal Business Experience
Name Director(1) Age During the Past Five Years
<S> <C> <C> <C>
Albert V. Bruno 1994 55 Director, Center for Innovation and Entrepreneurship
and Professor of Marketing at Santa Clara
University. He has been at Santa Clara University
since 1971 where he has served as chairman of the
Marketing Department and Acting Dean.
F. Jack Gorry 1988 66 Private consultant since September 1992.
William D. Kron 2000 56 Director of Western and Pacific Rim Sales at Silicon
Energy Corporation. Former Chairman and founder of
Saratoga National Bank.
V. Ronald Mancuso 2000 61 Retired Dentist since 1999. Private dental practice
in Saratoga from August 1967 through 1999.
Richard L. Mount 2000 55 Private consultant since 2000. Chairman, President
and Chief Executive Officer of Saratoga Bancorp and
President, Chief Executive Officer and Director of
Saratoga National Bank from 1982 through 2000.
Louis Oneal 1982 66 A practicing attorney at law and a member of The Law
Offices of Louis Oneal in San Jose.
Class II Directors, Continuing in Office:
First Elected a Principal Business Experience
Name Director(1) Age During the Past Five Years
Ray S. Akamine 1994 52 Chief Financial Officer of Hill View Packing Company
in San Jose since April 1998. Prior to that time, he
served as Chief Financial Officer of Consolidated
Factors in Monterey, California from November 1995 to
March 1998. Prior to that time, he served as Vice
President of Finance for Mariani Packing Company, a
food processing company located in San Jose, from
June 1984 to November 1995.
Rod Diridon 1994 61 Executive Director of the Norman Y. Mineta
International Institute for Surface Transportation
Policy Studies at the College of Business at San Jose
State University since 1994. Prior to that time, he
served as the Supervisor of the 4th District of the
County of Santa Clara, to which he was elected in
1974.
Robert G. Egan 2000 59 Managing Broker with Coldwell Banker Real Estate
since 1985.
Arthur K. Lund 1982 66 A practicing attorney at law and a member of Hoge
Fenton Jones & Appel in San Jose since March 2000.
Prior to that, he was a member Rosenblum, Parish &
Issacs from 1992 through March 2000. Mr. Lund was
the Chairman of the Board of the Corporation from
1983 through 1992.
Douglas L. Shen 1994 60 A self employed dentist since 1966. His office is
located in San Jose, California.
Class III Directors, Continuing in Office
First Elected a Principal Business Experience
Name Director(1) Age During the Past Five Years
Victor E. Aboukhater 2000 57 Since 1986, he has managed his personal investment
portfolio of real estate and securities.
Robert A. Archer 1982 66 Chairman of the Board of Directors of the Corporation
and SJNB since 1993. President and a principal
stockholder of Coast Counties Truck and Equipment
Company, a heavy duty truck dealership and service
facility in San Jose, which he has owned and operated
for more than 30 years.
James R. Kenny 1991 55 President, Chief Executive Officer and Secretary of
the Corporation and SJNB since September 1991.
Diane P. Rubino 1987 50 President of Hill View Packing Company since 1993.
Previously she was a partner of Valley View Packing
since 1977.
Gary S. Vandeweghe 1982 60 A practicing attorney at law with Olimpia, Whalen &
Lively since April 1996. From December 1995 to April
1996, he was a member of the Law Offices of Gary S.
Vandeweghe. Prior to that time, he was a member of
Rankin, Luckhardt, Vandeweghe, Landsness & Lahde in
San Jose.
<FN>
(1) Includes service as a director of SJNB prior to the organization of SJNB
Financial Corp. Directors Akamine, Bruno, Diridon and Shen were directors
of Business Bancorp and California Business Bank prior to the merger.
Directors Aboukhater, Egan, Kron, Mancuso and Mount were directors of
Saratoga Bancorp and Saratoga National Bank prior to the merger.
</FN>
</TABLE>
There is no family relationship among any of the Corporation's executive
officers, directors or nominees for director.
Nominations for Directors
The Corporation's Bylaws provide that nominations for a director may be made by
shareholders, provided that certain informational requirements concerning the
identities of the nominating shareholder and the nominee are complied with in
advance of the meeting. This provision is intended to provide advance notice to
management of any attempt to effect an election contest or a change in control
of the Board of Directors, and may have the effect of precluding third party
nominations if not followed. Specifically, the Bylaws provide that nominations
for directors, other than those made by or on behalf of existing management,
must be made in writing and mailed or delivered to the President of the
Corporation, no less than 14 nor more than 50 days prior to any meeting of
shareholders called for the election of directors, except that if less than 21
days' notice of the meeting is given, such nomination must be mailed or
delivered to the President by the close of business on the seventh day following
the date on which the notice was mailed. The written nomination must include the
following information, to the extent known by the nominating shareholder: (a)
the name and address of each proposed nominee; (b) the principal occupation of
each proposed nominee; (c) the total number of shares of Common Stock of the
Corporation that will be voted for each proposed nominee; (d) the name and
residence address of the nominating shareholder; and (e) the number of shares of
Common Stock of the Corporation owned by the nominating shareholder.
The Bylaws provide that nominations not made in accordance with the above
procedure may, at his discretion, be disregarded by the Chairman of the Meeting
and, upon his instructions, the inspectors of election shall disregard all votes
cast for each such nominee.
Certain Committees of the Board of Directors
The Board of Directors of the Corporation has a standing Audit Committee and
Compensation Committee. The Audit Committee of the Corporation is chaired by Rod
Diridon and the members are Ray S. Akamine, F. Jack Gorry, V. Ronald Mancuso,
Richard L. Mount, Diane P. Rubino, Douglas L. Shen and Gary S. Vandeweghe. The
Audit Committee met five times in 1999 for the purpose of reviewing the scope of
and planning for the annual audit, and reviewing the results of internal
operations audits of the Bank and the Bank's compliance with consumer laws,
regulatory agency reports and securities reports.
The Compensation Committee is chaired by Albert V. Bruno and the members are
Robert A. Archer, F. Jack Gorry, William D. Kron, Arthur K. Lund, Louis Oneal,
Douglas L. Shen and Gary S. Vandeweghe. The Compensation Committee met two times
in 1999 for the purpose of setting compensation levels of senior officers and
directors, reviewing and approving bonus plans and payments, and reviewing and
approving employee benefit plans, including stock option, insurance and
retirement plans. In addition, the Committee reviews and approves the
Corporation's Compensation Policy.
The Corporation does not have a standing nominating committee. The Board of
Directors of the Corporation performs the functions of such committee.
Nominations by shareholders can be made only by complying with the Corporation's
Bylaws and the notice provisions discussed above.
Compensation of Directors
In 1999, the outside directors of the Corporation were paid an annual retainer
$15,000. In addition, each director was paid $500 for attendance at each meeting
of standing committees of the Corporation of which he or she is a member.
Directors of the Corporation do not now receive additional fees for attendance
at the Corporation's Board meetings. In addition, the 1996 Stock Option Plan
provides for automatic annual grants to each non-employee director on March 1 of
each year of options to purchase 5,000 shares of Common Stock.
Meetings of the Board of Directors
The Corporation's Board of Directors held a total of 11 regular meetings and one
special meeting in 1999. Every director attended at least 75% of: (i) the
Corporation's 12 Board meetings; and (ii) all of the meetings of any committee
of the Corporation's Board on which such director served, except for Mr.
Vandeweghe who attended 51% of such meetings.
Executive Officers
The executive officers of the Corporation and SJNB include James R. Kenny,
President and Chief Executive Officer, about whom information is provided above,
and the following persons:
<TABLE>
Principal Occupation
Name and Position(s) Age During the Past Five Years
<S> <C> <C>
Eugene E. Blakeslee 54 Executive Vice President and Chief Financial
Executive Vice President and Chief Officer of the Corporation and SJNB since
Financial Officer of the Corporation and September 1991.
SJNB
Frederic H. Charpiot 53 Senior Vice President and Chief Credit Officer
Senior Vice President and Chief Credit of SJNB since October 1991.
Officer of SJNB
Margo F. Culcasi 52 Senior Vice President/Liability Management of
Senior Vice President/Liability Management SJNB since February 1993.
of SJNB
Judith Doering-Nielsen 54 Senior Vice President and Senior Lending Officer
Senior Vice President and Senior Lending of SJNB since October 1991.
Officer of SJNB
</TABLE>
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table sets forth information as of April 10, 2000, pertaining to
beneficial ownership of the Corporation's Common Stock by each current director
of the Corporation, each nominee to be elected to the Board of Directors, the
Chief Executive Officer, the four other most highly compensated executive
officers and all directors and officers(1) of the Corporation and SJNB as a
group. The information contained herein has been obtained from the Corporation's
records, from information furnished directly by the individual to the
Corporation, or from various filings made by the named individuals with the
Securities and Exchange Commission (the "SEC").
The table should be read with the understanding that more than one person may be
the beneficial owner or possess certain attributes of beneficial ownership with
respect to the same securities. Therefore, careful attention should be given to
the footnote references set forth in the column "Amount and Nature of Beneficial
Ownership." In addition, shares issuable pursuant to options which may be
exercised within 60 days of April 10, 2000, are deemed to be issued and
outstanding and have been treated as outstanding in calculating the percentage
ownership of those individuals possessing such interest, but not for any other
individuals. Thus, the total number of shares considered to be outstanding for
the purposes of this table may vary depending upon the individual's particular
circumstance.
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Beneficial Ownership Outstanding
Name and Address of (3) Common Stock
Beneficial Owner (2)
<S> <C> <C>
Victor E. Aboukhater 36,743 (4) 1.00%
Ray S. Akamine 19,000 (5) *
Robert A. Archer 62,584 (5)(6) 1.70%
Albert V. Bruno 25,165 (5) *
Rod Diridon 13,349 (5) *
Robert G. Egan 40,282 (4) 1.09%
F. Jack Gorry 19,000 (5) *
James R. Kenny 158,046 (7)(8) 4.28%
William D. Kron 34,311 (4) *
Arthur K. Lund 76,778 (5)(9)(10) 2.09%
V. Ronald Mancuso 76,631 (4)(12) 2.08%
Richard L. Mount 123,223 (13) 3.37%
Louis Oneal 74,604 (5)(9) 2.03%
Diane P. Rubino 25,337 (11) *
Douglas L. Shen 81,099 (5) 2.21%
Gary S. Vandeweghe 46,503 (5) 1.27%
Eugene E. Blakeslee 123,183 (7)(14) 3.34%
Frederic H. Charpiot 91,271 (7)(15) 2.48%
Margo F. Culcasi 21,666 (16) *
Judith Doering-Nielsen 31,466 (17) *
Directors and Executive Officers as a 1,006,662 (18) 25.24%
group (15 persons)
<FN>
* Less than 1% of the outstanding Common Stock.
(1) As used throughout this Proxy Statement, the terms "officer" and "executive
officer" refer to the Corporation and SJNB's President and Chief Executive
Officer, and Executive Vice President and Chief Financial Officer, and
SJNB's Chief Credit Officer, Senior Lending Officer and Senior Vice
President/Liability Management.
(2) The address for all persons is c/o SJNB Financial Corp., One North Market
Street, San Jose, California 95113.
(3) Includes shares beneficially owned, directly and indirectly, together with
associates. Subject to applicable community property laws and shared voting
or investment power with a spouse, the persons listed have sole voting and
investment power with respect to such shares unless otherwise noted.
(4) Includes 23,012 shares underlying stock options.
(5) Includes 13,000 shares underlying stock options.
(6) Includes 3,720 shares owned of record by a trust of which Mr. Archer is a
trustee and beneficiary.
(7) Includes 66,245 shares held in the SJNB Cash or Deferred Profit Sharing
Plan (the "401(k)") of which Messrs. Kenny, Blakeslee and Charpiot are
trustees and beneficiaries and with regard to which shares Messrs. Kenny,
Blakeslee and Charpiot have sole or shared voting power. Messrs. Kenny,
Blakeslee and Charpiot disclaim beneficial ownership of the 401(k) shares,
other than such shares allocated to their respective personal accounts in
the 401(k); 4,571; 3,679; 2,545; respectively.
(8) Includes 34,600 shares underlying stock options.
(9) Includes 51,884 shares owned of record by a trust of which Messrs. Lund and
Oneal are trustees, as to which shares they disclaim beneficial ownership.
(10) Includes 3,782 shares owned of record b a trust of which Mr. Lund is the
trustee and beneficiary.
(11) Includes 11,000 shares underlying stock options.
(12) Includes 13,585 shares owned of record by a trust of which Mr. Mancuso is
the trustee and beneficiary.
(13) Includes 122,935 shares owned of record by a trust of which Mr. Mount is
the trustee and beneficiary.
(14) Includes 24,800 shares underlying stock options.
(15) Includes 18,560 shares underlying stock options.
(16) Includes 13,800 shares underlying stock options.
(17) Includes 14,000 shares underlying stock options.
(18) Includes 325,808 shares underlying stock options.
</FN>
</TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Information herein regarding ownership of the Corporation's Common Stock by
entities or persons known by the Corporation to be the beneficial owner of more
than 5% of the Corporation's Common Stock is based solely on copies of Schedules
provided to the Corporation by such entities or persons which have also been
filed with the SEC.
According to a Schedule 13D filed with the SEC on April 5, 2000, Banc Fund III
L.P., Banc Fund III Trust, Banc Fund IV L.P. and Banc Fund IV Trust, Banc Fund V
L.P., 208 S. LaSalle Street, Chicago IL, 60604, collectively reported beneficial
ownership of 310,995 shares of the Corporation's Common Stock, or 8.49% of
shares outstanding as of April 10, 2000. Each of such entities reported that it
had sole voting and investment power with respect to the following shares of
Corporation Common Stock: Banc Fund III L.P., 20,710 shares; Banc Fund III
Trust, 63,481 shares; Banc Fund IV L.P., 24,376 shares; Banc Fund IV Trust,
81,978 shares; and Bank Fund V L.P., 120,450 shares.
Other than the above described entity, the Corporation knows of no other person
who beneficially owned more than five percent of the Corporation's Common Stock
as of April 10, 2000.
EXECUTIVE COMPENSATION AND TRANSACTIONS WITH DIRECTORS AND OFFICERS
Summary Compensation Table
The following table sets forth the cash compensation paid to or allocated for
the Chief Executive Officer of the Corporation and the four other most highly
compensated executive officers for services rendered in all capacities to the
Corporation and SJNB during 1999, 1998 and 1997.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation-Securities
<S> <C> <C> <C> <C> <C>
All Other
Name and Principal Position Year Salary(1) Bonus Underlying Options(2) Compensation(3)
James R. Kenny 1999 $200,000 $130,000 12,000 $6,426
President, Chief Executive 1998 $193,333 $130,000 24,000 $6,426
Officer and Secretary of the 1997 $160,000 $145,000 0 $6,176
Corporation and SJNB
Eugene E. Blakeslee 1999 $150,000 $95,000 6,000 $5,000
Executive Vice President and 1998 $142,833 $95,000 12,000 $5,000
Chief Financial Officer of the 1997 $107,000 $105,000 0 $4,750
Corporation and SJNB
Frederic H. Charpiot 1999 $120,000 $72,000 5,000 $5,000
Senior Vice President and Chief 1998 $113,333 $72,000 10,000 $5,000
Credit Officer of SJNB 1997 $80,000 $80,000 0 $4,750
Margo F. Culcasi 1999 $122,062 $72,000 5,000 $5,000
Senior Vice President/ 1998 $112,500 $72,000 10,000 $5,000
Liability Management of SJNB 1997 $75,000 $80,000 0 $4,750
Judith Doering-Nielsen 1999 $120,992 $72,000 5,000 $5,000
Senior Vice President and Senior 1998 $114,167 $72,000 10,000 $5,000
Lending Officer of SJNB 1997 $85,000 $80,000 0 $4,750
</TABLE>
[FN]
(1) The executive officers received perquisites in addition to their salaries.
The value of such perquisites did not exceed the lesser of $50,000 or 10%
of the total annual salary and bonus reported for each such executive
officer. Salary amounts include compensation deferred at the election of
the executive in the year earned.
(2) On March 24, 1999, the following options were granted to the named
executive officers at an exercise price equal to the market price of the
Common Stock on the date of such grant: Mr. Kenny, 12,000; Mr. Blakeslee,
6,000; Mr. Charpiot, 5,000; Ms. Culcasi, 5,000; and Ms. Doering-Nielsen,
5,000. See "Compensation Committee Report" and "Stock Option Plans" below.
(3) Consists of the Bank's contributions to vested and unvested defined
contribution plans. Mr. Kenny's total also includes a life insurance
premium of $1,426 paid by the Bank each year.
</FN>
Compensation Committee Report
The Corporation's compensation program and policies applicable to its executive
officers are administered by the Compensation Committee of the Board of
Directors. The Compensation Committee is made up entirely of non-employee
directors. The programs and policies are designed to enhance shareholder value
by aligning the financial interests of the executive officers of the Corporation
with those of its shareholders.
It is the Corporation's policy generally to qualify compensation paid to
executive officers for deductibility under section 162(m) of the Internal
Revenue Code. Section 162(m) generally prohibits the Corporation from deducting
the compensation of executive officers that exceeds $1,000,000 unless that
compensation is based on the satisfaction of objective performance goals. At the
1996 Annual Meeting, the Corporation obtained shareholder approval of the 1996
Stock Option Plan of SJNB Financial Corp. which contains limitations necessary
to qualify awards under such plan as performance-based compensation and to
maximize the tax deductibility of such awards. However, the Corporation reserves
the discretion to pay compensation to its executive officers that may not be
deductible.
There are three primary components of executive compensation: Base Salary,
Bonuses and Stock Options.
Base Salary
Base salaries for fiscal 1999 reported herein were determined by the
Compensation Committee. The Compensation Committee reviews salaries recommended
by the Chief Executive Officer for executive officers other than the Chief
Executive Officer. In conducting its review, the Compensation Committee takes
into consideration the overall performance of the Company and the Chief
Executive Officer's evaluation of individual executive officer performance.
Final decisions on base salary adjustments for executives other than the Chief
Executive Officer are made in conjunction with the Chief Executive Officer. The
Compensation Committee independently determines the base salary for the Chief
Executive Officer by: (a) examining the Corporation's performance against its
preset goals, (b) examining the Corporation's performance within the banking
industry, (c) evaluating the overall performance of the Chief Executive Officer
and (d) comparing the base salary of the Chief Executive Officer to that of
other chief executive officers in the banking industry. Based upon the data and
performance, the Chief Executive Officer's base salary remained $200,000
annually as of March 1, 1999.
Bonuses
The Incentive Bonus Plan is a cash-based incentive bonus program. The Incentive
Bonus Plan provides for payment to each named executive officer of an incentive
cash bonus that is related to a percentage of the Corporation's pre-tax net
earnings provided that such net earnings bear a certain relationship to the
Corporation's assets. Under the Incentive Bonus Plan, the Chief Executive
Officer was awarded a bonus of $130,000 in 2000 for performance in 1999.
Stock Options
The Compensation Committee annually grants options under the 1996 Stock Option
Plan with an exercise price equal to or greater than the fair market value on
the date of grant. The grants are intended to retain and motivate key executives
and to provide a direct link with the interests of the shareholders of the
Corporation. The Compensation Committee, in making its determination as to grant
levels, takes into consideration: (i) prior award levels, (ii) total awards
received to date by the individual executive, (iii) the total stock award to be
made and the executive's percentage participation in the award, (iv) the
executive's direct ownership of the Corporation's shares, (v) the number of
options vested and nonvested and (vi) the options outstanding as a percentage of
total shares outstanding. The 1996 Stock Option Plan limits the total number of
shares subject to options that may be granted to a participant in any year to
not more than 100,000 shares. In March 1999, Mr. Kenny was awarded options to
purchase 12,000 shares of Common Stock.
The Compensation Committee believes that stock options are a critical component
of the compensation offered by the Corporation to promote the long-term
retention of its employees, motivate high levels of performance and recognize
employee contributions to the success of the Corporation.
The foregoing report has been furnished by the Compensation Committee of the
Board of Directors of SJNB Financial Corp.:
Robert A. Archer
Albert V. Bruno (Chair)
F. Jack Gorry
William D. Kron
Arthur K. Lund
Louis Oneal
Douglas L. Shen
Gary S. Vandeweghe
Stock Option Plans
<TABLE>
<CAPTION>
The following table provides certain information concerning options granted to
the executive officers named in the Summary Compensation Table in the fiscal
year ended December 31, 1999:
Option Grants in Last Fiscal Year
Percent of
Total Potential Realizable
Number of Value at Assumed Annual
Number of Options Rates of Stock Price
Securities Granted to Appreciation for Option
Underlying Employees Exercise Expiration Term
Name Options in 1999 Price Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
James R. Kenny 12,000 12.48% $27.38 03/24/09 $206,592 $523,544
Eugene E. Blakeslee 6,000 6.24 27.38 03/24/09 103,296 261,772
Frederic H. Charpiot 5,000 5.20 27.38 03/24/09 86,080 218,143
Margo F. Culcasi 5,000 5.20 27.38 03/24/09 86,080 218,143
Judith Doering-Nielsen 5,000 5.20 27.38 03/24/09 86,080 218,143
</TABLE>
<TABLE>
<CAPTION>
The following table sets forth the stock options exercised in 1999 and the
December 31, 1999, unexercised value of both vested and unvested stock options
for the Corporation's Chief Executive Officer and the four other most highly
compensated executive officers:
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-end Option Values
Number of Securities Value of Unexercised
Underlying Unexercised In-the Money Options at
Shares Options at 12/31/99 12/31/99 (1)
Acquired Value ----------------------------- -----------------------------
Name on Exercise Realized($) Exercisable Unexercisable Exercisable Unexercisable
------------- ------------- ------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
James R. Kenny 0 - 29,800 19,200 $540,525 $60,072
Eugene E. Blakeslee 0 - 22,400 9,600 $427,294 $30,036
Frederic H. Charpiot 0 - 16,560 8,000 $329,925 $25,030
Margo F. Culcasi 2,200 $51,605 12,400 8,000 $229,857 $25,030
Judith Doering-Nielsen 0 - 12,000 8,000 $216,495 $25,030
<FN>
(1) Fair market value of the Corporation's Common Stock on December 31, 1999,
was $30.25.
</FN>
</TABLE>
Employment Agreements
Mr. Kenny is employed by the Corporation and SJNB pursuant to an employment
agreement dated March 27, 1996, which provides for a current annual salary of
$200,000. The term of the agreement is three years, with annual one year
extensions each year thereafter. In addition, Mr. Kenny is to receive an
incentive bonus of 1.5% of the Corporation's pre-tax, pre-bonus net earnings
before extraordinary items, provided that SJNB's net earnings before
extraordinary items in any year during the term of the Agreement are equal to or
exceed 1% of average assets. Mr. Kenny may also receive stock options. Pursuant
to the Agreement, the Corporation provides an automobile for Mr. Kenny, as well
as public liability and property damage insurance. Mr. Kenny also receives
$250,000 in term life insurance coverage. In the event that Mr. Kenny is
involuntarily terminated for reasons other than dishonesty or malfeasance, he is
entitled to receive a lump sum payment equal to twenty-four months' salary (plus
incentive or bonus payments accrued, if any). In the event of a "change in
control," Mr. Kenny will receive a lump sum payment in an amount equal to two
times his average annual compensation for the five years immediately preceding
the change in control (plus incentive or bonus payments accrued, if any).
Mr. Blakeslee is employed by the Corporation and SJNB pursuant to an employment
agreement dated March 27, 1996, which provides for a current annual salary of
$150,000. The term of the agreement is one year, with automatic extensions each
year thereafter. In addition, Mr. Blakeslee is entitled to participate in the
Corporation's bonus plan, stock option plan or other arrangements authorized and
approved by the Board of Directors. Mr. Blakeslee's agreement also requires that
the Corporation provide an automobile for Mr. Blakeslee, as well as public
liability and property damage insurance. In the event that Mr. Blakeslee is
involuntarily terminated for reasons other than dishonesty or malfeasance, he is
entitled to receive a lump sum payment equal to twelve months' salary (plus
incentive or bonus payments accrued, if any). In the event of a "change in
control," Mr. Blakeslee will receive severance pay in an amount equal to one
times his average annual compensation for the five years immediately preceding
the change in control (plus incentive or bonus payments accrued, if any).
Transactions with Directors and Officers
SJNB has had in the ordinary course of business, and expects to have in the
future, banking transactions with directors, officers, shareholders and their
associates, including transactions with corporations of which such persons are
directors, officers or controlling shareholders. In the opinion of management of
SJNB, all loans and commitments to lend included in such transactions have been
and will be entered into with such persons in the ordinary course of business,
on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons of
similar creditworthiness, and on terms not involving more than a normal risk of
collectibility or presenting other unfavorable features.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") requires the Corporation's directors, executive officers and any persons
beneficially owning ten percent or more of the Corporation's common stock to
timely file initial reports of ownership and reports of changes in that
ownership with the SEC and the Nasdaq National Market. Such persons are required
by SEC regulation to send copies of such reports to the Corporation. Except
below, based solely on a review of the copies of such reports furnished to the
Corporation and written representations that no other reports were required,
during the fiscal year ended December 31, 1999, the Corporation believes all
such filing requirements applicable to its directors, executive officers and ten
percent shareholders were met.
When Douglas L. Shen, DDS, a director, filed his initial beneficial owner report
upon becoming a director in December 1994, he failed to reflect 2,656 shares of
Common Stock, which he owned at that time. This mistake was not discovered until
April 2000. He also failed to file on a timely basis certain other reports
required to be filed in 1997, 1998, 1999 and 2000. Although Dr. Shen did file
certain reports on Form 4 and Form 5 during 1997 through December 31, 1999, none
of those reports reflected periodic purchases made through Dr. Shen's broker
with cash dividend proceeds paid by the Corporation in December 1997 and
quarterly in 1998 through the first quarter of 2000. Additionally, a Form 4
required to be filed by April 10, 2000 with respect to a purchase transaction in
March 2000 was filed on April 11, 2000. The Corporation was unaware of any of
the mistakes or unreported transactions discussed above and the Corporation
expects to file corrected reports on behalf of Dr. Shen in April 2000.
Proposal No. 2:
Ratification of Appointment of INDEPENDENT PUBLIC ACCOUNTANTS
Ratification of KPMG LLP
The Board of Directors has selected KPMG LLP to serve as independent public
accountants for the Corporation and its subsidiary for the year ending December
31, 2000. KPMG LLP examined the financial statements of the Corporation and its
subsidiary for the year ended December 31, 1999. KPMG LLP has informed the
Corporation that it has had no connection during the past three years with the
Corporation or its subsidiary in the capacity of promoter, underwriter, voting
trustee, director or employee.
In recognition of the important role of the independent public accountants, the
Board of Directors has determined that its selection of the independent public
accountants should be submitted to the shareholders for review and ratification
on an annual basis.
In the event the appointment is not ratified by the shareholders, the adverse
vote will be deemed to be an indication to the Board of Directors that it should
consider selecting other independent public accountants for 2001. Because of the
difficulty and expense of making any substitution of accounting firms after the
beginning of the current year, it is the intention of the Board of Directors
that the appointment of KPMG LLP for the year 2000 will stand unless for other
reasons the Board of Directors deems it necessary or appropriate to make a
change. The Board of Directors also retains the power to appoint another
independent public accounting firm to replace an accounting firm ratified by the
shareholders in the event the Board of Directors determines that the interests
of the Corporation require such a change.
It is anticipated that representatives of KPMG LLP will be present at the
Meeting and will have an opportunity to make a statement if they desire to do
so, and will be available to respond to appropriate questions.
Required Approval
The affirmative vote of a majority of the shares present in person or
represented and voting at the Meeting is required for ratification of KPMG LLP
as the Corporation's independent public accountants.
Recommendation of Management
The Board of Directors recommends that the shareholders vote FOR the
ratification of the selection of KPMG LLP to serve as independent public
accountants for the Corporation and its subsidiary for 2000.
OTHER MATTERS
The Board of Directors knows of no other matters which will be brought before
the Meeting, but if such matters are properly presented to the Meeting, proxies
solicited hereby will be voted in accordance with the judgment of the persons
holding such proxies.
ANNUAL REPORT ON FORM 10-K
A copy of the Corporation's Annual Report on Form 10-K for the year ended
December 31, 1999, is included in the Corporation's Annual Report to
Shareholders.
<PAGE>
SJNB FINANCIAL CORP./SAN JOSE NATIONAL BANK
CORPORATE OFFICES
One North Market Street San Jose CA 95113
(408) 947-7562
www.sjnb.com
Member FDIC
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF SJNB FINANCIAL CORP.
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Shareholders of SJNB Financial Corp., a California corporation (the
"Corporation") dated April 24, 2000, and revoking any proxy heretofore given,
hereby constitutes and appoints Douglas L. Shen, Diane P. Rubino and F. Jack
Gorry, or any of them, with full power of substitution, as attorney and proxy to
appear and vote all of the shares of Common Stock of the Corporation standing in
the name of the undersigned which the undersigned could vote if personally
present and acting at the Annual Meeting of Shareholders of the Corporation to
be held in the Quicksilver Room at The Silicon Valley Capital Club, 50 W. San
Fernando, Suite 1700, San Jose, California on May 24, 2000 at 10:00 a.m. local
time, or at any postponements or adjournments thereof, upon the following items
as set forth in the Notice of Annual Meeting and more fully described in the
Proxy Statement.
1. Election of Directors.
FOR ALL nominees (except as marked to the contrary below) ____
WITHHOLD AUTHORITY ____
Albert V. Bruno, F. Jack Gorry, William D. Kron, V. Ronald Mancuso, Richard
L. Mount, Louis Oneal
(Instructions: To withhold a vote for one or more nominees, strike a line
through that nominee's name. To vote for all nominees except one whose name
is struck, check "FOR." To vote against all nominees named above, check
"WITHHOLD AUTHORITY.")
2. Ratification of Accountants. To ratify the appointment of KPMG LLP as
independent certified public accountants for the Corporation for 2000.
FOR _____ AGAINST _____ ABSTAIN _____
3. Other Business. The proxies are authorized to vote in their discretion on
such other matters as may properly come before the meeting or any
postponement or adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER HEREIN
SPECIFIED BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS INDICATED,
THIS PROXY WILL BE VOTED FOR ALL NOMINEES LISTED IN PROPOSAL 1, IN FAVOR OF
PROPOSAL 2, AND IN ACCORDANCE WITH THE DISCRETION OF THE PROXIES ON ANY
OTHER MATTERS TO COME BEFORE THE ANNUAL MEETING.
Dated ___________, 2000
------------------------------------
(Signature)
------------------------------------
(Signature)
(This proxy should be marked, dated, signed by the
shareholder(s) exactly as his or her name appears hereon and
returned promptly in the enclosed envelope. Executors,
administrators, guardians, officers of the corporation and
others signing in a fiduciary capacity should state their
full titles as such. If shares are held by joint tenants or
as community property, both should sign.)
DO NOT FOLD, STAPLE OR MUTILATE
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU
ARE URGED TO MARK, SIGN, DATE AND PROMPTLY RETURN THIS
PROXY, USING THE ENCLOSED ENVELOPE.
