SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
COLUMBIA BANCORP
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(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>
[logo]
COLUMBIA BANCORP
10480 LITTLE PATUXENT PARKWAY
COLUMBIA, MARYLAND 21044
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 27, 1999
Notice is hereby given that the Annual Meeting of Stockholders of
Columbia Bancorp will be held at the Turf Valley Resort and Conference Center,
2700 Turf Valley Road, Ellicott City, Maryland 21042 on Tuesday, April 27, 1999,
at 5:30 p.m. for the following purposes:
1. To elect seven directors to serve until their terms of office
expire and until their successors are duly elected and qualified.
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March
10, 1999 as the record date for the determination of stockholders entitled to
notice of and to vote at the meeting or any adjournments or postponements
thereof.
Your Proxy is enclosed. You are encouraged to complete, date,
sign and return promptly the Proxy in the envelope provided even though you may
plan to attend the meeting. No postage is necessary for mailing in the United
States. Returning the Proxy will not limit your right to vote in person or to
attend the Annual Meeting, but will insure your representation if you cannot
attend. If you attend the meeting, you may revoke your Proxy and vote in person.
By Order of the Board of Directors
JOHN A. SCALDARA, JR.
Corporate Secretary
Columbia, Maryland
March 24, 1999
<PAGE>
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished on or about March 24, 1999 to
stockholders of Columbia Bancorp (the "Company") in connection with the
solicitation of proxies by the Company's Board of Directors to be used at the
annual meeting of stockholders described in the accompanying notice and at any
adjournments or postponements thereof. The purposes of the meeting are set forth
in the accompanying notice of annual meeting of stockholders.
PROXIES AND VOTING
The accompanying proxy is solicited by the Board of Directors of the
Company. The Board of Directors has selected Herschel L. Langenthal and John A.
Scaldara, Jr., or either of them, to act as proxies with full power of
substitution. Any stockholder executing a proxy has the power to revoke the
proxy at any time before it is voted. This right of revocation is not limited or
subject to compliance with any formal procedure. Any stockholder may attend the
meeting and vote in person whether or not he or she has previously given a
proxy.
The record date for stockholders entitled to notice of and to vote at
the annual meeting was the close of business on March 10, 1999. At that date
there were outstanding and entitled to vote 4,537,420 shares of Common Stock,
par value $.01 per share, of the Company. In the election of directors each
share is entitled to one vote for each director to be elected; however,
cumulative voting is not permitted. For all matters except the election of
directors, each share is entitled to one vote.
The cost of solicitation of proxies and preparation of proxy materials
will be borne by the Company. The solicitation of proxies will generally be by
mail and by directors, officers and employees of the Company and its subsidiary,
The Columbia Bank (the "Bank"), without additional compensation to them. In some
instances solicitation may be made by telephone or telegraph, the costs of which
will be borne by the Company. The Company may also reimburse brokers,
custodians, nominees and other fiduciaries for reasonable out-of-pocket and
clerical expenses for forwarding proxy materials to principals.
The Annual Report of the Company, including financial statements for the
fiscal year ended December 31, 1998, has been mailed to all stockholders with
this Proxy Statement.
PROPOSAL 1 - ELECTION OF DIRECTORS
The charter and by-laws of the Company provide that the directors shall
be classified into three classes as equal in number as possible, with each
director serving a three-year term.
Directors are elected by a plurality of the votes cast by the holders of
shares of Common Stock present in person or represented by proxy at the meeting
with a quorum present. Abstentions and broker non-votes are not considered to be
votes cast.
1
<PAGE>
NOMINEES
Unless otherwise indicated in the enclosed proxy, the persons named in
such proxy intend to nominate and vote for the election of the following seven
nominees for the office of director of the Company, to serve as directors for
three years or until their respective successors have been duly elected and
qualified. All such nominees are currently serving as directors, with the
exception of James R. Moxley, III. The Board of Directors is not aware that any
nominee named herein will be unable or unwilling to accept nomination or
election. Should any nominee for the office of director become unable to accept
nomination or election, the persons named in the proxy will vote for the
election of such other persons, if any, as the Board of Directors may recommend.
The names and ages (as of March 10, 1999) of persons nominated by the
Board of Directors, their principal occupations and business experience for the
past five years, and certain other information are set forth below. Unless
otherwise noted, each has served as a director of the Company and the Bank since
inception of the Company in 1987 and the Bank in 1988.
<TABLE>
<CAPTION>
NAME OF NOMINEE INFORMATION REGARDING NOMINEE
- --------------- -----------------------------
NOMINEES FOR DIRECTORS TO BE ELECTED AT THE 1999 ANNUAL MEETING
TO SERVE UNTIL THE 2002 ANNUAL MEETING (CLASS III)
<S> <C>
John M. Bond, Jr. Mr. Bond, Jr. is 55 years old and has served as a director and
President, Chief Executive Officer, and Treasurer
of the Company and the Bank since inception.
William L. Hermann Mr. Hermann is 57 years old and is President of William L.
Hermann, Inc., a financial management company. Mr. Hermann
served as General Manager of the Glenmore office of the Bank
until December 1997. He has served as a director of the
Company and the Bank since June 1989.
Charles C. Holman Mr. Holman is 65 years old. Since June, 1992 and until his
retirement effective December 31, 1998, Mr. Holman served as
Executive Vice President of the Bank and was responsible for
the Bank's acquisition, development and construction loan
portfolio. Mr. Holman has been involved in the banking and
real estate industries over the past 30+ years. He is a
graduate of the University of Baltimore and is a resident of
Baltimore County, Maryland. Mr. Holman has served as a
director of the Company and the Bank since December, 1998.
Harry L. Lundy, Jr. Mr. Lundy is 58 years old. He is President and owner of
Williamsburg Group, LLC, Williamsburg Builders, Inc. and
Hallmark Builders, Inc. He is Executive Vice President and
owner of Patriot Homes, Inc. Each of the aforementioned
companies is a residential construction company.
James R. Moxley, III Mr. Moxley, III is 38 years old. He is Vice President of SDC
Group, a real estate development company. Prior to this, Mr.
Moxley served as an Associate Attorney with a prominent law
firm in Baltimore, Maryland. He is a graduate of Duke
University and is a resident of Howard County, Maryland. Mr.
Moxley, III has not previously served in any capacity with the
Bank or the Company. He is the son of Mr. Moxley, Jr. Mr.
Moxley, III currently guarantees a credit facility with the
2
<PAGE>
Bank, along with Mr. Moxley, Jr. and others. As of March 10,
1999, the outstanding balance of the loan was $1,747,563.
Mary S. Scrivener Mrs. Scrivener is 61 years old. She is Secretary of Calvert
General Contractors, a commercial construction company.
Theodore G. Venetoulis Mr. Venetoulis is 64 years old. He is a former Baltimore
County Executive, the County's senior elected official, and has
been publisher of the Orioles Gazette and political analyst for
WBAL-TV in Baltimore, Maryland.
</TABLE>
CONTINUING DIRECTORS
The following information is provided with respect to directors who will
continue to serve as directors of the Company until the expiration of their
terms at the times indicated. Unless otherwise noted, each has served as a
director of the Company and the Bank since inception of the Company in 1987 and
the Bank in 1988.
<TABLE>
<CAPTION>
NAME OF DIRECTOR INFORMATION REGARDING DIRECTOR
- ---------------- ------------------------------
DIRECTORS TO SERVE UNTIL THE 2000 ANNUAL MEETING (CLASS I)
<S> <C>
Anand S. Bhasin Mr. Bhasin is 61 years old. He is President of Gemini
Ventures Corporation, an international trading company. Mr.
Bhasin has served as a director of the Company since November,
1990 and the Bank since April, 1992.
Garnett Y. Clark, Jr. Mr. Clark is 56 years old. He is President of GYC Group Ltd.,
a building and development company. He is also President of
Clark & Associates Realtors, Inc.
Robert J. Gaw Mr. Gaw is 65 years old. He is the retired President of Ryland
Mortgage Company and is a founding director of The Ryland
Group, Inc., a residential homebuilder and mortgage finance
company.
Maurice M. Simpkins Mr. Simpkins is 53 years old. He is Vice President for Public
Affairs at The Ryland Group, Inc., a residential homebuilder
and mortgage finance company, and has been with Ryland since
1971. Mr. Simpkins has served as a director of the Company and
Bank since April, 1997.
Robert N. Smelkinson Mr. Smelkinson is 69 years old. He is the retired Chairman of
Smelkinson Sysco, a distribution company.
<CAPTION>
DIRECTORS TO SERVE UNTIL THE 2001 ANNUAL MEETING (CLASS II)
<S> <C>
Hugh F.Z. Cole, Jr. Mr. Cole is 57 years old. He is Chairman and CFO of Brantly
Development Group, Inc., a real estate development company.
Mr. Cole has served as a director of the Company and Bank since
July, 1988.
G. William Floyd Mr. Floyd is 67 years old. He is a general partner of
Venture Associates, a commercial real estate investment firm.
3
<PAGE>
Herschel L. Langenthal Mr. Langenthal is 70 years old. He is the managing
partner of Langenmyer Company, an investment company. Mr.
Langenthal is also Vice-Chairman of the Company.
Richard E. McCready Mr. McCready is 65 years old. He is Chairman and CEO of
Eastern Sales and Marketing, a food brokerage company.
James R. Moxley, Jr. Mr. Moxley is 68 years old. He is President of Security
Development Corporation, a real estate development company.
Mr. Moxley is also Chairman of the Company and is the father of
Mr. Moxley, III.
</TABLE>
DIRECTORS EMERITUS
Mr. J. Clark, Jr., Mr. Payne, Ms. Gould and Ms. Rouse currently serve as
Directors Emeritus of the Company and the Bank. As a Director Emeritus, each is
eligible to receive compensation and perquisites offered to directors generally
and may participate in discussion at Board meetings of the Company and the Bank,
but may not vote and may not be counted for purposes of determining a quorum.
Terms for Mr. Clark, Jr., Ms. Gould and Ms. Rouse expire in April, 2000.
Mr. Payne's term expires in April, 1999.
BOARD AND COMMITTEE MEETINGS
The Board of Directors held eleven meetings during 1998. Directors Floyd
and McCready attended fewer than 75% of the sum of the total number of Company
meetings of the Board of Directors and of committees of the Board of Directors
on which each served during 1998.
The Board of Directors has seven standing committees. The committees are
the Executive; Acquisition, Development and Construction ("ADC"); Audit;
Asset/Liability Management ("ALM"); Community Reinvestment Act ("CRA") Advisory;
Marketing; and Personnel, Compensation and Stock Option ("PCSO") committees. The
Board of Directors has not established a nominating committee. The functions
customarily attributable to a nominating committee are performed by the PCSO
Committee and the Board of Directors as a whole. In addition, the Board of
Directors, from time to time, establishes special committees which have a
limited duration. Directors are appointed to each committee, except the
Executive Committee, for a one-year term. Directors are appointed to the
Executive Committee on a rotational basis with terms ranging from three months
to one year. The Chairman and Vice-Chairman of the Board of Directors are
ex-officio members of all committees, with the exception of the Audit Committee.
The President is an ex-officio member of all committees except the Audit and
PCSO committees.
The Executive Committee held forty-four meetings during 1998. The
Executive Committee currently consists of Directors Bond, Jr., Cole, Gaw,
Hermann, Holman, Langenthal (Chairman) and Moxley, Jr. The Committee is
responsible for evaluating and approving credits exceeding the lending authority
of officers of the Bank; reviewing on a regular basis financial information,
operational statistics, loan delinquencies and potential problem loans; and
taking other actions as may be required in the absence of the full Board of
Directors.
The ADC Committee held four meetings during 1998. The ADC Committee
consists of Directors Bond, Jr., G. Clark (Chairman), Holman, Langenthal, Lundy,
Moxley, Jr. and Simpkins. The Committee is responsible for monitoring business
development strategies and market trends specific to the Company's acquisition,
development and construction loan portfolio.
4
<PAGE>
The Audit Committee held one meeting during 1998. The Audit Committee
consists of Directors Bhasin, Cole (Chairman), Floyd, Hermann and Venetoulis.
The Committee is responsible for overseeing the Company's internal accounting
controls; recommending to the Board of Directors the selection of the Company's
independent auditors; reviewing the annual audit plan, annual report and results
of the independent audit; reviewing supervisory examination reports; and
initiating other special reviews when deemed necessary.
The ALM Committee held three meetings during 1998. The ALM Committee
consists of Directors Bhasin, Bond, Jr., Gaw (Chairman), Hermann, Langenthal,
Moxley, Jr. and Scrivener. The Committee monitors quarterly operating results,
liquidity, asset mix, interest rate risk, loan pricing and deposit rate policies
of the Company. In addition, the Committee directs the investment strategies of
the Company and makes recommendations of such to the Board of Directors when
strategies are outside its approval authority.
The CRA Advisory Committee held six meetings during 1998. The CRA
Advisory Committee consists of Directors Bhasin, Bond, Jr., Langenthal, Moxley,
Jr., Simpkins (Chairman) and Venetoulis. The Committee provides oversight and
guidance to the development of CRA programs and affordable housing initiatives
of the Company. This includes providing mortgage financing conduits for
low-to-moderate income housing, fair lending policies for minorities,
encouragement for first-time homebuyers, and education to the community to
foster affordable housing opportunities.
The PCSO Committee held three meetings during 1998. The PCSO Committee
consists of Directors Gaw, Langenthal, Lundy, McCready, Moxley, Jr., Simpkins,
Smelkinson (Chairman) and Venetoulis. The Committee oversees the compensation of
all employees, except the compensation of the President and directors; reviews
the compensation of the President and directors, and makes recommendations
regarding changes to such to the Board of Directors for approval; monitors
personnel related matters of the Company; reviews and authorizes employee
related benefit plans; and administers the Company's Stock Option Programs.
Effective January 1, 1999, the Board of Directors established the
Marketing Committee, consisting of Directors Bond, Jr., G. Clark, Gaw,
Langenthal, Lundy, Moxley, Jr., Smelkinson and Venetoulis (Chairman). The
Committee is responsible for monitoring the overall business development
strategies and marketing efforts of the Company.
COMPENSATION OF DIRECTORS
Non-employee directors of the Company and the Bank will receive $150 and
stock options to purchase thirty shares of Common Stock of the Company for each
Board and committee meeting attended during 1999. Chairpersons of committees,
other than directors Langenthal and Moxley, Jr., will receive $250 for each
committee meeting attended during 1999. Directors Moxley, Jr. and Langenthal,
serving in the capacities of Chairman and Vice-Chairman of the Company,
respectively, will receive annual fees of $29,000 and $27,000, respectively, in
addition to fees paid and stock options granted for meeting attendance. These
amounts are unchanged from those received during 1998. The Chairman and
Vice-Chairman are also eligible for a bonus to be awarded at the discretion of
the Board of Directors, although no bonus was awarded for 1998. On January 21,
1999, Directors Moxley, Jr. and Langenthal were granted stock options to
purchase 5,000 and 3,000 shares, respectively, of Common Stock of the Company at
$16.875 per share, the then current market price. Total director fees paid by
the Company and the Bank for 1998 service were $152,473, inclusive of annual
fees paid the Chairman and Vice-Chairman. In addition, on December 31, 1998,
stock options to purchase 15,350 shares of common stock at $17.00 per share, the
then current market price, were granted to directors for meeting attendance
during 1998.
5
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Act") requires that the Company's directors and executive officers, and persons
who own more than 10% of a registered class of the Company's equity securities,
file with the Securities and Exchange Commission (the "SEC") initial reports of
ownership and reports of change in ownership of Common Stock of the Company. The
same persons are also required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms that they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company, and written representations that no other
reports were required during the fiscal year ended December 31, 1998, all
Section 16(a) filing requirements applicable to the Company's executive
officers, directors and greater than 10% beneficial owners were complied with,
except that Director Lundy inadvertently failed to file a report (representing a
transaction) required by Section 16(a) of the Act on a timely basis.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Bank has made loans to certain of its executive officers, directors
and related parties. These loans were made on substantially the same terms,
including interest rate and collateral requirements, as those prevailing at the
time for comparable transactions with unrelated customers and did not involve
more than the normal risk of collectibility or present other unfavorable
features. At December 31, 1998, these loans totaled $3.2 million, or
approximately 8.4% of the total equity capital of the Bank.
PRINCIPAL BENEFICIAL OWNERS OF THE COMPANY'S COMMON STOCK
CERTAIN BENEFICIAL OWNERS
No persons were known by the Company to own beneficially, directly or
indirectly, more than 5% of the Company's Common Stock outstanding on December
31, 1998, except as follows:
<TABLE>
<CAPTION>
Name and Address Shares Beneficially Stock Percentage
of Stockholders Owned Options of Class
--------------- ----- ------- --------
<S> <C> <C> <C>
John M. Bond, Jr. 204,790 (a) 23,962 (b) 5.01%
The Columbia Bank
10480 Little Patuxent Pkwy.
Columbia, MD 21044
</TABLE>
(a) Includes 81,934 shares of Common Stock held by the Company's 401(k) Plan
and Trust on December 31, 1998 for which Mr. Bond, Jr. serves as a trustee.
Beneficial ownership of such shares is expressly disclaimed, except as to
17,759 shares held for the account of Mr. Bond, Jr.
(b) Represents the number of shares of Common Stock subject to stock options
currently exercisable.
6
<PAGE>
BENEFICIAL OWNERSHIP OF EXECUTIVE OFFICERS, DIRECTORS AND NOMINEES
The following table lists the number of shares of Common Stock of the
Company beneficially owned by directors and named Executive Officers of the
Company and the Bank, directly or indirectly, as of March 10, 1999. All shares
and stock options reported herein have been adjusted to reflect the payment of
the 2-for-1 common stock split-up in the form of a 100% stock dividend effective
June 19, 1998.
<TABLE>
<CAPTION>
Shares of % of
Common Stock Stock Options (1) Class
------------ ----------------- -----
<S> <C> <C> <C>
CONTINUING DIRECTORS:
Anand S. Bhasin (2) 46,698 2,153 1.08
Garnett Y. Clark, Jr 39,707 4,131 *
Hugh F.Z. Cole, Jr. (3) 43,217 3,605 1.03
G. William Floyd 28,196 225 *
Robert J. Gaw 58,586 1,300 1.32
Herschel L. Langenthal (4) 92,274 15,793 2.37
Richard E. McCready 45,628 2,569 1.06
James R. Moxley, Jr 46,208 21,904 1.49
Maurice M. Simpkins 11,174 875 *
Robert N. Smelkinson 117,908 4,704 2.70
DIRECTOR NOMINEES:
John M. Bond, Jr. (5)(6) 204,790 23,962 5.01
William L. Hermann (7) 53,960 800 1.21
Charles C. Holman (8) 9,162 15,500 *
Harry L. Lundy, Jr. (9) 110,386 3,050 2.50
James R. Moxley, III (10) 8,433 -- *
Mary S. Scrivener 50,159 2,699 1.16
Theodore G. Venetoulis (11) 26,120 3,201 *
EXECUTIVE OFFICERS:
Michael T. Galeone 3,712 19,000 *
Robert W. Locke (12) 26,491 8,100 *
John A. Scaldara, Jr. (13)(14) 84,778 19,000 2.28
========= ========= =====
All directors and executive
officers (20 persons) (15) 1,025,653 152,571 25.12%
========= ========= =====
Company totals 4,537,420 186,628
========= =======
</TABLE>
* Less than 1%
(1) Represents the number of shares of Common Stock subject to stock options
currently exercisable.
(2) Includes 4,088 shares of Common Stock owned by Mr. Bhasin's children.
(3) Includes 2,742 shares of Common Stock for which Mr. Cole is a trustee.
(4) Includes 23,424 shares of Common Stock for which Mr. Langenthal is a
trustee and 33,390 shares of Common Stock owned by two partnerships and a
corporation of which Mr. Langenthal owns an interest.
(5) Includes 45,230 shares of Common Stock and 2,962 stock options for which
Mr. Bond, Jr. is a co-trustee and a remainder beneficiary.
(6) Includes 81,934 shares of Common Stock held by the Company's 401(k) Plan
and Trust on December 31, 1998 for which Mr. Bond, Jr. serves as a trustee.
Beneficial ownership of such shares is expressly disclaimed, except as to
17,759 shares held for the account of Mr. Bond, Jr.
(7) Includes 4,728 shares of Common Stock owned by a corporation of which Mr.
Hermann owns an interest.
7
<PAGE>
(8) Includes 1,685 shares of Common Stock held for the account of Mr. Holman in
the Company's 401(k) Plan and Trust.
(9) Includes 47,029 shares of Common Stock for which Mr. Lundy is a trustee and
60,674 shares of Common Stock owned by a corporation and a limited
partnership of which Mr. Lundy owns an interest.
(10) Includes 2,604 shares of Common Stock owned by Mr. Moxley, III's children.
(11) Includes 25,978 shares of Common Stock held by a trust; the beneficial
ownership of such shares is expressly disclaimed.
(12) Includes 2,379 shares of Common Stock held for the account of Mr. Locke in
the Company's 401(k) Plan and Trust.
(13) Includes 312 shares of Common Stock for which Mr. Scaldara is trustee.
(14) Includes 81,934 shares of Common Stock held by the Company's 401(k) Plan
and Trust on December 31, 1998 for which Mr. Scaldara serves as a trustee.
Beneficial ownership of such shares is expressly disclaimed, except as to
8,124 shares held for the account of Mr. Scaldara.
(15) Includes 81,934 shares of Common Stock held by the Company's 401(k) Plan
and Trust for which Mr. Bond, Jr. and Mr. Scaldara are trustees.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following report is submitted by the Personnel, Compensation and
Stock Option Committee of the Board of Directors (the "Committee"). The report
addresses the executive compensation policies of the Bank and the Company
(collectively, the "Company") for 1998.
The Committee establishes the compensation of senior officers of the
Company with the exception of Mr. Bond, Jr., the President and Chief Executive
Officer. Mr. Bond, Jr.'s compensation is established by the Board of Directors
of the Company based upon data provided by and recommendations of the Committee.
The Board of Directors also establishes the compensation of the Chairman and
Vice Chairman of the Board of Directors based on the recommendations of the
Committee. In addition, the Committee generally reviews all personnel related
issues, including salary administration related to all other employees, and
administers the Company's 1997 Stock Option Plan, 401(k) Plan and Trust, and
Deferred Compensation Plan. The overall goal of the Committee is the
establishment and administration of compensation policies directly related to
attainment of corporate operational and financial goals which provide the
ability to attract, motivate, reward and retain qualified senior officers.
The Company utilizes an internal salary administration plan for the
basis of its analysis of compensation levels throughout the Company, including
senior officers. The plan includes job descriptions for all positions and rates
the overall responsibility of each position based on characteristics including,
job knowledge, problem-solving, accountability, human relations, communications,
supervision of others and marketing. Each position is assigned to a salary grade
based on level of overall responsibility. Salary ranges for each salary grade
are developed based on market information available for similar positions at
financial institutions both in the communities where the Company does business
and outside the Company's market area. These results are updated annually by the
Company's human resources staff using current market data which reflects
marketplace changes, inflation, and, if applicable, corporate performance. This
information is considered by the Committee.
The individual components of the Company's compensation program include:
(a) BASE SALARY. Base salary levels are established for senior officers
primarily based upon evaluation of the historical performance, degree of
responsibility, level of experience and number
8
<PAGE>
of years with the Company. In addition, the Committee considers
compensation data available through various surveys, including the
Sheshunoff Bank Executive and Director Compensation Survey, SNL Executive
Compensation Review, Bank Administration Institute Bank Cash Compensation
and Key Executive Compensation Surveys, Chesapeake Human Resources
Association Annual Benefits and Compensation Survey, and Starkey & Beall
Regional Financial Industry Salary Survey.
With respect to the base salary of $225,000 granted to Mr. Bond, Jr. for
the year 1998, the Committee took into account the Company's performance
during 1997 and survey information referred to above. Particular emphasis
was placed on Mr. Bond, Jr.'s individual performance, including his
leadership role through a period of continued aggressive growth.
(b) ANNUAL INCENTIVES/BONUSES. Bonuses are generally granted senior officers
based on the extent to which the Company achieves annual performance
objectives, as established by the Board of Directors. Such performance
objectives include net income, earnings per share and return on equity
goals. Bonuses may also be awarded to other officers and employees based on
recommendations by supervisors.
(c) STOCK OPTION AWARDS. The Committee believes that the granting of stock
options is the most appropriate form of long term compensation for senior
officers, since awards of equity encourage ownership in the success of the
Company. Stock option grants are discretionary and are limited by the terms
and conditions of the Company's 1987 Stock Option Plan, as amended, and the
1997 Stock Option Plan.
Section 162(m) of the Internal Revenue Code of 1986, as amended,
provides with certain exceptions, for an annual $1,000,000 limitation on the
deduction that an employer may claim for compensation of certain executives. In
light of the current level of compensation for the Company's named executive
officers, the Committee has not adopted a policy with respect to the foregoing
deductibility limit, but will adopt such a policy should it become relevant.
R. Smelkinson, Chairman R. McCready
R. Gaw J. Moxley, Jr.
H. Langenthal M. Simpkins
H. Lundy T. Venetoulis
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The table below provides the aggregate balance at December 31, 1998 of
loans in excess of $60,000 issued by the Bank to members of the Compensation
Committee and/or their affiliates. These loans were made in the ordinary course
of business, made on substantially the same terms, including interest rate and
collateral requirements, as those prevailing at the time for comparable
transactions with unrelated customers and did not involve more than a normal
risk of collectibility or present other unfavorable features.
<TABLE>
<CAPTION>
Aggregate Loan
Balance at December 31, 1998
----------------------------
<S> <C>
James R. Moxley, Jr. $1,903,792
</TABLE>
9
<PAGE>
SUMMARY COMPENSATION TABLE
The table below presents a summary of compensation for the last three
fiscal years of the chief executive officer of the Company and the other most
highly paid executive officers of the Company and the Bank (collectively, the
"Executive Officers") whose total annual salary and bonus exceeded $100,000
during the year ended December 31, 1998.
<TABLE>
<CAPTION>
Annual Compensation (a) Shares of Common
Name and ------------------------ Stock Underlying All Other
Principal Position Year Salary Bonus Options Awarded Compensation(b)
- ------------------ ---- ------ ----- --------------- ---------------
<S> <C> <C> <C> <C> <C>
John M. Bond, Jr 1998 $225,000 $ -- 40,000 $ 17,198
President and CEO 1997 215,000 -- -- 16,857
1996 200,000 -- -- 19,464
Michael T. Galeone 1998 $160,000 $ 15,000 8,000 $ 12,332
Executive Vice President 1997 154,000 -- -- 8,368
1996 148,000 -- -- 4,213
Charles C. Holman 1998 $157,000 $ -- 8,000 $ 12,109
Executive Vice President 1997 152,000 -- -- 12,138
1996 144,000 -- -- 10,801
Robert W. Locke 1998 $115,500 $ 7,500 8,000 $ 8,994
Executive Vice President 1997 109,000 -- -- 8,967
1996 106,000 -- -- 9,071
John A. Scaldara, Jr 1998 $130,000 $ -- 8,000 $ 10,073
Executive Vice President, 1997 120,000 -- 6,000 9,722
Chief Financial Officer 1996 100,000 -- -- 9,361
and Corporate Secretary
</TABLE>
(a) No officer named above received any perquisites and other personal
benefits the aggregate amount of which exceeded the lesser of $50,000 or
10% of the total annual salary and bonus reported for 1998 for such
officer in the Summary Compensation Table.
(b) Represents discretionary matching contributions made by the Company and
allocated forfeitures resulting from employee terminations as determined
under terms of the Company's 401(k) Plan and Trust. All employees
participating in the Company's 401(k) Plan and Trust receive matching
contributions and forfeitures on equivalent terms. Also includes
discretionary matching contributions made by the Bank as determined
under terms of the Bank's Deferred Compensation Plan.
OPTION GRANTS IN LAST FISCAL YEAR
The table below provides analysis of all individual grants of stock
options made during the year ended December 31, 1998 to the Executive Officers:
10
<PAGE>
<TABLE>
<CAPTION>
Percent of
Number of Total Options
Securities Granted to
Underlying Employees in Exercise or Grant Date
Name Options Granted (b) Fiscal Year Base Price Expiration Date Value (a)
- ---- ------------------- ----------- ---------- --------------- ---------
<S> <C> <C> <C> <C> <C>
John M. Bond, Jr. 40,000 46.0% $16.875 January 26, 2008 $309,200
Michael T. Galeone 8,000 9.2% $16.875 January 20, 2008 $ 62,320
Charles C. Holman 8,000 9.2% $16.875 January 20, 2008 $ 62,320
Robert W. Locke 8,000 9.2% $16.875 January 20, 2008 $ 62,320
John A. Scaldara, Jr. 8,000 9.2% $16.875 January 20, 2008 $ 62,320
</TABLE>
(a) Estimated using the Black-Scholes option pricing model and the following
assumptions:
Dividend yield 1.65%
Expected volatility 36.02%
Risk free interest rate (average) 5.70%
Expected life 10 years
(b) The stock options granted become vested to the extent of 25% after one year
from the date of grant, 50% after two years from the date of grant, 75%
after three years from the date of grant and 100% after four years from the
date of grant.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The table below provides an analysis of aggregated stock options
exercised during 1998 and outstanding stock options as of December 31, 1998 for
the Executive Officers. There were no adjustments or amendments to the exercise
price of stock options previously awarded to any Executive Officer during 1998.
<TABLE>
<CAPTION>
Shares of
Common Stock Underlying Value of Unexercised
Unexercised Options In-The-Money
Shares of Common at Fiscal Year-End Options at Fiscal Year-End
Stock Acquired Value --------------------------- --------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John M. Bond, Jr -- $ -- 11,000 40,000 $133,925 $ 5,000
Michael T. Galeone -- $ -- 17,000 8,000 $204,434 $ 1,000
Charles C. Holman -- $ -- 13,500 8,000 $167,443 $ 1,000
Robert W. Locke 6,500 $ 74,458 6,000 8,000 $ 69,277 $ 1,000
John A. Scaldara, Jr -- $ -- 15,500 12,500 $179,188 $ 28,000
</TABLE>
RETIREMENT PLANS AND SUPPLEMENTAL COMPENSATION ARRANGEMENTS
Executive Officers, like other employees of the Company, or its
subsidiaries, are eligible to participate in the Columbia Bancorp 401(k) Plan
and Trust adopted January 1, 1989 (the "401(k) Plan"). Under terms of the 401(k)
Plan, eligible employees may defer a portion of their total compensation on a
pretax basis. In order to be eligible to participate in the 401(k) Plan, an
employee must have completed one year of service in which 1,000 hours were
worked. The maximum percentage of total compensation
11
<PAGE>
eligible for deferral and the voluntary matching employer contribution are
established annually by the Board of Directors of the Company and are currently
15% and 50%, respectively. An employee is vested in the matching employer
contribution as follows: (i) 20% after three years of service, (ii) 40% after
four years of service, (iii) 60% after five years of service, (iv) 80% after six
years of service and (v) 100% after seven years of service. Employees can direct
the investment of their contribution and the matching employer contribution into
any one or more of seven investment options which include a Bank money market
account, five mutual funds managed by Fidelity Investments, or Common Stock of
the Company.
The vested portion of matching employer contributions made to the 401(k)
Plan during 1998 for each of the Executive Officers was $5,000.
Effective September 27, 1996, the Bank also established a nonqualified
deferred compensation arrangement (the "Deferred Compensation Plan") for
selected senior officers, including the named Executive Officers, of the Bank
and the Company or subsidiaries thereof (the "Senior Officers"). The Deferred
Compensation Plan provides supplemental retirement benefits for the Senior
Officers restricted from receiving further benefits under the 401(k) Plan as a
result of the limitations on pretax contributions imposed by the Internal
Revenue Code. Under the Deferred Compensation Plan, Senior Officers can continue
to make pretax contributions in excess of the IRS limits imposed on the 401(k)
Plan and receive matching employer contributions identical to what they would
have received in the 401(k) Plan if there were no IRS limitations. The maximum
amount that a Senior Officer may defer under the Deferred Compensation Plan,
when added to that deferred under the 401(k) Plan cannot exceed the maximum
percentage compensation deferral (currently 15%) as established by the Board of
Directors. Senior Officers may select a combination of two investment options
for their contributions and matching employer contributions. Contributions and
matching employer contributions may be calculated based on (i) the Bank's prime
rate of interest in effect as of December 15 of the preceding year, (ii) the
performance of the Company's Common Stock, as if contributions and matching
employer contributions were used to purchase shares of the Company's Common
Stock and dividends were reinvested, or (iii) a combination of (i) and (ii).
The vested portion of the matching employer contributions made to the
Deferred Compensation Plan during 1998 for Executive Officers were as follows:
Mr. Bond, Jr., $11,852; Mr. Galeone, $6,986; Mr. Holman, $6,763; Mr. Locke,
$3,649; and Mr. Scaldara, Jr., $4,727.
The Deferred Compensation Plan may also provide for payment of a death
benefit in the event that a Senior Officer dies while in active service. At
January 1, 1999, the death benefit for each of the Executive Officers was as
follows: Mr. Bond, Jr., $870,000; Mr. Scaldara, Jr., $700,000; Mr. Galeone,
$640,000; and Mr. Locke, $290,000. Mr. Holman retired on December 31, 1998 and
is no longer eligible for death benefits under the Deferred Compensation Plan.
In order to partially offset the costs associated with the Deferred
Compensation Plan, the Bank has purchased life insurance contracts on the lives
of the participating Senior Officers, with the Bank as beneficiary.
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL AGREEMENTS
The Company and the Bank entered into an employment agreement dated
February 26, 1996 with John M. Bond, Jr. (the "Agreement"). The terms of the
Agreement continue until the earlier of (i) the close of business on the date
which is three years after the date on which either party provides written
notice of termination, other than for "cause", as defined in the Agreement, but
no later than the close of business on the sixty-fifth birthday of Mr. Bond,
Jr., or (ii) the date on which Mr. Bond, Jr.'s employment is otherwise
terminated pursuant to the provisions of the Agreement. Under terms of the
Agreement, Mr. Bond, Jr. serves as President and Chief Executive Officer of the
Companies with a minimum annual base compensation of $230,625, which is subject
to normal periodic review, at least annually, for increases
12
<PAGE>
based on the salary policies of the Companies and Mr. Bond, Jr.'s contributions
to the Companies. Mr. Bond, Jr. is also entitled to participate in all incentive
and benefit programs offered by the Companies. If Mr. Bond, Jr.'s employment is
terminated, other than for "cause", the Companies are required to continue to
provide benefits to him and pay his salary for a predetermined period plus,
under certain circumstances, pay an annual bonus as determined in accordance
with the terms of the Agreement. The Agreement also contains a non-competition
provision which prohibits Mr. Bond, Jr., during his employment with the
Companies, or for a period of three years following voluntary resignation or
termination for "cause", from directly or indirectly engaging in activities
competitive with the business of the Companies.
The Agreement also provides that in the event of (i) termination, other
than for "cause", (ii) resignation due to a significant change in the nature or
scope of authority and duties, or (iii) resignation as a result of not having
been offered a new employment agreement with similar terms, 90 days prior to, or
within one year after, any "change in control" (as defined in the Agreement) of
the Companies, Mr. Bond, Jr., within 15 days of termination, will be paid a lump
sum payment equal to three times the sum of his annual base compensation and the
average of the bonuses paid to him over the past three years. In the event of
voluntary resignation 90 days prior to, or within one year after, any "change in
control" of the Companies, Mr. Bond, Jr., within 15 days of resignation, will be
paid a lump sum payment equal to the sum of his annual base salary and the
average of the bonuses paid to him over the past three years. Any payments made
in connection with a "change in control" of the Companies after Mr. Bond, Jr.
reaches 62 years of age will be pro-rated to age 65.
Messrs. Galeone, Locke and Scaldara also have employment agreements
specifying minimum annual base compensation of $164,000, $125,500 and $140,000,
respectively. The other terms of these agreements are similar to those of the
Agreement, except that the duration is a two-year continuous period and the lump
sum payment payable in the event of (i) termination other than for "cause", (ii)
resignation due to a significant change in the nature and scope of authorities
and duties, or (iii) resignation as a result of not having been offered a new
employment agreement with similar terms, 90 days prior to, or within one year
after, any "change in control" of the Companies is equal to two times the sum of
the applicable officer's base annual compensation and the average of such
officer's bonuses for the past three years. In addition, any payments made in
connection with a "change in control" of the Companies after reaching 63 years
of age will be pro-rated to age 65.
The Company's 1987 Stock Option Plan, as amended, 1990 Stock Option
Plan, 1997 Stock Option Plan, 401(k) Plan, and the Bank's Deferred Compensation
Plan all provide that in the event of a "change in control" (as defined by each
of the plans), all amounts not fully vested become immediately 100% vested.
STOCKHOLDER RETURN PERFORMANCE GRAPH
The following graph compares the cumulative total return on the
Company's Common Stock during the five years ended December 31, 1998 with that
of a broad market index (Nasdaq, U.S. Companies) and an industry peer group
index (publicly traded commercial banks in Maryland, Pennsylvania, Virginia and
the District of Columbia with total assets of less than $1 billion). The graph
assumes $100 was invested on December 31, 1993 in the Company's Common Stock and
in each of the indices and assumes reinvestment of dividends.
13
<PAGE>
[graph appears here]
Index Data:
<TABLE>
<CAPTION>
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>
Columbia Bancorp 100.00 147.54 191.44 241.06 392.91 399.87
Nasdaq, Total US 100.00 97.75 138.26 170.01 208.58 293.21
CBMD Peer Group 100.00 109.44 121.44 141.67 231.66 226.56
</TABLE>
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has selected KPMG LLP, independent
public accountants, to audit the Company's financial statements for the year
ending December 31, 1999. KPMG LLP has performed the annual audits of the
Company since its inception. Representatives of KPMG LLP plan to attend the
Annual Meeting and will be available to answer appropriate questions. The
representatives will have the opportunity to make a statement at the meeting if
they so desire.
OTHER MATTERS
The Board of Directors of the Company knows of no matters to be
presented for action at the Annual Meeting other than those mentioned above;
however, if any other matters properly come before the Annual Meeting, it is
intended that the persons named in the accompanying proxy will vote on such
other matters in accordance with their judgment of the best interests of the
Company. Other than the election of directors, each matter to be submitted to
the stockholders requires the affirmative vote of a majority of all the shares
voted at the meeting or a majority of all the shares outstanding and entitled to
be voted. Abstentions and broker non-votes are treated as shares not voted.
14
<PAGE>
STOCKHOLDER PROPOSALS
All stockholder proposals intended to be presented at the 2000 Annual
Meeting of Stockholders must be received by the Company not later than November
25, 1999 for inclusion in the Company's proxy statement and proxy relating to
that meeting. If a stockholder intends to present a stockholder proposal at the
2000 Annual Meeting in a manner other than the inclusion of the proposal in the
Company's proxy statement and proxy relating to that meeting, unless the
stockholder notifies the Company of such intention by February 25, 2000, the
proxy holders named by the Company may exercise their discretionary voting
authority on the matter in accordance with their best judgement.
REPORT ON FORM 10-K
The Annual Report on Form 10-K and applicable exhibits are available to
stockholders free of charge upon written request. Requests should be sent to
Columbia Bancorp, 10480 Little Patuxent Parkway, Columbia, Maryland 21044,
Attention: John A. Scaldara, Jr. (E-mail: [email protected]).
By Order of the Board of Directors
John A. Scaldara, Jr.
Corporate Secretary
March 24, 1999
15
<PAGE>
REVOCABLE PROXY
COLUMBIA BANCORP
[ ] PLEASE MARK VOTES AS IN THIS EXAMPLE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Columbia Bancorp hereby appoints Herschel L.
Langenthal and John A. Scaldara, Jr., or either of them, the lawful attorneys
and proxies of the undersigned, with several powers of substitution, to vote all
shares of Common Stock of Columbia Bancorp which the undersigned is entitled to
vote at the Annual Meeting of Stockholders to be held April 27, 1999, and at any
and all adjournments and postponements thereof. Any and all proxies heretofore
given are hereby revoked.
Please be sure to sign and date this Proxy in the box below.
For All
For Withhold Except
1. Election of Directors [ ] [ ] [ ]
J. Bond, Jr., W. Hermann, C. Holman, H. Lundy, Jr., J. Moxley, III, M.
Scrivener, T. Venetoulis
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK "FOR
ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
- -----------------------------------------------
2.In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL 1 AND IN THE BEST JUDGMENT OF THE PROXY HOLDERS ON ALL OTHER
MATTERS.
Please sign exactly as your name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
16
