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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K/A
AMENDMENT NO. 1 TO FORM 10-K
Mark one
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (Fee Required)
For the fiscal year ended December 31, 1998
[__] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to ______________ .
Commission file number 0-25034
GREATER BAY BANCORP
(Exact name of registrant as specified in its charter)
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California 77-0387041
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
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2860 West Bayshore Road, Palo Alto, California 94303
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (650) 813-8200
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
9.75% Cumulative Trust Preferred Securities of GBB Capital I
Guarantee of Greater Bay Bancorp with respect to the
9.75% Cumulative Trust Preferred Securities of GBB Capital I
Preferred Share Purchase Rights
(Title of class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [__]
1
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the Common Stock held by non-affiliates, based
upon the closing sale price of the Common Stock on January 29, 1999, as reported
on the Nasdaq National Market System, was approximately $272,319,000. Shares of
Common Stock held by each officer, director and holder of 5% or more of the
outstanding Common Stock have been excluded in that such persons may be deemed
to be affiliates. Such determination of affiliate status is not necessarily a
conclusive determination for other purposes.
As of January 29, 1999, 9,666,002 shares of the Registrant's Common Stock were
outstanding.
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Greater Bay Bancorp ("Greater Bay") files this Amendment No. 1 to its
Annual Report on Form 10-K to include Part III, Item 10, Item 11, Item 12 and
Item 13.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Directors
The following table sets forth the names and five-year biographies of
Greater Bay's Class I, Class II and Class III directors as of the date hereof.
The term of three-year office for Class I directors expires 2001, for Class II
directors the date is 1999, and for Class III directors the date is 2000.
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Name and Age Principal Occupation and Business Experience
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Class I Directors
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James E. Jackson Director of Greater Bay since November 1996. He served as a director of
(64) Cupertino National Bancorp (which merged into Greater Bay in November 1996)
from 1984 until November 1996 and has served as a director of Cupertino
National Bank ("CNB"), a wholly owned subsidiary of Greater Bay, since
1984. Mr. Jackson has been an attorney-at-law with the law firm of Jackson
& Abdalah, a Professional Corporation, since 1963.
Leo K.W. Lum Director of Greater Bay since May 1998. Mr. Lum has served as Chairman of
(57) the Board of Directors of Golden Gate Bank ("Golden Gate"), a wholly owned
subsidiary of Greater Bay, since June 1994. Prior to Greater Bay's
acquisition of Golden Gate, Mr. Lum was the sole shareholder of Pacific Rim
Bancorporation, the former holding company of Golden Gate. Mr. Lum has
been a private international investor and consultant since 1988. Previously,
Mr. Lum served as President and Chief Executive Officer of Global Union
Bank, New York.
George M. Marcus Director of Greater Bay since 1998. He has served as a director of Mid-Peninsula
(57) Bank ("MPB"), a wholly owned subsidiary of Greater Bay, since 1987. Mr. Marcus
is the founder of The Marcus & Milichap Company, the nation's fourth largest
commercial real estate brokerage firm, and currently serves as a director of such
firm. He also serves as director of Essex Property Trust, a real estate investment
trust company. Mr. Marcus is an advisor to the University of California, Berkeley
Center for Real Estate and Urban Economics, and serves on the Board of Trustees of
the Fine Arts Museums of San Francisco. Mr. Marcus is a former founding director of
Plaza Bank of Commerce in San Jose.
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Name and Age Principal Occupation and Business Experience
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Duncan L. Matteson (64) Co-Chairman of the Board of Directors of Greater Bay since November 1996.
He served as Chairman of the Board of Mid-Peninsula Bancorp from 1994 until
November 1996 and has served as Chairman of the Board of MPB since 1987.
Mr. Matteson has served as director of Golden Gate Bank since May 1998.
Mr. Matteson also serves as President of the Matteson Companies, a
diversified group of real estate investment and property management
corporations located in Menlo Park. He has actively involved himself in
the real estate investment and securities industries in the Palo Alto/Menlo
Park Area since 1959. Mr. Matteson is a member of the Executive Committee
of the Stanford Heart Council, and serves as a trustee of the Palo Alto
Medical Foundation. As an appointee of the Governor, Mr. Matteson is Vice
President of the Board of Directors of the Cow Palace. He is the Immediate
Past-Chairman of the National Multi-Housing Council, a group of the leading
apartment owners and managers throughout the United States.
Rebecca Q. Morgan Director of Greater Bay since July 1998. In December 1998, Ms. Morgan
(60) retired as President and Chief Executive Officer of Joint Venture: Silicon
Valley Network, a non-profit organization devoted to regional economic and
community issues. Ms. Morgan served in that position since September 1993.
Ms. Morgan also serves as a director of PG&E Corporation. She has formerly
served as a member of the Stanford Business School Advisory Council and Board
of Trustees, a California State Senator, a member of the Santa Clara County
Board of Supervisors and a member of the Palo Alto Board of Education.
Class II Directors
- ------------------
George R. Corey Director of Greater Bay since December 1997. Mr. Corey served as Chairman
(65) of the Board of Peninsula Bank of Commerce ("PBC"), a wholly owned
subsidiary of Greater Bay, from September 1981 until December 1997 and
continues to serve as a board member of PBC. Mr. Corey is an attorney and
partner with the law firm of Corey, Luznich, Manos & Pliska of Millbrae,
California. Mr. Corey is also a former mayor of San Bruno, California.
John M. Gatto Co-Chairman of Greater Bay since November 1996. He was a director of
(61) Cupertino National Bancorp from 1984 until November 1996 and has served as
a director of CNB since 1984 and a director of MPB since 1996. Mr. Gatto
has been the sole proprietor of Maria Enterprises, a development consulting
company, since December 1993. From 1984 to 1993, Mr. Gatto was an
architect for Cypress Properties, a real estate development company.
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Name and Age Principal Occupation and Business Experience
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Dick J. Randall Director of Greater Bay since November 1996. He served as a director of
(67) Cupertino National Bancorp from 1984 to November 1996, and has served as a
director of CNB since 1984. Mr. Randall has been a private investor and
rancher since 1993. From 1962 until his retirement in 1993, Mr. Randall
served as president of The William Lyon Co., a real estate development and
construction company. Mr. Randall was one of the founding directors of the
New Children's Shelter in San Jose, California.
Donald H. Seiler Director of Greater Bay since 1994 and of MPB since 1987. He is the
(70) founder and managing partner of Seiler & Company, LLP, Certified Public
Accountants, in Redwood City and San Francisco. He has been a certified
public accountant in San Francisco and the Peninsula area since 1952. He
is presently a director of Ross Stores, Inc., serves on the audit committee
of Stanford Health Services, and is a past-president of the Jewish
Community Federation of San Francisco, the Peninsula and Marin and Sonoma
Counties. He is on the Board of Directors of the Peninsula Community
Foundation.
Class III Directors
- -------------------
David L. Kalkbrenner President, Chief Executive Officer and a director of Greater Bay since
(59) 1994. Mr. Kalkbrenner also serves as a director of MPB, CNB, PBC and
Golden Gate. He was a founder of MPB and was appointed President and Chief
Executive Officer when the bank was chartered in 1987, positions he held
through March 1998. He was employed by Crocker National Bank from 1963 to
1986 and held positions as First Vice President, Regional Manager and
Regional Vice President. He is a member of the Board of Directors of the
College of Notre Dame and is a former director of the Palo Alto Chamber of
Commerce and the Community Association for the Retarded.
Rex D. Lindsay Vice-Chairman of the Board of Directors of Greater Bay since November 1996.
(73) He served as a director of Cupertino National Bancorp from 1984 until
November 1996 and has served as a director of CNB since 1984. For
approximately the past seven years, Mr. Lindsay has been a rancher and a
private investor.
Glen McLaughlin Director of Greater Bay since November 1996. He served as a director of
(64) Cupertino National Bancorp from 1984 until November 1996 and has served as
a director of CNB since 1984. Mr. McLaughlin has also served as the
President and Chief Executive Officer of Venture Leasing Associates, an
equipment leasing company, since December 1986.
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Name and Age Principal Occupation and Business Experience
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Warren R. Thoits Director of Greater Bay since 1994 and of MPB since 1987. He is a partner
(76) with the Palo Alto law firm of Thoits, Love, Hershberger & McLean. He is a
native of Palo Alto and a graduate of Stanford University and its School of
Law. Mr. Thoits has been very active in community and charitable
organizations, having served as President of the Palo Alto Chamber of
Commerce, the Palo Alto Rotary Club and as Chairman of the Palo Alto Area
Chapter of the American Red Cross. He was formerly a member of the Board
of Directors of Northern California Savings and Loan Association (now Great
Western Bank).
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Executive Officers
Set forth below are the names and five-year biographies of Greater Bay's
executive officers as of the date hereof.
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Name and Age Principal Occupation and Business Experience
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David L. Kalkbrenner President, Chief Executive Officer and a director of Greater Bay
(59) since 1994. Mr. Kalkbrenner also serves as a director of MPB, CNB,
PBC and Golden Gate. He a was founder of MPB and was appointed
President and Chief Executive Officer when the bank was chartered in
1987, positions he held through March 1998. He was employed by
Crocker National Bank from 1963 to 1986 and held positions as First
Vice President, Regional Manager and Regional Vice President. He is
a member of the Board of Directors of the College of Notre Dame and
is a former director of the Palo Alto Chamber of Commerce and the
Community Association for the Retarded.
Steven C. Smith Executive Vice President, Chief Operating Officer and Chief Financial
(47) Officer of Greater Bay since November 1996. Mr. Smith is a certified
public accountant who joined Cupertino National Bancorp and CNB in
December 1993 as Senior Vice President and Chief Financial Officer,
and in 1995 was named Executive Vice President and Chief Operating
Officer of Cupertino National Bancorp and CNB. From July 1993 to
December 1993, Mr. Smith served as Executive Vice President and Chief
Financial Officer of Commercial Pacific Bank. From 1992 to July
1993, Mr. Smith served as Executive Vice President and Chief
Financial Officer of First Charter Bank. From 1984 to 1991, Mr.
Smith served as Senior Vice President of Finance and Treasurer of
Fidelity Federal Bank, a federal savings bank.
David R. Hood Executive Vice President and Chief Lending Officer of Greater Bay
(54) since November 1996. Since November 1998, he has served as President
and a director of CNB. From April 1995 until November 1998, he
served as Executive Vice President and Chief Lending Officer of CNB.
From April 1985 to March 1995, he held the positions of Executive
Vice President, Senior Loan Officer, and President of University Bank
& Trust. From 1967 to 1985, Mr. Hood held various positions, the
most recent of which was Vice President and Manager of the San Mateo
Business Loan Center for Wells Fargo, N.A.
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Name and Age Principal Occupation and Business Experience
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Susan K. Black Executive Vice President of Greater Bay since November 1998. She has
(49) also served as President and Chief Executive Officer of MPB since
April 1998. Ms. Black joined MPB in October 1987 as Vice President
and Director of Marketing. In 1993, she became Senior Vice President
and in 1996 Executive Vice President of MPB. From 1984 until 1987,
Ms. Black was a Vice President of Wells Fargo Bank, formerly Crocker
National Bank. Ms. Black was one of the organizers of Lenders for
Community Development and served two terms as Chairman of the Board.
She currently serves as a director of that organization. She is a
past director of Peninsula Children's Center, Mid-Peninsula YWCA,
Center for Community Change, United Way and Professional and Business
Women of California, Inc. Ms. Black holds a Masters of Business
Administration from the Rochester Institute of Technology.
Gregg A. Johnson Executive Vice President, Business and Technology Services of Greater
(49) Bay since April 1998. From April 1997 to December 1997, Mr. Johnson
was Vice President of Development and Customer Service at Computer
Sciences Corporation. From April 1996 to April 1997, Mr. Johnson was
Vice President of Information Systems at First Plus Financial.
Before joining First Plus, Mr. Johnson was employed as Senior Vice
President and Chief Information Officer at San Francisco Federal
Bank, a federal savings bank, from February 1995 to February 1996.
Mr. Johnson also served as Senior Vice President and Chief
Information Officer at Fidelity Federal from December 1990 to
February 1995. Prior to 1990, Mr. Johnson served as Executive Vice
President of ABQ Bank, Albuquerque, New Mexico and Director of
Commercial Systems for Norwest Corporation Minneapolis.
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Section 16(a) Beneficial Ownership Reporting Compliance by Directors and
Executive Officers
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
Greater Bay's directors and executive officers to file reports with the
Securities and Exchange Commission and the Nasdaq Stock Market on changes in
their beneficial ownership of Greater Bay Common Stock, and to provide Greater
Bay with copies of the reports.
Based solely on Greater Bay's review of these reports or of certifications
to Greater Bay that no report was required to be filed, Greater Bay believes
that all of its executive officers and all of its directors, except Roger V.
Smith, complied with all Section 16(a) filing requirements applicable to them
during the 1998 fiscal year. Mr. Smith, a director of Greater Bay until January
13, 1999, failed to file on a timely basis one report on Form 4 required by
Section 16(a) regarding one transaction. Mr. Smith filed the report on Form 4
on September 20, 1998.
ITEM 11. EXECUTIVE COMPENSATION.
Board of Directors -- Compensation
Greater Bay has a policy of compensating directors for their service on the
Board and for their attendance at committee meetings. The Greater Bay Board has
five standing committees: an Audit Committee, an Executive Committee, a Loan
Committee, a Trust Oversight Committee and an Investment/Asset-Liability
Management Committee ("Investment/ALCO Committee"). In 1998, Duncan Matteson,
as the Co-Chairman of the Board, received an annual retainer of $5,500 and John
Gatto, as Co-Chairman of the Board, received an annual retainer of $5,000. All
other non-officer directors received annual retainers of $3,200. Mr.
Kalkbrenner's compensation is discussed below in the section entitled "
Executive Officers--Compensation." The total compensation for the Greater Bay
Board of Directors in 1998 was $209,000.
In 1998, Audit Committee members received annual retainers of $500.
Executive Committee members received annual retainers of $1,500. Loan Committee
members received annual retainers of $1,500. Trust Oversight Committee members
received annual retainers of $750. Investment/ALCO Committee members received
annual retainers of $500. Members of the Boards of Directors of CNB and
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MPB received annual retainers of $1,800. Directors of PBC received fees of
$26,700 and directors of Golden Gate received fees of $15,000. Beginning in
January 1999, PBC directors will receive annual retainers of $1,800. Beginning
in June 1999, Golden Gate directors will receive annual retainers of $1,800.
In addition, directors are eligible to participate in Greater Bay's 1996
Stock Option Plan and the Greater Bay 1997 Elective Deferred Compensation Plan.
All stock options granted to non-officer directors vest in equal annual
installments over five-year periods beginning on the date of grant, subject to
continued service on the Board of Directors. Directors are also entitled to the
protection of certain indemnification provisions in Greater Bay's articles of
incorporation and bylaws.
Executive Officers -- Compensation
Summary Compensation Table
The following table summarizes information about compensation paid to or
earned by Greater Bay's Chief Executive Officer, David Kalkbrenner. It also
summarizes the compensation paid to or earned by Greater Bay's four other most
highly compensated officers, who earned salary and bonus compensation in excess
of $100,000 during 1998. In all cases, the officers concerned earned all the
compensation shown for their services, in all their capacities, to Greater Bay,
its predecessors, or its subsidiaries during the years 1998, 1997 and 1996.
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<CAPTION>
Summary Compensation Table
All Other
Long-Term Compensation
Annual Compensation Compensation (5) ($)
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<S> <C> <C> <C> <C> <C> <C>
Securities
Other Annual Underlying
Salary Bonus Compensation Options/SARs
Name and Principal Position Year (1) ($) (2) ($) (3) ($) (4) (#)
- ------------------------------------------------------------------------------------------------------------------------------
David L. Kalkbrenner.......................... 1998 $298,164 $275,000 $8,400 31,500 $74,111
President and CEO 1997 261,028 225,000 8,400 30,000 96,138
1996 182,083 124,000 8,400 40,000 71,054
Steven C. Smith............................... 1998 201,069 150,000 6,000 23,700 33,935
Executive Vice President, COO and............ 1997 164,386 130,268 6,000 22,500 39,060
CFO 1996 139,020 70,860 6,000 18,262 28,501
Susan K. Black................................ 1998 156,598 110,000 6,000 15,800 43,915
Executive Vice President 1997 130,000 90,000 6,000 10,000 40,268
1996 130,000 65,000 6,000 12,000 29,405
David R. Hood................................. 1998 177,017 125,000 6,000 15,800 49,696
Executive Vice President and Chief Lending 1997 150,823 110,000 6,000 15,000 45,471
Officer 1996 124,120 62,490 6,000 14,262 31,354
Gregg A. Johnson (6).......................... 1998 102,935 62,800 4,500 17,100 38,339
Executive Vice President, Business and 1997 -- -- -- -- --
Technology Services 1996 -- -- -- -- --
</TABLE>
_________________
(1) Annual salary includes cash compensation earned and received by executive
officers as well as amounts earned but deferred at the election of those
officers under Greater Bay's 401(k) Plan.
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(2) Amounts indicated as bonus payments were earned for performance during
1998, 1997, and 1996 but paid in the first quarters of 1999, 1998, and
1997, respectively. Also included in amounts indicated as bonus payments
are any amounts deferred at the election of those officers under Greater
Bay's Deferred Compensation Plan.
(3) No 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 1998, 1997 or 1996. Amounts shown are for
automobile allowances.
(4) Under the Greater Bay Bancorp 1996 Stock Option Plan, options and
restricted stock may be granted to directors and key, full-time salaried
officers and employees of Greater Bay or its subsidiaries. Options granted
under the 1996 Stock Option Plan are either incentive options or non-
statutory options. Options granted under the 1996 Stock Option Plan become
exercisable in accordance with a vesting schedule established at the time
of grant. Vesting may not extend beyond ten years from the date of grant.
Options and restricted stock granted under the 1996 Stock Option Plan are
adjusted to protect against dilution in the event of certain changes in
Greater Bay's capitalization, including stock splits and stock dividends.
All options granted to executive officers were incentive stock options and
have an exercise price equal to the fair market value of Greater Bay's
Common Stock on the date of grant.
(5) Amounts shown for David L. Kalkbrenner include (a) for 1998, $6,185 in
401(k) plan matching contributions, $64,488 accrued under Greater Bay's
Supplemental Executive Retirement Plan (the "SERP"), $2,088 in long term
disability insurance premiums and $1,350 in group term life insurance
premiums; (b) for 1997, $6,063 in 401(k) plan matching contributions,
$82,237 accrued under the SERP, $6,544 in long term disability insurance
premiums and $1,294 in group term life insurance premiums; and (c) for
1996, $7,125 in 401(k) plan matching contributions, $50,529 accrued under
his former Executive Salary Continuation Agreement, $11,000 in long term
disability insurance premiums and $2,400 in director fees.
Amounts shown for Steven C. Smith include (a) for 1998, $6,250 in 401(k)
plan matching contributions, $25,764 accrued under the SERP, $522 in
group term life insurance premiums and $1,399 in long term disability
insurance premiums; (b) for 1997, $6,063 in 401(k) plan matching
contributions, $31,775 under the SERP, $700 in long term disability
insurance premiums and $522 in group term life insurance premiums; and
(c) for 1996, $4,750 in 401(k) plan matching contributions and $23,751 to
fund retirement benefits in 1996.
Amounts shown for David R. Hood include (a) for 1998, $6,250 in 401(k) plan
matching contributions, $41,304 accrued under the SERP, $864 in group term
life insurance premiums and $1,278 in long term disability insurance
premiums; (b) for 1997, $6,063 in 401(k) plan matching contributions,
$37,905 accrued under the SERP, $639 in long term disability insurance
premiums and $864 in group term life insurance premiums; and (c) for
1996, $4,750 in 401(k) plan matching contributions and $26,604 to fund
his retirement benefits.
Amounts shown for Susan K. Black include (a) for 1998, $6,250 in 401(k)
plan matching contributions and $36,000 accrued under the SERP; (b) for
1997, $5,938 in 401(k) plan matching contributions, $33,200 accrued
under the SERP, $651 in long term disability insurance premiums and $479
in group term life insurance premiums; and (c) for 1996, $7,125 in
401(k) plan matching contributions, $22,000 accrued under the SERP and $280
in group term life insurance premiums.
Amounts shown for Gregg A. Johnson include, for 1998, $1,969 in 401(k) plan
matching contributions and $36,000 accrued under the SERP and $370 in
group term life insurance premiums.
(6) Amounts shown for Gregg A. Johnson, who joined Greater Bay in April 1998,
are amounts earned from the period April 6, 1998 through December 31, 1998.
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Option Grants in 1998
The following table sets forth information concerning stock options granted
during the year ended December 31, 1998 to the persons named in the Summary
Compensation Table.
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Option/SAR Grants in Last Fiscal Year
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Application for Option
Individual Grants in Fiscal 1998 Term(1)
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<S> <C> <C> <C> <C> <C> <C>
Number of
Securities % of Total
Underlying Options/SARs Exercise
Options/SARs Granted to Price(3) Expiration @5% @10%
Name Granted(2) Employees ($/sh) Date ($) ($)
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David L. Kalkbrenner.............. 31,500 6.87% $33.500 12/15/08 $663,641 $1,681,797
Steven C. Smith................... 23,700 5.17% 33.500 12/15/08 499,311 1,265,352
David R. Hood..................... 15,800 3.45% 33.500 12/15/08 332,874 843,568
Susan K. Black.................... 15,800 3.45% 33.500 12/15/08 332,874 843,568
Gregg A. Johnson.................. 7,100 1.55% 33.500 12/15/08 149,583 379,072
................... 10,000 2.18% 29.375 04/07/08 184,738 468,162
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(1) Potential gains are net of exercise price, but before taxes associated with
exercise. These amounts represent certain assumed rates of appreciation
only, based on Securities and Exchange Commission rules. Actual gains, if
any, on stock option exercises are dependent on the future performance of
the common stock, overall market conditions and the option holders'
continued employment through the vesting period. The amounts reflected in
this table may not necessarily be achieved. One share of stock purchased
in 1998 at $33.50 would yield profits of $21.07 per share at 5%
appreciation over ten years, or $53.39 per share at 10% appreciation over
the same period. One share of stock purchased in 1998 at $29.375 would
yield profits of $18.47 per share at 5% appreciation over ten years, or
$46.82 per share at 10% appreciation over the same period.
(2) Generally, options granted under the 1996 Stock Option Plan vest at the
rate of 20% of the options granted for each full year of the optionee's
continuous employment with Greater Bay and are exercisable to the extent
vested. See also "-- Employment Contracts, Change in Control Arrangements
and Termination of Employment" herein.
(3) All options listed were granted at the estimated fair market value on the
date of grant.
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Aggregated Option Exercises and Option Values
The following table sets forth the specified information concerning
exercises of options to purchase Greater Bay Common Stock in the fiscal year
ended December 31, 1998 and unexercised options held as of December 31, 1998 by
the persons named in the Summary Compensation Table.
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<CAPTION>
Aggregated Option Exercises in Fiscal Year 1998 and Fiscal Year-End Option Values
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at 12/31/98 (#) 12/31/98 ($)(1)
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Shares
Acquired on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
David L. Kalkbrenner......... 8,918 $172,920 48,624 85,000 $1,165,620 $963,438
Steven C. Smith.............. 0 0 56,522 50,700 1,487,374 378,300
David R. Hood................ 6,000 132,360 29,166 34,400 746,705 265,925
Susan K. Black............... 2,214 42,663 11,224 32,900 253,763 304,863
Gregg A. Johnson............. 0 0 0 17,100 0 45,525
</TABLE>
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(1) Based on the closing price of Greater Bay Common Stock on December 31, 1998
the last trading day in 1998 which was $33.75.
Employment Contracts, Change in Control Arrangements and Termination of
Employment
Employment Contracts
Effective January 1, 1999, Greater Bay entered into a five-year employment
agreement with its President and Chief Executive Officer, David L. Kalkbrenner.
The agreement, provides for, among other things (a) a base salary of $360,000
per year, which the Board may adjust annually at its discretion; (b)
discretionary annual bonus based upon Greater Bay's pre-tax net profits; (c) in
the event that Mr. Kalkbrenner becomes disabled so that he cannot perform his
duties, payment to him of his base salary for one year, reduced by any amounts
received by him from state disability insurance, worker's compensation, or
similar insurance provided by Greater Bay; (d) five weeks annual vacation; (e)
a $500,000 life insurance policy; (f) an automobile allowance; (g) supplemental
retirement benefits (see "Supplemental Executive Retirement Plan" below); and
(h) reimbursement for ordinary and necessary expenses incurred by Mr.
Kalkbrenner in connection with his employment. Greater Bay may terminate the
agreement with or without cause.
Upon Mr. Kalkbrenner's involuntary termination of employment for any
reason, Mr. Kalkbrenner will be entitled to receive severance benefits equal to
36 months of salary and bonus at the rate in effect immediately preceding the
termination. In the event of a termination of his employment following a change
in control of Greater Bay, Mr. Kalkbrenner will be entitled to receive severance
pay equal to 2.99 times his average annual compensation for the five years
immediately preceding the change in control. If any portions of this amount
constitute "express parachute payments" under the Internal Revenue Code of 1986,
Greater Bay will increase the amount payable to Mr. Kalkbrenner to account for
any excise tax that may be imposed on him.
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The benefits provided to Mr. Kalkbrenner under the Agreement supersede any
benefits to which he may otherwise be entitled under Greater Bay's Termination
and Layoff Plan for Key Executives and Change in Control Plan for Key Executives
(as described below).
Change in Control Plans
Effective January 1, 1998, the Greater Bay Board of Directors adopted the
Greater Bay Bancorp Change in Control Pay Plan and the Greater Bay Bancorp
Change in Control Pay Plan for Key Executives (collectively, the "Plans") to
provide eligible employees of Greater Bay and its subsidiaries and certain key
executives of Greater Bay, respectively, with severance benefits upon their
termination of employment on account of a change in control. The Plans provide
that a change in control occurs when Greater Bay, a subsidiary, branch, division
or other entity employing an eligible employee or covered key executive is sold
or otherwise transferred in ownership to new ownership.
The Plans generally provide each participant with a base benefit based on
the participant's pay, full years of service with Greater Bay or its subsidiary,
and his or her title or position at Greater Bay or the subsidiary as of the date
he or she terminates employment, and an added benefit based on the participant's
pay and his or her full years of service as of the date of his termination of
employment. "Pay" for purposes of the Plans means the total annual compensation
paid to an employee, including base wages and average bonus paid to the employee
in the three most recent years.
Under the Change in Control Plan for Key Executives, Steven C. Smith would
be entitled to receive a base benefit equal to 20 months of pay and an added
benefit of 2 weeks of pay for each full year of service, for a maximum severance
of up to 2 1/2 years of pay; and David R. Hood, Susan K. Black and Gregg A.
Johnson would each be entitled to receive a base benefit equal to 18 months of
pay and an added benefit of 2 weeks of pay for each full year of service, for a
maximum severance benefit of up to 2 years of pay.
Termination and Layoff Plans
The Greater Bay Board has also adopted the Greater Bay Bancorp Termination
and Layoff Pay Plan (the "Termination and Layoff Plan") and the Greater Bay
Bancorp Termination and Layoff Pay Plan for Key Executives (the "Termination and
Layoff Plan for Key Executives") (collectively, the "Plans"), effective January
1, 1998, to provide severance benefits to eligible employees of Greater Bay or
its subsidiaries and certain key executives of Greater Bay, respectively, upon
the termination of their employment because of circumstances which the Plans
define.
The Plans also provide each participant with a severance benefit based on
the participant's pay, full years of service with Greater Bay or its subsidiary,
and his or her title or position in Greater Bay or the subsidiary as of the date
of his or her involuntary termination of employment or layoff. "Pay" for
purposes of the Plans means the total annual compensation paid to an employee,
including base wages and average bonus paid to the employee in the three most
recent years.
Under the Termination and Layoff Plan for Key Executives, Steven C. Smith
would be entitled to receive a severance benefit equal to 20 months of pay; and
David R. Hood, Susan K. Black and Gregg A. Johnson would each be entitled to
receive a severance benefit equal to 18 months of pay.
Greater Bay's Stock Option Plan
The Greater Bay Board of Directors adopted the Greater Bay Bancorp 1996
Stock Option Plan in 1996, as amended in 1998 (the "Option Plan"). The Option
Plan allows Greater Bay to offer selected
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<PAGE>
employees, directors and consultants an opportunity to purchase Greater Bay
Common Stock or to receive grants of restricted stock. Through this plan, the
Board hopes to motivate such individuals by giving them an ownership interest in
Greater Bay's success.
Options granted under the Option Plan contain a provision that takes effect
upon a "change in control" of Greater Bay. Prior to the happening of any such
change in control, all options granted under the Option Plan will become
immediately exercisable.
Supplemental Executive Retirement Plan
In December 1997, the Greater Bay Board of Directors approved the
implementation of the Greater Bay Bancorp Supplemental Executive Retirement Plan
("SERP"), which provides supplemental retirement benefits to a select group of
management or highly compensated employees of Greater Bay and its subsidiaries
who have titles of senior vice president or above. Greater Bay's Board of
Directors designates those employees who are eligible to participate in the
SERP. The SERP replaces all prior agreements to provide supplemental retirement
benefits between employees and Greater Bay or its subsidiaries.
The SERP provides lifetime income benefits as well as a death benefit to
participants. The Plan has four benefit levels (A through D). Greater Bay
invests in specially-designed life insurance policies that provide tax-free
income, provided the policies are held until the death of the participants.
After recovering the opportunity cost of the investment, Greater Bay credits
plan participants with any remaining income. The participant's plan level and
projected years of future service to Greater Bay dictate the amount of insurance
that is purchased by Greater Bay.
A participant who terminates employment at his or her normal retirement
date will receive 100% of his or her target benefit under the SERP. A
participant who terminates employment prior to the normal retirement date may
receive all, none or a specific percentage of the benefits based on his or her
vested interest in the benefits as of the date of termination of employment.
David L. Kalkbrenner, Steven C. Smith, David R. Hood, Susan K. Black and
Gregg A. Johnson are participants in level "A" of the plan. Generally,
participants in level "A" of the Plan vest 20% after 5 years of service and 20%
for each year thereafter. Participants in levels "B" and "C" of the plan vest
10% after 5 years of service, 10% for each year thereafter, with 100% vesting
after 15 years of service. Participants in level "D" vest 10% per year from
year 6 through 10 and 5% per year from year 11 through 20 with 100% vesting
after 20 years. If a participant resigns prior to becoming 100% vested, he or
she forfeits all SERP benefits. If a participant is involuntarily terminated
(other than "for cause") they will receive their vested percentage of SERP
benefits upon retirement.
Participants with at least two years of service at the time of a change of
control who are subsequently terminated, will become 100% vested in their
benefits regardless of years of service. The SERP provides that normal
retirement age for participants in level "A" is 62. The normal retirement age
for all other participants is 65.
David L. Kalkbrenner will be entitled to receive a projected benefit under
the SERP that is equal to 43.62% of his 1998 total compensation at his normal
retirement age of 62; Steven C. Smith will be entitled to receive a projected
benefit of 60.00% of his 1998 total compensation; David R. Hood will be entitled
to receive a projected benefit of 45.36% of his 1998 total compensation; Susan
K. Black will be entitled to receive a projected benefit of 63.96% of her 1998
total compensation; and Gregg A. Johnson will be entitled to receive a projected
benefit of 70.40% of his 1998 annualized total compensation.
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<PAGE>
As of December 31, 1998, Mr. Kalkbrenner was credited with 11 years of
services under the SERP; Mr. Smith was credited with 9 years of service under
the SERP; Mr. Hood was credited with 8 years of service under the SERP; Ms.
Black was credited with 8 years of service under the SERP; and Mr. Johnson
was credited with 1 year of service under the SERP.
Compensation Committee Interlocks and Insider Participation
The Executive Committee of the Greater Bay Board acts as the Executive
Compensation Committee. The members of the Executive Committee are Messrs.
Kalkbrenner, Gatto, Matteson, Lindsay and Seiler. None of these persons serves
or has served as an officer or employee of Greater Bay or its subsidiaries,
except for Mr. Kalkbrenner, who serves as the President and Chief Executive
Officer of Greater Bay. In addition, Mr. Matteson has an interest in a building
leased by MPB. See "Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Beneficial Ownership
The following table shows, as of December 31, 1998, an individual who
beneficially owns 5% or more of Greater Bay's Common Stock. As of December 31,
1998, Greater Bay did not know of any other individual or company which
beneficially owned 5% or more of Greater Bay's Common Stock. The Securities and
Exchange Commission has defined "beneficial ownership" to mean more than
ownership in the usual sense. For example, a person has beneficial ownership of
a share not only if they own it in the usual sense, but also if they have the
power to vote, sell or otherwise dispose of the share. Beneficial ownership
also includes that number of shares that a person has the right to acquire
within 60 days. Two or more persons might count as beneficial owners of the
same share.
<TABLE>
<CAPTION>
Shares Beneficially Owned
---------------------------------------------
<S> <C> <C>
Name and Address of Beneficial Owner Number of Percentage of
Shares Class
- ----------------------------------------------------------------- -------------------- -----------------
Leo K.W. Lum, PRB Revocable Trust................................ 951,804 9.84%
344 Pine Street
San Francisco, California 94104
</TABLE>
Ownership by Greater Bay Directors and Executive Officers
The following table shows, as of December 31, 1998, beneficial ownership of
Greater Bay Common Stock by each of Greater Bay's directors and
executive officers, and for directors and executive officers as a group.
Unless otherwise indicated in the table below, no director or executive
officer of Greater Bay shares beneficial ownership of these shares with anyone
else.
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<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially Owned(2)
---------------------------------------------
Name and Address of Beneficial Owner(1) Number of Percentage of
Shares Class(3)
- ----------------------------------------------------------------- -------------------- -----------------
<S> <C> <C>
Susan K. Black(4)................................................ 17,654 .18
George R. Corey.................................................. 82,248 .85
John W. Gatto(5)................................................. 37,778 .39
David R. Hood(6)................................................. 51,263 .53
James E. Jackson(7).............................................. 97,628 1.01
Gregg A. Johnson................................................. -- --
David L. Kalkbrenner(8).......................................... 110,167 1.13
Rex D. Lindsay(9)................................................ 83,860 .87
Leo K.W. Lum (10)................................................ 950,748 9.84
George M. Marcus(11)............................................. 72,604 .75
Duncan L. Matteson(12)........................................... 95,556 .76
Glen McLaughlin(13).............................................. 53,746 .56
Rebecca Q. Morgan................................................ -- --
Dick J. Randall(14).............................................. 217,188 2.25
Donald H. Seiler(15)............................................. 85,738 .89
Steven C. Smith(16).............................................. 83,134 .86
Warren R. Thoits(17)............................................. 61,840 .64
All directors and executive officers as a group (17 persons)(18). 2,101,232 21.72
</TABLE>
_____________
(1) The address for each of the beneficial owners is care of Greater Bay
Bancorp, 2860 West Bayshore Road, Palo Alto, California 94303.
(2) Includes shares issuable upon the exercise of stock options exercisable
within 60 days of December 31, 1998.
(3) Shares of Greater Bay Common Stock issuable upon exercise of stock options
exercisable within 60 days of December 31, 1998 are deemed outstanding for
computing the percentage of the person holding such securities but are not
deemed outstanding for computing the percentage of any other person.
(4) Includes 5,430 shares held jointly by Susan K. Black and her spouse and
11,224 shares issuable upon the exercise of stock options exercisable
within 60 days of December 31, 1998.
(5) Includes 4,400 shares issuable upon the exercise of options exercisable
within 60 days of December 31, 1998.
(6) Includes 11,052 shares held in an IRA for Mr. Hood, 9,301 shares held
jointly by Mr. Hood and his spouse, 1,744 shares in a 401(k) plan for Mr.
Hood and 29,166 shares issuable upon the exercise of options exercisable
within 60 days of December 31, 1998.
(7) Includes 63,458 shares held jointly by James E. Jackson and his spouse,
2,982 shares held in an IRA for the benefit of Mr. Jackson's spouse, 14,126
shares held in an IRA for Mr. Jackson, and 17,062 shares issuable upon the
exercise of options exercisable within 60 days of December 31, 1998.
(8) Includes 19,994 shares held in an IRA for Mr. Kalkbrenner, 3,935 shares in
a 401(k) plan for Mr. Kalkbrenner and 48,624 shares issuable upon the
exercise of stock options exercisable within 60 days of December 31,
1998.
(9) Includes 62,558 shares held by the Rex D. and Leanor L. Lindsay Family
Trust and 21,302 shares issuable upon the exercise of options exercisable
within 60 days of December 31, 1998.
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<PAGE>
(10) Represents shares owned by the Leo K.W. Lum PRB Revocable Trust of which
Mr. Lum is the sole trustee and beneficiary.
(11) Includes 11,156 shares issuable upon the exercise of stock options
exercisable within 60 days of December 31, 1998.
(12) Includes 65,178 shares held jointly with Mr. Matteson's spouse as trustees
of the Matteson Family Trust, 22,000 shares held by the Matteson Realty
Services, Inc. Defined Benefit Employees' Retirement Trust and 8,378
shares issuable upon the exercise of stock options exercisable within 60
days of December 31, 1998.
(13) Includes 10,000 shares held by the McLaughlin Family Foundation and 16,158
shares issuable upon the exercise of options exercisable within 60 days of
December 31, 1998.
(14) Includes 209,982 shares held by the Dick J. and Carolyn L. Randall Trust
and 6,836 shares issuable upon the exercise of stock options exercisable
within 60 days of December 31, 1998.
(15) Includes 71,982 shares held jointly with Mr. Seiler's spouse as trustees of
the Seiler Family Trust and 13,756 shares issuable upon the exercise of
stock options exercisable within 60 days of December 31, 1998.
(16) Includes 5,467 shares held in a 401(k) Plan for Mr. Smith, 12,873 shares
held jointly by Mr. Smith and his spouse, 7,532 shares held in an IRA for
Mr. Smith, 740 shares held in an IRA for his spouse and 56,522 shares
issuable upon the exercise of stock options exercisable within 60 days of
December 31, 1998.
(17) Includes 26,392 shares held by Mr. Thoits as trustee of the Warren R.
Thoits Trust dated December 30, 1983, 11,678 shares held by Thoits
Brothers, Inc., 13,992 shares for which Mr. Thoits is the record holding
trustee, 4,500 shares held by Mr. Thoits and his spouse as trustees of the
WRT-VBT 1998 Trust dated September 1, 1988 and 5,278 shares issuable upon
the exercise of stock options exercisable within 60 days of December 31,
1998.
(18) Includes 250,222 shares issuable upon the exercise of stock options
exercisable within 60 days of December 31, 1998.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Greater Bay, through its subsidiaries has had and expects in future to have
banking transactions in the ordinary course of business with Greater Bay's
directors and officers or associates of Greater Bay's directors and officers.
Greater Bay may also have banking transactions with corporations of which
Greater Bay's directors or officers may own a controlling interest, or also
serve as directors or officers. Such transactions have taken place and will
take place on substantially the same terms, including interest and collateral,
as those prevailing for comparable transactions with others. Greater Bay
believe that such transactions involving loans did not present more than normal
risk of noncollectibility or present other unfavorable features. The Federal
Reserve Act, as amended, limits the loans to Greater Bay's executive officers by
amount and purpose.
MPB leases its offices at 420 Cowper Street, Palo Alto, California 94301
from MPB Associates, a tenant-in-common arrangement. Three directors of Greater
Bay, Messrs. Matteson, Seiler and Thoits, and four other directors of MPB,
together own an approximately 51% interest in MPB Associates. The acquisition
of MPB's leased premises by MPB Associates did not result in a change in the
terms of MPB's lease.
The lease, which originally expired in May 1993, has been extended through
January 2000. MPB pays an annual rental of $560,000 for the entire leased
space. Additionally, MPB pays real property taxes, utilities, and building
insurance, to the extent they exceed, on an annual basis, $1.40 per rentable
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<PAGE>
square foot, $1.60 per rentable square foot, and $0.17 per rentable square foot,
respectively. MPB received a rent adjustment on June 1, 1998, and will receive
similar adjustments every following 12 months, based on the change in the
immediately preceding year over 1992 in the Consumer Price Index for All Urban
Consumers, San Francisco/Oakland Metropolitan Area, All-Items (1967 = 100) as
published by the U.S. Department of Labor, Bureau of Labor Statistics. The
lease also contains a provision granting MPB a right of first refusal to
purchase the building during the term of the lease upon the same terms and
conditions that the landlord is willing to accept from a third party.
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<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 17th day of
March, 1999.
Greater Bay Bancorp
By: /s/ Steven C. Smith
-------------------
Steven C. Smith
Executive Vice President, Chief
Operating Officer and Chief Financial
Officer
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