<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
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
PACIFIC CAPITAL BANCORP
- --------------------------------------------------------------------------------
(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:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
PACIFIC CAPITAL BANCORP
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 19, 1998
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of Pacific Capital Bancorp (the
"Company"), a California corporation and bank holding company for First National
Bank of Central California and South Valley National Bank will be held at The
Valley Room at Quail Lodge, 8000 Valley Greens Drive, Carmel, California on
Tuesday, May 19, 1998, at 4:00 p.m. for the following purposes:
1. To elect directors to serve until the next Annual Meeting of
Shareholders or until their successors are elected;
2. To ratify the appointment of KPMG Peat Marwick LLP as the
Company's independent certified public accountants for the 1998 fiscal
year; and
3. To transact such other business as may properly come before the
meeting.
The foregoing items of business are more fully described in the
accompanying Proxy Statement.
The Bylaws of Pacific Capital Bancorp provide for the nomination of
Directors in the following manner:
Nomination for election of members of the Board of Directors may be
made by the Board of Directors or by any shareholder of any outstanding class
of capital stock of the corporation entitled to vote for the election of
Directors. Notice of intention to make any nominations shall be made in
writing and shall be delivered or mailed to the President of the corporation
not less than twenty-one (21) days nor more than sixty (60) days prior to any
meeting of shareholders called for the election of Directors; provided
however, that if less than twenty-one (21) days' notice of the meeting is
given to shareholders, such notice of intention to nominate shall be mailed
or delivered to the President of the corporation not later than the close of
business on the tenth day following the day on which the notice of the
meeting was mailed; provided further, that if notice of such meeting is sent
by third-class mail as permitted by Section 6 of the Bylaws, no notice of
intention to make nominations shall be required. Such notification shall
contain the following information to the extent known to the notifying
shareholder: (a) the name and address of each proposed nominee; (b) the
principal occupation of each proposed nominee; (c) the number of shares of
capital stock of the corporation owned by each proposed nominee; (d) the name
and residence address of the notifying shareholder; and (e) the number of
shares of capital stock of the corporation owned by the notifying
shareholder. Nominations not made in accordance herewith may, in the
discretion of the Chairman of the meeting, be disregarded and upon the
Chairman's instructions, the inspectors of election can disregard all votes
cast for each such nominee.
The Board of Directors has fixed the close of business on March 31,
1998 as the record date for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting and any adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS,
JAMES L. GATTIS, SECRETARY
SALINAS, CALIFORNIA
APRIL 20, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POST-PAID
ENVELOPE.
<PAGE>
PROXY STATEMENT
OF
PACIFIC CAPITAL BANCORP
307 MAIN STREET
SALINAS, CALIFORNIA 93901
INFORMATION CONCERNING THE SOLICITATION
This Proxy Statement is furnished in connection with the solicitation
of the enclosed proxy by, and on behalf of, the Board of Directors of Pacific
Capital Bancorp, a California corporation and bank holding company (the
"Company") for First National Bank of Central California and South Valley
National Bank (the "Banks"), for use at the Annual Meeting of Shareholders of
the Company to be held at the Valley Room at Quail Lodge, 8000 Valley Greens
Drive, Carmel, California at 4:00 p.m. on May 19, 1998 (the "Meeting"). Only
shareholders of record on March 31, 1998, (the "Record Date") will be entitled
to vote at the Meeting. At the close of business on the Record Date, the
Company had outstanding 4,310,155 shares of its no par value common stock (the
"Common Stock").
This Proxy Statement and the accompanying form of proxy is being sent
or given to shareholders on or about April 20, 1998.
Shareholders of the Company's Common Stock are entitled to one vote
for each share held except for the election of directors where each shareholder
has cumulative voting rights and is entitled to as many votes as shall equal the
number of shares held by such shareholder multiplied by the number of directors
to be elected and such shareholder may cast all of his or her votes for a single
candidate or distribute such votes among any or all of the candidates he or she
chooses. However, no shareholder shall be entitled to cumulate votes unless
such candidate's or candidates' name(s) have been placed in nomination prior to
the voting and the 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 in
nomination. An opportunity will be given at the Meeting prior to the voting for
any shareholder who desires to do so to announce his or her intention to
cumulate his or her votes. The proxy holders are given discretionary authority,
under the terms of the proxy, to cumulate votes represented by shares for which
they are named in the proxy.
Any person giving a proxy in the form accompanying this statement has
the power to revoke it prior to its exercise. It is revocable prior to the
Meeting by an instrument revoking it or by a duly executed proxy bearing a later
date delivered to the Secretary of the Company. Such proxy is also revoked if
the shareholder is present at the Meeting and elects to vote in person.
The Company will bear the entire cost of preparing, assembling,
printing and mailing the proxy materials furnished by the Board of Directors to
shareholders. Copies of the proxy materials will be furnished to brokerage
houses, fiduciaries and custodians to be forwarded to the beneficial owners of
the 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 Banks may (without additional compensation) solicit proxies by telephone or
personal interview, the costs of which the Company will bear.
Each of the Company's proposals described in this Proxy Statement
requires the affirmative vote of the holders of a majority of the shares of the
Company's Common Stock represented and voting at the Meeting if a quorum is
present. Each valid returned proxy which is not revoked will be voted in the
election of directors "FOR" the Company's nominees for the Board of Directors,
"FOR" Proposal No. 2 as described in this Proxy Statement and, at the proxy
holders' discretion, on such other matters, if any, which may come before the
Meeting (including any proposal to adjourn the Meeting).
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Company has only one class of shares, Common Stock,
outstanding. As of the Record Date, no person or group known to the Company
owned beneficially more than five percent (5%) of the outstanding shares of
its Common Stock.
The following table sets forth certain information regarding Common
Stock beneficially owned as of the Record Date by those persons nominated by the
Board of Directors for election as directors, as well as all directors and
officers of the Company as a group. The person named in the table possesses
sole voting power, except as otherwise indicated in the notes to the table.
<TABLE>
<CAPTION>
Amount and Name of Percent of
Name of Beneficial Owner Office Beneficial Ownership (1) Class (2)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Charles E. Bancroft Director 37,688(3) *
Dennis A. DeCius EVP and CFO 26,814(4) *
Gene DiCicco Director 39,775(3)(5) *
Dale R. Diederick EVP & Loan Administrator 7,911(6) *
Lewis L. Fenton Director 45,256(3)(7) 1.04%
Gerald T. Fry Director 35,670(3)(8) *
James L. Gattis Director, Secretary 43,719(3) 1.00%
Eugene R. Guglielmo Director 55,873(9) 1.29%
Stanley R. Haynes Director 39,879(3)(10) *
D. Vernon Horton Director, Chairman 83,077(11) 1.92%
Hubert W. Hudson Director 52,347(12) 1.21%
William J. Keller Director 45,135(13) 1.04%
Roger C. Knopf Director 130,618(14) 3.02%
Clayton C. Larson Director, President 93,031(15) 2.14%
William S. McAfee Director 66,385(3)(16) 1.53%
William H. Pope Director 52,089(3)(17) 1.20%
Mary Lou Rawitser Director 17,337(18) *
William K. Sambrailo Director 58,483(19) 1.35%
Robert B. Sheppard Director 51,608(3)(20) 1.19%
All directors and executive officers as a group (19 persons) 982,695 22.66%
</TABLE>
* Owns less than 1%.
3
<PAGE>
(1) All shares are calculated on the basis of the number of current
shares held plus shares subject to options that are currently exercisable or
will become exercisable within sixty (60) days after the Record Date.
(2) All percentages are calculated on the basis of the number of shares
outstanding as of the record date plus shares subject to options that are
currently exercisable or will become exercisable within sixty (60) days after
the record date.
(3) Includes 7,031 shares subject to presently exercisable options
granted under the Company's 1992 Directors' Stock Option Plan and 22,654 shares
issuable upon exercise of options granted under the Company's 1994 Stock Option
Plan.
(4) Includes 6,029 shares subject to presently exercisable options
granted under the Company's 1984 Stock Option Plan and 2,067 shares subject to
presently exercisable options granted under the Company's 1994 Stock Option
Plan. Includes 5,024 shares allocated as of December 31, 1997, to Mr. DeCius'
account pursuant to the Company's Employee Stock Ownership Plan, and 2,169
shares held in the 1991 Pacific Capital Bancorp Irrevocable Nonqualified
Deferred Compensation Trust, FBO Dennis A. DeCius and 717 shares acquired under
the Company's 401(k) Profit Sharing Plan. Also includes 8,738 held in the name
of the 1994 DeCius Revocable Trust, 1,057 shares held by Smith Barney in an IRA
for the benefit of Mr. DeCius and 1,013 shares held in an IRA by Smith Barney
for the benefit of his wife.
(5) Includes 2,786 shares held by DiCicco Centers, a partnership of
which Mr. DiCicco is a general partner.
(6) Includes 4,671 shares subject to presently exercisable options
granted under the Company's 1994 Stock Option Plan and 3,023 shares allocated as
of December 31, 1997 to Mr. Diederick's account pursuant to the Company's
Employee Stock Ownership Plan.
(7) Includes 9,594 shares held in the name of the Lewis L. Fenton Living
Trust and 5,977 shares held in an IRA by Wells Fargo Bank for the benefit of Mr.
Fenton.
(8) Includes 2,980 shares held by Dean Witter in an IRA for the benefit
of Mr. Fry.
(9) Includes 10,500 shares subject to presently exercisable options
granted under the Company's 1994 Stock Option Plan. Also includes 27,840 shares
held in the name of Emilio Guglielmo Winery Inc., of which Mr. Guglielmo is a
shareholder, director and executive officer, 3,616 shares owned by Guglielmo
Winery Inc. Profit Sharing Plan and 250 shares held in the name of Mr.
Guglielmo's children and grandchild.
(10) Includes 6,069 shares held in the name of the Stanley Haynes Living
Trust and 1,185 shares owned by Cinderella Showcase, Inc., a corporation
controlled by Mr. Haynes. Also includes 2,459 shares held by Dean Witter in an
IRA for the benefit of Mr. Haynes and 481 shares owned by Mr. Haynes and his
daughter as joint tenants.
(11) Includes 20,099 shares subject to presently exercisable options
granted under the Company's 1984 Stock Option Plan and 5,512 shares subject to
presently exercisable options granted under the Company's 1994 Stock Option
Plan. Includes 7,208 shares allocated as of December 31, 1997 to Mr. Horton's
account pursuant to the Company's Employee Stock Ownership Plan and 674 shares
held in the 1991 Pacific Capital Bancorp Irrevocable Nonqualified Deferred
Compensation Trust, FBO D. Vernon Horton. Includes 2,127 shares held by Smith
Barney in an IRA for the benefit of Mr. Horton and 46,987 shares held in the
name of D. Vernon Horton and Joyce Marie Horton Revocable Trust. Also includes
470 shares held in the Jeffrey L. Meeks and Debra Burk Meeks Irrevocable Trust
FBO Mallory Mae Meeks of which Mr. Horton is Trustee.
(12) Includes 12,154 shares subject to presently exercisable options
granted under the Company's 1992 Directors' Stock Option Plan and 10,500 shares
subject to presently exercisable options granted under the Company's 1994 Stock
Option Plan. Also includes 29,693 shares held in the name of Hubert W. Hudson &
Patricia A. Hudson Revocable Trust.
(13) Includes 12,154 shares subject to presently exercisable options
granted under the Company's 1992 Directors' Stock Option Plan and 10,500 shares
subject to presently exercisable options granted under the Company's 1994 Stock
Option Plan. Also includes 7,907 held by Charles Schwab & Co., Inc. in an IRA
for the benefit of Dr. Keller and 14,574 held in the name of William James
Keller & Clara Downs Keller Trust.
4
<PAGE>
(14) Includes 10,500 shares subject to presently exercisable options
granted under the Company's 1994 Stock Option Plan. Also includes 26,658 held
by the Knopf Construction Co. Retirement Plan and 2,782 held in the name of Mr.
Knopf's children.
(15) Includes 20,099 shares subject to presently exercisable options
granted under the Company's 1984 Stock Option Plan and 5,512 shares subject to
presently exercisable options granted under the Company's 1994 Stock Option
Plan. Includes 7,082 shares allocated as of December 31, 1997 to Mr. Larson's
account pursuant to the Company's Employee Stock Ownership Plan and 6,851 shares
held in the 1991 Pacific Capital Bancorp Irrevocable Nonqualified Deferred
Compensation Trust, FBO of Clayton C. Larson. Also includes 44,993 held in the
name of the Clayton C. Larson and Sharon Joy Larson Family Trust, 7,663 shares
held by First Trust & Co. in an IRA for the benefit of Mr. Larson, 636 shares
held in an IRA by First Trust & Co. for the benefit of his wife and 195 shares
held in the name of Mr. Larson's children with Mrs. Larson as custodian.
(16) Includes 31,691 held by Paine Webber in an IRA for the benefit of
Dr. McAfee.
(17) Includes 14,135 shares held by W. H. Pope, Inc., as to which Mr.
Pope exercises sole voting and investment control and 1,088 held in an IRA by
Charles Schwab & Co., Inc. for the benefit of Mr. Pope. Also includes 2,126
shares held in the name of the Church Trust FBO David Andrew Church and 2,125
shares FBO Jennifer Gudrun Church of which Mr. Pope is Trustee.
(18) Includes 10,500 shares subject to presently exercisable options
granted under the Company's 1994 Stock Option Plan.
(19) Includes 5,775 shares subject to presently exercisable options
granted under the Company's 1992 Directors' Stock Option Plan and 22,654 shares
subject to presently exercisable options granted under the Company's 1994 Stock
Option Plan. Includes 15,777 shares held in the name of the William K.
Sambrailo Trust, 10,824 shares held in name of the Charles Sambrailo Paper Co.
Profit Sharing Trust over when Mr. Sambrailo exercises voting and investment
control, 1,256 shares held in the name of the William K. Sambrailo Community
Property Trust, 141 shares held by Mr. Sambrailo and Clarence J. Ferrari, Jr.,
Co-Trustees of the Charles P. Sambrailo, Jr., QTIP Trust and 2,056 shares held
by Paul E. Crabb, Trustee, The William K. Sambrailo Grandchildren's Trust I, II
and III.
(20) Includes 21,923 shares held by The Bank of California in an IRA for
the benefit of Mr. Sheppard.
PROPOSAL NO. 1
ELECTION OF DIRECTORS OF THE COMPANY
The Bylaws of the Company provide a procedure for nomination for
election of members of the Board of Directors, which procedure is printed in
full in the Notice of Annual Meeting of Shareholders accompanying this Proxy
Statement. Nominations not made in accordance therewith may be disregarded
by the Chairman of the Meeting and the inspectors of election may disregard
all votes cast for such nominee(s).
The authorized number of Directors to be elected at the Meeting is
seventeen (17). Each Director will hold office until the next Annual Meeting
of Shareholders and until his or her successor is elected and qualified.
All proxies will be voted for the election of the following
seventeen (17) nominees recommended by the Board of Directors, all of whom
are incumbent directors, unless authority to vote for the election of
directors is withheld. 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 to be 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
named below.
5
<PAGE>
EXECUTIVE OFFICERS & DIRECTORS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
NAME AGE POSITIONS HELD WITH THE COMPANY, FIRST NATIONAL
BANK OF CENTRAL CALIFORNIA (FNBCC) AND SOUTH
VALLEY NATIONAL BANK (SVNB)
- ---------------------------------------------------------------------------
<S> <C> <C>
Charles E. Bancroft 72 Director of the Company since 1983; Director of
FNBCC since 1983.
Dennis A. DeCius 59 Executive Vice President and Chief Financial
Officer of the Company since 1983; Senior Vice
President and Chief Financial Officer of FNBCC
since 1983; Executive Vice President and Chief
Financial Officer of FNBCC and SVNB since 1997.
Gene DiCicco 56 Director of the Company since 1990; Director of
FNBCC since 1990.
Dale R. Diederick 48 Senior Vice President and Loan Administrator of
FNBCC since 1983; Senior Vice President and
Loan Administrator of the Company since 1993;
Executive Vice President and Loan Administrator
of the Company, FNBCC and SVNB since 1997.
Lewis L. Fenton 72 Director of the Company since 1983; Director of
FNBCC since 1983.
Gerald T. Fry 69 Director of the Company since 1983; Director of
FNBCC since 1983.
James L. Gattis 60 Secretary of the Company. Director of the
Company since 1983; Director of FNBCC since
1983.
Eugene R. Guglielmo 47 Director of the Company since 1997; Director of
SVNB since 1983.
Stanley R. Haynes 58 Director of the Company since 1983; Director of
FNBCC since 1983.
D. Vernon Horton 58 Chairman of the Board. Director of the Company
since 1983; Director of FNBCC since 1983;
Director of SVNB since 1997.
Hubert W. Hudson 71 Director of the Company since 1990; Director of
FNBCC since 1990.
William J. Keller 65 Director of the Company since 1983; Director of
FNBCC since 1983.
Roger C. Knopf 57 Director of the Company since 1997; Director of
SVNB since 1983.
Clayton C. Larson 51 President. Director of the Company since 1983;
Director of FNBCC since 1983; Director of SVNB
since 1997.
William S. McAfee 64 Director of the Company since 1983; Director of
FNBCC since 1983.
William H. Pope 70 Director of the Company since 1983; Director of
FNBCC since 1983; Director of SVNB since 1997.
Mary Lou Rawitser 53 Director of the Company since 1997; Director of
SVNB since 1994.
William K. Sambrailo 70 Director of the Company since 1990; Director of
FNBCC since 1990.
Robert B. Sheppard 75 Director of the Company since 1983; Director of
FNBCC since 1983.
- ---------------------------------------------------------------------------
</TABLE>
DIRECTORS
The following information with respect to the principal occupation
or employment of each nominee for director, the principal business of the
corporation or other organization in which such occupation or employment is
carried on, and such nominee's business experience during the past five (5)
years, has been furnished to the Company by the respective nominees for
director. Except for the Banks and Pacific Capital Services Corporation (an
inactive subsidiary of the Company), none of the corporations or organizations
discussed below is an affiliate of the Company.
CHARLES E. BANCROFT is a director, President and CEO of Sequoia
Insurance Company and Citation Insurance Company, both California domiciled
property and casualty insurance companies. He was formerly President of
American Sentinel Insurance Company and director and officer for Pace
America, from which he resigned in August 1994. Until June 30, 1986,
Mr. Bancroft served as Chairman, President and Chief Executive Officer of
Calmutual Insurance Company, a successor to California Mutual Insurance
Company, for which Mr. Bancroft served as Chairman and Chief Executive
Officer for twenty one years. Mr. Bancroft has also held numerous civic and
trade-related offices and directorships.
6
<PAGE>
GENE DICICCO founded and is a principal in DiCicco Nurseries, Inc.,
Sunnyvale Floral Shippers, Inc., DiCicco Centers and Watsonville Nurseries.
He has had active involvement as a board member, President, or Committee
Chair in the Watsonville Chamber of Commerce, Rotary Club, Watsonville
Community Hospital and Watsonville YMCA. Mr. DiCicco is a member of the
Board of Directors for Watsonville Community Hospital. He also has held
positions of responsibility in trade organizations serving rose growers in
the United States.
LEWIS L. FENTON is a practicing attorney serving as of counsel to
Fenton & Keller, a professional corporation with offices in Monterey and
Salinas, and to Hoge, Fenton, Jones and Appel, Inc. of San Jose. Mr. Fenton
received his A.B. degree from Stanford University in 1948 and his L.L.B.
degree from Stanford University Law School in 1950 and has been a member of
the California Bar Association since that time. Mr. Fenton is a member of
the American Bar Association, the Monterey and Santa Clara County Bar
Associations, the National Association of Railroad Trial Counsel, the
Association of Defense Counsel of Northern California (serving as President
during 1966-1967) and the International Academy of Trial Lawyers. He is
certified as an Advocate by the American Board of Trial Advocates, the
National Board of Trial Advocates and is a fellow of the American College of
Trial Lawyers.
GERALD T. FRY is the former owner of OPI-Office Products, Inc. in
Monterey and served as a member of the Monterey City Council beginning in
1963, having been re-elected six times. Mr. Fry also served as Mayor of
Monterey, having been elected three times. Presently he serves as Chairman
of the Community Health Plan and is a member of the Board of Directors of the
Naval Postgraduate School Foundation. He has been actively engaged in the
office products sales field since 1960.
EUGENE R. GUGLIELMO is a director and Executive Officer of Emilio
Guglielmo Winery, a family-owned and operated vineyard and winery located in
Morgan Hill, Santa Clara Valley since 1925. Mr. Guglielmo received his B.S.
degree in Business Administration and Marketing from the Santa Clara
University in 1971. He is a past President and current director of the Santa
Clara Winegrowers Association. He and his family have been involved in and
supportive of many local community organizations and activities.
JAMES L. GATTIS is a self-employed real estate developer and is active
in commercial real estate development and the renovation of commercial
buildings in Salinas. Mr. Gattis is the former owner of Jim Gattis Men's
Wear and is President of Keystone Plus, Inc. which is a management consulting
company. Mr. Gattis serves as a Founding Director of the California
International Airshow, and is a director of the Community Foundation for
Monterey County and of the Steinbeck Center Foundation.
STANLEY R. HAYNES has been President of Cinderella Showcase, Inc., since
1967, a retail carpet firm with four stores in Salinas, three stores in San
Luis Obispo and stores in Concord, San Jose and Oakland. Mr. Haynes serves
on the Board of Directors of the Carpet Co-Op of America Association. He is
a former member of the Evans-Black Carpets National Dealer Advisory Council,
a former member of the Board of Directors of the Retail Carpet Institute and
was named America's Floor Covering Dealer of the Year in 1978.
HUBERT W. HUDSON retired in 1996 from McSherry & Hudson, Watsonville, a
general insurance agency, having held a partnership interest since 1950. In
addition to his insurance business, Mr. Hudson is an investor in several
Santa Cruz County properties including Aptos Station, a shopping center in
Aptos, and properties in the City of Watsonville held by the partnership,
Arthur Road Properties of Watsonville. He is past President of the
Watsonville Rotary Club, Watsonville Insurance Agents Association and past
director of the Independent Insurance Agents Association of California. He
is a member of SCORE, a counseling service to small businesses.
WILLIAM J. KELLER is a retired urologist who has practiced in Salinas
since 1964. A graduate of the University of Illinois with a degree in
Chemistry, he attended medical school at the University of Illinois Medical
Center in Chicago and received his M.D. in 1957. His internship in Chicago
in 1957 and 1958 was followed by a four-year residency in urology at the
Southern Pacific Hospital in San Francisco. Following a two-year tour of
duty as a captain in the Medical Corps at Womack Army Hospital in Fort Bragg,
North Carolina, he moved to Salinas. Professional activities include
membership in the California Medical Association and Monterey County Medical
Society (President 1975-76). Dr. Keller is also a Fellow of the American
College of Surgeons and a Diplomate of the American Board of Urology. He is
past President of the Salinas Rotary Club.
7
<PAGE>
ROGER C. KNOPF is the President of Knopf Construction Inc., a general
building construction company located in Morgan Hill since 1976. Mr. Knopf
attended San Jose State University. He is a past President of the Santa
Clara County Landowners Association and the Morgan Hill Rotary Club. He has
served on many County of Santa Clara, City of Morgan Hill, and Morgan Hill
Unified School District committees. He is presently Chairman of the Board of
COLUMBIA Good Samaritan Health System and is a director of the Morgan Hill
Rotary Endowment Fund. Mr. Knopf was Morgan Hill Citizen of the Year in 1989.
WILLIAM S. MCAFEE is a physician and surgeon specializing in
otolaryngology and head and neck surgery in Monterey since 1968. Dr. McAfee
graduated from Ohio Wesleyan University in 1956, received his M.D. from the
Ohio State University College of Medicine in 1961 and served his internship
and residency between 1962 and 1966 at the Herbert C. Moffitt - University of
California Hospital in San Francisco. He was Board certified in
otolaryngology in 1966, has been a Fellow of the American College of Surgeons
since 1972 and is a Fellow in the American Academy of Facial Plastic and
Reconstructive Surgery. Dr. McAfee is the President of the Monterey Peninsula
Surgery Center. He serves on the Monterey County Medical Society Board of
Directors, a member of the California Medical Association and Governing Board
Community Health Plan. Dr. McAfee is the Medical Director of the Rotacare
Clinic in Seaside, Chairman of the Maxillofacial Division of the Community
Hospital of the Monterey Peninsula and serves on the P.A.C. Advisory Board of
the American Academy of Otolaryngology, Head and Neck Surgery. He is also
the past President of the Monterey Rotary Club.
WILLIAM H. POPE is a retired certified public accountant. In 1960,
Mr. Pope was instrumental in the formation of the firm of Kasavan and Pope,
of which he was the senior partner, which now has offices in Salinas and
Monterey. He holds memberships in the American Institute of Certified Public
Accountants as well as the California Society of CPA's.
MARY LOU RAWITSER is a Registered Investment Advisor and a Certified
Financial Planner. Ms. Rawitser is a graduate of the University of Southern
California and received a Master of Arts degree from San Francisco State
University. Her professional affiliations include the Institute of Certified
Financial Planners and the International Association for Financial Planning.
She is active in the Chamber of Commerce, AAUW, Gilroy Rotary as past
President and is currently President of the Gilroy Rotary Endowment Fund.
WILLIAM K. SAMBRAILO joined the Charles Sambrailo Paper Company,
Watsonville, a produce packaging supplies company, in 1962 and has served as
its President since 1989. He is also Secretary/Treasurer of S&S Trucking, a
common carrier, a partner in Charles Sambrailo & Sons, and a partner in Samco
Plastics, Inc., an injection mold and manufacturing company.
ROBERT B. SHEPPARD retired in 1981 as Vice Chairman of the Board of
Directors of Allstate Insurance Companies, culminating a thirty-year career
in the insurance industry. He was President of Allstate Insurance Companies
and Allstate Enterprises, Inc. from 1973 to 1980. Mr. Sheppard served on the
Executive Committee of the United States Olympic Committee from 1976 to 1988
and is currently a trustee of the United States Olympic Foundation. He is
also a former Trustee of Community Hospital of the Monterey Peninsula. In
addition, Mr. Sheppard is a consultant and a member of the Compensation
Committee to The Doctors Co., a medical malpractice insurer.
No director or executive officer of the Company or the Banks has
any family relationship with any other director or executive officer of the
Company or the Banks.
No director or nominee as a director of the Company is a director
of any company with a class of securities registered pursuant to Section 12
of the Securities Exchange Act of 1934, as amended, or subject to the
requirements of Section 15(d) of such Act or of any company registered as an
investment company under the Investment Company Act of 1940, as amended.
COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended December 31, 1997, the Board of
Directors of the Company held twelve (12) regularly scheduled meetings and
one (1) special meeting. Each director attended at least 75% of the
aggregate number of Board of Directors' meetings and meetings held by all
committees of the Board on which each director served. Information regarding
the committees below is as of December 31, 1997.
8
<PAGE>
The EXECUTIVE COMMITTEE is chaired by Mr. Pope. Messrs. Gattis,
Haynes, Knopf, McAfee and Sheppard are also members. Messrs. Horton and
Larson serve as ex-officio members of the committee. The primary
responsibility of the Executive Committee is to ensure that the Company and
the Banks are functioning in accordance with their articles of incorporation,
their Bylaws, and other legal requirements. When business conditions warrant
or situations arise that require Board decisions between Board meetings, the
committee has the authority to hold a special meeting and conduct Board
business. The Executive Committee held two (2) meetings during 1997.
The AUDIT COMMITTEE is chaired by Mr. Pope. Messrs. DiCicco and
Fry are also members. The committee (a) approves the selection and
termination of independent public auditors, (b) approves the scope of
external audit services, (c) reviews adjustments recommended by the
independent public accountant and address disagreements between the
independent public accountant and management, (d) reviews the adequacy of
internal controls and management's handling of identified material
inadequacies and reportable conditions in the internal controls over
financial reporting and compliance with laws and regulations, and
(e) supervises the internal audit function, which may include approving the
selection, compensation and termination of internal auditors. The Audit
Committee held three (3) meetings during 1997.
The STOCK OPTION COMMITTEE is chaired by Mr. Sheppard. Messrs.
Fenton and Pope are also members. The committee principal function is to
administer the Company's stock option plans. The Stock Option Committee held
two (2) meetings and approved five (5) resolutions by unanimous written
consent without a meeting in 1997.
The HUMAN RESOURCES COMMITTEE is chaired by Mr. Sheppard. Messrs.
Bancroft, Gattis, Keller, and Sambrailo are also members. Messrs. Horton and
Larson serve as ex-officio members of the committee. The committee is to
ensure that the Banks human resources administration supports and maintains
the Banks primary mission while providing proper management policies,
procedures, and reporting systems that assure appropriate recruiting,
training, human resources development activities, and that compensation and
benefit plans are competitive within the industry. The Human Resources
Committee held one (1) meeting in 1997.
The LOAN AND DISCOUNT COMMITTEE is comprised of five (5) outside
directors, Messrs. Gattis, Haynes, Knopf, McAfee and Pope. Messrs. Horton
and Larson participate as non-voting members of the committee. This
committee evaluates compliance with adopted loan policy and the condition of
the loan portfolio, and participates in credit evaluation and approval. The
Loan and Discount Committee held forty-nine (49) meetings in 1997.
The INVESTMENT/ASSET AND LIABILITY COMMITTEE is chaired by Dr.
Keller. Messrs. Fenton, Hudson, and Ms. Rawitser are also members. Messrs.
Horton, Larson and DeCius serve as ex-officio members of the committee. This
committee establishes, communicates and controls procedures for asset/
liability management, liquidity management, investments and interest rate
risk management. The committee establishes and monitors the volume and mix of
the subsidiaries' assets and funding sources to produce results that are
consistent with the subsidiaries' liquidity, capital adequacy, growth, risk
and profitability objectives. The Investment/Asset and Liability Committee
held six (6) meetings in 1997.
The MARKETING COMMITTEE is chaired by Mr. Gattis. Messrs. DiCicco,
Guglielmo and Haynes are also members. Messrs. Horton and Larson serve as
ex-officio members of the committee. This committee is responsible for
reviewing and approving the annual marketing plan. The Marketing Committee
held one (1) meeting in 1997.
The INSURANCE COMMITTEE is chaired by Mr. Bancroft. Messrs.
Fenton, Hudson and Sheppard are also members. Messrs. Horton, Larson and
DeCius serve as ex-officio members of the committee. This committee meets
annual or as necessary to review the Company and its banking subsidiaries'
insurance policies, to access current market conditions, and to ensure
prudent risk management, loss control and disaster recovery. The committee
is also responsible for recommending to the Board for approval the
appropriate levels of coverage and deductibles and to ensure maximum and
appropriate coverage at reasonable cost. The Insurance Committee held one
(1) meeting in 1997.
The INFORMATION SERVICES STEERING COMMITTEE is chaired by Dr.
Keller. Messrs. Gattis and McAfee are also members. Messrs. Horton, Larson
and DeCius serve as ex-officio members of the committee. This committee is
responsible for ensuring that management provides adequate supervision and
maintains safe and sound operations for data processing, item processing,
micro processing and system communications. A committee meeting was not
necessary in 1997.
9
<PAGE>
In accordance with the requirements of the Securities and Exchange
Commission ("SEC"), the Human Resources Committee of the Board of Directors
of the Bank has prepared the Report on Executive Compensation which appears
at page 16 of this Proxy Statement.
OTHER COMPENSATION AND COMPENSATION OF DIRECTORS
The non-employee Company directors receive $300 for each regular
meeting of the Board of Directors attended. The Chairman of the Audit and
Security Committee and the Chairman of the Human Resources Committee receive
$300 and other non-employee directors receive $100 for each meeting attended.
The Chairman of the Investment/Asset and Liability Committee receives $200
and other non-employee directors receive $100 for each meeting attended. The
non-employee directors who serve as members of the Loan and Discount
Committee receive $300 for each meeting attended. The non-employee directors
who serve as members of the Executive Committee, Information Services
Steering Committee, Insurance Committee and Marketing Committee receive $100
for each meeting attended.
The Company, on behalf of certain of its directors who desire group
medical insurance coverage, paid $32,673 in insurance premium payments for
such coverage in 1997.
EXECUTIVE MANAGEMENT
D. VERNON HORTON is Chairman of the Board and Chief Executive Officer
and a director of the Company, First National Bank of Central California and
South Valley National Bank. Mr. Horton's banking career commenced in 1964
with Valley National Bank, Salinas. He served that bank in various
capacities including lending, operations and business development and in 1979
was appointed Chief Executive Officer and a member of the Board of Directors.
In August of 1981 he was appointed President of Valley National Bank. He
resigned all positions with Valley National Bank on December 31, 1983, to
join the Company and First National Bank of Central California. Mr. Horton
is also a director of Pacific Capital Services Corporation. He serves as a
director of Cherry's Jubilee and the California Rodeo Association.
CLAYTON C. LARSON is President and Chief Administrative Officer and a
director of the Company, First National Bank of Central California and Vice
Chairman of the Board of South Valley National Bank. Mr. Larson's banking
career commenced in 1972 when he joined Valley National Bank. During his
tenure with Valley National Bank he attained the position of Senior Vice
President/Branch Administrator and in 1981 became a director of that bank.
In addition to his duties as Branch Administrator, he was responsible for the
marketing activities of the bank and was chairman of the salary committee.
Mr. Larson is also President and a director of Pacific Capital Services
Corporation. He serves on the Board of Trustees of the Monterey Institute of
International Studies, Community Hospital of the Monterey Peninsula and the
California State University Monterey Bay Foundation Board He is President of
the Coalition for Research in Education (CoRE), and serves on the Advisory
Boards for Leadership Monterey Peninsula, Legal Services for Seniors and the
Monterey Peninsula Chamber of Commerce.
DENNIS A. DECIUS is Executive Vice President and Chief Financial Officer
of the Company, First National Bank of Central California and South Valley
National Bank. He serves as Chief Financial Officer and Secretary of Pacific
Capital Services Corporation. Mr. DeCius' banking career began in 1959 when
he joined the Federal Reserve Bank of San Francisco. During his nine and
one-half years with the Federal Reserve Bank of San Francisco, he held
various positions and spent six years serving in the capacity of Assistant
Auditor. In 1970, he was employed by Valley National Bank of Arizona as
Assistant Branch Manager/Operations. In 1973, he moved to El Camino Bank,
Anaheim, California as the Vice President and Cashier and served in that
capacity until June of 1974 when he joined Valley National Bank, Salinas,
California as Vice President and Cashier. Mr. DeCius rejoined Valley
National Bank of Arizona in 1976 as Project Coordinator. In 1979, Mr. DeCius
accepted a position with Valley Bank of Nevada as Vice President/Manager of
Depositor Services, and, during the remainder of his tenure, also served in
the positions of Vice President, Chief Auditor and Vice President of Human
Resources. In 1982, he joined Chino Valley Bank, Chino, California as Senior
Vice President and Cashier. Mr. DeCius serves as a director and past
Chairman of Western Payments Alliance.
10
<PAGE>
DALE R. DIEDERICK is Executive Vice President/Loan Administrator for the
Company, First National Bank of Central California and South Valley National
Bank. He has been with the Company since 1984 and was elected an executive
officer in January 1993. Mr. Diederick was with Valley National Bank,
Salinas from 1977-1984 and served as a regional supervisor responsible for
the loan operations of nine branches prior to joining the Company. He was a
branch manager with Household Finance Company prior to beginning his banking
career. Mr. Diederick has also served as an instructor for Robert Morris
Associates in both consumer lending and commercial lending courses.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth a summary of the compensation paid
(for services rendered in all capacities) during the Company's past three
fiscal years to D. Vernon Horton, Clayton C. Larson, Dennis A. DeCius and
Dale R. Diederick, executive officers of the Company whose salary and bonus
for 1997 exceeded $100,000 ("named executive officers").
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Long-Term
Other Annual Compensation
Compensation Awards/ All Other
Name Position Year Salary Bonus ($) (1) Options (#)(2) Compensation (3)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
D. Vernon Chairman of the Board and 1997 $196,984 $250,000 -- 0 $203,119
Horton Chief Executive Officer 1996 $183,241 $180,000 -- 22,050 $54,455
1995 $171,254 $155,250 -- 0 $90,556
Clayton C. President and Chief 1997 $190,571 $250,000 -- 0 $169,974
Larson Administrative Officer 1996 $177,276 $180,000 -- 22,050 $36,403
1995 $165,672 $155,250 -- 0 $70,575
Dennis A. Executive Vice President/ 1997 $125,408 $80,000 -- 0 $143,386
DeCius Chief Financial Officer 1996 $116,659 $70,000 -- 8,268 $40,210
1995 $109,027 $67,650 -- 0 $63,208
Dale R. Executive Vice President/ 1997 $102,624 $50,000 -- 0 $95,457
Diederick Loan Administrator 1996 $93,295 $35,000 -- 8,268 $10,248
1995 $87,192 $22,000 -- 3,472 $24,814
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) No named executive officer received perquisites or other personal
benefits in excess of the lesser of $50,000 or 10% of each such
officer's total annual salary and bonus during 1997, 1996 or 1995.
(2) As adjusted for 5% stock dividend issued to shareholders of record
as of December 1, 1997.
(3) Includes the value of shares and cash allocated to Mr. Horton's ESOP
account ($9,300) for 1997 and earnings on prior year's contributions
to his ESOP account ($133,581), $1,600 contributed by the Company to
Mr. Horton's account in the Company's 401(k) Plan, $6,467 paid in
life insurance and medical coverage premiums for Mr. Horton and
$52,171 accrued under Mr. Horton's Salary Continuation Agreement.
Includes the value of shares and cash allocated to Mr. Larson's ESOP
account ($9,300) for 1997 and earnings on prior year's contributions
to his ESOP account ($131,210), $1,600 contributed by the Company
to Mr. Larson's account in the Company's 401(k) Plan, $6,687 paid in
life insurance and medical coverage premiums for Mr. Larson and
$21,177 accrued under Mr. Larson's Salary Continuation Agreement.
Includes the value of shares and cash allocated to Mr. DeCius' ESOP
account ($9,300) for 1997 and earnings on prior year's contributions
to his ESOP account ($92,677), $1,600 contributed by the Company to
Mr. DeCius' account in the Company's 401(k) Plan, $5,031 paid by the
Company for life insurance and medical coverage premiums for
Mr. DeCius and $34,778 accrued under Mr. DeCius' Salary Continuation
Agreement. Includes the value of shares and cash allocated to
Mr. Diederick's ESOP account ($9,200) for 1997 and earnings on prior
year's contributions to his ESOP account ($55,372), $1,582
contributed by the Company to Mr. Diederick's 401(k) Plan, $2,694
paid by the Company for life insurance and medical coverage premiums
for Mr. Diederick and $26,609 accrued under Mr. Diederick's Salary
Continuation Agreement.
STOCK OPTIONS GRANTS AND EXERCISES
In addition to the Company's 1984 Stock Option Plan, the Board of
Directors of the Company adopted the Pacific Capital Bancorp 1994 Stock
Option Plan (the "1994 Plan") on September 27, 1994, in which the Chief
Executive Officer and other executive officers of the Company participate.
The 1994 Plan set aside 489,000 shares (adjusted to reflect all stock
dividends, stock splits and option exercises) of the Company's Common Stock
for which options may be granted to the directors, officers and employees of
the Company. The 1994 Plan was approved by the shareholders of the Company at
its 1995 Annual Meeting of Shareholders. The 1994 Plan extends for a period
of ten (10) years and is administered by a three-member committee of the
Board of Directors. All committee members qualify as "non-employee
directors" within the meaning of the Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended.
11
<PAGE>
The 1994 Plan provides for the issuance of options which qualify as
incentive stock options and under Section 422A of the Internal Revenue Code,
as amended (the "Code") as well as nonqualified options. Incentive stock
options are subject to different tax treatment than nonqualified options.
The exercise price of any option may not be less than 100% of the fair market
value of the shares subject to option on the date the option is granted.
Within three (3) months following termination of directorship or
employment for any reason other than death, disability, or cause, an optionee
may exercise his or her option to the extent such option was exercisable on
the date of termination. If an optionee's employment or status as an officer
or director is terminated by death or disability, such optionee or such
optionee's qualified representative or estate has the right for a period of
twelve (12) months following the date of such death or disability to exercise
the option to the extent the optionee was entitled to exercise such option on
the date of the optionee's death or disability, provided the actual date of
exercise is in no event after the expiration of the term of the option. If
an optionee is terminated for cause, neither the optionee nor the optionee's
estate is entitled to exercise any option with respect to any shares of the
Company Common Stock.
No options under the 1984 Stock Option Plan or 1994 Plan were
exercised by any of the named executive officer of the Company during the
1997 fiscal year. No options to purchase shares of Common Stock were granted
to the named executive officers during 1997.
The following table shows the value at December 31, 1997, of
unexercised options held by the named executive officers:
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Number of securities Value of unexercised
underlying unexercised in-the-money options
options at fiscal year-end (#) at fiscal year-end ($)
- ---------------------------------------------------------------------------------------------------------------------------------
Name Shares acquired on exercise (#) Value Realized ($) Exercisable/unexercisable Exercisable/unexercisable
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
D. Vernon Horton 0 0 25,611/16,538 $679,312/$285,449
Clayton C. Larson 0 0 25,611/16,538 $679,312/$285,449
Dennis A. DeCius 0 0 8,096/6,201 $210,909/$107,030
Dale R. Diederick 0 0 4/671/7,069 $101,655/$129,023
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
EMPLOYMENT CONTRACTS
The Company entered into a three-year employment agreement with
Mr. Horton on August 26, 1997, pursuant to which he serves as Chairman of the
Board and Chief Executive Officer of the Company and its banking
subsidiaries. Mr. Horton's annual salary for 1997 was $196,984. Future
annual increases are subject to the discretion of the Board of Directors of
the Company. The Company may also pay an annual discretionary cash bonus to
Mr. Horton based upon his efforts and performance. The amount of such bonus,
if any, will be determined within the sole discretion of the Board of
Directors of the Company. If Mr. Horton is terminated without cause during
the course of the agreement, he will be entitled to receive severance pay in
an amount equal to three times his annual salary plus bonus using an average
of the last three year's annual base salary and bonus; and medical and life
insurance coverage for one year. In the event of a change in control by
merger or purchase of the Company into or by another entity, not resulting
from financial difficulties or insolvency of the Company, Mr. Horton shall
receive the same amount of severance as described above including medical and
insurance coverage for two years plus $15,000 towards outplacement services.
Mr. Horton has been provided with an automobile for use during the term of
the agreement. Mr. Horton is also being reimbursed for all ordinary and
necessary expenses incurred by him in connection with activities associated
with promoting the business of the Company. Further, Mr. Horton has been
furnished a term life insurance policy in the face amount of $250,000 and
with health, accident and disability insurance for himself and his family.
The Company entered into a three-year employment agreement with
Mr. Larson on August 26, 1997, pursuant to which he serves as President and
Chief Administrative Officer of the Company and First National Bank of
Central California and Vice Chairman of the Board of Directors of South
Valley National Bank. Mr. Larson's annual salary for 1997 was $190,571.
Future annual increases are subject to the discretion of the Board of
Directors of the Company. The remaining terms of Mr. Larson's agreement
regarding automobile, bonuses, termination, expenses, insurance and severance
pay are identical to those contained in Mr. Horton's agreement.
12
<PAGE>
The Company entered into a three-year employment agreement with
Mr. DeCius on August 26, 1997, pursuant to which he serves as Executive Vice
President and Chief Financial Officer of the Company and its banking
subsidiaries. Mr. DeCius' annual salary for 1997 was $125,408. Future
annual increases are subject to the discretion of the Board of Directors of
the Company. If Mr. DeCius is terminated without cause during the course of
the agreement, he will be entitled to receive severance pay in an amount
equal to one and half times his annual salary plus bonus using an average of
the last three year's annual base salary and bonus; and medical and life
insurance coverage for one year. The remaining terms of Mr. DeCius'
agreement regarding automobile, bonuses, termination, expenses, and insurance
are identical to those contained in Mr. Horton's agreement.
The Company entered into a three-year employment agreement with
Mr. Diederick on August 26, 1997, pursuant to which he serves as Executive
Vice President and Credit Administrator of the Company and its banking
subsidiaries. Mr. Diederick's annual salary for 1997 was $102,684. Future
annual increases are subject to the discretion of the Board of Directors of
the Company. The remaining terms of Mr. Diederick's agreement regarding
automobile, bonuses, termination, expenses, insurance, and severance pay are
identical to those contained in Mr. DeCius' agreement.
EXECUTIVE SALARY CONTINUATION AGREEMENTS
Messrs. Horton, Larson, DeCius and Diederick each participate in a
Executive Salary Continuation Agreement with the Company. The agreements
provide that if the Executive continues to be employed by the Company at
least until he reaches age 65, the Executive may retire or continue to work
past age 65. Upon the Executive's retirement, the Company will pay an annual
amount of $125,000, $120,000, $82,500 and $60,000 to Messrs. Horton, Larson,
DeCius and Diederick, respectively, payable monthly for a period of 180
months following such retirement, subject to certain conditions set forth in
the agreements. The Executive may also elect to take "early retirement"
provided he has reached age 55 and has completed 10 years of service. If he
so elects, he will receive monthly payments determined pursuant to a formula
set forth in the agreements for a period of 180 months.
In the event of a change in control of the Company, and if the
Executive's employment is terminated as a result of said change in control,
the Executive will be entitled to the full benefits under the Executive
Salary Continuation Agreement.
The Company purchased single premium life insurance policies on
Messrs. Horton, Larson, DeCius and Diederick in order to assist in meeting
its obligations under the agreements and to indemnify the Company against
loss. The Company is named as owner and beneficiary under each of the
insurance policies.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and any person who owns more than ten
percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the SEC. Officers,
directors and greater than ten-percent shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file. To the best knowledge of the Company, there are no greater than
ten-percent holders of the Company's Common Stock.
Based solely on its review of the copies of such forms received by
it, or written representations from certain reporting persons that no Forms 5
were required for those persons, the Company believes that for the period
from January 1, 1997, through December 31, 1997, all filing requirements
applicable to its officers and directors were complied with except that one
report, covering one transaction by Clayton C. Larson was filed late.
13
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's Administrative and Oldtown office is leased from
James L. Gattis, a director of the Company, pursuant to a lease for a total
of 17,033 square feet of office space in a building located at 307 Main
Street, Salinas, California. The initial lease commenced on May 1, 1989, for
a five (5) year term with three consecutive five-year options to renew. The
first option commenced on January 1, 1994. The initial rental rate under the
lease was $10,600 per month and is increased annually to reflect changes in
the Consumer Price Index for all items for the San Francisco/Oakland
Metropolitan Area, using October, 1988 as the base month. The Company also
paid all taxes and assessments levied against the leased premises and also
pays for all utilities. The Company paid $179,010 in rent for these premises
during 1997.
In 1996, the Company's Credit Administration and Loan Operations
Department was relocated to 517 Main Street, Salinas, California which is
leased from Mr. Gattis. The lease for 5,365 square feet of office space,
commenced on December 1, 1996, through April 30, 1999, with two consecutive
five-year options to renew. The initial rental rate under the lease was
$4,500 per month and is increased annually to reflect changes in the Consumer
Price Index for all items for the San Francisco/Oakland Metropolitan Area,
using September 1996 as the base month. The Company also paid all taxes and
assessments levied against the leased premises and also pays for all
utilities. The Company paid $66,363 in rent for these premises during 1997.
Based on available market lease rate information, the Company's
Board of Directors have determined that the lease rates are competitive with
and comparable to market lease rates in Salinas, California and that the
terms of the leases are no less favorable to the Company than would be the
terms of a lease with an unrelated party.
INDEBTEDNESS OF MANAGEMENT
Some of the directors and executive officers of the Company and
members of their immediate families and the companies with which they have
been associated have been customers of and have had banking transactions with
the Banks in the ordinary course of the Banks businesses since January 1,
1997, and the Banks expect to have such banking transactions in the future.
All loans and commitments to lend included in such transactions were made on
substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons
and, in the opinion of the Banks, did not involve more than the normal risk
of collectibility or present other unfavorable features.
YEAR 2000
During 1997, the Company began the implementation of its Year 2000
Plan. The Year 2000 problem, or "millennium bug" was created when software
engineers, in an attempt to save processing speed and hard disk storage,
decided to create a two-digit year field within a date record instead of
four. The two-digit year does not allow the software to determine if '00' is
the year 1900 or 2000. The year 2000 issue is very pervasive and complex as
virtually every computer operation will be affected in some way by the
rollover of the date from 1999 to 2000.
The Company is using both internal and external resources to
identify, correct or reprogram and test the systems for year 2000 compliance.
It is anticipated that all reprogramming efforts or system changes will be
completed by December 31, 1998, allowing adequate time for testing. To date,
conformations have been received from the Company's primary processing
vendors that their systems are year 2000 compliant. Based on a preliminary
study, the Company expects to spend approximately $150,000 over the next two
years to modify and test its computer systems to allow for transactions in
the year 2000 and beyond. The amount expensed in 1997 was not significant.
14
<PAGE>
PERFORMANCE GRAPH
Shown below is a table prepared by SNL Securities, L.P. from
sources believed by SNL to be reliable and is believed by SNL to be true and
accurate in both form and content which charts the value of the Company's
Common Stock during the past 5 years compared to the Standard & Poors 500
("S&P 500") and the "California Independent Bank Index". The table assumes a
$100 investment on December 31, 1991, in the Company's Common Stock, the S&P
500 and in the institutions included in the California Independent Bank
Index, and that all dividends paid have been reinvested.
[GRAPH]
<TABLE>
<CAPTION>
PERIOD ENDING
---------------------------------------------------------------
INDEX 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Pacific Capital Bancorp 100.00 107.12 140.21 198.94 211.48 370.89
S&P 500 100.00 110.08 111.53 153.44 188.52 251.44
California Independent Bank Index 100.00 123.17 130.64 180.54 222.82 222.82
</TABLE>
15
<PAGE>
REPORT ON EXECUTIVE COMPENSATION
THE HUMAN RESOURCES COMMITTEE
The following report is made by the Human Resources Committee of
the Board of Directors of the Company.
The Human Resources Committee of the Board of Directors makes
recommendations on executive compensation annually to the Board of the
Company. Among other responsibilities, the function of the Human Resources
Committee is to analyze, review and recommend to the Board annually, an
executive compensation program that covers the named executive officers of
the Company.
The Human Resources Committee has also considered the tax law
limitation of deductibility of executive compensation of $1,000,000 per
executive for publicly-held corporations. The Committee does not believe
that this limitation will affect the Company as it does not anticipate that
its executives' compensation will approach this limit.
COMPENSATION PHILOSOPHY
The Company's compensation philosophy is to provide executive
officers with compensation that is competitive with that paid by industry
peers consisting of banks located in northern California of similar asset
size, financial performance and marketing strategy.
CORPORATE PERFORMANCE FACTORS
It is the policy of the Human Resources Committee to determine the
components of executive compensation principally upon the basis of corporate
performance. Among the performance factors considered by the Committee are
profitability, capital levels and asset quality (non-performing assets, loan
delinquencies and loan charge-offs), net interest margin, Return on Average
Assets and Return on Average Equity. In considering these factors, the
Committee does not assign any quantitative weight to the factors considered,
but considers all the factors taken together.
INDIVIDUAL PERFORMANCE FACTORS
Annual increases to an executive officer's base salary are
determined, in part, based on the officer's responsibilities, performance of
those responsibilities and achievement of corporate goals previously
established by the Board of Directors at the beginning of each year.
Incentive compensation is tied to individual performance, provided that
corporate goals are met, in a manner that is intended to encourage continuous
focus on enhancing shareholder value, profitability and teamwork.
COMPENSATION - SALARIES AND BONUS AWARDS
The Human Resources Committee decided upon the compensation for
each executive officer, including salary and incentive compensation, based on
its review of industry peer group data for both corporate performance and
compensation, and evaluations of the performance of each executive officer.
Salaries are set at a level below those of industry peers in order to give a
greater emphasis to incentive compensation. Industry peer group data for
corporate performance is obtained from publications from regulatory agencies,
industry consultants and an investment banking firm. Industry peer group
data for compensation is obtained from regulatory agencies and industry trade
groups.
Incentive compensation is based on individual performance and
industry peer group data, provided that pre-established corporate goals are
met. At the end of each year, the Company's actual performance is assessed
against these corporate goals and the results of these evaluations determine
the amount of incentive compensation for the executive officers.
16
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CHIEF EXECUTIVE OFFICER AND CHIEF ADMINISTRATIVE OFFICER COMPENSATION
Mr. D. Vernon Horton serves as Chairman of the Board and Chief
Executive Officer of the Company and the Banks, and Mr. Clayton C. Larson,
President and Chief Administrative Officer of the Company and First National
Bank of Central California, also serves as Vice Chairman of South Valley
National Bank. These two senior executive officers serve primarily in equal
capacities. Although somewhat unique, the Company's organizational structure
has proven to be highly successful. This unique organizational structure
does not affect the Company's overall salary expenses as evidenced by the
Company's being below the median in total salary expenses in comparison to
industry peer group data, primarily because the Company has $2.68 million in
assets per employee whereas $2.52 million in assets per employee is
considered to be an industry standard. It has afforded management strength
in succession and has clearly demonstrated economic value and efficiency in
operations. Accordingly, recommendations and decisions on their compensation
are made based upon the same performance criteria.
The Company continues to experience positive growth under the joint
leadership of Mr. Horton and Mr. Larson. Under the combined leadership of
these two executive officers First National Bank of Central California and
South Valley National Bank enjoy over fifty years of seasoned experience.
Both have extensive contact with customers, shareholders and personnel; and
their immediate presence and interaction serves to reinforce First National
Bank of Central California's and South Valley National Bank's founding
philosophy in providing superior customer service and the support of the
communities it serves, while focusing on the long-term health and growth of
the Company.
To encourage the achievement of corporate goals and foster the
continuing growth of the Company, the Committee established the base salary
for Mr. Horton's and Mr. Larson's compensation below the median salary level
of other chief executive officers within the Company's peer group and adjusts
their overall compensation through the payment of incentive compensation.
The Committee considers incentive compensation to be a significant element of
overall compensation in comparison to the base salaries paid to other chief
executive officers of First National Bank of Central California's and South
Valley National Bank's industry peer group.
Mr. Horton's and Mr. Larson's incentive compensation was based upon
their achievement of corporate goals previously established by the Board.
Under the leadership of these two executive officers the Company exceeded the
established goals and performance standards as defined under CORPORATE
PERFORMANCE FACTORS. The Committee considered the Company's positive
performance on Return on Average Assets, Return on Average Equity, Net Income
and growth in Shareholders' Equity. Additionally considered was First
National Bank of Central California's and South Valley National Bank's loan
loss ratio and record of nonperforming assets, which continues to be well
below peer group banks.
PACIFIC CAPITAL BANCORP
HUMAN RESOURCES COMMITTEE:
Robert B. Sheppard, Chairman
Charles E. Bancroft
James L. Gattis
William J. Keller
William K. Sambrailo
THE HUMAN RESOURCES COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Human Resources Committee is comprised of five non-employee
Directors: Mr. Bancroft, Mr. Gattis, Mr. Keller, Mr. Sambrailo, and
Mr. Sheppard. None of these individuals is or has been employed as an officer
or employee of the Company or any of its subsidiaries.
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PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
The firm of KPMG Peat Marwick LLP, which served the Company as
independent certified public accountants for 1997, has been selected by the
Board of Directors of the Company to be its independent certified public
accountants for the 1998 fiscal year. KPMG Peat Marwick LLP has no interest,
financial or otherwise, in the Company. All proxies will be voted "FOR"
ratification of such selection unless authority to vote for the ratification
of such selection is withheld or an abstention is noted. If the nominee
should unexpectedly for any reason decline or be unable to act as independent
certified public accountants, the proxies will be voted for a substitute
nominee to be designated by the Board of Directors.
Representatives from the accounting firm of KPMG Peat Marwick LLP
will be present at the Meeting will be afforded the opportunity to make a
statement if they desire to do so, and will be available to respond to
appropriate questions.
SHAREHOLDER PROPOSALS
The 1999 Annual Meeting of Shareholders will be held on May 19,
1999. The deadline for shareholders to submit proposals to be considered for
inclusion in the Company's Proxy Statement and form of proxy for next year's
Annual Meeting of Shareholders is December 18, 1998.
OTHER PROPOSED ACTION
The Board of Directors is not aware of any other business which
will come before the Meeting, but if any such matters are properly presented,
the proxies solicited hereby will be voted in accordance with the best
judgment of the persons holding the proxies. All shares represented by duly
executed proxies will be voted at the Meeting.
A COPY OF THE ANNUAL REPORT OF THE COMPANY FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1997, ACCOMPANIES THIS PROXY STATEMENT. ADDITIONAL COPIES
OF THE ANNUAL REPORT ARE AVAILABLE UPON REQUEST TO DENNIS A. DECIUS,
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER OF THE COMPANY.
THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K MAY BE OBTAINED BY ANY SHAREHOLDER OF THE COMPANY,
WITHOUT CHARGE, BY WRITING TO DENNIS A. DECIUS, EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER, PACIFIC CAPITAL BANCORP, PO BOX 1786, SALINAS,
CALIFORNIA 93902-1786, (408) 757-4900.
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PACIFIC CAPITAL BANCORP
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 19, 1998
The undersigned holder of Common Stock acknowledges receipt of a copy of
the Notice of Annual Meeting of Shareholders of Pacific Capital Bancorp, and
the accompanying Proxy Statement dated April 20, 1998 and revoking any Proxy
heretofore given, hereby constitutes and appoints William J. Keller, William
S. McAfee and William H. Pope, and each of them, with full power of
substitution, as attorneys and Proxies to appear and vote all the shares of
Common Stock of Pacific Capital Bancorp, a California 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 Pacific Capital
Bancorp, to be held at The Valley Room at Quail Lodge, 8000 Valley Greens
Drive, Carmel, California on Tuesday, May 19, 1998, at 4:00 p.m. or at any
adjournments thereof, upon the following items as set forth in the Notice of
Meeting and Proxy Statement and to vote according to their discretion on all
other matters which may be properly presented for action at the Meeting or
any adjournments thereof. The above-named proxy holders are hereby granted
discretionary authority to cumulate votes represented by the shares covered
by this Proxy in the election of Directors.
FOLD AND DETACH HERE
<PAGE>
FOR all nominees listed WITHHOLD AUTHORITY to
below (EXCEPT AS MARKED vote for all nominees
TO THE CONTRARY BELOW) listed below.
1. To elect as Directors the / / / /
nominees set forth below.
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
- ------------------------------------------------------------------------------
Charles E. Bancroft; Gene DiCicco; Lewis L. Fenton; Gerald T. Fry; James L.
Gattis; Eugene R. Guglielmo; Stanley R. Haynes; D. Vernon Horton; Hubert W.
Hudson; William J. Keller; Roger C. Knopf; Clayton C. Larson; William S.
McAfee; William H. Pope; Mary Lou Rawitser; William K. Sambrailo; Robert B.
Sheppard.
FOR AGAINST ABSTAIN
2. To approve the proposal to ratify / / / / / /
the appointment of KPMG Peat Marwick
as independent certified public
accountants for the Company's 1998
fiscal year.
3. In their discretion, the Proxies are / / / / / /
authorized to vote upon such other
business as may properly come before
the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF
DIRECTORS, NOMINATED BY THE BOARD OF DIRECTORS AND "FOR" PROPOSAL NO. 2.
THE PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED "FOR" THE ELECTION OF
DIRECTORS NOMINATED BY THE BOARD OF DIRECTORS AND "FOR" PROPOSAL NO. 2.
I/We do _______ or do not _______ expect to attend the meeting.
Signature(s)______________________________________ Dated______________, 1998
FOLD AND DETACH HERE
