<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
JEFFBANKS, INC.
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
<PAGE>
[JEFFBANKS LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 22, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of JEFFBANKS,
INC. (the "Company") will be held at its principal executive office located at
1609 Walnut Street, Philadelphia, Pennsylvania, on Thursday, May 22, 1997, at
10:00 a.m. (the "Meeting") for the following purposes:
1. To elect three Class A Directors to serve until the expiration of
their three-year terms and until their successors shall have been duly
elected and qualified.
2. To ratify the selection of Grant Thornton LLP as independent public
auditors for the Company for the fiscal year ending December 31, 1997.
3. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
Only those shareholders who hold Common Stock of record at the close of
business on April 3, 1997 are entitled to notice of and to vote at the
Meeting or any adjournment thereof.
Your attention is directed to the Proxy Statement accompanying this Notice
for a more complete statement regarding matters proposed to be acted upon at
the Meeting.
By Order of the Board of
Directors,
[SIGNATURE]
WILLIAM H. LAMB, Secretary
April 18, 1997.
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
HOWEVER, TO ENSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE URGED TO VOTE,
SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENVELOPE
PROVIDED.
<PAGE>
[JEFFBANKS LOGO]
1609 Walnut Street
Philadelphia, Pennsylvania 19103
------
PROXY STATEMENT
------
GENERAL
This Proxy Statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of JeffBanks, Inc. (the
"Company") to be voted at the Annual Meeting of Shareholders (the "Meeting")
to be held at 1609 Walnut Street, Philadelphia, Pennsylvania 19103 on
Thursday, May 22, 1997 at 10:00 a.m., or any adjournment thereof, pursuant to
the foregoing Notice of Annual Meeting. This Proxy Statement and the
accompanying Notice were mailed to shareholders of the Company on or about
April 18, 1997.
SECURITIES ENTITLED TO VOTE
The Board of Directors has determined that shareholders of record at the
close of business on April 3, 1997 are entitled to notice of and to vote at
the Meeting or any adjournment thereof. Only those persons holding of record
shares of the Company's common stock, par value $1.00 per share ("Common
Stock"), are entitled to notice of, and to vote at, the Meeting. There were
4,740,580 shares of Common Stock outstanding on the record date. Each holder
of Common Stock is entitled to one vote for each share of stock held by him
on all matters to be acted on at the Meeting.
SOLICITATION AND VOTING OF PROXIES
Shares represented by the enclosed form of proxy (the "Proxy"), if
properly signed and returned, will be voted in accordance with the
specifications made thereon by the shareholder. Any Proxy not specifying to
the contrary will be voted FOR (1) the election of the nominees for Class A
Director named below and (2) the ratification of the selection of Grant
Thornton LLP as independent public auditors for the Company for the fiscal
year ending December 31, 1997. Execution and return of the enclosed Proxy
will not affect a shareholder's right to attend the Meeting and vote in
person after giving written notice of revocation of the Proxy to the
Secretary of the Company. See "Revocability of Proxy."
Votes cast by Proxy or in person at the Meeting will be counted by persons
appointed by the Company to act as judges of election for the Meeting. The
judges of election will treat shares represented by Proxies that reflect
abstentions as shares that are present and entitled to vote for purposes of
determining the presence of a quorum and for purposes of determining the
outcome of any matter submitted to the shareholders for a vote. Abstentions
do not constitute a vote "for" or "against" any matter.
The Company will bear the entire cost of solicitation, including
preparation, assembly, printing and mailing of this Proxy Statement, the
Proxy and any additional material furnished to shareholders. In addition to
the use of the mails, certain Directors, officers and employees of the
Company may solicit proxies personally, by telephone, telegraph and
telecopier. No additional compensation will be
1
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paid for any such services. Arrangements will be made with brokerage houses,
custodians, nominees and fiduciaries to forward proxy materials to the
beneficial owners of Common Stock, and, upon request therefor, the Company
will reimburse them for their reasonable forwarding expenses.
REVOCABILITY OF PROXY
A Proxy may be revoked by the person giving the Proxy at any time prior to
the close of voting. Prior to the Meeting, a Proxy may be revoked by filing
with the Secretary of the Company a written revocation or a duly executed
Proxy bearing a later date. During the Meeting, a Proxy may be revoked by
filing a written revocation or a duly executed Proxy bearing a later date
with the Secretary of the Meeting prior to the close of voting. Any
shareholder of record may attend the Meeting and vote in person, whether or
not a Proxy has previously been given.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 3, 1997, information with
respect to the beneficial ownership of Common Stock of (i) each Director,
nominee for Director and executive officer of the Company, (ii) the Directors
and executive officers as a group and (iii) each person known by the Company
to own beneficially more than five percent of the Company's outstanding
Common Stock. Unless otherwise indicated in footnotes to the table, each
person listed has sole voting and dispositive power with respect to the
securities owned by such person. The business address of the persons listed
below is 1609 Walnut Street, Philadelphia, Pennsylvania 19103.
<TABLE>
<CAPTION>
Number of Shares
and Nature of Percent of
Name Title of Class Beneficial Ownership Class(1)
--------------------------- -------------- -------------------- ------------
<S> <C> <C> <C>
Betsy Z. Cohen ............ Common Stock 623,308((2)(3)) 12.66%
Edward E. Cohen ........... Common Stock 623,308((2)(3)) 12.66%
Robert J. Coleman ......... Common Stock 131,701((4)) 2.74%
John G. Hoopes ............ Common Stock 72,291((5)) 1.52%
Hersh Kozlov .............. Common Stock 30,370((6)) *
William H. Lamb ........... Common Stock 300,854((7)) 6.34%
Arthur Makadon ............ Common Stock 4,100((8)) *
P. Sherrill Neff .......... Common Stock 6,200((9)) *
James R. Sibel ............ Common Stock 29,290((10)) *
Harmon S. Spolan .......... Common Stock 231,082((2)(11)) 4.78%
William D. White .......... Common Stock 4,628((12)) *
Paul Frenkiel ............. Common Stock 31,521((13)) *
All Directors and executive Common Stock 1,424,954 27.58%
officers as a group
(12 persons)
</TABLE>
- ------
* Less than 1%.
(1) Shares of Common Stock issuable pursuant to options or warrants are
deemed outstanding for purposes of computing the percentage of the person
or group holding such options but are not deemed outstanding for purposes
of computing the percentage of any other person (except that the
aggregate of the options held by Betsy Z. and Edward E. Cohen are
included in the shares set forth as held by each individually). See Notes
(2), (4), (5), (6), (7), (8), (9), (10), (11), (12) and (13), below, for
information concerning outstanding options and warrants.
(2) The 623,308 shares of Common Stock owned by Betsy Z. and Edward E. Cohen
consist of: 260,899 shares owned jointly; 3,523 shares held in a 401(k)
plan for the benefit of Mrs. Cohen; 1,896 shares held in a 401(k) plan
for the benefit of Mr. Cohen; 249 shares held in an individual retirement
2
<PAGE>
account ("IRA") for the benefit of Mrs. Cohen; 16,334 shares held in an
IRA for the benefit of Mr. Cohen; 2,153 shares held by the Jefferson Bank
Employee Stock Ownership Plan ("ESOP") for the benefit of Mrs. Cohen; 881
shares held by the ESOP for the benefit of Mr. Cohen; 8,653 shares held
by Mrs. Cohen as custodian for the benefit of their children; 74,575
shares held by trustees for the benefit of their children; 9,415 shares
held by Mr. Cohen as trustee for Mr. Spolan and his wife (Mr. Cohen
disclaims beneficial ownership of such shares); and 55,314 shares held by
Mr. and Mrs. Cohen as trustees of a charitable foundation (Mr. and Mrs.
Cohen disclaim beneficial ownership of such shares). The share amount
also includes 125,104 shares issuable to Mrs. Cohen upon the exercise of
stock options and 57,750 shares issuable to Mr. Cohen upon the exercise
of stock options.
(3) Includes 6,562 shares of Common Stock owned by Resource America, Inc., of
which Mr. Cohen is Chairman. Mr. Cohen disclaims beneficial ownership of
such shares.
(4) The 131,701 shares of Common Stock owned by Mr. Coleman consist of:
63,901 shares held by Mr. Coleman directly and 67,800 issuable to Mr.
Coleman pursuant to a warrant.
(5) The 72,291 shares of Common Stock owned by Mr. Hoopes consist of: 55,341
shares held by Mr. Hoopes directly and 16,950 shares issuable to Mr.
Hoopes pursuant to a warrant.
(6) The 30,370 shares of Common Stock owned by Mr. Kozlov consist of: 11,412
shares held in an IRA for the benefit of Mr. Kozlov; 213 shares held by
Mr. Kozlov as custodian for the benefit of his minor child; 13,801 shares
held directly by Mr. Kozlov; 844 shares held in an IRA for the benefit of
his wife; and 4,100 shares issuable to him upon the exercise of stock
options.
(7) The 300,854 shares of Common Stock owned by Mr. Lamb consist of: 153,401
shares held by Mr. Lamb directly; 62,339 shares held jointly with his
wife; 53,008 shares held by his wife; 6,056 shares held by Mr. Lamb as
trustee for his children; 17,691 shares held by the Lamb, Windle &
McErlane Money Purchase Pension Trust (of which Mr. Lamb is sole
trustee); 4,259 shares held by Mrs. Lamb as trustee for her child; and
4,100 shares issuable to Mr. Lamb upon the exercise of stock options.
(8) The 4,100 shares of Common Stock owned by Mr. Makadon consist entirely of
shares issuable to him upon the exercise of stock options.
(9) The 6,200 shares of Common Stock owned by Mr. Neff consist of: 2,100
shares held by Mr. Neff directly and 4,100 shares issuable to him upon
the exercise of stock options.
(10) The 29,290 shares of Common Stock owned by Mr. Sibel consist of: 312
shares held by Mr. Sibel directly; 1,817 shares held in the ESOP for his
account; 36 shares held in a 401(k) plan for the benefit of Mr. Sibel;
and 27,125 shares issuable to Mr. Sibel upon the exercise of stock
options.
(11) The 231,082 shares of Common Stock held by Mr. Spolan consist of: 86,205
shares owned jointly with his wife; 914 shares owned by Mr. Spolan
directly; 9,415 shares held in a trust for Mr. and Mrs. Spolan of which
Mr. Cohen is trustee; 3,238 shares held by the ESOP for the account of
Mr. Spolan; 1,610 shares held in a 401(k) plan for the benefit of Mr.
Spolan; 30,976 shares held by Mr. Spolan as trustee for the children of
Mr. and Mrs. Cohen; 5,910 shares held by Mr. Spolan as trustee for
himself and his wife; 460 shares held in a benefit plan for the benefit
of Mr. Spolan; and 92,354 shares issuable to Mr. Spolan upon the
exercise of stock options.
(12) The 4,628 shares of Common Stock held by Mr. White consist of: 528
shares held in a pension plan for the benefit of Mr. White and 4,100
shares issuable to Mr. White upon the exercise of stock options.
(13) The 31,521 shares of Common Stock held by Mr. Frenkiel consist of: 5,663
shares held directly by Mr. Frenkiel; 2,304 shares held in an IRA for
the benefit of Mr. Frenkiel; 558 shares held by the ESOP for the account
of Mr. Frenkiel; 3,199 shares held in a 401(k) plan for the benefit of
Mr. Frenkiel; 2,197 shares held by Mr. Frenkiel as custodian for his
child; and 17,600 shares issuable to Mr. Frenkiel upon the exercise of
stock options.
3
<PAGE>
1. ELECTION OF DIRECTORS
The Board of Directors is divided into three classes with Directors in
each class serving three-year terms. The term of Directors in Class A expire
at the Meeting. The Nominating Committee of the Board of Directors has
nominated Edward E. Cohen, James R. Sibel and P. Sherrill Neff as Directors
in Class A. Should any nominee become unable or refuse to accept nomination
for election as a Director in Class A, it is intended that the persons acting
as proxies will vote for the election of such other person as the Nominating
Committee of the Board of Directors may recommend. The Board of Directors
knows of no reason why any of the nominees might be unable or refuse to
accept election. During 1996, the Board of Directors held 7 meetings. In
1996, all of the Directors attended at least 75% of the aggregate of meetings
of the Board of Directors of the Company and the committees (described below)
on which they served during the period they were Directors and members of
such committees.
Set forth below are the names, ages and principal occupations during the
past five years of the nominees for election as Directors, the continuing
members of the Board of Directors and the executive officers of the Company.
The nominees for Class A Directors receiving a plurality of the votes cast
at the Meeting will be elected.
<TABLE>
<CAPTION>
Served as Principal Occupation for Past Five
a Director Years and Position Held with the
Name Age Since Company or Its Subsidiary Banks
------------------------ ----- ------------ --------------------------------------------
<S> <C> <C> <C>
NOMINEES FOR ELECTION AS
CLASS A DIRECTORS
Edward E. Cohen((1)(3)(5)) 58 1981 Edward E. Cohen has been a Director of the Company
and its subsidiary banks, Jefferson Bank and
Jefferson Bank of New Jersey ("Jefferson NJ")
since 1981, 1976 and 1988, respectively, and
presently serves as Chairman of the Company's
Executive Committee. Mr. Cohen is Chairman of
the Board of Directors and a principal stockholder
of Resource America, Inc., a publicly-held
specialty finance company. Until April 1996, Mr.
Cohen was of counsel to Ledgewood Law Firm, P.C.,
a Philadelphia law firm which provides legal
services to the Company, Jefferson Bank and
Jefferson NJ. Mr. Cohen is married to Betsy Z.
Cohen, referred to below.
James R. Sibel((1)(5)) . 53 1989 James R. Sibel has served as Executive Vice
President, Chief Credit Officer and a Director
of the Company since 1989. Mr. Sibel has been
the Executive Vice President, Chief Credit Officer
and a Director of Jefferson Bank since 1987.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Served as Principal Occupation for Past Five
a Director Years and Position Held with the
Name Age Since Company or Its Subsidiary Banks
------------------------ ----- ------------ --------------------------------------------
<S> <C> <C> <C>
P. Sherrill
Neff((2)(4)(5)) ........ 45 1994 P. Sherrill Neff became a Director of the Company
in 1994. Mr. Neff is President, Chief Financial
Officer and a Director of Neose Technologies,
Inc., a biotechnology firm based in Horsham,
Pennsylvania. From February 1993 to December 1994,
Mr. Neff was Senior Vice President, Corporate
Development, of U.S. Healthcare, Inc., a national
managed health care company headquartered in Blue
Bell, Pennsylvania. Prior thereto, Mr. Neff was
a Managing Director in the Investment Banking
Division of Alex. Brown & Sons Incorporated,
Baltimore, Maryland.
CLASS B DIRECTORS
Harmon S. Spolan((1)(5)) . 61 1981 Harmon S. Spolan has been President, Chief
Operating Officer and a Director of the Company
since 1981 and has been President, Chief Operating
Officer and a Director of Jefferson Bank since
1978. Mr. Spolan is also Vice Chairman and a Director
of Jefferson NJ. Mr. Spolan is admitted to practice
law as a member of the Pennsylvania bar.
Hersh Kozlov((3)(4)(5)) . 49 1994 Hersh Kozlov became a Director of the Company
in 1994 and has been a Director of Jefferson NJ
since 1988. Mr. Kozlov has been a senior member
of the Cherry Hill, New Jersey law firm of Kozlov,
Seaton, Romanini, Brooks & Greenberg, since 1980.
Arthur Makadon((4)(5)) . 54 1995 Arthur Makadon became a Director of the Company
in 1995. Mr. Makadon is a senior partner at the
Philadelphia law firm of Ballard Spahr Andrews
& Ingersoll, with which he has been affiliated
since 1975.
John G. Hoopes((5)) .... 51 1997 John G. Hoopes became a Director of the Company
in 1997. From 1988 to January 1997, Mr. Hoopes
was Chairman of the Board of Directors and a Director
of United Valley Bancorp, Inc. and its wholly-
owned banking subsidiary, United Valley Bank.
Mr. Hoopes is the Chairman of DVF Financial,
Inc., an investment firm located in
Wayne, Pennsylvania.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Served as Principal Occupation for Past Five
a Director Years and Position Held with the
Name Age Since Company or Its Subsidiary Banks
------------------------ ----- ------------ --------------------------------------------
<S> <C> <C> <C>
CLASS C DIRECTORS
Betsy Z. Cohen((1)(5)) . 55 1981 Betsy Z. Cohen has served as Chairman of the Board
of Directors, Chief Executive Officer and a
Director of the Company since 1981, as Chairman
of the Board of Directors, Chief Executive Officer
and a Director of Jefferson Bank since 1974 and
as Chairman of the Board of Directors and a Director
of Jefferson NJ since 1988. Mrs. Cohen is also
a Director of Life Technologies, Inc. and Aetna
US Healthcare. Mrs. Cohen is married to Edward
E. Cohen, referred to above.
William H. Lamb((1)(4)(5)) 57 1981 William H. Lamb has served as Secretary and a
Director of the Company and Jefferson Bank since
1981 and 1974, respectively. Mr. Lamb has been
a senior member of the Chester County, Pennsylvania
law firm of Lamb, Windle & McErlane, P.C. since
1970.
William D.
White((2)(3)(5)) ....... 63 1994 William D. White became a Director of the Company
in 1994. From 1989 to 1994, Mr. White, who is
now retired, was the President of the National
League of Professional Baseball Clubs. Mr. White
is a Director and/or trustee of investment
companies for which Mitchell Hutchins Asset
Management Inc. serves as investment advisor.
Robert J. Coleman((5)) . 58 1997 Robert J. Coleman became a Director of the Company
in 1997. From 1988 to January 1997, Mr. Coleman
was a Director of United Valley Bancorp, Inc.
and its wholly-owned banking subsidiary, United
Valley Bank. Mr. Coleman is the Chairman of the
Executive Committee of the regional law firm of
Marshall, Dennehey, Warner, Coleman & Goggin.
Mr. Coleman is also a Director of the Hero
Scholarship Fund of Delaware County and the
Insurance Society of Philadelphia.
</TABLE>
- ------
(1) Member of the 1996 Executive Committee. The Executive Committee, which
serves at the pleasure of the Board of Directors, has the authority to
take action between meetings of the Board of Directors. During 1996, the
Executive Committee held five meetings.
6
<PAGE>
(2) Member of the 1996 Audit Committee. The Audit Committee, which serves at
the pleasure of the Board of Directors, selects the independent auditors,
reviews the scope and results of the audit and reviews the adequacy of
the Company's accounting, financial and operating controls. During 1996,
the Audit Committee held four meetings.
(3) Member of the 1996 Nominating Committee. The Nominating Committee, which
serves at the pleasure of the Board of Directors, recommends nominees for
election to the Board of Directors. The Nominating Committee will
consider recommendations of security holders in proposing nominees for
election to the Board of Directors at the 1998 Annual Meeting of
Shareholders, provided that such recommendations are received by the
Company at its executive offices not later than December 19, 1997. During
1996, the Nominating Committee held two meetings.
(4) Member of the 1996 Compensation Committee. The Compensation Committee
serves at the pleasure of the Board of Directors. The Compensation
Committee establishes compensation for senior executive officers of the
Company (Mrs. Cohen and Messrs. Cohen, Sibel and Spolan) and recommends
appropriate compensation levels to the Boards of Directors of the
Company's subsidiary banks for their senior executive officers. During
1996, the Compensation Committee held four meetings.
(5) For 1997, committee assignments are as follows: Executive Committee -
Mrs. Cohen and Messrs. Cohen, Spolan, Sibel and Lamb; Audit Committee -
Messrs. Neff, Hoopes and White; Nominating Committee - Messrs. Cohen,
Kozlov, Coleman and White; Compensation Committee - Messrs. Lamb, Kozlov,
Makadon and Neff.
DIRECTORS' FEES
Each Director of the Company who is not an employee of the Company or its
subsidiary banks is paid a fee of $6,000 per year plus $500 for each meeting
of the Board of Directors attended and $300 for each committee meeting
attended. Directors are also eligible to participate in the Company's Key
Employee Stock Option Plan and the 1996 Stock Option Plan subject to the
conditions thereof.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers, Directors, and persons who own more than ten percent of a
registered class of the Company's equity securities to file reports of
ownership and changes in ownership with the Securities and Exchange
Commission and to furnish the Company with copies of all such reports.
Based solely on its review of the reports received by it, or written
representations from certain reporting persons that no filings were required
for those persons, the Company believes that, during the fiscal year ended
December 31, 1996, its officers, Directors and greater than ten percent
shareholders complied with all applicable filing requirements except that one
report on Form 4 was filed late by each of Messrs. Makadon, Kozlov, White,
Lamb and Neff due to a delay by the Company in delivering to them certain
stock option grants reported therein.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION OF NAMED EXECUTIVES
The following table sets forth the cash compensation and certain other
components of compensation paid during 1994, 1995 and 1996 for the Company's
Chief Executive Officer and the other executive officers of the Company whose
salary plus bonus exceeded $100,000 for the fiscal year ended December 31,
1996. The table includes compensation paid by the Company, Jefferson Bank and
Jefferson NJ to the individuals listed. Compensation to the Company's
executive officers and Directors is allocated among the Company and its
subsidiary banks based upon the relative amount of time spent by such persons
on the affairs of the Company and the subsidiary banks; the subsidiary banks
further allocate between themselves the compensation of persons employed by
both based upon their relative amount of total assets and the amount of time
spent on the affairs of each subsidiary bank.
7
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------------------------
ANNUAL COMPENSATION Awards Payouts
------------------------------------- ----------------------------- -----------
Options, Long-Term
Other Restricted Stock Incentive
Name and Principal Annual Stock Appreciation Plan All Other
Position Year Salary Bonus Compensation Awards(1)(2) Rights Payments Compensation(3)
------------------------ ----- --------- -------- ------------ ------------ -------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Betsy Z. Cohen ......... 1996 $310,000 $125,000 0 $2,807 0 0 $2,000
Director, Chairman and 1995 285,000 75,000 0 1,765 0 0 2,000
Chief Executive Officer 1994 285,000 15,000 0 2,698 0 0 2,000
Harmon S. Spolan ....... 1996 290,000 25,000 0 4,172 0 0 750
Director and Chief 1995 280,000 15,011 0 2,807 0 0 750
Operating Officer 1994 280,000 15,000 0 5,428 0 0 750
Edward E. Cohen ........ 1996 175,000 0 0 3,776 0 0 0
Director and Chairman 1995 175,000 0 0 1,042 0 0 0
of Executive Committee 1994 175,000 0 0 1,817 0 0 2,000
James R. Sibel ......... 1996 175,000 15,000 0 4,172 0 0 360
Director, Executive Vice 1995 165,000 26,725 0 2,808 0 0 360
President and Chief Credit 1994 165,000 10,000 0 2,802 0 0 360
Officer
</TABLE>
- ------
(1) Represents the dollar value of shares estimated to be allocated to the
accounts of Mrs. Cohen and Messrs. Spolan, Cohen and Sibel under the ESOP
for 1996.
(2) The total number of shares held in the ESOP (including estimated share
allocation for 1996) for the benefit of Mrs. Cohen and Messrs. Spolan,
Cohen and Sibel, and their aggregate market value as of December 31, 1996
are as follows: Mrs. Cohen - 2,153 shares, $58,131; Mr. Spolan - 3,238
shares, $87,426; Mr. Cohen - 881 shares, $23,787; and Mr. Sibel - 1,817
shares, $49,059. The Company pays dividends on the shares of Common Stock
held in the ESOP as and when declared by the Board of Directors. The
market value used for purposes of this table is the closing price per
share of the Company's Common Stock as of such date ($27.00 per share).
(3) Represents the dollar value of shares contributed by the Company to the
Company's Cash or Deferred Savings Plan (the "401(k) Plan"). The value
used for purposes of this table is the closing price per share of the
Company's Common Stock as of December 31, 1996 ($27.00 per share).
OPTION GRANTS AND EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
The Company granted no new options to Directors and executive officers
during 1996. The following table sets forth the aggregated option exercises
during 1996, the number of unexercised options (adjusted for the 5% stock
dividend declared during 1996) and the value thereof on December 31, 1996 by
the executive officers and Directors listed in the Summary Compensation
Table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES TABLE
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
Shares December 31, December 31,
Acquired 1996 1996
on Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable
----------------- ---------- ---------- --------------- --------------
Betsy Z. Cohen .. 0 $0 115,104/0 $1,140,030 (1)
Harmon S. Spolan 0 0 88,854/0 920,055 (1)
Edward E. Cohen . 0 0 57,750/0 556,658 (1)
James R. Sibel .. 0 0 23,625/0 195,983 (1)
- ------
(1) Calculated as the difference between market value (closing sale price)
per share of Common Stock as of December 31, 1996 ($27.00 per share) and
the option prices per share.
8
<PAGE>
EMPLOYMENT AGREEMENT
The Company has entered into an employment agreement with Betsy Z. Cohen,
effective as of January 1, 1997, pursuant to which Mrs. Cohen serves as the
Chairman of the Board of Directors and Chief Executive Officer. Under the
agreement, Mrs. Cohen will receive base compensation of $475,000 per year,
which may be increased by the Compensation Committee of the Board of
Directors based upon its evaluation of Mrs. Cohen's performance. Mrs. Cohen
is eligible to receive incentive bonuses and stock option grants in amounts
to be determined by the Compensation Committee and to participate in all
employee benefit plans in effect during her period of employment. The Company
has also established a Supplemental Employment Retirement Plan ("SERP") for
Mrs. Cohen's benefit which will pay to Mrs. Cohen, upon the later of her
actual retirement or her reaching Retirement Age (defined as age 65), a
monthly retirement benefit equal to one-twelfth of the product of (i) 2 1/4 %
multiplied by (ii) the number of years that she shall have been employed by
the Company, or its affiliates, multiplied by (iii) her Average Compensation
(defined as the average of the compensation received by Mrs. Cohen in the
three most highly compensated years during the previous eight years of
employment). The agreement requires Mrs. Cohen to devote as much of her
business time to the Company as is necessary to the fulfillment of her
duties, although it permits her to have outside business interests. The
Company will also pay the cost of premiums for a second-to-die insurance
policy on the life of Mrs. Cohen and her husband, Edward E. Cohen, in a face
amount not less than $2,500,000.
The agreement has a term of three years which is automatically extended so
that, on any day on which the agreement is in effect, it shall have a
then-current three year term. The Company may elect to cease the automatic
extension of the Agreement by providing Mrs. Cohen notice thereof. The
agreement may be sooner terminated in the event of Mrs. Cohen's disability
extending for more than 240 days, death or retirement. Mrs. Cohen also has
the right to terminate the agreement upon a change in control of the Company
(as described below), and for cause. Otherwise, Mrs. Cohen may terminate the
agreement upon 90 days' notice.
The agreement provides the following termination benefits: (i) upon
termination due to death, Mrs. Cohen's estate will receive an amount equal to
three times Average Compensation (payable over 36 months); (ii) upon
termination due to disability, Mrs. Cohen will receive a monthly benefit
equal to one-twelfth of the product of (a) Average Compensation and (b) 75%,
which will terminate upon the commencement of retirement benefits; (iii) upon
termination by Mrs. Cohen for cause, by the Company without cause, or upon a
change in control, Mrs. Cohen will receive an amount equal to three times
Average Compensation plus continuation of life, health, accident and
disability insurance benefits for a period of 36 months; and (iv) upon
termination by the Company for cause, Mrs. Cohen will receive her SERP
benefits. In the event that any amounts payable to Mrs. Cohen pursuant to
items (i) through (iv), above ("Total Benefits"), become subject to any
excise tax imposed under Section 4999 of the Internal Revenue Code of 1986,
the Company is required to pay Mrs. Cohen an additional sum such that the net
amounts retained by Mrs. Cohen, after payment of excise, income and
withholding taxes, shall equal Total Benefits. Upon any termination of Mrs.
Cohen's employment, any options to purchase securities of the Company that
had not previously vested will automatically vest on the later of the
effective date of her termination or six months after the date such option
was granted.
For the purpose of Mrs. Cohen's employment agreement, the term "change in
control" means the occurrence of any of the following: (i) beneficial
ownership of 25% or more of the voting securities of the Company being held
by any person, entity or group, excluding employee benefit plans of the
Company and any person, entity or group holding such combined voting powers
on January 1, 1997; (ii) approval by the shareholders of (or, in the event no
approval is required, the Company consummates) a merger, consolidation, share
exchange, division or other reorganization of the Company (a "Fundamental
Transaction"), other than a Fundamental Transaction that would result in the
voting securities of the Company outstanding immediately prior to such
Fundamental Transaction continuing to represent at least 60% of the combined
voting power of (a) in case the Company is the surviving entity, the
Company's outstanding securities immediately after such Fundamental
Transaction, (b) the surviving entity's outstanding securities; or (c) in the
case of a division, the outstanding securities of each entity
9
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resulting from the division; (iii) the approval by the shareholders of a plan
of liquidation or winding-up of the Company or an agreement to sell all or
substantially all of the Company's assets; or (iv) during any 24 consecutive
months, individuals who at the beginning of such period constituted the Board
of Directors of the Company no longer constituting at least a majority of the
Board of Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, Messrs. Lamb, Kozlov, Makadon and Neff served as members of
the Company's compensation committee. Messrs. Lamb, Kozlov, Makadon and Neff
are neither officers nor employees of the Company or its subsidiary banks and
are not members of any Board of Directors (other than of the Company or a
subsidiary bank) which has as a member an officer, employee or Director of
the Company.
CERTAIN TRANSACTIONS
Directors and officers of the Company, and certain business organizations
and individuals associated with them, have been customers of and have had
normal banking transactions with Jefferson Bank and Jefferson NJ. As of
December 31, 1996, Jefferson Bank and Jefferson NJ had loans outstanding to
Directors and officers and certain business organizations and individuals
associated with them totalling $15,946,000 on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with unrelated parties. The aggregate outstanding
balance of loans to Directors, officers and their affiliates made by
Jefferson Bank represented 21% of its shareholders' equity at December 31,
1996, while such loans made by Jefferson NJ represented 16% of its
shareholders' equity at such date. In the aggregate, such loans were 20% of
the Company's shareholders' equity at December 31, 1996. These loans do not,
in management's opinion, represent a greater than normal risk of
collectability or present any other unfavorable features.
The Pennsylvania banking laws prohibit state-chartered banks from owning
property (fixed assets) having a total book value in excess of 25% of the
aggregate of capital, surplus, undivided profits and capital securities of
such bank. In light of this restriction, Jefferson Bank and Jefferson NJ have
determined to rent, rather than own, their branches and Jefferson Bank's
executive office. In the case of the three leases between Jefferson Bank and
related parties and the one lease between Jefferson NJ and a related party,
described below, management believes that the rental paid for each of these
offices is comparable to, or lower than, the rental which would have been
required by unrelated parties in similar commercial transactions for similar
locations.
Jefferson Bank's executive offices occupy a portion (1,800 square feet) of
the first floor of a high rise condominium building located on Rittenhouse
Square in Philadelphia. Jefferson Bank rents the premises from Jefferson
Associates, a Pennsylvania limited partnership comprised principally of
persons related to the Company and Jefferson Bank as officers, Directors or
legal counsel. Messrs. Cohen and Spolan are limited partners of Jefferson
Associates. The rent for the year ended December 31, 1996 was $21,468.
Jefferson Bank is responsible for payment of its proportionate share of
taxes, utilities, insurance and condominium fees. The premises were rented
under a lease which expired in 1991, and Jefferson Bank is currently
occupying the premises on a year-to-year basis.
Jefferson Bank leases facilities at 1607-1609 Walnut Street from Jefferson
Associates II. Jefferson Associates II is a Pennsylvania limited partnership,
the partners of which are also comprised principally of persons related to
the Company and Jefferson Bank as officers, Directors or legal counsel.
Messrs. Cohen and Spolan, and Patricia K. Lamb, the wife of Mr. Lamb, are
limited partners of Jefferson Associates II. A lease was executed in December
1985 and amended effective April 1988 to include the 1609 Walnut Street
space. As amended, the lease provides for a twenty-year term, with a five
year renewal option, at an annual gross rental base of $152,216. The lease
provides for yearly escalations based upon increases in the cost of living,
with a minimum increase of 3% and a maximum increase of 7% in any such year.
In addition, under the terms of the lease, Jefferson Bank is responsible for
payment of taxes, utilities and insurance on the building.
10
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Jefferson Bank has also leased premises for its Manayunk branch office
from Canal House Historic Associates, a Pennsylvania limited partnership
which may be deemed to be an affiliate of Mr. Cohen. The lease provided for a
five-year term (which commenced in May 1990) with three five-year renewal
options, covering 2,426 square feet of space. Jefferson Bank exercised the
first of its renewal options, effective May 1995, at an annual base rent of
$46,095. During the second and third renewal terms, base rent is the
prevailing market rent, provided that the minimum annual rent payable during
the second renewal term is $48,250 and during the third renewal term is
$53,372. The maximum annual rent in any renewal period cannot exceed 120% of
the rent paid at the expiration of the prior period.
Jefferson NJ has leased premises for its Haddon Heights branch office from
Jefferson Associates NJ, L.P., a New Jersey limited partnership comprised of
Directors of Jefferson NJ. Mrs. Cohen and Messrs. Cohen and Spolan are
limited partners of the partnership. The lease provides for a term expiring
March 1, 2001 at an annual rental of $116,400 and a five-year option period
at an annual rental of $116,400 as adjusted by the cost of living index
increase since 1991 (lease inception) with a maximum increase of 15%.
Ledgewood Law Firm, P.C., a law firm to which Mr. Cohen was of counsel
until April 1996, provides legal services to the Company and its subsidiary
banks. During 1996, such firm received $606,000 in connection with services
rendered to the Company and its subsidiary banks (a portion of which related
to acquisitions and capital offerings made by Jefferson Bank), excluding
amounts paid directly by the bank's borrowers.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The executive compensation program of the Company is administered by the
Compensation Committee, which is composed of four independent, non-employee
Directors (Messrs. Lamb, Kozlov, Makadon and Neff). The function of the
Compensation Committee is to review general compensation policies, to
establish the compensation for the senior executive officers of the Company
(Mrs. Cohen and Messrs. Cohen, Sibel and Spolan) and to recommend appropriate
compensation levels for senior officers of the Company's subsidiary banks.
OVERALL POLICY
The Board of Directors and the Compensation Committee subscribe to The
Business Roundtable's statement of principles in considering executive
compensation: "Executive compensation and share ownership programs should be
designed to attract, motivate, reward and retain the management talent
required to achieve corporate objectives and increase shareholder value."
Compensation decisions for all executive officers, including the Company's
Chief Executive Officer, Mrs. Cohen, are based on the same criteria,
consisting primarily of a consideration of the Company's overall general
performance, its performance relative to its competitors and peer group
institutions, and the performance of particular areas of the Company's
operations for which the executive is responsible. In establishing
compensation for its executive officers, the Company seeks to:
1. link rewards to results of operations and shareholder returns;
2. encourage the creation of shareholder value and achievement of
strategic objectives;
3. attract and retain, on a long-term basis, highly qualified executive
personnel; and
4. provide a total compensation program that is competitive with the
Company's competitors and linked to individual responsibility and
performance.
KEY ELEMENTS
The Company's compensation program consists of three components: base
salary, short-term incentives and long-term incentives.
Base Salary
Base salaries for executive officers are substantially dependent upon
salaries paid for comparable positions by the Company's competitors. The
responsibilities undertaken and the competence with
11
<PAGE>
which these responsibilities are carried out by the particular executive
officer are taken into account. In determining the level of any year-to-year
salary increase for a particular executive, the general overall performance
of the Company and the person's contribution thereto are also taken into
account, although the Compensation Committee has not applied arithmetic
guidelines in so doing. In addition, the Compensation Committee will consider
whether a particular aspect of the Company's operations (as, for example,
asset quality) under the direct supervision and control of an officer has
achieved significant improvement (or experienced deterioration) irrespective
of the Company's overall performance.
Bonus
Bonus compensation is a short-term incentive program, discretionary with
the Compensation Committee, which makes cash awards based upon what the
Compensation Committee determines to be outstanding performance in achieving
particular strategic goals of the Company as well as the overall performance
of the Company. Historically, bonus compensation had only rarely been awarded
to senior executives, as it was preferred to reflect an executive's
performance in his or her salary. Commencing in 1994, however, the
Compensation Committee modified the Company's policy and placed more emphasis
on bonus compensation as an appropriate method of recognizing short-term
performance or achievements by the Company's senior executives. Bonus
determinations are made on a case-by-case basis and, accordingly, are not the
result of the application of a particular formula. For 1996, bonus
compensation for senior executives was set at an average of slightly less
than 18% of 1995 compensation, reflecting the Company's improved performance,
including increased income, improved operating ratios, loan growth and the
expansion of the Company through new branch openings and acquisitions.
Long-Term Incentives
As with bonus compensation, long-term incentive compensation is based on
contributions to the Company's performance. These programs are designed not
only to develop and maintain strong management but also to align the
interests of executives with the enhancement of shareholder value. The
Company's Key Employee Stock Option Plan, the 1996 Stock Option Plan, the
ESOP and the Jefferson Bank Cash or Deferred Savings (401K) Plan are used to
motivate key employees and executive officers to achieve long-term results
beneficial to shareholders since the value of awards under such programs are
directly linked to the value of the Company's Common Stock. As with bonus
compensation, long-term incentive compensation is awarded on a case-by-case
basis and, for 1996, reflected the longer-term growth, since 1991, in the
Company's net income, loans, non-interest income, return on assets, return on
equity and the improvement since that date in the Company's asset quality.
1996 COMPENSATION OF CHIEF EXECUTIVE OFFICER
In general, the compensation of Betsy Z. Cohen, the Company's Chief
Executive Officer, is determined in the same manner as that of other senior
executives, as described above. For 1996, the Compensation Committee
determined to recommend, and the Board approved, a base salary for Mrs. Cohen
of $310,000. The Committee also approved, in 1996, $125,000 in bonus
compensation relating to 1995. In making its recommendations, the
Compensation Committee considered the following:
The continued increase in fully diluted per share earnings of the Company.
The five-year growth of non-interest income.
The five-year growth of the Company's total assets.
The five-year growth of the Company's return on average assets.
The substantial increase in the Company's return on average common equity
over a five year period.
The substantial improvements in the Company's asset quality.
The Company's successful acquisitions of new branches and other banks.
1996 Compensation Committee
William H. Lamb
Hersh Kozlov
Arthur Makadon
P. Sherrill Neff
12
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SHARE INVESTMENT PERFORMANCE
The following graph compares the change in the cumulative total
shareholder return on the Company's Common Stock from November 12, 1993
(inception of trading) to December 31, 1996, with the performance of the
Nasdaq Broad Market Index and the performance of the Nasdaq Banking Index for
the same period. The Company's shares are traded on the Nasdaq National
Market under the symbol "JEFF." The total return indices reflect reinvestment
of dividends.
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L | |
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A 100|*&#-------------#--------------*&#------------------------------|
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0|----------------|---------------|---------------|---------------|
11/12/93 12/93 12/94 12/95 12/96
*=JEFFBANKS, INC. &=NASDAQ BANKING INDEX #=NASDAQ MARKET INDEX
----------FISCAL YEAR ENDING----------
COMPANY 1993 1993 1994 1995 1996
JEFFBANKS INC 100.00 82.67 103.71 127.14 162.42
PEER GROUP 100.00 103.14 102.77 153.11 202.31
BROAD MARKET 100.00 98.64 103.56 134.33 166.92
THE PEER GROUP CHOSEN WAS:
NASDAQ BANKING INDEX
THE BROAD MARKET INDEX CHOSEN WAS:
NASDAQ MARKET INDEX
FROM INCEPTION OF TRADING THROUGH DEC. 31, 1996
ASSUMES $100 INVESTED ON NOV. 12, 1993
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 1996
2. RATIFICATION OF AUDITORS
The Board of Directors recommends that the shareholders ratify the
selection of Grant Thornton LLP, independent certified public accountants, to
audit the financial statements of the Company for the fiscal year ending
December 31, 1997. A plurality of the votes cast at the Meeting is required
for ratification.
Representatives of Grant Thornton LLP will not be present at the Meeting.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the next Annual Meeting
of Shareholders and included in the Company's Proxy Statement relating to
that meeting must be received by the Company at its executive offices not
less than 120 days prior to the date corresponding to the date of the release
of the Company's Proxy Statement to shareholders in connection with this
Meeting. Accordingly, shareholder proposals to be presented at the 1998
Annual Meeting of Shareholders must be submitted to and received by the
Company no later than December 19, 1997.
13
<PAGE>
PROXY
JEFFBANKS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS OF JEFFBANKS, INC.
The undersigned hereby appoints Betsy Z. Cohen
and Harmon S. Spolan, or either of them, as and for
his proxies, each with the power to appoint such
proxy's substitute, and hereby authorizes them, or
either of them, to vote all of the shares of Common
Stock of JeffBanks, Inc. held of record by the
undersigned on April 3, 1997 at the Annual Meeting
of Shareholders of JeffBanks, Inc. to be held
Thursday, May 22, 1997 and at any and all
adjournments thereof as follows:
* FOLD AND DETACH HERE *
<PAGE>
_________
Please mark | |
your votes | X |
as this |_______|
1. ELECTION OF DIRECTORS.
The nominees for election are Edward E. Cohen, James R. Sibel, and
P. Sherrill Neff.
I plan to attend
the meeting
|_|
FOR all nominees Withhold authority to To withhold authority to vote
listed above vote for all nominees for any individual nominee,
(except as marked listed above write that nominee's name
to the contrary in the space provided below.
at the right)
|_| |_| ------------------------------
2. RATIFICATION OF SELECTION OF GRANT
THORNTON LLP AS INDEPENDENT
AUDITORS OF THE COMPANY FOR FISCAL
1997.
FOR AGAINST ABSTAIN
|_| |_| |_|
This proxy, when properly executed, will
be voted in the manner described herein
by the undersigned. If no direction is
made, this proxy will be voted FOR all
nominees listed and FOR the ratification
of Grant Thornton LLP. Please sign
exactly as your name appears on this
proxy card. When shares are held by
joint tenants, both should sign. When
signing as an 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.
Signature ___________________________________________________ Date _____________
PLEASE MARK, SIGN, DATE AMD RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
* FOLD AND DETACH HERE *
