<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
CAPITOL BANCORP LTD.
________________________________________________________________________
(Name of Registrant as Specified in Its Charter)
CAPITOL BANCORP LTD.
________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of filing fee (Check the appropriate box):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] 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 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> 2
CAPITOL BANCORP LTD.
One Business & Trade Center
200 Washington Square North
Lansing, Michigan 48933
ANNUAL MEETING OF STOCKHOLDERS
May 1, 1997
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Capitol Bancorp Ltd. (the "Corporation")
to be used at the 1997 Annual Meeting of Stockholders of the Corporation (the
"Meeting") which will be held at the Lansing Center, 333 East Michigan Avenue,
Lansing, Michigan, on Thursday, May 1, 1997 at 4:00 p.m. Eastern Time. The
accompanying Notice of Meeting and this Proxy Statement are being mailed to
stockholders on or about March 13, 1997.
REVOCATION OF PROXIES
Stockholders who execute proxies retain the right to revoke them at
any time. Unless so revoked, the shares represented by such proxies will be
voted at the Meeting and all adjournments thereof. Proxies may be revoked by
written notice to the Secretary of the Corporation or by the filing of a later
proxy prior to a vote being taken on a particular proposal at the Meeting. A
proxy will not be voted if a particular stockholder attends the Meeting and
revokes his proxy by notifying the Secretary at the Meeting of his or her
intention to do so. Any stockholder who attends the Meeting and revokes his
proxy may vote in person. Proxies solicited by the Board of Directors of the
Corporation will be voted in accordance with the directions given therein.
Where no instructions are indicated, proxies will be voted FOR the nominees
for directors set forth below.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Stockholders of record as of the close of business on March 7, 1997
(the "Record Date"), are entitled to one vote for each share then held. As of
February 17, 1997, the Corporation had 4,522,066 shares of Common Stock issued
and outstanding.
The following table sets forth, as of February 17, 1997, certain
information as to each person (including any group as that term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934) who was known to be
the beneficial owner of more than 5% of the Corporation's Common Stock as of
that date, and as to the shares of Common Stock beneficially owned by all
executive officers and directors of the Corporation as a group.
<TABLE>
<CAPTION>
Name and Address of Shares of Percent of
Beneficial Owner Common Stock Common Stock
- - ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Joseph D. Reid 894,840(a) 18.10%
Capitol Bancorp Ltd.
One Business & Trade Center
200 Washington Square North
Lansing, Michigan 48933
All Directors and Executive 1,607,949(b) 32.03%
Officers as a group (25 persons)
- - ------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Includes 422,600 options, each to purchase one share of Common Stock.
See "Executive Compensation".
(b) Includes 58,761 shares held by 8 persons who are executive officers
of the Corporation but not directors, of which 19,750 are vested
shares held in the Capitol Bancorp Ltd. Employee Stock Ownership
Plan. Also includes 84,942 shares held by Capitol Bancorp Ltd.
Directors' Deferred Compensation Plan and 477,600 options each to
purchase one share of Common Stock.
1
<PAGE> 3
ELECTION OF DIRECTORS
The Bylaws of the Corporation establish that the number of directors
shall be not less than five nor more than twenty-five.
The persons named in the enclosed Proxy intend to vote for the
election of the nominees named in this Proxy Statement unless it contains
instructions to the contrary, in which case it will be voted pursuant to such
instructions. All nominees are willing to be elected and to serve in such
capacity for one year and until their successors are elected and qualified. If
any of the nominees becomes unavailable for election, which is not anticipated,
the persons named in the Proxy will vote for such other nominee, if any, as may
be proposed by the Board of Directors. A majority of the Common Stock voting
at the Meeting is required for the election of nominees to the Board of
Directors.
Each of the nominees for election to the Board of Directors is
currently a member of the Corporation's Board of Directors and has been a
member of the Board of Directors of the Corporation since the year shown in the
table below (or, as to dates prior to 1988, Capitol National Bank), except as
indicated.
The table below sets forth information regarding the Corporation's
Directors based on the data furnished by them. They have held the principal
occupations shown for at least the past five years unless otherwise indicated.
The shares in this table do not include the ESOP shares voted by Messrs. Reid,
O'Leary and Carr as trustees of the ESOP for which such trustees disclaim
beneficial ownership thereof except insofar as they are beneficiaries of the
ESOP trust. See "Executive Compensation".
<TABLE>
<CAPTION>
Name; Positions with the
Corporation or Principal
Occupations or Positions
During Past Five Years; Other
Directorships in Companies Shares of Common
With Securities Registered Stock of the
Pursuant to Section 12 Year First Corporation Owned Percent of Total
of the Securities Became A Beneficially At Common Stock At
Exchange Act of 1934 Age Director February 17, 1997(a) February 17, 1997
- - -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Joseph D. Reid 54 1982 894,840(b) 18.10%
Chairman of the Board, President
and Chief Executive Officer of
the Corporation; Chairman of the
Board of the Corporation's
subsidiaries; Chairman and Chief
Executive Officer, Access
BIDCO, Inc. and Onset BIDCO, Inc.
(subsidiary of Access BIDCO, Inc.);
Chairman of the Board, Amera
Mortgage Corporation
Robert C. Carr 57 1982 44,316(c) .98%
Treasurer and Executive Vice
President of the Corporation;
President and CEO, Capitol
National Bank
David O'Leary 66 1982 35,811 .79%
Secretary of the Corporation;
Chairman, O'Leary Paint Company
- - -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Includes all shares as to which the nominee has voting power and/or
investment power, including shares held by corporations owned and
controlled, and shares held by children residing in the same
household or jointly with spouse. This total does not reflect
stock purchased through voluntary participation in the Capitol Bancorp
Ltd. Directors' Deferred Compensation Plan.
(b) Includes 422,600 options, each to purchase one share of Common Stock.
See "Executive Compensation".
(c) Includes 23,000 options, each to purchase one share of Common Stock.
Also includes 8,497 vested shares held in the Capitol Bancorp Ltd.
Employee Stock Ownership Plan.
2
<PAGE> 4
<TABLE>
<CAPTION>
Name; Positions with the
Corporation or Principal
Occupations or Positions
During Past Five Years; Other
Directorships in Companies Shares of Common
With Securities Registered Stock of the
Pursuant to Section 12 Year First Corporation Owned Percent of Total
of the Securities Became A Beneficially At Common Stock At
Exchange Act of 1934 Age Director February 17, 1997(a) February 17, 1997
- - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Louis G. Allen 67 1989 435 .01%
Private Banker,
The Bank of Bloomfield Hills
Paul R. Ballard 47 1990 66,913(b) 1.47%
Executive Vice President of the
Corporation; President and
CEO, Portage Commerce Bank
David L. Becker 61 1990 38,168 .84%
President, Becker
Insurance Agency, P.C.
Douglas E. Crist 56 1982 42,713 .94%
President, Developers of
SW Florida, Inc.
Richard G. Dorner 51 1990 10,312(c) .23%
President and CEO, Ann
Arbor Commerce Bank
Gary A. Falkenberg 58 1982 29,566 .65%
Doctor of Osteopathic Medicine
Joel I. Ferguson 58 1982 32,126 .71%
President, WLAJ TV 53, Inc.;
President, F & S
Development Co. (a real
estate development firm);
Director, Maxco, Inc.
Kathleen A. Gaskin 55 1982 23,130 .51%
Associate Broker/State Appraiser,
Tomie Raines, Inc. Realtors
(formerly, Associate Broker,
Moore-Jensen Associates, Inc.)
- - --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Includes all shares as to which the nominee has voting power and/or
investment power, including shares held by corporations owned and
controlled, and shares held by children residing in the same
household or jointly with spouse. This total does not reflect
stock purchased through voluntary participation in the Capitol Bancorp
Ltd. Directors' Deferred Compensation Plan.
(b) Includes 18,000 options, each to purchase one share of Common
Stock. Also includes 6,422 vested shares held in the Capitol
Bancorp Ltd. Employee Stock Ownership Plan.
(c) Includes 1,000 options, each to purchase one share of Common Stock
and 4,700 vested shares held in the Capitol Bancorp Ltd. Employee
Stock Ownership Plan.
3
<PAGE> 5
<TABLE>
<CAPTION>
Name; Positions with the
Corporation or Principal
Occupations or Positions
During Past Five Years; Other
Directorships in Companies Shares of Common
With Securities Registered Stock of the
Pursuant to Section 12 Year First Corporation Owned Percent of Total
of the Securities Became A Beneficially At Common Stock At
Exchange Act of 1934 Age Director February 17, 1997(a) February 17, 1997
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
H. Nicholas Genova 57 1992 9,918 .22%
Chairman and CEO, Washtenaw
News Company, Inc.; President,
H. N. Genova Development Company
L. Douglas Johns 53 1982 72,850 1.60%
President, Mid-Michigan Investment
Company (a holding company for
real estate developments);
Vice President, Leon's Foods
Michael L. Kasten 51 1990 49,955 1.10%
Managing Partner, Kasten Investments,
LLC; Vice President, Kasten Insulation
Services (formerly M. L. Kasten
Company); Managing Partner, Portage
Commerce Investors
James R. Kaye 39 1992 3,857(b) .08%
President and CEO, Oakland Commerce
Bank (formerly, Assistant Vice
President, Banc One Leasing Corporation)
Leonard Maas 75 1995 70,979 1.56%
President, Gillisse Construction
Company (underground utility
construction); Honorary Trustee,
Hope College; Limited Partner,
CP Limited Partnership; Director,
Quincy Street, Inc. (pork processors)
- - -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Includes all shares as to which the nominee has voting power and/or
investment power, including shares held by corporations owned and
controlled, and shares held by children residing in the same
household or jointly with spouse. This total does not reflect
stock purchased through voluntary participation in the Capitol Bancorp
Ltd. Directors' Deferred Compensation Plan.
(b) Includes 1,000 options, each to purchase one share of Common Stock.
Also includes 1,053 vested shares held in the Capitol Bancorp Ltd.
Employee Stock Ownership Plan.
4
<PAGE> 6
<TABLE>
<CAPTION>
Name; Positions with the
Corporation or Principal
Occupations or Positions
During Past Five Years; Other
Directorships in Companies Shares of Common
With Securities Registered Stock of the
Pursuant to Section 12 Year First Corporation Owned Percent of Total
of the Securities Became A Beneficially At Common Stock At
Exchange Act of 1934 Age Director February 17, 1997(a) February 17, 1997
- - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Lyle W. Miller 53 1982 32,357 .71%
Executive Vice President,
CUC International;
President, SERVCO, Inc.
(provider of credit card
enhancements and services to the
financial industry); President,
Northern Leasing & Sales; President,
Lansing Ice Arena; President, McMiller Holding
(land holding company); Partner, Mahmill Acres
(residential development company)
- - --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Includes all shares as to which the nominee has voting power and/or
investment power, including shares held by corporations owned and
controlled, and shares held by children residing in the same
household or jointly with spouse. This total does not reflect stock
purchased through voluntary participation in the Capitol Bancorp Ltd.
Directors' Deferred Compensation Plan
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors conducts its business through meetings of the
Board and through its committees. During the year ended December 31, 1996, the
Board of Directors held 8 meetings. Three directors of the Corporation,
Messrs. Ferguson, Crist and Maas, attended fewer than 75% of the total
meetings of the Board of Directors and committee meetings on which such Board
member served during this period.
Directors who are not employees of the Corporation or its subsidiaries
are entitled to receive an annual directors' fee ($6,000 in 1996). Directors
entitled to receive such fee may either receive the amount currently or elect
to defer the amount pursuant to a deferred compensation plan. See "Directors'
Deferred Compensation Plan".
The Executive Committee, composed of Messrs. Reid, Carr, O'Leary,
Ballard, Ferguson and Johns, meets for the purpose of monitoring current
operating strategy and implementation of the Corporation's business plan.
During the year ended December 31, 1996, the Executive Committee met 4 times.
The Audit Committee, composed of Messrs. Falkenberg, Genova and
Kasten, reviews the results of the independent auditors' audit of the
Corporation's consolidated financial statements and evaluates policies,
procedures and results relating to the internal audit function and recommends
to the Corporation's Board of Directors the selection of independent auditors.
During the year ended December 31, 1996, 5 meetings were held by the Audit
Committee.
The Compensation Committee, composed of Messrs. Miller and Kasten and
Ms. Gaskin, meets for the purpose of reviewing compensation and benefit levels
for the Corporation's management and making related recommendations to the
Corporation's Board of Directors. During the year ended December 31, 1996, 5
meetings were held by the Compensation Committee.
5
<PAGE> 7
EXECUTIVE COMPENSATION
The following table sets forth compensation paid to the CEO and the
next four most highly compensated executive officers of the Corporation for
each of the three years in the period ended December 31, 1996. The Corporation
has entered into written employment agreements with Joseph D. Reid and certain
officers of the Corporation and its subsidiaries. See "CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS".
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
---------------------------------------
Annual Compensation Awards Payouts
---------------------------------------------------------------------------------------------------------------------------------
Other
Name and Annual Restricted Number of All Other
Principal Compen- Stock Options/ LTIP Compen-
Position/Year Salary Bonus (a) sation(b) Award(s) SARs Payouts sation
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Joseph D. Reid (c)
Chairman, President
and CEO:
1996 255,798 255,534 3,779 -0- 198,251(d) -0- -0-
1995 213,165 25,440 250 -0- 41,941(d) -0- -0-
1994 205,120 -0- 250 -0- 121,951(d) -0- -0-
Robert C. Carr
Treasurer and Executive
Vice President of the
Corporation; President and
CEO, Capitol National Bank:
1996 150,000 27,000 2,252 -0- 10,000 -0- -0-
1995 130,000 20,215 2,382 -0- 10,000 -0- -0-
1994 125,000 12,000 2,251 -0- -0- -0- -0-
Paul R. Ballard
Executive Vice President of
the Corporation; President and
CEO, Portage Commerce Bank:
1996 130,000 23,000 3,685 -0- 10,000 -0- -0-
1995 104,000 20,140 3,726 -0- 5,000 -0- -0-
1994 100,000 19,000 3,140 -0- -0- -0- -0-
David K. Powers
Senior Vice President:
1996 103,736 20,000 2,669 -0- -0- -0- -0-
1995 99,746 13,000 2,792 -0- -0- -0- -0-
1994 94,122 6,000 2,820 -0- -0- -0- -0-
John C. Smythe
Executive Vice President of
the Corporation; Executive Vice
President, Capitol National Bank:
1996 103,000 18,500 2,037 -0- -0- -0- -0-
1995 99,009 17,950 1,391 -0- -0- -0- -0-
1994 95,217 9,000 2,144 -0- -0- -0- -0-
</TABLE>
(a) Represents amounts pursuant to incentive compensation program.
(b) Represents allocated personal portion of value of automobile and life
insurance provided by the Corporation.
(c) See also "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS".
(d) Represents options granted pursuant to employment agreement. See
"CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS".
6
<PAGE> 8
DIRECTORS' DEFERRED COMPENSATION PLAN
Nonemployee directors of the Corporation may either receive directors'
fees currently or elect to defer such fees pursuant to a deferred compensation
plan (the "Plan"). Under the terms of the Plan, directors' fees voluntarily
deferred are remitted to a trustee (the "Trustee", City Bank and Trust Company,
Jackson. Michigan) and such funds are invested in shares of Common Stock of the
Corporation in open market transactions. As of February 17, 1997, the Plan
held 84,942 shares of the Corporation's common stock. The Trustee has sole
voting power over the shares held by the Plan; accordingly, the shares held by
the Plan are not included in the shares attributed to each director in the
table included elsewhere in this Proxy Statement. However, shares held by the
Plan are included in the total of all shares held by directors and officers as
a group. Each director's participation in the Plan is voluntary and does not
affect the amount of his/her director fees.
PROFIT-SHARING PLAN
The Corporation maintains a Profit-Sharing IRC Section 401(k) plan
covering substantially all full-time employees of the Corporation and 80% or
more owned subsidiaries over age 21. The Profit-Sharing Plan provides for
contributions in amounts determined annually by the Board of Directors.
Eligible employees may also make voluntary contributions to the Plan. The
Corporation's contributions to the Profit-Sharing Plan charged to expense for
the years 1996, 1995 and 1994 were $88,000, $84,000 and $33,500, respectively.
EMPLOYEE STOCK OWNERSHIP PLAN
The Corporation has an Employee Stock Ownership Plan ("ESOP"). All
employees of the Corporation and its 80 or more owned subsidiaries, subject to
meeting certain eligibility criteria, are entitled to participate in the ESOP,
excepting only Mr. Reid. Contributions to the ESOP (exclusive of amounts
required pursuant to the ESOP's loan) are determined at the discretion of the
Corporation's Board of Directors.
The ESOP program was initially structured as a leveraged ESOP. Prior
borrowings by the ESOP to fund purchase of Common Stock by the ESOP were
retired in 1996.
ESOP contributions charged to expense in 1996, 1995 and 1994
approximated $131,000, $130,000 and $116,000, (including ESOP note payable
interest of $8,400, $19,000, and $19,000), respectively.
The ESOP trust held 98,430 shares of the Corporation's Common Stock at
December 31, 1996. The ESOP shares are voted by eligible participants of the
ESOP, including officers and directors of the Corporation, insofar as such
shares are vested (80,307 at February 17, 1997). Unvested shares (18,123 at
February 17, 1997) are voted by Messrs. Reid, Carr and O'Leary. Vested shares
voted by officers of the Corporation who are also participants in the ESOP at
December 31, 1996 are included in the "Voting Securities and Principal Holdings
Thereof" section of the Proxy Statement.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Corporation has entered into an Employment Agreement with Joseph
D. Reid under which, in addition to any other functions to be performed by him
as may be prescribed by the Board of Directors of the Corporation, he agreed to
serve as Chairman of the Board, President and Chief Executive Officer of the
Corporation. The term of the Employment Agreement is three years and is
automatically extended for an additional year each January 1 unless either
party gives written notice to the contrary. Mr. Reid's Employment Agreement
binds the Corporation to issue Mr. Reid certain options at the outset of the
Employment Agreement and additional options in the event of any new issue of
shares equal to 15% of the sum of the additional shares issued and the shares
subject to the options. The exercise price of such options is to be
established by the Board of Directors based on the fair market price at the
time of issuance of the option at an exercise price of not less than $7.27 per
share currently. Each option expires seven years after its date of issuance.
At December 31, 1996, Mr. Reid held options to purchase up to 442,273 shares of
Common Stock of the Corporation at exercise prices ranging from $7.27 per share
to $16.25 per share.
7
<PAGE> 9
<TABLE>
<Captions>
Option/SAR Grants in Last Fiscal Year
Individual Grants
- - ----------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Number of
Securities % of Total Options/
Underlying SARs Granted to
Options/SARs Employees in Exercise or Base Expiration
Name Granted (#) Fiscal Year Price ($/Sh) Date
- - ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Joseph D. Reid 58,173 26.96 10.187 2003
" " 6,735 3.12 10.25 2003
" " 2,353 1.09 10.50 2003
" " 4,739 2.20 10.56 2003
" " 26,894 12.46 10.625 2003
" " 4,215 1.95 10.687 2003
" " 425 .20 11.75 2003
" " 805 .37 12.937 2003
" " 2,190 1.02 14.0625 2003
" " 89,286 41.37 16.25 2003
Robert C. Carr 10,000 4.63 10.187 2003
Paul R. Ballard 10,000 4.63 10.187 2003
John C. Smythe None None
David K. Powers None None
</TABLE>
<TABLE>
<Captions>
Aggregated Option/SAR Exercised in Last Fiscal Year and Fiscal Year-End Option/SAR Values
- - ----------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Number of Value of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
Fiscal Year-End Fiscal Year-End
Name Shares Acquired Exercisable/ Exercisable/
on Exercise Value Realized Unexercisable Unexercisable
- - ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Joseph D. Reid 172,001 $944,778(a) 442,273(b) $2,184,152(c)
Robert C. Carr 20,000(b) 110,530(c)
Paul R. Ballard 15,000(b) 80,580(c)
</TABLE>
(a) Based on approximate average market price per share during month of
exercise ($12.39) less exercise price of stock options multiplied by
number of stock options exercised.
(b) All outstanding options are currently exercisable.
(c) The Corporation's common stock is traded on the National Market tier
of The Nasdaq Stock Market(SM) under the symbol "CBCL". Value is based
on December 31, 1996 closing price of $15.25 per share (which was
based on market quotations supplied to the Corporation and reflects
inter-dealer prices without retail mark-up, mark-down or commissions).
The Corporation has entered into Employment Agreements with certain
executive officers and/or employee directors of the Corporation (Robert C.
Carr, Paul R. Ballard, Richard G. Dorner, James R. Kaye, John C. Smythe,
Charles J. McDonald and David K. Powers) Except for the salaries, the terms of
each agreement currently in force are substantially identical. The term of
each Employment Agreement is three years and is extended automatically for one
year each January 1 unless either party gives written notice to the contrary.
In addition to their salaries, each employee is entitled to various fringe
benefits and a discretionary bonus. All employees are entitled to disability
benefits under prescribed circumstances. Similar Employment Agreements have
been entered into by the Corporation's subsidiaries with certain of their
executive officers who are not executive officers or directors of the
Corporation.
The Corporation and/or its subsidiaries have entered into revised
Executive Supplemental Income Agreements with certain of those executive
officers and/or employee directors of the Corporation and similarly by the
Corporation's subsidiaries with certain of their executive officers who are not
executive officers or directors of the Corporation. Executive Supplemental
Income Agreements provide for the payment to each employee or designated
beneficiary an annual
8
<PAGE> 10
benefit which is approximately equal to the annual base salary of each employee
for a period of fifteen years in the event of either the employee's retirement
or the death of the employee before attaining retirement age. In the event of
a change in control of the Corporation (as defined in the Agreements) which is
not approved by the Board of Directors, each employee can retire with full
benefits at any time after attaining the age of 55 without approval of the
Board of Directors as then constituted. The benefit liabilities under the
Agreements are covered by a funded insurance program by the Corporation and/or
its subsidiaries.
The Corporation and Capitol National Bank paid rent of approximately
$222,000 during 1996 for their principal offices at One Business & Trade
Center, 200 Washington Square North, Lansing, Michigan to Business & Trade
Center Limited, a Michigan limited partnership ("Partnership"), under lease
agreements with expiration dates ranging from 1998 to 2003 and portions of
which are renewable for periods of 2 1/2 years. Joseph D. Reid and L. Douglas
Johns are partners of the Partnership. These two individuals abstained from
voting on any matters pertaining to the leases. Management believes that the
leases were made on substantially the same terms as those prevailing for
comparable transactions with unrelated third parties.
The Corporation's banking subsidiaries have, in the normal course of
business, made loans to certain directors and officers of the Corporation and
its subsidiaries, and to organizations in which certain directors and officers
have an interest. As of December 31, 1996, the outstanding principal balance
of such loans approximated $14,727,000 representing 36.7% of stockholders'
equity. In the opinion of management, such loans were made in the ordinary
course of business and were made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with unrelated parties and did not involve more than the normal
risk of collectibility or present other unfavorable features. The Corporation
has a written policy that all loans to, and all transactions with, Corporation
officers, directors, affiliates and/or shareholders holding 10% or more of the
Corporation's stock will be made or entered into for bona fide business
purposes, on terms no less favorable than could be made to, or obtained from,
unaffiliated parties, and shall be approved by a majority of the directors of
the Corporation, including a majority of the independent disinterested
directors of the Corporation.
The Corporation and its subsidiaries on a consolidated basis own
approximately 20% of the outstanding common stock of Access BIDCO,
Incorporated, with an aggregate carrying value of $895,000 at December 31,
1996. During 1996, the Corporation and its subsidiaries received cash
dividends from Access BIDCO aggregating $268,500. Access BIDCO is a
specialized business and industrial development corporation, regulated by the
Michigan Financial Institutions Bureau which is the same state agency which
regulates state-chartered commercial banks and other state-chartered financial
institutions. As a Michigan BIDCO, Access BIDCO is a non-depository financial
institution engaged in making loans and providing other financing and
management assistance to Michigan businesses as permitted under the Michigan
BIDCO Act.
Joseph D. Reid, Chairman and Chief Executive Officer of Access BIDCO,
Incorporated serves as a director of Access BIDCO and its majority-owned
subsidiary, Onset BIDCO. In his capacity as an executive officer of Access
BIDCO, Mr. Reid received cash compensation in 1996 in the form of a salary in
the amount of $122,850 (exclusive of a retirement plan contribution on behalf
of Mr. Reid of $18,428). Mr. Reid also owns 4.5% of the outstanding common
stock of Access BIDCO. In addition to the relationship between Mr. Reid and
Access BIDCO, Vice President and Chief Financial Officer of Capitol Bancorp,
Lee W. Hendrickson, serves as Vice President, Chief Financial Officer, and a
director of Access BIDCO and its majority-owned subsidiary. Mr. Hendrickson
received a salary from Access BIDCO for his services as an executive officer of
Access BIDCO. Cristin K. Reid, Mr. Reid's daughter, is an employee and officer
of Access BIDCO and is a director of its majority owned subsidiary. Ms. Reid,
through Access BIDCO, performed certain services for Capitol Bancorp in 1996
relating to formation of de novo banks and regulatory compliance. Capitol
Bancorp pays periodic fees ($100,000 in 1996) to Access BIDCO for the services
of Mr. Hendrickson and Ms. Reid.
In conjunction with its business financing activities, Access BIDCO
and Onset BIDCO have from time to time purchased loan participations from or
sold participations to the Corporation's banks and has engaged in business
financing transactions with such banks, consistent with efforts in engaging in
tandem financing of Michigan businesses with banks and other financial
institutions, including transactions with certain directors of the Corporation
and/or businesses in which they are principal owner(s), directors or
management. Any loans by Access BIDCO or Onset BIDCO purchased by the
Corporation's banks on a participating basis or otherwise are subject to the
banks' normal credit review and approval analysis procedures. Conversely,
loans of the Corporation's banks purchased by Access BIDCO or Onset BIDCO on a
participating basis or otherwise are subject to the normal credit review
analysis and approval of Access and Onset.
In addition to the foregoing, Access BIDCO leases office space from
the Corporation and certain subsidiaries on a month-to-month basis at
approximately $2,000 per month.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
BDO Seidman, LLP acted as independent auditors for the Corporation for
the year ended December 31, 1996. Representatives of BDO Seidman, LLP will be
present at the Meeting to respond to appropriate questions and will have the
opportunity to make a statement if they desire to do so.
9
<PAGE> 11
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Meeting,
including matters relating to the conduct of the Meeting, it is intended that
proxies in the accompanying form will be voted in respect thereof in accordance
with the judgment of those voting the proxies.
MISCELLANEOUS
The cost of solicitation of proxies will be borne by the Corporation.
In addition to solicitations by mail, directors, officers and regular employees
of the Corporation may solicit proxies personally or by telephone without
additional compensation.
The Corporation's 1996 Annual Report to Stockholders ("Annual Report")
is being provided herewith. Any stockholder who does not receive a copy of the
Annual Report may obtain a copy by writing the Corporation. The Annual Report
is not to be treated as a part of the proxy solicitation material nor as having
been incorporated herein by reference.
FORM 10-KSB
A COPY OF THE CORPORATION'S 1996 FORM 10-KSB, WITHOUT EXHIBITS, IS
AVAILABLE TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO: CAPITOL
BANCORP LTD., ONE BUSINESS & TRADE CENTER, 200 WASHINGTON SQUARE NORTH,
LANSING, MICHIGAN 48933, ATTENTION: LINDA D. PAVONA, VICE PRESIDENT.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Corporation's proxy
material for next year's annual meeting of stockholders, any stockholder
proposal to take action at such meeting must be received at the Corporation's
main office at One Business & Trade Center, 200 Washington Square North,
Lansing, Michigan 48933, no later than November 13, 1997. Any such proposal
shall be subject to the requirements of the proxy rules adopted under the
Securities Exchange Act of 1934, as amended.
BY ORDER OF THE BOARD OF DIRECTORS
\s\ Joseph D. Reid
JOSEPH D. REID
Chairman of the Board
Lansing, Michigan
March 13, 1997
10
<PAGE> 12
CAPITOL BANCORP LTD.
One Business & Trade Center PROXY
200 Washington Square North
Lansing, MI 48933
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Joseph D. Reid and David O'Leary as Proxies,
each with the power to appoint his substitute and hereby authorizes them to
represent and to vote as designated below, all the shares of Common Stock of
Capitol Bancorp Ltd. held of record by the undersigned on March 7, 1997 at the
Annual Meeting of Shareholders to be held on May 1, 1997, or any adjournment
thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSAL:
1. Election of Directors:
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY to vote for all
(except as marked to the contrary) nominees listed below
Louis G. Allen Richard G. Dorner H. Nicholas Genova Leonard Maas
Paul R. Ballard Gary A. Falkenberg Lewis D. Johns Lyle W. Miller
David L. Becker Joel I. Ferguson Michael L. Kasten David O'Leary
Robert C. Carr Kathleen A. Gaskin James R. Kaye Joseph D. Reid
Douglas E. Crist
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON 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.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
<PAGE> 13
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.
Please sign this proxy exactly as your name
appears on the books of the company. Joint
owners should each sign personally.
Trustees and other fiduciaries should
indicate the capacity in which they sign,
and where more than one name appears, a
majority must sign. If a corporation, this
signature should be that of an authorized
officer who should state his or her title.
Date ________________________________, 1997
Signature _________________________________
Signature if held jointly _________________
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE INDICATE WHETHER YOU PLAN TO ATTEND
THE ANNUAL MEETING OF STOCKHOLDERS
[ ] WILL ATTEND
[ ] WILL NOT ATTEND
