<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
GREATER BAY BANCORP
(Name of Registrant as Specified In Its Charter)
....................................N/A.........................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6b(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
...........................................................................
(2) Aggregate number of securities to which transaction applies:
...........................................................................
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
...........................................................................
(4) Proposed maximum aggregate value of transaction:
...........................................................................
(5) Total fee paid:
...........................................................................
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ___________
(2) Form, Schedule or Registration Statement No.: ______________
(3) Filing Party: ______________________________________________
(4) Date Filed: _______________________
<PAGE>
GREATER BAY BANCORP
----------------
NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS
AND
PROXY STATEMENT
----------------
DATE: Tuesday, May 25, 1999
TIME: 6:30 p.m.
PLACE: Hotel Sofitel
223 Twin Dolphin Drive
Redwood City, California 94065
<PAGE>
[GBB LETTERHEAD]
April 12, 1999
Dear Shareholder:
It is my pleasure to invite you to Greater Bay Bancorp's 1999 Annual
Meeting of Shareholders.
We will hold the meeting on Tuesday, May 25, 1999, at 6:30 p.m., at the
Hotel Sofitel, 223 Twin Dolphin Drive, Redwood City, California 94065. In
addition to the formal items of business, I will review the major developments
of 1998, answer your questions and discuss our future prospects.
This booklet includes the Notice of Annual Meeting and the Proxy Statement.
The Proxy Statement describes the business that we will conduct at the meeting
and provides information about Greater Bay Bancorp.
Your vote is important. Whether or not you plan to attend the meeting,
please complete, date, sign and return the enclosed proxy card promptly. If you
attend the meeting and prefer to vote in person, you may do so.
We look forward to seeing you at the meeting.
Sincerely,
/s/ David L. Kalkbrenner
David L. Kalkbrenner
President and Chief Executive Officer
<PAGE>
GREATER BAY BANCORP
_________________
NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS
_________________
DATE: TUESDAY, MAY 25, 1999
TIME: 6:30 P.M.
PLACE: HOTEL SOFITEL
223 TWIN DOLPHIN DRIVE
REDWOOD CITY, CALIFORNIA 94065
Dear Shareholders:
At our 1999 Annual Meeting, we will ask you to:
. Elect four directors to each serve for a term of three years;
. Ratify the selection of PricewaterhouseCoopers L.L.P. as our
independent accountants for 1999; and
. Transact any other business that may properly be presented at the
Annual Meeting.
If you were a shareholder of record at the close of business on April 1,
1999, you may vote at the Annual Meeting.
Article IV, Section 2 of our Bylaws provides for the nomination of
directors in the following manner:
"Nomination for election of directors may be made by the Board of Directors
or by any holder 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 (10th) day following the day on which the notice
of meeting was mailed; provided further, that if notice of such meeting is sent
by third class mail (if permitted by law), 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. A
copy of this paragraph shall be set forth in a notice to shareholders of any
meeting at which directors are to be elected."
IT IS IMPORTANT THAT ALL SHAREHOLDER VOTE. WE URGE YOU TO SIGN AND RETURN
THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE, REGARDLESS OF WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING IN PERSON. IF YOU DO ATTEND THE MEETING, YOU MAY
THEN WITHDRAW YOUR PROXY AND VOTE IN PERSON. IN ORDER TO FACILITATE THE
PROVIDING OF ADEQUATE ACCOMODATIONS, PLEASE INDICATE ON THE PROXY WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING.
By Order of the Board of Directors
/s/ Linda M. Iannone
Linda M. Iannone
Corporate Secretary
Palo Alto, California
Dated: April 12, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING................................................... 1
WHY DID YOU SEND ME THIS PROXY STATEMENT?.................................................... 1
WHO IS ENTITLED TO VOTE?..................................................................... 1
WHAT CONSTITUTES A QUORUM?................................................................... 1
HOW MANY VOTES DO I HAVE?.................................................................... 1
HOW DO I VOTE BY PROXY?...................................................................... 1
MAY I CHANGE MY VOTE AFTER I RETURN MY PROXY?................................................ 2
HOW DO I VOTE IN PERSON?..................................................................... 2
WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL?.............................................. 2
PROPOSAL 1:.................................................................................. 2
PROPOSAL 2:.................................................................................. 2
WHAT ARE THE COSTS OF SOLICITING THESE PROXIES?.............................................. 2
HOW DO I OBTAIN AN ANNUAL REPORT ON FORM 10-K?............................................... 3
INFORMATION ABOUT GREATER BAY STOCK OWNERSHIP..................................................... 3
DOES ANYONE OWN 5% OR MORE OF GREATER BAY'S COMMON STOCK?.................................... 3
HOW MUCH OF GREATER BAY'S COMMON STOCK IS OWNED BY DIRECTORS AND EXECUTIVE OFFICERS?......... 4
INFORMATION ABOUT DIRECTORS AND EXECUTIVE OFFICERS................................................ 6
THE BOARD OF DIRECTORS....................................................................... 6
THE COMMITTEES OF THE BOARD.................................................................. 6
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.................................. 6
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE BY DIRECTORS AND EXECUTIVE OFFICERS.. 7
HOW WE COMPENSATE DIRECTORS.................................................................. 7
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............................................... 7
EXECUTIVE OFFICERS........................................................................... 8
HOW WE COMPENSATE EXECUTIVE OFFICERS......................................................... 10
EMPLOYMENT CONTRACTS, CHANGE IN CONTROL ARRANGEMENTS AND TERMINATION OF EMPLOYMENT........... 13
EXECUTIVE COMMITTEE'S REPORT ON EXECUTIVE COMPENSATION....................................... 16
THE REPORT................................................................................... 16
PERFORMANCE GRAPH............................................................................ 18
DISCUSSION OF PROPOSALS RECOMMENDED BY THE BOARD.................................................. 19
PROPOSAL 1: ELECT FOUR DIRECTORS............................................................ 19
PROPOSAL 2: RATIFY SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS FOR 1999..................... 21
OTHER BUSINESS.................................................................................... 22
INFORMATION ABOUT SHAREHOLDER PROPOSALS........................................................... 22
</TABLE>
i
<PAGE>
PROXY STATEMENT FOR GREATER BAY BANCORP
1999 ANNUAL MEETING OF SHAREHOLDERS
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
WHY DID YOU SEND ME THIS PROXY STATEMENT?
We sent you this Proxy Statement and the enclosed proxy card because our
Board of Directors is soliciting your proxy to vote at the 1999 Annual Meeting
of Shareholders. This Proxy Statement summarizes the information you need to
know to cast an informed vote at the Annual Meeting. However, you do not need to
attend the Annual Meeting to vote your shares. Instead, you may simply complete,
sign and return the enclosed proxy card.
Along with this Proxy Statement, we are also sending you the Greater Bay
Bancorp ("Greater Bay") 1998 Summary Annual Report and Annual Report on Form 10-
K for the year ended December 31, 1998, which includes our financial statements.
WHO IS ENTITLED TO VOTE?
We will begin sending this Proxy Statement, the attached Notice of Annual
Meeting and the enclosed proxy card on April 12, 1999 to all shareholders
entitled to vote. Shareholders who owned Greater Bay Common Stock at the close
of business on April 1, 1999 are entitled to vote. On this record date, there
were 9,733,209 shares of Greater Bay Common Stock outstanding. Greater Bay
Common Stock is our only class of outstanding stock.
WHAT CONSTITUTES A QUORUM?
A majority of our shareholders entitled to vote at the meeting must be
present, in person or by proxy, in order to constitute a quorum. We can only
conduct the business of the meeting if a quorum has been established. We will
include proxies marked as abstentions and broker non-votes in determining the
number of shares present at the meeting.
HOW MANY VOTES DO I HAVE?
Each share of Greater Bay Common Stock that you owned at the close of
business on April 1, 1999 entitles you to one vote. The proxy card indicates the
number of votes that you have.
HOW DO I VOTE BY PROXY?
Whether or not you plan to attend the Annual Meeting, we urge you to
complete, sign and date the enclosed proxy card and to return it promptly in the
envelope provided. Returning the proxy card will not affect your right to attend
the Annual Meeting and vote.
If you properly fill in your proxy card and send it to us in time to vote,
your "proxy" (one of the individuals named on your proxy card) will vote your
shares as you have directed. If you sign the proxy card but do not make specific
choices, your proxy will vote your shares as recommended by the Board of
Directors as follows:
. "FOR" the election of all four nominees for director
. "FOR" ratification of the selection of independent accountants for
1999
If any other matter is presented, your proxy will vote in accordance with
the recommendation of the Board of Directors, or, if no recommendation is given,
in accordance with his or her best judgment. At the time this Proxy Statement
went to press, we knew of no matters which needed to be acted on at the Annual
Meeting, other than those discussed in this Proxy Statement.
1
<PAGE>
If you hold your shares of Greater Bay Common Stock in "street name" (that
is, through a broker or other nominee) and you fail to instruct your broker or
nominee as to how to vote such shares of common stock, your broker or nominee
may, in its discretion, vote your shares "FOR" the election of the nominees for
director set forth herein, and "FOR" ratification of the appointment of
PricewaterhouseCoopers L.L.P. as our independent public accountants for the year
ending December 31, 1999.
MAY I CHANGE MY VOTE AFTER I RETURN MY PROXY?
Yes. If you fill out and return the enclosed proxy card, you may change
your vote at any time before the vote is conducted at the Annual Meeting. You
may change your vote in any one of three ways:
. You may send to Greater Bay's Corporate Secretary another completed
proxy card with a later date.
. You may notify Greater Bay's Corporate Secretary in writing before the
Annual Meeting that you have revoked your proxy.
. You may attend the Annual Meeting and vote in person.
HOW DO I VOTE IN PERSON?
If you plan to attend the Annual Meeting and vote in person, we will give
you a ballot form when you arrive. However, if your shares are held in the name
of your broker, bank or other nominee, you must bring an account statement or
letter from the nominee indicating that you were the beneficial owner of the
shares on April 1, 1999, the record date for voting.
WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL?
<TABLE>
<S> <C>
PROPOSAL 1:
Elect Four Directors The four nominees for director who receive the most votes will be
elected. So, if you do not vote for a particular nominee, or you
indicate "WITHHOLD AUTHORITY" to vote for a particular nominee on
your proxy card, your vote will not count either "for" or
"against" the nominee. Our Articles of Incorporation do not
permit cumulative voting.
PROPOSAL 2:
Ratify Selection of Independent Public The affirmative vote of a majority of the votes cast at the
Accountants Annual Meeting on this proposal is required to ratify the
selection of independent public accountants. So, if you
"ABSTAIN" from voting, it has no effect on the outcome of this
proposal.
</TABLE>
WHAT ARE THE COSTS OF SOLICITING THESE PROXIES?
We will pay all the costs of soliciting these proxies. In addition to
mailing proxy soliciting material, our directors, officers and employees also
may solicit proxies in person, by telephone or by other electronic means of
communication for which they will receive no compensation. We will ask banks,
brokers and other institutions, nominees and fiduciaries to forward the proxy
materials to their principals and to obtain authority to execute proxies. We
will then reimburse them for their reasonable expenses. We have hired
Kissel-Blake, a division of Shareholder Communications Corporation, to seek the
proxies of custodians, such as brokers, who hold shares which belong to other
people. This service will cost Greater Bay approximately $2,500.
2
<PAGE>
HOW DO I OBTAIN AN ANNUAL REPORT ON FORM 10-K?
A COPY OF GREATER BAY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1998 IS INCLUDED WITH THIS PROXY STATEMENT. IF YOU DID NOT RECEIVE
ONE, WE WILL SEND YOU ONE WITHOUT CHARGE. PLEASE WRITE TO:
GREATER BAY BANCORP
2860 WEST BAYSHORE ROAD
PALO ALTO, CALIFORNIA 94303
ATTENTION: SHAWN E. SAUNDERS, CONTROLLER
INFORMATION ABOUT GREATER BAY STOCK OWNERSHIP
DOES ANYONE OWN 5% OR MORE OF GREATER BAY'S COMMON STOCK?
Yes. The following table shows, as of April 1, 1999, an individual who
beneficially owns 5% or more of Greater Bay's Common Stock. As of April 1, 1999,
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 he owns it in the usual sense, but also if he has 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
-------------------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF PERCENTAGE
SHARES OF
CLASS
- -------------------------------------------------------------------- -------------------- --------------
<S> <C> <C>
Leo K.W. Lum, PRB Revocable Trust................................... 964,748 9.91%
344 Pine Street
San Francisco, California 94104
</TABLE>
3
<PAGE>
HOW MUCH OF GREATER BAY'S COMMON STOCK IS OWNED BY DIRECTORS AND EXECUTIVE
OFFICERS?
The following table shows, as of April 1, 1999, beneficial ownership of
Greater Bay Common Stock by each of Greater Bay's directors, nominees for
director 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 the same Greater Bay
Common Stock with anyone else.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED(2)
------------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER(1) NUMBER OF PERCENTAGE
SHARES OF
CLASS(3)
------------------------------------------------------------------- ------------ ---------------
<S> <C> <C>
Susan K. Black (4).......................................... 21,654 .22
George R. Corey............................................. 82,248 .85
John W. Gatto(5)............................................ 37,778 .39
David R. Hood(6)............................................ 51,263 .53
James E. Jackson(7)......................................... 96,628 .99
Gregg A. Johnson(8)......................................... 2,000 .02
David L. Kalkbrenner(9)..................................... 122,667 1.25
Rex D. Lindsay(10).......................................... 77,860 .80
Leo K.W. Lum (11)........................................... 964,748 9.91
George M. Marcus(12)........................................ 75,582 .78
Duncan L. Matteson(13)...................................... 99,734 1.02
Glen McLaughlin(14)......................................... 53,746 .56
Rebecca Q. Morgan........................................... 2,000 .02
Dick J. Randall(15)......................................... 217,188 2.25
Donald H. Seiler(16)........................................ 98,116 1.01
Steven C. Smith(17)......................................... 83,134 .86
Warren R. Thoits(18)........................................ 64,568 .66
All directors and executive officers as a group (17 persons)(19) 2,150,914 22.08
</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 April 1, 1999.
(3) Shares of Greater Bay Common Stock issuable upon exercise of stock options
exercisable within 60 days of April 1, 1999 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 12,754 shares held jointly by Ms. Black and her spouse and 8,900
shares issuable upon the exercise of stock options exercisable within 60
days of April 1, 1999.
(5) Includes 33,378 shares held directly by Mr. Gatto and 4,400 shares issuable
upon the exercise of options exercisable within 60 days of April 1, 1999.
(6) Includes 11,052 shares held in an IRA for Mr. Hood, 16,701 shares held
jointly by Mr. Hood and his spouse, 1,744 shares in a 401(k) plan for Mr.
Hood and 21,766 shares issuable upon the exercise of options exercisable
within 60 days of April 1, 1999.
(7) Includes 79,520 shares held jointly by Mr. Jackson and his spouse, 2,982
shares held in an IRA for the benefit of Mr. Jackson's spouse and 14,126
shares held in an IRA for Mr. Jackson.
4
<PAGE>
(8) Includes 2,000 shares issuable upon the exercise of stock options
exercisable within 60 days of April 1, 1999.
(9) Includes 39,738 shares held directly by Mr. Kalkbrenner, 19,994 shares held
in an IRA for Mr. Kalkbrenner, 3,935 shares in a 401(k) plan for Mr.
Kalkbrenner and 59,000 shares issuable upon the exercise of stock options
exercisable within 60 days of April 1, 1999.
(10) Includes 63,506 shares held by the Rex D. and Leanor L. Lindsay Family
Trust and 14,354 shares issuable upon the exercise of options exercisable
within 60 days of April 1, 1999.
(11) Represents shares owned by the Leo K.W. Lum PRB Revocable Trust of which
Mr. Lum is the sole trustee and beneficiary.
(12) Includes 61,448 shares held directly by Mr. Marcus and 14,134 shares
issuable upon the exercise of stock options exercisable within 60 days of
April 1, 1999.
(13) 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 12,556
shares issuable upon the exercise of stock options exercisable within 60
days of April 1, 1999.
(14) Includes 37,228 shares held by the McLaughlin Family Foundation and 16,518
shares issuable upon the exercise of options exercisable within 60 days of
April 1, 1999.
(15) Includes 370 shares held directly by Mr. Randall, 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 April 1, 1999.
(15) Includes 95,738 shares held jointly with Mr. Seiler's spouse as trustees of
the Seiler Family Trust and 2,378 shares issuable upon the exercise of
stock options exercisable within 60 days of April 1, 1999.
(17) 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
April 1, 1999.
(18) Includes 27,642 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 6,756 shares issuable upon
the exercise of stock options exercisable within 60 days of April 1, 1999.
(19) Includes 226,120 shares issuable upon the exercise of stock options
exercisable within 60 days of April 1, 1999.
5
<PAGE>
INFORMATION ABOUT DIRECTORS AND EXECUTIVE OFFICERS
THE BOARD OF DIRECTORS
The Board of Directors oversees our business and monitors the performance
of management. In accordance with corporate governance principles, the Board
does not involve itself in day-to-day operations. The directors keep themselves
informed through, among other things, discussions with the Co-Chairmen, other
key executives and our principal external advisers (legal counsel, outside
auditors, investment bankers and other consultants), by reading reports and
other materials that we send them and by participating in Board and committee
meetings.
Greater Bay's Bylaws currently permit the number of Board members to range
from 9 to 17, leaving the Board authority to fix the exact number of directors
within that range. The Board has fixed the exact number of directors at 14.
The Board met 13 times during 1998. Each incumbent director attended at
least 75% of the total number of Board meetings plus meetings of the standing
committees on which that particular director served.
THE COMMITTEES OF THE BOARD
The Board may delegate portions of its responsibilities to committees of
its members. These "standing committees" of the Board meet at regular intervals
to attend to their particular areas of responsibility. Our 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").
The Audit Committee directs our external auditors to insure that they
satisfy the legal and technical requirements necessary for the protection of our
shareholders, employees and directors and oversees the internal audit function.
The Audit Committee annually recommends a firm of public accountants to serve as
external auditors to the Board. It also makes certain that the external
auditors have the independence necessary to freely examine all of Greater Bay's
books and records. The Audit Committee held six meetings during 1998. Mr.
Seiler chairs the Audit Committee and Messrs. McLaughlin, Randall and Thoits are
also members.
Our Executive Committee also acts as our Executive Compensation Committee
and Nominating Committee. In performing its duties as the Executive
Compensation Committee, the Executive Committee determines the salary and bonus
structure of Greater Bay's executive officers and supervises compensation for
our other officers.
In performing its duties as the Nominating Committee, the Executive
Committee selects management nominees to stand for election as directors. It
also considers nominations made to the Board by shareholders, provided such
nominations comply with Greater Bay's Bylaws. The Executive Committee held 12
meetings during 1998. Mr. Matteson chairs the Executive Committee and Messrs.
Gatto, Kalkbrenner, Lindsay and Seiler also are members.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Executive Committee (which also acts as an
Executive Compensation Committee) 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 Mid-Peninsula Bank ("MPB").
See "Certain Relationships and Related Transactions."
6
<PAGE>
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
our 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 our review of these reports or of certifications to us that
no report was required to be filed, we believe that all of our directors and
executive officers, 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.
HOW WE COMPENSATE DIRECTORS
Greater Bay has a policy of compensating directors for their service on the
Board and for their attendance at committee meetings. 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 "How We
Compensate Executive Officers." The total compensation for the Greater Bay Board
of Directors in 1998 was $209,000.
In 1998, committee members received annual retainers as follows: (i) Audit
Committee, $2,000; (ii) Executive Committee, $6,000; (iii) Loan Committee,
$6,000; (iv) Trust Oversight Committee, $3,000; and (v) Investment/ALCO
Committee, $2,000. Members of the Boards of Directors of Greater Bay's
subsidiary banks received fees in 1998 as follows: (i) Cupertino National Bank
("CNB") and MPB, $1,800; (ii) Peninsula Bank of Commerce ("PBC"), $26,700; and
(iii) Golden Gate Bank ("Golden Gate"), $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
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Greater Bay, through its subsidiaries, has had and expects in the future to
have banking transactions in the ordinary course of business with our directors
and officers or associates of our directors and officers. We may also have
banking transactions with corporations of which our 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. We 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
our 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.
7
<PAGE>
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 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.
EXECUTIVE OFFICERS
Set forth below are the names and five-year biographies of Greater Bay's
executive officers.
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
- -------------------------------- -----------------------------------------------------------------------------
<S> <C>
David L. Kalkbrenner President, Chief Executive Officer and a director of Greater Bay since 1994.
(59) 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 currently a member of the Board of Directors of the College
of Notre Dame.
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.
David R. Hood Executive Vice President and Chief Lending Officer of Greater Bay since
(54) November 1996. Since November 1998, he has served as President Chief Operating
Officer 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.
Susan K. Black Executive Vice President of Greater Bay since November 1998. She has also
(49) 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. 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.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
- -------------------------------- -----------------------------------------------------------------------------
<S> <C>
Gregg A. Johnson Executive Vice President, Business and Technology Services of Greater Bay
(49) 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.
</TABLE>
9
<PAGE>
HOW WE COMPENSATE EXECUTIVE OFFICERS
The following table summarizes information about compensation paid to or
earned by our Chief Executive Officer, David L. Kalkbrenner. It also summarizes
the compensation paid to or earned by our four other most highly compensated
officers who earned salary and bonus compensation in excess of $100,000 during
1998. In all cases, the officers concerned earned all the compensation shown
for their services, in all their capacities, to Greater Bay, its predecessors,
or its subsidiaries during the years 1998, 1997 and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------- ------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION OPTIONS/SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR (1) ($) (2) ($) (3) ($) (4) (#) (5) ($)
- --------------------------- ---- --------- --------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
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 1997 164,386 130,268 6,000 22,500 39,060
and CFO 1996 139,020 70,860 6,000 18,262 28,501
David R. Hood............................... 1998 177,017 125,000 6,000 15,800 49,696
Executive Vice President and Chief 1997 150,823 110,000 6,000 15,000 45,471
Lending Officer 1996 124,120 62,490 6,000 14,262 31,354
Susan K. Black.............................. 1998 156,598 110,000 6,000 15,800 43,915
Executive Vice President 1997 129,240 90,000 6,000 10,000 42,193
1996 107,030 65,000 6,000 12,000 13,230
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.
(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
10
<PAGE>
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 Mr. 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 Mr. 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 Mr. 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 Ms. Black include (a) for 1998, $6,250 in 401(k) plan
matching contributions and $36,000 accrued under the SERP, $1,143 in long
term disability insurance premiums and $522 in group term life insurance
premiums; (b) for 1997, $6,063 in 401(k) plan matching contributions,
$35,000 accrued under the SERP, $651 in long term disability insurance
premiums and $479 in group term life insurance premiums; and (c) for 1996,
$4,750 in 401(k) plan matching contributions, $7,946 accrued under the
SERP, $254 in long term disability insurance premiums and $280 in group
term life insurance premiums.
Amounts shown for Mr. Johnson include, for 1998, $1,969 in 401(k) plan
matching contributions, $36,000 accrued under the SERP and $370 in group
term life insurance premiums.
Amounts accrued under the SERP represent the estimated present value of
future benefits to be paid, which is accrued over the vesting period of the
participants. Depending on the SERP agreement, Greater Bay and the
participants are beneficiaries of life insurance policies that have been
purchased as a method of financing these benefits. Accordingly, the
expense associated with the accrual is generally offset by a corresponding
increase in the cash surrender value of these policies.
(6) Amounts shown for Mr. Johnson, who joined Greater Bay in April 1998, are
amounts earned from the period April 6, 1998 through December 31, 1998.
11
<PAGE>
Option Grants in 1998
The following table sets forth information concerning stock options granted
during the year ended December 31, 1998 to the persons named in the Summary
Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS IN FISCAL 1998
------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES % OF TOTAL PRICE APPRECIATION FOR
UNDERLYING OPTIONS/SARS EXERCISE OPTION TERM(1)
OPTIONS/SARS GRANTED TO TREES EXPIRATION --------------------
NAME GRANTED(2) EMPLOYEES ($/SH) DATE @5%($) @10%($)
- ------------------------ ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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
</TABLE>
_______________
(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
$46.82 per share at 10% appreciation over the same period.
(2) Generally, options granted under the 1996 Stock Option Plan vest at the
rate of 20% of the options granted for each full year of the optionee's
continuous employment with Greater Bay and are exercisable to the extent
vested. See also "Employment Contracts, Change in Control Arrangements
and Termination of Employment."
(3) All options listed were granted at the estimated fair market value on the
date of grant.
12
<PAGE>
Aggregated Option Exercises and Option Values
The following table sets forth the specified information concerning
exercises of options to purchase Greater Bay Common Stock in the fiscal year
ended December 31, 1998 and unexercised options held as of December 31, 1998 by
the persons named in the Summary Compensation Table.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1998 AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
SHARES UNDERLYING UNEXERCISED THE-MONEY OPTIONS AT
ACQUIRED ON VALUE OPTIONS AT 12/31/98 (#) 12/31/98 ($)(1)
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>
_______________
(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) a
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 at the rate in effect immediately preceding the termination
and the amount of any bonus due him. 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 "excess 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.
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) to the extent they exceed the benefits otherwise payable
under these plans.
13
<PAGE>
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 "Change in
Control 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 Change in Control Plans provide that a change in control occurs
when Greater Bay is sold or otherwise transferred in ownership to new ownership.
The Change in Control Plans generally provide each participant with a base
benefit based on the participant's pay, full years of service with Greater Bay
or a 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 Change in
Control 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, Mr. Kalkbrenner would
be entitled to receive a base benefit equal to 25 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 3 years of pay; Mr. 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 Mr.
Hood, Ms. Black and Mr. 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 and the Greater Bay Bancorp Termination and Layoff Pay Plan
for Key Executives (collectively, the "Termination 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 Termination
Plans define.
The Termination Plans also provide each participant with a severance
benefit based on the participant's pay, full years of service with Greater Bay
or a 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 Termination 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, Mr. Kalkbrenner
would be entitled to receive a severance benefit equal to 25 months of pay; Mr.
Smith would be entitled to receive a severance benefit equal to 20 months of
pay; and Mr. Hood, Ms. Black and Mr. 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 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.
14
<PAGE>
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 management
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.
Benefits under the SERP include income generally payable commencing upon a
designated retirement date for the life of the participant and a death benefit
for the participant's designated beneficiaries. The income benefits consist of
accruals to a benefit account during the participant's employment and a benefit
determined after termination of employment. The benefit account accruals are
determined annually based upon annual earnings (or loss) and certain investment
opportunity costs related to life insurance contracts.
SERP benefits for the persons named in the Summary Compensation Table vest
at a rate of approximately 20% after 5 years of service and 20% each year
thereafter. Vesting accelerates to 100% upon a change in control of Greater Bay
to the extent any portion of such benefits remains unvested at such time. Upon
a termination of employment for "cause", the participant forfeits all benefits.
The participant is entitled to all vested benefits in the case of a termination
without "cause"; however, if a participant voluntarily resigns prior to becoming
100% vested, his or her benefits are reduced by amounts ranging from a total
forfeiture to approximately 40% of benefits.
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
At normal retirement age of 62, Mr. Kalkbrenner will be entitled to receive
a projected benefit under the SERP that is equal to 43.62% of his 1998 total
compensation; Mr. Smith will be entitled to receive a projected benefit of
60.00% of his 1998 total compensation; Mr. Hood will be entitled to receive a
projected benefit of 45.36% of his 1998 total compensation; Ms. Black will be
entitled to receive a projected benefit of 63.96% of her 1998 total
compensation; and Mr. Johnson will be entitled to receive a projected benefit of
70.40% of his 1998 annualized total compensation.
15
<PAGE>
EXECUTIVE COMMITTEE'S REPORT ON EXECUTIVE COMPENSATION
Set forth below is a report of our Executive Committee addressing the
compensation policies for 1998 applicable to our executive officers.
The Report of the Executive Committee of the Board of Directors shall not
be deemed incorporated by reference by any general statement incorporating by
reference this Proxy Statement into any filing under the Securities Act of 1933
or under the Securities Exchange Act of 1934, except to the extent that Greater
Bay specifically incorporates the information contained in the report by
reference, and shall not otherwise be deemed filed under such acts.
THE REPORT
The Executive Committee of the Board of Directors acts as our Executive
Compensation Committee. The Executive Committee establishes our overall
compensation and employee benefits and approves specific compensation levels for
executive officers. It is a goal of the Executive Committee to implement
executive officer compensation programs that further our business objectives and
that attract, retain and motivate the best qualified executive officers.
Currently, the members of the Executive Committee are John M. Gatto, Duncan L.
Matteson, David L. Kalkbrenner, Rex D. Lindsay and Donald H. Seiler. Each
member of the Executive Committee is a non-employee director, except for Mr.
Kalkbrenner.
Greater Bay's executive compensation policies and specific executive
compensation programs are adopted and administered in accordance with the
principal goal of maximizing return on shareholders' equity. The Executive
Committee believes that this performance goal, and the long-term interests of
our shareholders generally, are best achieved by attracting and retaining
management of high quality, and that such management will require commensurate
compensation. The Executive Committee believes that our executive officer
compensation policies are consistent with this policy.
In addition, the Executive Committee believes that while our compensation
programs should reflect the philosophy that executive compensation levels be
linked to Greater Bay's performance, such compensation programs should also be
competitive and consistent with those provided to others holding positions of
similar responsibility in the banking and financial services industry. Our
compensation plans are designed to assist Greater Bay in attracting and
retaining qualified employees critical to Greater Bay's long-term success, while
enhancing employees' incentives to perform to their fullest abilities to
increase profitability and maximize shareholder value.
Annual compensation levels for executive officers and compensation levels
to be implemented from time to time in written employment agreements with
executive officers are determined by the Executive Committee based primarily on
its review and analysis of the following factors: (i) the responsibilities of
the position, (ii) the performance of the individual and his or her general
experience and qualifications, (iii) the overall financial performance
(including return on equity, levels of general and administrative expense and
budget variances) of Greater Bay for the previous year and the contributions to
such performance measures by the individual or his or her department, (iv) the
officers' total compensation during the previous year, (v) compensation levels
paid by comparable companies in similar industries, (vi) the officer's length of
service with Greater Bay, and (vii) the officer's effectiveness in dealing with
external and internal audiences. The Executive Committee believes that the base
compensation of the executive officers is competitive with companies of similar
size and with comparable operating results in similar industries.
The base salary of our Chief Executive Officer was determined primarily on
the terms of his employment agreement dated March 3, 1992, which was entered
into prior to the merger of Mid-Peninsula Bancorp and Cupertino National Bancorp
(see "Employment Contracts, Change in Control Arrangements and Termination of
Employment" for a discussion of Mr. Kalkbrenner's new employment agreement).
The agreement provided for a base salary, subject to annual adjustments by the
Board of Directors, and for a discretionary annual bonus based upon the pre-tax
net profits of Greater Bay. In addition, the Chief Executive
16
<PAGE>
Officer's compensation for 1998 was based in part on his progress in achieving
certain additional criteria. These criteria included completing the acquisition
of Golden Gate and Pacific Business Funding Corporation, results in meeting
Greater Bay's strategic business plan, total return to shareholders and
leadership abilities. Based on the foregoing, and a review of compensation paid
to chief executive officers in Greater Bay's peer group (institutions with
assets of $1-5 billion), in 1998 Mr. Kalkbrenner received a base salary of
$298,164 and a bonus of $275,000. Mr. Kalkbrenner did not participate in the
Executive Committee's deliberations concerning his compensation.
While the Executive Committee establishes salary and bonus levels based on
the above described criteria, the Executive Committee also believes that
encouraging equity ownership by executive officers further aligns the interests
of the officers with the performance objectives of our shareholders and enhances
our ability to attract and retain highly qualified personnel on a basis
competitive with industry practices. Stock options granted by Greater Bay
pursuant to the 1996 Stock Option Plan help achieve this objective, and provide
additional compensation to the officers to the extent that the price of the
Common Stock increases over fair market value on the date of grant. Stock
options have been granted to each of the executive officers and to other
officers or key employees of Greater Bay. Through the 1996 Stock Option Plan,
there will be an additional direct relationship between Greater Bay's
performance and benefits to plan participants.
In addition, through Greater Bay's Employee Stock Purchase Plan, eligible
employees of Greater Bay and its subsidiaries who are scheduled to work at least
20 hours a week may acquire an interest in our growth and productivity. Under
this plan, participants may purchase shares of Greater Bay Common Stock through
payroll deductions. The purchase price per share generally equals 85% of the
lesser of the fair market value of a share on the first or last day of the
offering period. Offering periods are for three months, commencing the first
day of each calendar quarter.
Certain key employees participate in Greater Bay's Supplemental Executive
Retirement Plan. This plan provides supplemental retirement benefits to a
select group of management or highly compensated employees who have titles of
senior vice president or higher. Upon vesting, participants in the plan receive
lifetime retirement income benefits and death benefits.
Eligible employees are also able to participate in Greater Bay's 401(k)
Plan. The 401(k) Plan permits participants to make 401(k) contributions on a
pretax basis. All employees of Greater Bay and its subsidiaries who are at
least age 21 are eligible to participate in the 401(k) Plan on the first day of
the month following their date of hire. Participants can contribute up to 15%
of their pretax compensation to the 401(k) Plan annually, subject to certain
legal limitations. The 401(k) Plan also provides that Greater Bay and its
subsidiaries will make a matching contribution on behalf of each eligible
participant equal to 62.5% of the 401(k) contributions made by such
participants, up to 8% of their individual compensation.
Finally, our Board of Directors adopted the Greater Bay Bancorp 1997
Elective Deferred Compensation Plan at its December 1997 meeting (the "Deferred
Compensation Plan"). The Deferred Compensation Plan is an unfunded Plan that
provides deferred compensation benefits to directors and a select group of
management and highly compensated employees who contribute materially to the
continued growth, development and future business success of Greater Bay and its
subsidiaries.
Through these various compensation programs, the Executive Committee
believes that Greater Bay furthers its objectives of attracting, retaining and
motivating the best qualified executive officers and employees, and ultimately
will serve to increase Greater Bay's profitability and maximize shareholder
value.
EXECUTIVE COMMITTEE
Dated: April 1, 1999
Duncan L. Matteson, Chairman
John M. Gatto
David L. Kalkbrenner
Rex D. Lindsay
Donald H. Seiler
17
<PAGE>
PERFORMANCE GRAPH
The following graph compares, for the period December 31, 1993 through
December 31, 1998, the yearly percentage change in Greater Bay's cumulative
total return on its common stock with the cumulative total return of (i) the
NASDAQ - Total US (formerly called the "NASDAQ Total Return Index"), an index
consisting of Nasdaq-listed U.S.-based companies; and (ii) the SNL $1B-$5B Bank
Asset-Size Index, an index composed of a survey of banks and bank holding
companies having between $1 billion and $5 billion in total assets.
The graph shall not be deemed incorporated by reference by any general
statement incorporating by reference this Proxy Statement into any filing under
the Securities Act of 1933 or under the Securities Exchange Act of 1934, except
to the extent that Greater Bay specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such acts.
- --------------------------------------------------------------------------------
GREATER BAY BANCORP
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
PERIOD ENDING
-----------------------------------------------------------------
INDEX 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Greater Bay Bancorp 100.00 187.71 254.90 378.95 759.07 1,080.59
NASDAQ - Total US 100.00 97.75 138.26 170.01 208.58 293.21
SNL $1B-$5B Bank Asset-Size Index 100.00 105.28 141.58 183.54 306.09 305.38
</TABLE>
18
<PAGE>
DISCUSSION OF PROPOSALS RECOMMENDED BY THE BOARD
PROPOSAL 1: ELECT FOUR DIRECTORS
The Board has nominated four persons for election as Class II Directors at
the Annual Meeting. If you elect them, they will hold office until the election
of their successors at the Annual Meeting in 2002, or until they resign.
We know of no reason why any nominee may be unable to serve as a director.
If any nominee is unable to serve, your proxy may vote for another nominee
proposed by the Board. If for any reason these nominees prove unable or
unwilling to stand for election, the Board will nominate alternates. The Board
has no reason to believe that its nominees would prove unable to serve if
elected.
The following table sets forth the names and five-year biographies of the
four persons nominated by the Board to serve as Class II Directors. The table
also sets forth the names and five-year biographies of our Class I Directors
whose terms expire in 2001 and Class III Directors whose terms expire in 2000.
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
- -------------------------------------------------------------------------------
CLASS II NOMINEES
- -----------------
<S> <C>
George R. Corey Director of Greater Bay since December 1997.
(65) Mr.Corey served as Chairman of the Board of PBC,
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
(61) was a director of Cupertino 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.
Dick J. Randall Director of Greater Bay since November 1996. He
(67) served as a director of Cupertino 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 from
(70) 1987 to 1998. He is the 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. and the Peninsula
Community Foundation and serves on the audit
committee of Stanford Health Services.
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
- --------------------------------------------------------------------------------
CLASS I DIRECTORS
- -----------------
<S> <C>
James E. Jackson Director of Greater Bay since November 1996. He
(64) served as a director of Cupertino 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
(57) has served as Chairman of the 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 Yor k.
George M. Marcus Director of Greater Bay since 1998. He has
(57) served as a director of MPB since 1987. Mr.
Marcus is the founder of The Marcus & Millichap
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.
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
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
Redwood City. 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.
Rebecca Q. Morgan Director of Greater Bay since July 1998. In
December 1998, Ms. Morgan 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.
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
- --------------------------------------------------------------------------------
CLASS III DIRECTORS
- -------------------
<S> <C>
David L. Kalkbrenner President, Chief Executive Officer and a
(59) director of Greater Bay since 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 currently a member of the
Board of Directors of the College of Notre
Dame.
Rex D. Lindsay Vice-Chairman of the Board of Directors of
(73) Greater Bay since November 1996. 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 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.
Warren R. Thoits Director of Greater Bay since 1994 and of MPB
(76) since 1987. He is a partner 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.
</TABLE>
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF ALL FOUR CLASS II
NOMINEES FOR DIRECTOR.
PROPOSAL 2: RATIFY SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS FOR 1999
The Board of Directors has appointed PricewaterhouseCoopers L.L.P. ("PwC")
as our independent public accountants for the year ending December 31, 1999, and
shareholders are being asked to ratify the appointment. The appointment was
recommended by the Audit Committee. PwC, our accountants for the year ended
December 31, 1998, performed audit services for 1998 which included the
examination of the consolidated financial statements and services related to
filings with the Securities and Exchange Commission. All professional services
rendered by PwC during 1998 were furnished at customary rates and terms.
Representatives of PwC will be present at the Annual Meeting and will be
available to respond to appropriate questions from shareholders.
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" RATIFICATION OF THE SELECTION OF
PRICEWATERHOUSECOOPERS L.L.P. AS INDEPENDENT PUBLIC ACCOUNTANTS FOR 1999.
21
<PAGE>
OTHER BUSINESS
We know of no other business which will be presented for consideration at
the Annual Meeting other than as stated in the Notice of Meeting. If, however,
other matters are properly brought before the meeting, it is the intention of
the persons named as proxies in the enclosed proxy card to vote the shares
represented thereby in accordance with their best judgment and in their
discretion, and authority to do so is included in the proxy.
INFORMATION ABOUT SHAREHOLDER PROPOSALS
Under certain circumstances, shareholders are entitled to present proposals
at shareholder meetings. If you wish to submit a proposal to be included in our
2000 proxy statement, we must receive it, in a form which complies with the
applicable securities laws, on or before December 13, 1999. Please address your
proposals to: Greater Bay Bancorp, 400 Emerson Street, Palo Alto, California
94301, Attention: Corporate Secretary.
In addition, in the event a shareholder proposal is not submitted to
Greater Bay prior to February 26, 2000, the proxy to be solicited by the Board
of Directors for the 2000 Annual Meeting of Shareholders will confer authority
on the holders of the proxy to vote the shares in accordance with their best
judgment and discretion if the proposal is presented at the 2000 Annual Meeting
of Shareholders without any discussion of the proposal in the proxy statement
for such meeting.
By Order of the Board of Directors,
/s/ Linda M. Iannone
Linda M. Iannone
Corporate Secretary
April 12, 1999
22
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------Please detach here----------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2
<S> <C> <C> <C> <C>
1. Election of directors: 01 George R. Corey 02 John M. Gatto [_] Vote FOR [_] Vote WITHHELD
03 Dick J. Randall 04 Donald H. Seiler all nominees from all nominees
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
--------------------------------------------
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE, --------------------------------------------
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
2. Ratification of Appointment of PricewaterhouseCoopers L.L.P. [_] For [_] Against [_] Abstain
as independent public accountants for the year ending December 31,
1999.
</TABLE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
---
Address Change? Mark Box [_] Date ________________________
Indicate changes below:
- -------------------------------------------- -----------------------------
-----------------------------
Signature(s) in Box
Please sign exactly as your
name(s) appear on Proxy. If held
in joint tenancy, all persons must
sign. Trustees, administrators,
etc., should include title and
authority. Corporations should
provide full name of corporation
and title of authorized officer
signing the proxy.
- --------------------------------------------
I (WE) WILL__ WILL NOT__ ATTEND
THE
MEETING
IN PERSON
<PAGE>
[LOGO]
[MAP] Annual Meeting of Shareholders
Tuesday, May 25, 1999
6:30 p.m.
Hotel Sofitel
223 Twin Dolphin Drive
Redwood City, California
(650) 598-9000
[LOGO]
2860 West Bayshore Road
Palo Alto, California 94303 PROXY
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING
ON MAY 25, 1999.
The shares of stock you hold in your account or in a dividend reinvestment
account will be voted as you specify on this proxy.
IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED "FOR" ITEMS 1 AND 2.
By signing the proxy, you revoke all prior proxies and appoint David L.
Kalkbrenner, Steven C. Smith, and Linda M. Iannone, and each of them, with full
power of substitution, to vote your shares on the matters shown on the reverse
side and any other matters which may come before the Annual Meeting and all
adjournments. The Board of Directors at present knows of no other business to be
presented by or on behalf of Greater Bay Bancorp or the Board of Directors at
the meeting.
See reverse for voting instructions
