<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 [ ]
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
ROYAL BANCSHARES OF PENNSYLVANIA, 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)(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> 2
ROYAL BANCSHARES OF PENNSYLVANIA, INC.
----------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 23, 1999
----------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of ROYAL
BANCSHARES OF PENNSYLVANIA, INC. will be held at Twelve Caesars Banquet
Facility, 4200 City Line Avenue, Philadelphia, Pennsylvania, 18049 on Wednesday,
June 23, 1999, at 6:30 p.m. for the following purposes:
1. ELECTION OF DIRECTORS. To elect four Class III Directors to serve a
term of three years and until their successors are elected and qualified.
2. OTHER BUSINESS. To consider such other business as may properly be
brought before the meeting and any adjournment or postponement thereof.
Only shareholders of record at the close of business on May 7, 1999 are
entitled to notice of and to vote at the meeting.
A copy of the 1998 Annual Report of Royal Bancshares of Pennsylvania,
Inc. has been provided contemporaneously herewith. Additional copies of the 1998
Annual Report are available upon request.
By Order of the Board of Directors
/s/ Richard S. Hannye
----------------------------------
Richard S. Hannye, Esquire
Secretary
Enclosures (Proxy Card and Annual Report)
May 27, 1999
WE URGE YOU TO SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS
POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. IF YOU DO ATTEND THE
MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON AFTER GIVING WRITTEN
NOTICE TO THE SECRETARY OF THE CORPORATION.
<PAGE> 3
ROYAL BANCSHARES OF PENNSYLVANIA, INC.
732 MONTGOMERY AVENUE
NARBERTH, PENNSYLVANIA 19072
----------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 23, 1999
----------
This proxy statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Royal Bancshares of Pennsylvania, Inc.
for the Annual Meeting of Shareholders of the corporation to be held on June 23,
1999, and any adjournment or postponement of the meeting. The expense of
soliciting proxies will be borne by the corporation. In addition to the use of
the mails, directors, officers and employees of the corporation may, without
additional compensation, solicit proxies personally or by telephone.
Arrangements will be made with brokerage houses and other custodians, nominees
and fiduciaries to forward proxy solicitation material to the beneficial owners
of stock held of record by these persons and, upon request therefor, the
corporation will reimburse them for their reasonable forwarding expenses. This
proxy statement and the enclosed proxy card are first being given or sent to
shareholders on or about May 27, 1999.
REVOCATION AND VOTING OF PROXIES
The execution and return of the enclosed proxy will not affect a
shareholder's right to attend the meeting and to vote in person. You may revoke
any proxy given pursuant to this solicitation by delivering written notice of
revocation to Richard S. Hannye, Esquire, Secretary of the corporation, at the
address that appears above at any time before the proxy is voted at the meeting.
Unless revoked, the proxyholders will vote any proxy given pursuant to this
solicitation at the Meeting in accordance with the instructions of the
shareholder giving the proxy. In the absence of instructions, proxyholders will
vote all proxies FOR the election of the four nominees for Class III Director
identified in this proxy statement. Although the Board of Directors knows of no
other business to be presented, in the event that any other matters are brought
before the meeting, proxyholders will vote any proxy given pursuant to this
solicitation in accordance with the recommendations of the management of the
corporation.
VOTING SECURITIES, RECORD DATE AND QUORUM
Shareholders of record at the close of business on May 7, 1999 are
entitled to vote at the meeting and any adjournment or postponement thereof. At
the close of business on May 7, 1999 there were issued and outstanding 7,731,768
shares of Class A common stock ($2.00 par value per share) and 1,695,878 shares
of Class B common stock ($0.10 par value per share).
Each shareholder is entitled to one vote for each share of Class A
common stock held by the shareholder and ten votes for each share of Class B
common stock held by the shareholder on all
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<PAGE> 4
matters to be acted upon at the meeting, except that in the election of
directors shareholders are entitled to vote shares cumulatively. See "ELECTION
OF DIRECTORS--CUMULATIVE VOTING."
The presence, in person or by proxy, of the holders of a majority of
the outstanding shares entitled to vote constitutes a quorum for the conduct of
business. A majority of the votes cast at a meeting at which a quorum is present
is required in order to approve any matter submitted to a vote of the
shareholders, except in cases where the vote of a greater number of votes is
required by law or under the Articles of Incorporation or Bylaws of the
corporation. Votes withheld and abstentions will be counted in determining the
presence of a quorum for the particular matter. Broker non-votes will not be
counted in determining the presence of a quorum for the particular matter as to
which the broker withheld authority.
In the case of the election of directors and assuming the presence of a
quorum, the four candidates for Class III receiving the highest number of votes
in Class III shall be elected to the Board of Directors. Votes withheld from a
nominee and broker non-votes will not be cast for such nominee.
PRINCIPAL SHAREHOLDERS
The following table shows the amount of outstanding common stock
beneficially owned by each shareholder (including any "group" as the term is
used in Section 3(d)(3) of the Securities Exchange Act of 1934) known by the
Registrant to be the beneficial owner of more than 5% of such stock, and all
directors and officers as a group. Each share of Class A common stock is
entitled to one vote per share. Each share of Class B common stock is entitled
to ten votes per share and may be converted into shares of Class A common stock
at the rate of 1.15 shares of Class A common stock for each share of Class B
common stock. Beneficial ownership is determined in accordance with applicable
regulations of the Securities and Exchange Commission and the information is not
necessarily indicative of beneficial ownership for any other purpose. For
purposes of the table set forth below, beneficial ownership includes any shares
as to which the individual has sole or shared voting power or investment power
and any shares that the individual has the right to acquire within 60 days of
February 28, 1999. In addition, a person is deemed to beneficially own any stock
for which he, directly or indirectly, through any contact, arrangement,
understanding, relationship or otherwise has or shares:
(i) voting power, which includes the power to vote or to direct
the voting of the stock, or
(ii) investment power, which includes the power to dispose or to
direct the disposition of the stock.
Unless otherwise indicated in a footnote shares reported in this table are owned
directly by the reporting person. The percent of class assumes all options
exercisable within 60 days of February 28, 1999 have been exercised and,
therefore, on a proforma basis, 7,523,803 shares of Class A common stock would
be outstanding. The information is furnished as of February 28, 1999, on which
date 7,224,883 Class A shares and 1,630,517 Class B shares were issued and
outstanding.
3
<PAGE> 5
<TABLE>
<CAPTION>
NAME AND ADDRESS OF SHARES BENEFICIALLY PERCENT OF
BENEFICIAL OWNER OWNED CLASS(6)
---------------- ----- --------
<S> <C> <C>
Daniel M. Tabas (1)(4)(5) 3,774,898(Class A) 51.56%
543 Mulberry Lane 1,178,156(Class B) 72.26%
Haverford, PA 19041
Lee E. Tabas (2)(4)(5) 648,572(Class A) 8.85%
1 Dove Lane 107,274(Class B) 6.58%
Haverford, PA 19041
Richard Tabas (3)(5) 57(Class A) --%
1309 Lafayette Road 111,761(Class B) 6.85%
Gladwyne, PA 19035
</TABLE>
(1) The 3,774,898 shares of Class A common stock and the 1,178,156 Class B
shares beneficially owned by Daniel M. Tabas include: 2,341,327 shares of Class
A common stock and 775,956 shares of Class B common stock held jointly with his
wife, Evelyn R. Tabas; 63,264 shares of Class A common stock and 27,521 shares
of Class B common stock owned by Rome Enterprises, a partnership controlled by
Mr. Tabas; 1,052,211 shares of Class A common stock and 374,662 shares of Class
B common stock owned by the children of Mr. Tabas; 220,959 shares of Class A
common stock and 17 shares of Class B common stock controlled by Evelyn R. Tabas
as custodian for her grandchildren; and options to purchase 97,137 shares of
Class A common stock that are exercisable within 60 days of February 28, 1999.
Mr. Tabas shares power with Evelyn R. Tabas to vote and dispose of 3,774,898
shares of Class A common stock and 1,178,156 shares of Class B common stock. In
calculating the tabulated percent of class, the options to purchase 97,137
shares of Class A common stock were added to the shares of Class A common stock
currently held by Mr. Tabas and to the total number of shares of Class A common
stock outstanding assuming all options exercisable within 60 days of February
28, 1999 held by Mr. Tabas, were exercised.
(2) The 648,572 shares of Class A common stock and 107,274 shares of Class B
common stock beneficially owned by Lee E. Tabas include: 216,370 shares of Class
A common stock and 42,212 shares of Class B common stock owned jointly with his
wife, Nancy Tabas; 3,716 shares of Class A common stock owned by his wife, Nancy
Tabas; 120,721 shares of Class A common stock and 4,232 shares of Class B common
stock owned by Mr. Tabas as custodian for his children; and options to purchase
103,759 shares of Class A common stock exercisable within 60 days of February
28, 1999. Mr. Tabas has sole power to vote and dispose of 440,850 shares of
Class A common stock and 46,444 shares of Class B common stock. In addition,
204,006 shares of Class A common stock and 60,830 shares of Class B common stock
are included under the beneficial ownership of Daniel M. Tabas described in
footnote 1 above. These shares of common stock are held in a trust under which
Daniel M. Tabas retains voting control. In calculating the tabulated percent of
class, the options to purchase 103,759 shares of Class A common stock were added
to the shares of Class A common stock currently held by Mr. Tabas and to the
total number of shares of Class A common stock outstanding assuming all
outstanding options held by Mr. Tabas which are exercisable within 60 days of
February 28, 1999, were exercised.
(3) The 57 shares of Class A common stock and 111,761 shares of Class B common
stock beneficially owned by Richard Tabas include: 74,273 shares of Class B
common stock owned solely by Mr. Tabas; 13,049 shares of Class B common stock
owned by his mother, Harriette Tabas; 57 shares of Class A common stock and 169
shares of Class B common stock owned by his wife, Leslie Silverman, Esquire; and
21,299 shares of Class B common stock owned by ANR Ventures, an entity partially
controlled by Mr. Tabas. Upon information and belief, Mr. Tabas has sole power
to vote and dispose of 77,244 shares of Class B common stock, shared power to
vote or dispose of 21,299 shares of Class B common stock, and has no power to
vote or dispose of 57 shares of Class A common stock and 13,049 shares of Class
B common stock.
(4) Daniel M. Tabas, Lee E. Tabas, Robert R. Tabas, Murray Stempel, Howard
Wurzak, members of their immediate families and their affiliates and associates,
in the aggregate, own 4,666,290 shares of Class A common stock and 1,344,699
shares of Class B common stock.
(5) Daniel M. Tabas is the father of Lee E. Tabas and Robert R. Tabas, the uncle
of Richard Tabas, and the father in law of Murray Stempel and Howard Wurzak.
(6) The percent of class assumes all options exercisable within 60 days of
February 28, 1999 have been exercised and, therefore, on a pro forma basis,
7,224,883 shares of Class A common stock would be outstanding.
4
<PAGE> 6
ELECTION OF DIRECTORS
The Bylaws of the corporation provide that the Board of Directors
consists of not less than 5 nor more than 25 persons and that the directors are
classified with respect to the time they hold office by dividing them into 3
classes, as nearly equal in number as possible. The Bylaws further provide that
the directors of each class are elected for a term of 3 year terms, so that the
term of office of one class of directors expires at the annual meeting each
year. The Bylaws also provide that the aggregate number of directors and the
number of directors in each class of directors is determined by the Board of
Directors. Any vacancy occurring on the Board of Directors is filled by
appointment by the remaining directors. Any director who is appointed to fill a
vacancy holds office until the expiration of the term of office of the class of
directors to which he or she was appointed.
There are presently 14 members of the Board of Directors. There have
been several changes in the membership of the corporation's Board of Directors
since the 1998 Annual Meeting of Shareholders. On August 13, 1998, Susan Tabas
Tepper, a Class I Director, resigned. On September 16, 1998, John M. Decker and
Murray Stempel, III, were appointed to Class III. At the April 23, 1999, meeting
of the corporation's Board of Directors, in accordance with Article 10 of the
corporation's Bylaws, the directors fixed the number of directors in Class I at
4, the number in Class II at 5 and the number in Class III at 5. The Board of
Directors then appointed Murray Stempel, III, who was a member of Class III, to
fill the vacancy in Class I, and thereby make the size of the respective Classes
as nearly even as possible. At the May 19, 1999 meeting of the corporation's
Board of Directors, Terri N. Gelberg, a Class III Director, resigned and
therefore the Board of Directors reduced the number of Directors from 14 to 13,
and the number of Directors in Class III from 5 to 4.
After the Annual Meeting there will be 4 directors in Class I and Class
III and 5 directors in Class II, a total of 13 Directors. The Board of Directors
has nominated the following 4 persons for election to the Board of Directors as
Class III Directors for a term of 3 years:
Carl M. Cousins Edward B. Tepper
John M. Decker Lee E. Tabas
The 9 Class I and Class II directors will continue in office.
The Board of Directors has established, by resolution, a mandatory
retirement age for directors. Upon reaching age seventy, a director must retire
from the Board of Directors, but may become a Director Emeritus, who is entitled
to attend meetings, but is not entitled to vote. There are currently six
Directors Emeritus of the corporation: Anthony Arobone, Royal Flagg Jonas,
Alfred Stein, Charles Willner, Frank Grossman and Maurice Tepper. Daniel M.
Tabas reached age seventy during 1993; however, the Board of Directors decided,
in view of his long-standing relationship with the corporation, ownership of
shares of the corporation's common stock and his years of service to the
corporation, to make an exception and permit Mr. Tabas to continue to serve on
the Board of Directors.
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<PAGE> 7
CUMULATIVE VOTING
In the election of directors, every shareholder entitled to vote has
the right, in person or by proxy, to multiply the number of votes to which he
may be entitled by the number of directors in the class to be elected at the
annual meeting. Every shareholder may cast his or her whole number of votes for
one candidate or may distribute them among any 2 or more candidates in that
class. The 4 candidates receiving the highest number of votes for Class III at
the meeting will be elected. There are no conditions precedent to the exercise
of cumulative voting rights. Daniel M. Tabas and Robert R. Tabas, the persons
named as proxies, have the right to vote cumulatively and to distribute their
votes among the nominees as they consider advisable, unless a shareholder
indicates on his or her Proxy how votes are to be cumulated for voting purposes.
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<PAGE> 8
INFORMATION ABOUT NOMINEES, CONTINUING DIRECTORS
AND EXECUTIVE OFFICERS
Information concerning the directors of the corporation, including the
4 persons nominated for election to the Board of Directors as Class III
Directors at the meeting, the 9 continuing directors and the executive officers
of the corporation is set forth below, including the number of shares of common
stock of the corporation beneficially owned, as of February 28, 1999, by each of
them. Unless otherwise indicated in a footnote, each nominee and continuing
director holds sole voting and investment power with respect to shares
beneficially owned.
<TABLE>
<CAPTION>
DIRECTOR SHARES PERCENT
OR OFFICER BENEFICIALLY OF
NAME AGE SINCE OWNED STOCK
- ------------------------ --- ----- ----- -----
<S> <C> <C> <C> <C>
NOMINEES FOR CLASS III DIRECTOR
Lee E. Tabas(1),(5) 48 1980 648,572(A) 8.39%
107,274(B)
Edward B. Tepper 59 1986 22.343(A) .55%
24,085(B)
Carl M. Cousins 66 1993 8,346(A) .09%
John M. Decker 38 1998 15,225(A) .17%
CLASS I DIRECTORS
Daniel M. Tabas (3)(5) 75 1980 3,774,898(A) 55.78%
1,178,156(B)
Joseph P. Campbell 52 1982 75,224(A) .83%
Howard Wurzak(4)(5) 43 1985 .57%
52,225(A)
Murray Stempel, III(5) 43 1998 907(A) .01%
CLASS II DIRECTORS
Albert Ominsky(2) 65 1982 24,203(A) .63%
28,713(B)
Robert R. Tabas(5),(6) 43 1988 189,688(A) 2.83%
59,269(B)
Anthony J. Micale 61 1997 500(A) .01%
Gregory T. Reardon 45 1997 .01%
390(A)
Jack R. Loew 51 1997 4,622(A) .05%
</TABLE>
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<TABLE>
CLASS III DIRECTORS
<S> <C> <C> <C> <C>
Lee E. Tabas(1),(5) 48 1980 648,572(A) 8.39%
107,274(B)
Edward B. Tepper 59 1986 22.343(A) .55%
24,085(B)
Carl M. Cousins 66 1993 8,346(A) .09%
John M. Decker 38 1998 15,225(A) .17%
Terri Gelberg(7) 50 1998 100(A) .01%
EXECUTIVE OFFICERS
James J. McSwiggan 43 1993 14,968(A) .16%
Chief Financial Officer
and Treasurer
Richard S. Hannye 41 1993 2,091(A) .02%
Secretary and General
Counsel
-------------------
PERCENT OF CLASS(5)
ALL DIRECTORS AND -------------------
EXECUTIVE OFFICERS -- -- 4,834,359(A) 64.25%
AS A GROUP (16 PERSONS) 1,509,258(B) 92.56%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
The information in this table was furnished by beneficial owners or their
representative and includes direct and indirect ownership.
We assume full conversion of Class B common stock to Class A common stock at the
conversion factor of 1.15 shares of Class A shares for each share of Class B
common stock. In calculating the tabulated percent of class for each officer and
director who has exercisable stock options, the additional shares of Class A
common stock to which the officer and director would be entitled upon the
exercise of his options were added to the shares of Class A common stock
currently held by the officer and director and to the total number of shares of
Class A common stock outstanding assuming the officer and directors exercised
all outstanding exercisable options.
The table includes options exercisable within 60 days of February 28, 1999,
stock options unexercised, but currently exercisable, and stock beneficially
owned.
The percent of class assumes all outstanding exercisable options and options
exercisable within 60 days of February 28, 1999, issued to directors and
officers, have been exercised and therefore, on a pro forma basis, 9,099,978
shares of Class A common stock would be outstanding at February 28, 1999.
(1) The 648,572 shares of Class A common stock and 107,274 shares of Class B
common stock beneficially owned by Lee E. Tabas include: 216,370 shares of Class
A common stock and 42,212 shares of Class B common stock owned jointly with his
wife, Nancy Tabas; 3,716 shares of Class A common stock owned by his wife, Nancy
Tabas; 120,721 shares of Class A common stock and 4,232 shares of Class B common
stock owned by Mr. Tabas as custodian for his children; and options to purchase
103,759 shares of Class A common stock exercisable within 60 days of February
28, 1999. Mr. Tabas has sole power to vote and dispose of 440,850 shares of
Class A common stock and 46,444 shares of Class B common stock. In addition,
204,006 shares of Class A common stock and 60,830 shares of Class B common stock
are included under the beneficial ownership of Daniel M. Tabas described in
footnote 3 below. These shares of common stock are held in a trust under which
Daniel M. Tabas retains voting control. In calculating the tabulated percent of
class, the options to purchase 103,759 shares of Class A common stock were added
to the shares of Class A common stock currently held by Mr. Tabas and to the
total number of shares of Class A common stock outstanding assuming all
outstanding options held by Mr. Tabas which are exercisable within 60 days of
February 28, 1999, were exercised.
(2) The 24,203 shares of Class A common stock and 28,713 shares of Class B
common stock beneficially owned by Mr. Ominsky include: 10,420 shares of Class A
common stock and 28,713 shares of Class B common stock owned by Ominsky & Messa,
P.C. as trustee for a rollover account for
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<PAGE> 10
the benefit of Albert Ominsky; 4,590 shares of Class A common stock owned by
Ominsky & Messa, P.C. Profit Sharing Plan, and options to purchase 9,193 shares
of Class A common stock exercisable within 60 days of February 28, 1999.
(3) The 3,774,898 shares of Class A common stock and the 1,178,156 shares of
Class B common stock beneficially owned by Daniel M. Tabas include: 2,341,327
shares of Class A common stock and 775,956 shares of Class B common stock held
jointly with his wife, Evelyn R. Tabas; 63,264 shares of Class A common stock
and 27,521 shares of Class B common stock owned by Rome Enterprises, a
partnership controlled by Mr. Tabas; 1,052,211 shares of Class A common stock
and 374,662 shares of Class B common stock owned by the children of Mr. Tabas;
220,959 shares of Class A common stock and 17 shares of Class B common stock
controlled by Evelyn R. Tabas as custodian for her grandchildren; and options to
purchase 97,137 shares of Class A common stock that are exercisable within 60
days of February 28, 1999. Mr. Tabas shares power with Evelyn R. Tabas to vote
and dispose of 3,774,898 shares of Class A common stock and 1,178,156 shares of
Class B common stock. In calculating the tabulated percent of class, the options
to purchase 97,137 shares of Class A common stock were added to the shares of
Class A common stock currently held by Mr. Tabas and to the total number of
shares of Class A common stock outstanding assuming all options exercisable
within 60 days of February 28, 1999 held by Mr. Tabas, were exercised.
(4) The 52,225 shares of Class A common stock beneficially owned by Mr. Wurzak
include 43,032 shares which are owned solely by his children, Brittany, Chelsea
and Jake Wurzak. Mr. Wurzak has no power to vote or dispose of these shares.
(5) Daniel M. Tabas, Lee E. Tabas, Robert R. Tabas, Murray Stempel, Howard
Wurzak and members of their immediate families and their affiliates and
associates, in the aggregate, own 4,666,290 shares of Class A common stock
(62.54 % of Class A) and 1,344,699 shares of Class B common stock (82.47% of
Class B), or 66.55% of Class A assuming full conversion of Class B common stock
to Class A common stock at a conversion factor of 1.15 shares of Class A common
stock for each share of Class B common stock..
(6) Included in Robert R. Tabas's beneficial ownership are 148,694 shares of
Class A common stock and 54,610 shares of Class B common stock which are
included in the beneficial ownership of Daniel M. Tabas described in footnote 3
above. These shares of common stock are held in a trust under which Daniel M.
Tabas retains voting control.
(7) Ms. Gelberg resigned from the Board of Directors, effective May 19, 1999.
NOMINEES FOR CLASS III DIRECTOR - (THREE YEAR TERM)
Lee Evan Tabas is a DIRECTOR of the corporation and retired, effective
May 31, 1999, as President and Chief Executive Officer of the corporation. He is
the son of Daniel M. Tabas, the brother of Robert R. Tabas, and the
brother-in-law of Howard Wurzak.
Edward B. Tepper, a DIRECTOR of the corporation, is the Chairman of the
Philadelphia Kixx, a professional indoor soccer team, and the President of
Tepper Properties, a real estate investment company in Villanova, Pennsylvania.
Carl M. Cousins, a DIRECTOR of the corporation, is the owner and
principal veterinarian of Fairmount Animal Hospital in Philadelphia,
Pennsylvania.
John M. Decker is a Senior Vice President, Senior Lender and DIRECTOR
of the corporation.
CLASS I DIRECTORS
Joseph P. Campbell, a DIRECTOR of the corporation, was the
corporation's Managing Director. Effective May 31, 1999, the Board of Directors
appointed Mr. Campbell President and Chief Executive Officer of the corporation.
Mr. Campbell is also employed by Tabas Enterprises on a part time basis.
Daniel M. Tabas is the Chairman of the Board and a DIRECTOR of the
corporation. Mr. Tabas is also Chief Executive Officer for Tabas Enterprises,
which consists of various entities in the restaurant, hotel, real estate and
entertainment businesses in the Philadelphia and Downingtown,
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<PAGE> 11
Pennsylvania areas. He is the father of Lee E. Tabas, Robert R. Tabas and the
father-in-law of Howard Wurzak. (1)
Murray Stempel, III, is a Vice President and a DIRECTOR of the
corporation. Mr. Stempel is the son-in-law of Daniel M. Tabas, and
brother-in-law of Lee E. Tabas, Robert R. Tabas and Howard Wurzak. Mr. Stempel
was formerly a Director, Executive Vice President and General Manager of Ajax
Adhesives Industries Inc.
Howard Wurzak, a DIRECTOR of the corporation, is General Manager of the
Twelve Caesars banquet facility in Philadelphia, Pennsylvania. He is the
son-in-law of Daniel M. Tabas, and the brother-in-law of Lee E. Tabas, and
Robert R. Tabas.(1)
- --------------------------------------------------------------------------------
(1) During 1998, the corporation used the services of Twelve Caesars banquet
facilities for customers, directors, and employee appreciation activities.
Twelve Caesars complex is managed by Howard Wurzak, and owned by Daniel M.
Tabas.
CLASS II DIRECTORS
Jack R. Loew, a DIRECTOR of the corporation since January, 1997, is the
President and Treasurer of Hough/Loew Associates, a design/build construction
and development firm specializing in office, industrial and retail properties.
Anthony J. Micale, a DIRECTOR of the corporation is President of Micale
Management Corporation and owns and operates eight McDonald's restaurants.
Albert Ominsky, a DIRECTOR of the corporation, is an attorney and
President of the law firm of Ominsky & Messa, P.C. in Philadelphia,
Pennsylvania.
Gregory T. Reardon, a DIRECTOR of the corporation, is President of The
Reardon Group, Inc. The Reardon Group, located in Glen Mills, Pennsylvania,
comprises Weiss + Reardon & Company, PC (a regional public accounting firm);
Reardon Consulting, Inc (a management consulting firm); and Valuation Advisors,
Inc. (a business appraisal firm). The Reardon Group is devoted to healthcare and
other highly regulated industries.
Robert R. Tabas is a Senior Vice President, Senior Lender and DIRECTOR
of the corporation. Mr. Tabas is a Vice President with Tabas Enterprises. He is
the son of Daniel M. Tabas, brother of Lee E. Tabas and the brother-in-law of
Howard Wurzak.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The committees of the Board of Directors are the Executive Board, the
Audit Committee, and the Compensation, Stock Option and Appreciation Rights Plan
Committee. The corporation does not have a standing Nominating Committee. A
shareholder who desires to propose an individual for consideration by the Board
of Directors as a nominee for director should submit a proposal in writing to
the Secretary of the corporation in accordance with Section 10.1 of the
corporation's Bylaws. Any shareholder who intends to nominate any candidate for
election to the
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Board of Directors must notify the Secretary of the corporation in writing not
less than 60 days prior to the date of the annual meeting of shareholders or not
later than 7 days after the date on which notice was given for any other meeting
of shareholders called for the election of one or more directors.
The Executive Board of the Board of Directors conducted twenty-three
meetings in 1998. The members of the Executive Board during 1998 were Daniel M.
Tabas, Lee E. Tabas, Albert Ominsky, Edward B. Tepper, Gregory T. Reardon,
Howard Wurzak and Joseph P. Campbell. The Executive Board has authority to
supervise and direct the finances and business of the corporation between the
regular meetings of the Board of Directors.
The Audit Committee met once in 1998. The members of the Audit
Committee during 1998 were Daniel M. Tabas (ex officio), Lee E. Tabas (ex
officio), Susan Tabas Tepper (who resigned as a director August 13, 1998), Jack
R. Loew, Terri N. Gelberg and Anthony J. Micale. The Audit Committee supervises
the corporation's internal audit staff and reviews the outside certified public
accounting firm's audit and management reports which are conducted annually.
The Compensation Committee met once in 1998. The members of this
committee in 1998 were Edward B. Tepper, Carl M. Cousins, Jack R. Loew, Joseph
P. Campbell and Terri N. Gelberg. Daniel M. Tabas and Lee E. Tabas attended the
meetings in an ex officio capacity. The committee has the authority to manage,
administer, amend and interpret the Stock Option Plan and to determine, among
other things,
(i) the employees to whom awards shall be made under the plan;
(ii) the type of the awards to be made and the amount, size and
terms of the awards; and
(iii) when awards shall be granted. Additionally, the committee
reviews and determines compensation for all officers and
employees of the corporation.
The Investment Committee met 6 times in 1998. The members of this
committee in 1998 were Daniel M. Tabas, Lee E. Tabas, Albert Ominsky, Anthony J.
Micale, and Joseph P. Campbell.
The Succession to the President Committee met 3 times in 1998. The
members of this committee are Daniel M. Tabas, Lee E. Tabas, Gregory T. Reardon,
Anthony J. Micale, Robert R. Tabas and Jack R. Loew.
The Board of Directors of the corporation held twelve formal meetings
during 1998. Each director attended at least 75% of the aggregate number of
meetings of the Board of Directors and the various committees on which he or she
served.
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REMUNERATION OF DIRECTORS AND OFFICERS AND OTHER TRANSACTIONS
Each member of the Board of Directors receives a fee of $500 per board
meeting attended. Additionally, a director receives $300 for each committee
meeting attended; however, directors who are also employees of the corporation
are not compensated for attendance at committee meetings.
SUMMARY COMPENSATION TABLE
The following table sets forth all compensation paid by the corporation
to the Chief Executive Officer and each of the four most highly compensated
executive officers whose total annual salary and bonus exceeded $100,000 in
1998, for services rendered during the past three fiscal years.
<TABLE>
<CAPTION>
OTHER RESTRICTED SECURITIES ALL
ANNUAL STOCK UNDERLYING OTHER
COMPENSATION AWARD(S) OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS ($)(2) ($) ($) SARS(#) ($)(1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Daniel M. Tabas 1998 324,007 130,413 32,000 7,800 2,550
Chairman of the Board 1997 318,200 130,463 32,000 -- 7,800 2,550
1996 308,112 129,509 30,800 -- 21,589 2,550
Lee E. Tabas(3) 1998 255,795 95,603 19,000 7,800 2,550
President and CEO 1997 251,210 95,640 18,900 -- 7,800 2,550
1996 243,247 94,941 17,800 -- 17,044 2,550
Joseph P. Campbell(3) 1998 162,213 37,309 6,000 2,439 2,550
Managing Director 1997 159,305 37,323 6,000 -- 3,480 2,550
1996 154,256 37,050 4,800 -- 4,632 2,550
James J. McSwiggan 1998 124,375 28,606 -- 1,870 2,550
Treasurer and CFO 1997 122,146 28,617 -- -- 2,668 2,550
1996 118,274 28,408 -- -- 3,078 2,550
Richard S. Hannye 1998 161,681 -- 1,020 -- 1,621 2,550
Corporate Counsel 1997 158,783 -- 1,020 -- 2,312 2,550
1996 153,750 -- 780 -- 3,552 2,550
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Consists of the Bank's contribution to its Employee 401(k) Pension Plan,
under which the Board of Directors has an obligation to match 100% of the total
employee contributions up to an annual maximum of $2,550. The Plan is
administered by J. M. Singley Associates, Inc. Each employee participant is
entitled to contribute up to 15% of his gross salary. Senior management
executives are asked to refrain from contributing to the plan in the event the
administrator determines their contributions would make the Plan top heavy. Each
participant in the Plan will have credited to his Participant's Benefit Account
his proportionate share of all appropriate amounts. Future benefits are based on
future contributions.
(2) Bonuses of Messrs. Tabas, Campbell and McSwiggan are performance based and
tied to goals set by the Stock Option, SARS and Compensation Committee.
(3) Mr. Tabas resigned as President and Chief Executive Officer, effective May
31, 1999. Mr. Campbell succeeded Mr. Tabas as President and Chief Executive
Officer of the corporation. The position of Managing Director will be eliminated
effective May 31, 1999.
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EMPLOYEE OPTIONS/SAR GRANTS IN FISCAL YEAR 1998
<TABLE>
<CAPTION>
POTENTIAL REALIZED
VALUE AT
ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES OF STOCK PRICE
SECURITIES OPTIONS/SARS EXERCISE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM
OPTIONS/SARS EMPLOYEES PRICE EXPIRATION ---------------------
NAME GRANTED (#)(1) IN FISCAL YEARS ($/SH) DATE 5% 10%
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Daniel M. Tabas 7,800 19.574% 19.95 4/20/08 97,872 248,027
Lee E. Tabas 7,800 19.574% 19.95 4/20/08 97,872 248,027
Joseph P. Campbell 2,439 6.121% 19.95 4/20/08 30,604 77,556
James J. McSwiggan 1,870 4.693% 19.95 4/20/08 23,464 59,463
Richard S. Hannye 1,621 4.068% 19.95 4/20/08 20,340 51,545
</TABLE>
- ----------------------------------------------------
(1) Pursuant to the employee stock option plan, the options are exercisable at
20% per year after the date of grant and must be exercised within ten years of
the grant (April 20, 1998).
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND 1998 OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF
SHARES OPTIONS/SARS UNEXERCISED IN-THE MONEY
ACQUIRED AT OPTIONS/SARS AT
ON VALUE DECEMBER 31, 1998 DECEMBER 31, 1998
NAME EXERCISE REALIZED ----------------------------- --------------------------------
(#) ($) EXERCISABLE(#) UNEXERCISABLE EXERCISABLE($) UNEXERCISABLE($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Daniel M. Tabas -- -- 97,137 46,369 1,810,116 540,645
Lee E. Tabas 104,284 2,921,398 103,759 39,615 2,033,523 431,309
Joseph P. Campbell -- -- 14,023 10,948 244,917 94,334
James J. McSwiggan -- -- 11,905 8,465 208,707 73,615
Richard S. Hannye -- -- 2,091 7,407 27,606 65,402
</TABLE>
- ----------------------------------------------------
(1) Value of unexercised options/SARS is based used the closing stock price at
December 31, 1998.
During 1998, no present or former officer or employee of the
corporation or its subsidiary and no individual who had a relationship with the
corporation requiring disclosure under Item 404 of Regulation S-K participated
in deliberations of the Compensation Committee, concerning executive officer
compensation. Lee E. Tabas and Daniel M. Tabas attended the meetings in an
ex-officio capacity, but did not vote.
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COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Board of Directors of Royal Bancshares of Pennsylvania, Inc. is
responsible for the governance of the corporation and its subsidiaries. In
fulfilling its fiduciary duties, the Board of Directors acts in the best
interests of the corporation's shareholders, customers and the communities
served by the corporation and its subsidiaries. To accomplish the strategic
goals and objectives of the corporation, the Board of Directors engages
competent persons to accomplish these objectives with integrity and in a
cost-effective manner. The compensation of these individuals is part of the
Board of Directors' fulfillment of its duties to accomplish the corporation's
strategic mission. The corporation provides compensation to its employees.
The fundamental philosophy of the corporation's and the Bank's
compensation program is to offer competitive compensation opportunities for all
employees based on the individual's contribution and personal performance. The
compensation program is administered by a committee comprised of outside
directors. The objectives of the compensation committee are to establish a fair
compensation policy to govern executive officers' base salaries and incentive
plans, to attract and motivate competent, dedicated, and ambitious managers
whose efforts will enhance the products and services of the corporation, the
results of which will be improved profitability, increased dividends to the
corporation shareholders and subsequent appreciation in the market of the
corporation's shares.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Committee increased the Chief Executive Officer's aggregate
compensation by one percent (1%) to 1998 aggregate compensation of $370,398 in
light of the corporation's 1997 performance accomplishments: net income of $9.4
million, return on average equity of $10.8. and nonperforming assets to total
assets of 1.09%. Chief Executive Officer's compensation consists of a base
salary, a bonus, and perquisites. For 1998, the CEO bonus was directly tied to
specific performance goals, some of which are listed above. The increase in the
CEO base salary and perquisites in 1998 were based on the committees subjective
determination after a review of all information, including the above that it
deems relevant. Future methods of determining CEO compensation may differ.
EXECUTIVE OFFICERS COMPENSATION
The committee increased the corporation's four executive officer's 1998
aggregate compensation by one percent (1%) to 1998 aggregate compensation of
$1,030,624, in light of the above performance results. Executive Officer
compensation consists of a base salary, a bonus, and perquisites. For 1998, the
Executive Officer's bonus was directly tied to specific performance goals, some
of which are listed above. The increase in the Executive Officer's base salary
and perquisites in 1998 were based on the committee's subjective determination
after a review of all information, including the above, that it deems relevant.
Future methods of determining Executive Officer compensation may differ.
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Total compensation opportunities available to the employees of the
corporation are influenced by general labor market conditions, the specific
responsibilities of the individual, and the individual's contributions to the
corporation's success. Individuals are reviewed annually on a calendar year
basis. The corporation strives to offer compensation that is competitive with
that offered employees of comparable size in our industry. Through these
compensation policies, the corporation strives to meets its strategic goals and
objectives to its constituencies and provide compensation that is fair and
meaningful to its employees.
COMPENSATION COMMITTEE
Edward B. Tepper Carl M. Cousins
Jack R. Loew Terri N. Gelberg
Joseph P. Campbell
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
In the ordinary course of business, Royal Bank of Pennsylvania, the
corporation's wholly-owned banking subsidiary, has had, and expects to have in
the future, banking transactions with directors, officers, principal
shareholders of the corporation and the Bank and their associates which involve
substantially the same terms, including interest rates, collateral and repayment
terms as those prevailing at the time for comparable transactions with others
and no more than the normal risk of collectability or other unfavorable
features. During the three years ended December 31, 1998, no transaction of the
above nature exceeded $9,000,000 or 10 percent of the equity capital accounts of
the corporation.
The largest aggregate amount of indebtedness to the corporation and the
Bank during the year 1998, by all directors and officers of the corporation and
bank as a group, and their associates was $14,393,830. The total of such
outstanding loans at December 31, 1998 was $14,393,830. Interest rates ranged
for fixed rates from 7.5 percent to 10.5 percent. Floating rates ranged from
prime to prime plus 2.5 points.
The corporation has had and intends to have business transactions in
the ordinary course of business with directors, officers and associates on
comparable terms as those prevailing from time to time for other nonaffiliated
vendors of the corporation. In particular, the corporation has used hospitality
services of Directors Howard Wurzak, and Daniel Tabas.
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COMMON STOCK PERFORMANCE GRAPH
The following performance graph shows cumulative investment returns to
shareholders based on the assumptions that (A) an investment of $100 was made on
December 31, 1992, in each of the following: (i) Royal Bancshares of
Pennsylvania, Inc. Class A common stock, (ii) the stock of all United States
companies trading on the NASDAQ market, and (iii) common stock of the peer group
of Mid-Atlantic banks with less than $500 million in assets; and (B) all
dividends were reinvested in such securities over the past five years.
ROYAL BANCSHARES OF PENNSYLVANIA
<TABLE>
<CAPTION>
TOTAL RETURN PERFORMANCE
PERIOD ENDING
-----------------------------------------------------------------------------------
INDEX 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Royal Bancshares of Pennsylvania 100.00 115.61 161.28 206.59 457.60 338.43
NASDAQ - Total US 100.00 97.75 138.26 170.01 208.58 293.21
Royal Bancshares Peer Group 100.00 111.38 132.62 165.33 253.89 256.38
</TABLE>
BENEFICIAL OWNERSHIP - COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the corporation's officers and directors, and persons who own more than
10% of the registered class of the corporation's equity securities, to file
reports of ownership and changes in ownership with the SEC. Officers, directors
and greater than 10% shareholders are required by SEC regulation to furnish the
corporation copies of all Section 16(a) forms they file.
Based solely on its review of forms that were received from certain
reporting persons, or written representations from reporting persons that no
Forms 5 were required for those persons, the corporation believes that during
the period January 1, 1998 through December 31, 1998, its officers and directors
were in compliance with all filing requirements applicable to them.
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LEGAL PROCEEDINGS
In the opinion of the management of the corporation, there are no
proceedings pending to which the corporation and the bank are a party or to
which its property is subject, which, if determined adversely to the corporation
and the bank, would be material in relation to the corporation's and the bank's
financial condition. There are no proceedings pending other than litigation
incident to the business of the corporation and the Bank. In addition, no
material proceedings are pending or are known to be threatened or contemplated
against the corporation and the bank by government authorities.
SHAREHOLDER PROPOSALS
Any shareholder who, in accordance with and subject to the provisions
of the proxy rules of the SEC, wishes to submit a proposal for inclusion in the
corporation's proxy statement for its 2000 Annual Meeting of Shareholders must
deliver the proposal in writing to the President of Royal Bancshares of
Pennsylvania, Inc. at its principal executive offices, 732 Montgomery Avenue,
Narberth, Pennsylvania 19072, not later than Thursday, February 21, 2000.
OTHER MATTERS
The Board of Directors does not know of any matters to be presented for
consideration other than the matters described in the accompanying Notice of
Annual Meeting of Shareholders, but if any matters are properly presented, it is
the intention of the persons named in the accompanying Proxy to vote on such
matters in accordance with their best judgment.
ADDITIONAL INFORMATION
A COPY OF THE CORPORATION'S 1998 ANNUAL REPORT TO SHAREHOLDERS IS ENCLOSED.
UPON WRITTEN REQUEST OF ANY SHAREHOLDER, A COPY OF THE CORPORATION'S REPORT ON
FORM 10-K FOR ITS FISCAL YEAR ENDED DECEMBER 31, 1998, INCLUDING THE FINANCIAL
STATEMENTS AND THE SCHEDULES THERETO, AS REQUIRED TO BE FILED WITH SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO RULE 13A-1 UNDER THE SECURITIES AND EXCHANGE
ACT OF 1934 WILL BE PROVIDED WITHOUT CHARGE. REQUESTS SHOULD BE ADDRESSED TO
JAMES J. MCSWIGGAN, TREASURER AND CFO, ROYAL BANCSHARES OF PENNSYLVANIA, INC.,
732 MONTGOMERY AVENUE, NARBERTH, PENNSYLVANIA 19072.
17
