SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
MONTEREY BAY BANCORP, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
MONTEREY BAY BANCORP, INC.
36 BRENNAN STREET
WATSONVILLE, CALIFORNIA 95076
408-722-3885
April 13, 1998
Fellow Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders
(the "Annual Meeting") of Monterey Bay Bancorp, Inc. (the "Company"), the
holding company for Monterey Bay Bank (the "Bank"), which will be held on May
21, 1998, at 11:00 a.m., Pacific Time, at the Watsonville Women's Club, 12
Brennan Street, Watsonville, California 95076.
The attached Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted at the Annual Meeting. Directors and officers
of Monterey Bay Bancorp, Inc., as well as a representative of Deloitte & Touche
LLP, the Company's independent auditors, will be present at the Annual Meeting
to respond to any questions that stockholders may have regarding the business to
be transacted.
The Board of Directors of Monterey Bay Bancorp, Inc. has determined
that the matters to be considered at the Annual Meeting are in the best
interests of the Company and its stockholders. For the reasons set forth in the
Proxy Statement, the Board unanimously recommends that you vote "FOR" each
matter to be considered.
YOUR COOPERATION IS APPRECIATED SINCE A MAJORITY OF THE COMMON STOCK
MUST BE REPRESENTED, EITHER IN PERSON OR BY PROXY, TO CONSTITUTE A QUORUM FOR
THE CONDUCT OF BUSINESS. WHETHER OR NOT YOU EXPECT TO ATTEND, PLEASE SIGN, DATE
AND RETURN THE ENCLOSED PROXY CARD PROMPTLY IN THE POSTAGE-PAID ENVELOPE
PROVIDED SO THAT YOUR SHARES WILL BE REPRESENTED.
On behalf of the Board of Directors and all of the employees of the
Company and the Bank, I thank you for your continued interest and support.
Sincerely yours,
/s/ Eugene R. Friend
__________________________
Eugene R. Friend
Chairman of the Board and
Chief Executive Officer
<PAGE>
MONTEREY BAY BANCORP, INC.
36 BRENNAN STREET
WATSONVILLE, CALIFORNIA 95076
408-722-3885
------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 21, 1998
-------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Annual Meeting") of Monterey Bay Bancorp, Inc. (the "Company") will be held on
May 21, 1998 at 11:00 a.m., Pacific Time, at the Watsonville Women's Club, 12
Brennan Street, Watsonville, California 95076.
The purpose of the Annual Meeting is to consider and vote upon the
following matters:
1. The election of four directors to three-year terms of office,
each;
2. The ratification of the appointment of Deloitte & Touche LLP
as independent auditors of the Company for the fiscal year
ending December 31, 1998; and
3. Such other matters as may properly come before the Annual
Meeting and at any adjournments thereof, including whether or
not to adjourn the meeting.
The Board of Directors has established March 25, 1998, as the record
date for the determination of stockholders entitled to receive notice of and to
vote at the Annual Meeting and at any adjournments thereof. Only record holders
of the common stock of the Company as of the close of business on that date will
be entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof. In the event there are not sufficient votes for a quorum or to approve
or ratify any of the foregoing proposals at the time of the Annual Meeting, the
Annual Meeting may be adjourned in order to permit further solicitation of
proxies by the Company. A list of stockholders entitled to vote at the Annual
Meeting will be available at Monterey Bay Bancorp, Inc., 36 Brennan Street,
Watsonville, California 95076, for a period of ten days prior to the Annual
Meeting and will also be available at the meeting itself.
By Order of the Board of Directors
/s/ Carlene F. Anderson
__________________________________
Carlene F. Anderson
Corporate Secretary
Watsonville, California
April 13, 1998
<PAGE>
MONTEREY BAY BANCORP, INC.
--------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
APRIL 13, 1998
--------------------------
SOLICITATION AND VOTING OF PROXIES
This Proxy Statement is being furnished to stockholders of Monterey Bay
Bancorp, Inc. (the"Company") in connection with the solicitation by the Board of
Directors ("Board of Directors" or "Board") of proxies to be used at the annual
meeting of stockholders (the "Annual Meeting"), to be held on May 21, 1998, at
11:00 a.m., Pacific Time, at The Watsonville Women's Club, 12 Brennan Street,
Watsonville, California 95076 and at any adjournments thereof. The 1997 Annual
Report to Stockholders, including consolidated financial statements for the
fiscal year ended December 31, 1997, and a proxy card, accompanies this Proxy
Statement, which is first being mailed to record holders on or about April 13,
1998.
Regardless of the number of shares of common stock owned, it is
important that record holders of a majority of the outstanding shares of common
stock be represented by proxy or in person at the Annual Meeting. Stockholders
are requested to vote by completing the enclosed proxy card and returning it
signed and dated in the enclosed postage-paid envelope. Stockholders are urged
to indicate their vote in the spaces provided on the proxy card. PROXIES
SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY WILL BE VOTED IN ACCORDANCE
WITH THE DIRECTIONS GIVEN THEREIN. WHERE NO INSTRUCTIONS ARE INDICATED, SIGNED
PROXY CARDS WILL BE VOTED FOR THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR
NAMED IN THIS PROXY STATEMENT AND FOR THE RATIFICATION OF EACH OF THE SPECIFIC
PROPOSALS PRESENTED IN THIS PROXY STATEMENT.
Other than the matters set forth on the attached Notice of Annual
Meeting of Stockholders, the Board of Directors knows of no additional matters
that will be presented for consideration at the Annual Meeting. Execution of a
proxy, however, confers on the designated proxy holders discretionary authority
to vote the shares in accordance with their best judgment on such other
business, if any, that may properly come before the Annual Meeting and at any
adjournments thereof, including whether or not to adjourn the Annual Meeting.
A proxy may be revoked at any time prior to its exercise by filing a
written notice of revocation with the Corporate Secretary of the Company, by
delivering to the Company a duly executed proxy bearing a later date, or by
attending the Annual Meeting and voting in person. However, if you are a
stockholder whose shares are not registered in your own name, you will need
appropriate documentation from your record holder to vote personally at the
Annual Meeting.
The cost of solicitation of proxies on behalf of the Board of Directors
will be borne by the Company. In addition to the solicitation of proxies by
mail, Chase Mellon Shareholder Services
<PAGE>
will assist the Company in soliciting proxies for the Annual Meeting and will be
paid a fee of $3,750. Proxies may also be solicited personally or by mail or
telephone by directors, officers and other employees of the Company and its
subsidiary, the Bank, without additional compensation therefor. The Company will
also request persons, firms and corporations holding shares in their names, or
in the name of their nominees, which are beneficially owned by others, to send
proxy material to and obtain proxies from such beneficial owners, and will
reimburse such holders for their reasonable expenses in doing so.
VOTING SECURITIES
The securities which may be voted at the Annual Meeting consist of
shares of common stock of the Company ("Common Stock"), with each share
entitling its owner to one vote on all matters to be voted on at the Annual
Meeting, except as described below. There is no cumulative voting for the
election of directors.
The close of business on March 25, 1998, has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
stockholders of record entitled to notice of and to vote at the Annual Meeting
and at any adjournments thereof. The total number of shares of Common Stock
outstanding on the Record Date was 3,166,214 shares.
In accordance with the provisions of the Company's Certificate of
Incorporation, record holders of Common Stock who beneficially own in excess of
10% of the outstanding shares of Common Stock (the "Limit") are not entitled to
any vote with respect to the shares held in excess of the Limit. A person or
entity is deemed to beneficially own shares owned by an affiliate of, as well as
by persons acting in concert with, such person or entity. The Company's
Certificate of Incorporation authorizes the Board of Directors (i) to make all
determinations necessary to implement and apply the Limit, including determining
whether persons or entities are acting in concert, and (ii) to demand that any
person who is reasonably believed to beneficially own stock in excess of the
Limit supply information to the Company to enable the Board of Directors to
implement and apply the Limit.
The presence, in person or by proxy, of the holders of at least a
majority of the total number of shares of Common Stock entitled to vote (after
giving effect to the Limit described above, if applicable) is necessary to
constitute a quorum at the Annual Meeting. In the event that there are not
sufficient votes for a quorum, or to approve or ratify any matter being
presented at the time of the Annual Meeting, the Annual Meeting may be adjourned
in order to permit the further solicitation of proxies.
As to the election of directors, the proxy card being provided by the
Board of Directors enables a stockholder to vote "FOR" the election of the
nominees proposed by the Board of Directors, or to "WITHHOLD AUTHORITY" to vote
for one or more of the nominees being proposed. Under Delaware law and the
Company's Bylaws, directors are elected by a plurality
2
<PAGE>
of votes cast, without regard to either broker non-votes, or proxies as to which
authority to vote for one or more of the nominees being proposed is withheld.
As to the ratification of Deloitte & Touche LLP as independent auditors
of the Company and all other matters that may properly come before the Annual
Meeting, by checking the appropriate box, a stockholder may: (i) vote "FOR" the
item; (ii) vote "AGAINST" the item; or (iii) "ABSTAIN" from voting on the item.
Under the Company's Bylaws, unless otherwise required by the Certificate of
Incorporation or by law, the ratification of auditors and other matters shall be
determined by a majority of the votes cast, without regard to either broker
non-votes, or proxies marked "ABSTAIN" as to that matter.
Proxies solicited hereby will be returned to the Company's transfer
agent, and will be tabulated by inspectors of election designated by the Board
of Directors, who will not be employed by, or a director of, the Company or any
of its affiliates.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as to those persons believed
by the Company to be beneficial owners of more than 5% of the Company's
outstanding shares of Common Stock on March 31, 1998 or as disclosed in certain
reports regarding such ownership filed by such persons with the Company and with
the Securities and Exchange Commission ("SEC"), in accordance with Sections
13(d) and 13(g) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"). Other than those persons listed below, the Company is not aware of any
person, as such term is defined in the Exchange Act, that owns more than 5% of
the Company's Common Stock as of March 31, 1998.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP CLASS
- ------------------------- --------------------------------- ---------- ----------
<S><C>
Common Stock Monterey Bay Bank Employee 284,070(1) 8.97%
Stock Ownership Plan ("ESOP")
36 Brennan Street
Watsonville, California 95076
Common Stock Josiah T. Austin 298,164(2) 9.42%
Valer C. Austin
HC Box 395
Pearce, AZ 85625
Common Stock Kahn Brothers & Co., Inc. 270,900(3) 8.56%
555 Madison Avenue
New York, NY 10022
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP CLASS
- ------------------------- --------------------------------- ---------- ----------
<S><C>
Common Stock Findim Inv., SA 313,000(4) 9.89%
Gradinata Forghee 2
Massagno, Switzerland
011-41-91-568916
</TABLE>
(1) Shares of Common Stock were acquired by the ESOP in the conversion of
the bank from mutual to stock form and the formation of the Company.
The Company's Compensation/Benefits Committee serves as the ESOP
Committee and administers the ESOP. See "Proposal 1. Election of
Directors - Meetings of the Board of Directors and Committees of the
board of Directors - Compensation/Benefits Committee." CNA Trust, Costa
Mesa, California has been appointed as the corporate trustee for the
ESOP ("ESOP Trustee"). The ESOP Trustee, subject to its fiduciary duty,
must vote all allocated shares held in the ESOP in accordance with the
instructions of the participants. At December 31, 1997, 82,820 shares
had been allocated under the ESOP. Unallocated shares and allocated
shares for which no voting instructions are received will be voted by
the ESOP Trustee in a manner calculated to most accurately reflect the
instructions received from participants regarding the allocated stock
so long as such vote is in accordance with the provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
(2) Based upon information supplied to the Company by Mr. Austin on March
27, 1998.
(3) Based upon information in a Schedule 13F filed in December, 1997.
(4) Based upon information provided to the Company by the shareholder on
March 31, 1998.
PROPOSALS TO BE VOTED ON AT THE MEETING
PROPOSAL 1. ELECTION OF DIRECTORS
The Board of Directors of the Company consists of eleven directors and
is divided into three classes. Each of the eleven members of the Board of
Directors of the Company also presently serve as directors of the Bank.
Directors are elected for staggered terms of three years each, with the term of
office of only one of the three classes of Directors expiring each year.
Directors serve until their successors are elected and qualified.
The four nominees proposed for election at this Annual Meeting are P.W.
Bachan, Edward K. Banks, Nicholas C. Biase and Louis Resetar, Jr.
In the event that any such nominee is unable to serve or declines to
serve for any reason, it is intended that the proxies will be voted for the
election of such other person as may be designated by the present Board of
Directors. The Board of Directors has no reason to believe that any of the
persons named will be unable or unwilling to serve. UNLESS AUTHORITY TO VOTE FOR
THE ELECTION OF ANY NOMINEE IS WITHHELD, IT IS INTENDED THAT THE SHARES
REPRESENTED BY THE
4
<PAGE>
ENCLOSED PROXY CARD, IF EXECUTED AND RETURNED, WILL BE VOTED FOR THE ELECTION OF
THE NOMINEES PROPOSED BY THE BOARD OF DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE
NOMINEES NAMED IN THIS PROXY STATEMENT.
INFORMATION WITH RESPECT TO THE NOMINEES AND CONTINUING DIRECTORS
The following table sets forth, as of March 31, 1998, the names of the
nominees and continuing directors of the Company; their ages; a brief
description of their recent business experience, including present occupations
and employment; certain directorships held by each; the year in which each
became a director of the Bank; and the year in which their terms (or in the case
of the nominees, their proposed terms) as director of the Company expire. The
table also sets forth the amount of Common Stock and the percent thereof
beneficially owned by each and by all directors and executive officers as a
group as of March 31, 1998.
<TABLE>
<CAPTION>
SHARES OF
NAME AND PRINCIPAL EXPIRATION COMMON STOCK
OCCUPATION AT PRESENT DIRECTOR OF TERM AS BENEFICIALLY PERCENT OF
AND FOR PAST FIVE YEARS AGE SINCE (1) DIRECTOR OWNED (2) CLASS
- ----------------------- --- --------- ---------- ------------ ----------
<S><C>
NOMINEES
P. W. Bachan
Partner in the law firm of Bachan, 71 1954 2001 13,661(3)(4) *
Skillicorn, Marinovich and Balian
Watsonville, CA
Edward K. Banks (5) 49 1993 2001 7,526(3)(4) *
Chief Executive Officer of Pajaro
Valley Insurance Agencies, Inc.
Watsonville, CA
Nicholas C. Biase 30 1997 2001 1,105(3)(4)(6) *(6)
Representative of Findim
Investments, S.A.;
President of Omabuild, Inc.,
a real estate company, New York,
New York
Louis Resetar, Jr. 71 1961 2001 21,964(3)(4) *
Retired; apple grower
Resetar Farms
Watsonville, CA
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
NAME AND PRINCIPAL EXPIRATION COMMON STOCK
OCCUPATION AT PRESENT DIRECTOR OF TERM AS BENEFICIALLY PERCENT OF
AND FOR PAST FIVE YEARS AGE SINCE (1) DIRECTOR OWNED (2) CLASS
- ----------------------- --- --------- ---------- ------------ ----------
<S><C>
CONTINUING DIRECTORS
Eugene R. Friend 74 1969 2000 25,105(7)(8)(9) *
Chairman of the Board and
Chief Executive Officer of the
Company and the Bank;
Retired insurance executive
Donald K. Henrichsen 66 1970 2000 28,468(3)(4) *
President of John's Shoe
Store, Inc., a retail business
in Watsonville, California,
McKenzie Moss 67 1996 2000 3,105(3)(4) *
Financial & Strategic
Planning Consultant;
University Instructor and
Lecturer; Writer;
Retired bank executive
Stephen G. Hoffmann(10) 53 1997 1999 1,105(3)(4) *
President/CEO of Canyon
National Bank, in organization,
Palm Springs, California;
President and CEO of Palm
Springs Savings Bank
from 1988 until 1996;
President of Hemet
Federal Savings Bank
from September 1, 1996 to
February, 1997.
Steven Franich 51 1989 1999 30,964(3)(4) *
President of Marty Franich
Auto Dealerships, Watsonville,
California
Gary L. Manfre 44 1993 1999 24,650(3)(4) *
President of Watsonville
Coast Produce, Inc.,
Watsonville, California
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
NAME AND PRINCIPAL EXPIRATION COMMON STOCK
OCCUPATION AT PRESENT DIRECTOR OF TERM AS BENEFICIALLY PERCENT OF
AND FOR PAST FIVE YEARS AGE SINCE (1) DIRECTOR OWNED (2) CLASS
- ----------------------- --- --------- ---------- ------------ ----------
<S><C>
Marshall G. Delk(11) 43 1998 1999 63,780(7)(8)(9) 2.01%
President and Chief
Operating Officer of the
Company and the Bank;
Stock Ownership of all
Directors and Executive
Officers as a Group (17 persons) 315,802(12) 9.97%
</TABLE>
- ----------
*Represents less than 1.0% of the Company's voting securities.
(1) Includes years of service as a director of the Bank.
(2) Each person effectively exercises sole (or shares with spouse or other
immediate family member) voting or dispositive power as to shares
reported herein (except as noted).
(3) Includes 1,658, 1,658, 3,317, 1,658, 3,317, 3,317,1,105, 1,105 and
1,105 shares awarded to Messrs. Franich, Manfre, Bachan, Banks,
Resetar, Henrichsen, Moss, Biase and Hoffmann respectively, pursuant to
the Bank's Recognition and Retention Plan for Outside Directors ("RRP")
that have not vested. Awards under the RRP to Messrs. Franich, Manfre,
Bachan, Banks, Resetar and Henrichsen began vesting in five equal
annual installments on August 24, 1996, the first anniversary of the
effective date of the grant. Awards to Messrs. Moss, Biase and Hoffmann
will begin vesting on March 13, 1999, the first anniversary of the
effective date of the grant.
(4) Does not include 7,801, 7,801, 5,900, 7,801, 5,900, 5,900, 1,966, 1,966
and 1,966 shares subject to options awarded to Messrs. Franich, Manfre,
Bachan, Banks, Resetar, Henrichsen, Moss, Biase and Hoffmann,
respectively, pursuant to the Monterey Bay Bancorp, Inc. 1995 Stock
Option Plan for Outside Directors ("Directors' Option Plan") that have
not vested. Options granted to Messrs. Franich, Manfre, Bachan, Banks,
Resetar and Henrichsen began vesting in five equal annual installments
on August 24, 1996, the first anniversary of the effective date of the
grant. Options granted to Messrs. Moss, Biase and Hoffmann will begin
vesting on March 13, 1999, the first anniversary of the effective date
of the grant.
(5) Mr. Banks is the son-in-law of Mr. Friend.
(6) Findim Investments, S.A. is the beneficial owner of 313,000 shares of
Company Common Stock of which Mr. Biase disclaims beneficial ownership.
(7) Includes 3,317 and 17,250 shares awarded to Messrs. Friend and Delk,
respectively, pursuant to the Monterey Bay Bank Performance Equity
Program for Officers and Employees ("Performance Equity Program") that
have not vested. Base awards under the Performance Equity Program began
vesting in five equal annual installments, on August 24, 1996, the
first anniversary of the effective date of the grant. Performance and
high performance awards under the Performance Equity Program began
vesting in five equal annual installments on August 24, 1996, the first
anniversary of the effective date of the grant; however, such vesting
is subject to the attainment of certain performance goals, and if such
goals are not met, the shares which would have vested will lapse and be
returned to the Plan Share Reserve. See Footnote 3 to the "Summary
Compensation Table."
7
<PAGE>
(8) Does not include 6,900 and 34,500 shares subject to options awarded to
Messrs. Friend and Delk, respectively, pursuant to the Monterey Bay
Bancorp, Inc. 1995 Incentive Stock Option Plan ("Incentive Option
Plan") that have not vested. Awards began vesting in five equal annual
installments on August 24, 1996, the first anniversary of the effective
date of the grant.
(9) Includes 2,871 and 5,351 shares allocated to Messrs. Friend and Delk,
respectively, pursuant to the Bank's ESOP as of December 31, 1997.
(10) Mr. Hoffmann was elected by the Board of Directors on November 1, 1997
to complete the term of retiring
director William J. Meidl.
(11) Mr. Delk was elected by the Board of Directors to a newly created
directorship on February 19, 1998.
(12) Includes 18,240 shares awarded to directors under the RRP that have not
vested and 47,567 shares awarded to executive officers under the
Performance Equity Program that have not vested. Does not include
47,001 shares subject to options awarded to directors under the
Directors Option Plan that have not vested or 103,928 shares subject to
options awarded to executive officers under the Incentive Option Plan
that have not vested. Also includes 24,255 shares awarded to executive
officers pursuant to the ESOP.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors conducts its business through meetings of the
Board of Directors and through activities of its committees. The Board of
Directors meets monthly and may have additional meetings as needed. During
fiscal 1997, the Company's Board of Directors held 21 meetings. All of the
directors of the Company attended at least 75% of the total number of the
Company's Board meetings held and committee meetings on which such directors
served during fiscal 1997. The Boards of Directors of the Company and the Bank
maintain committees, the nature and composition of which are described below:
AUDIT COMMITTEE. The Audit Committee of the Company consists of Messrs.
Bachan (Chairman), Resetar, Franich and Henrichsen, all of whom are outside
directors. This committee meets as called by the Committee Chairman and met
twice in fiscal year 1997. The purpose of this committee is to provide assurance
that financial disclosures made by management portray the financial condition
and results of operations. The committee also maintains a liaison with the
outside auditors and reviews the adequacy of internal controls. The Audit
Committee of the Bank met 13 times in fiscal 1997.
NOMINATING COMMITTEE. The Company's Nominating Committee for the 1998
Annual Meeting consists of Messrs. Franich (Chairman) Henrichsen and Moss. The
committee considers and recommends the nominees for director to stand for
election at the Company's annual meeting of stockholders. The Company's
Certificate of Incorporation and Bylaws also provide for stockholder nominations
of directors. These provisions require such nominations to be made pursuant to
timely notice in writing to the Secretary of the Company. The stockholder's
notice of nomination must contain all information relating to the nominee which
is required to be disclosed by the Company's Bylaws and by the Securities
Exchange Act of 1934. The Nominating Committee met on February 19, 1998.
COMPENSATION/BENEFITS COMMITTEE. The Compensation/Benefits Committee of
the Bank consists of Messrs. Henrichsen (Chairman), Banks, Manfre and Hoffmann.
The
8
<PAGE>
Compensation/Benefits Committee also serves as the ESOP Committee. This
committee meets to establish compensation for the Chief Executive Officer,
approves the compensation of senior officers and various compensation and
benefits to be paid to employees and to review the incentive compensation
programs when necessary. See "Executive Compensation - Compensation Committee
Report on Executive Compensation." The Compensation/Benefits Committee met 4
times in fiscal 1997.
DIRECTORS' COMPENSATION
DIRECTORS' FEES. Directors of the Company who are not also employees of
the Company receive a retainer of $200 per month for serving on the Company's
Board of Directors. In 1997, the monthly retainer for service on the Board of
Directors of the Bank by directors who are not also employees of the Bank was
$1,500. All members of the Board of Directors of the Bank are also members of
the Board of Directors of Portola Investment Corporation, a wholly-owned
subsidiary of the Bank ("Portola"), and directors of Portola who are not also
employees of the Bank receive a monthly retainer fee of $200. No committee
meeting fees are paid.
DIRECTORS' OPTION PLAN. The Company maintains the Directors' Option
Plan for all directors who are not also employees of the Company or the Bank.
Under the Directors' Option Plan, each outside director is granted options to
purchase shares of Common Stock based upon his years of service. Each outside
director who had less than twenty years of service on August 24, 1995, the
effective date of the Directors' Option Plan, received 13,001 options and each
outside director who had twenty years or more of service on such date received
9,835 options. The options had an exercise price of $11.37 per share, which was
the fair market value of the shares on the date of grant. To the extent options
for shares are available for grant under the Directors' Option Plan, each
subsequently elected and qualified outside director will be granted
non-statutory stock options to purchase a number of shares of Common Stock equal
to 9,835 shares or options to purchase such lesser number of shares as remain in
the Directors' Option Plan. If options for sufficient shares are not available
to fulfill the grant of options to outside directors and thereafter options
become available such persons shall receive options to purchase an amount of
shares of Common Stock, determined by dividing pro rata among such persons the
number of options available. The exercise price of each option granted to
subsequent directors will be equal to the fair market value of the Common Stock
on the date of the grant. Pursuant to the foregoing provisions of the Directors
Option Plan, three outside directors elected subsequent to the effective date of
the plan were each granted 1,966 options on March 13, 1998. The options had an
exercise price of $20.75 per share, which was the fair market value on the date
of grant. All options granted under the Directors' Option Plan begin vesting in
five equal annual installments on the first anniversary of the date of the
grant, provided, however, that in the event of death or disability of the
participant or, to the extent not prohibited by the OTS, upon a change in
control of the Company or the Bank, all options previously granted would
automatically become exercisable. In the event that a director terminates
service with the Company and the Bank before his or her options have fully
vested, the director's unvested options are forfeited.
RECOGNITION AND RETENTION PLAN FOR OUTSIDE DIRECTORS. The Company
maintains the Recognition and Retention Plan ("RRP") which grants awards to all
directors who are not also
9
<PAGE>
employees of the Company or the Bank. Under the RRP, each outside director who
had less than 20 years of service on August 24, 1995, the effective date of the
RRP, was awarded 2,764 shares of Common Stock and each outside Director who had
20 years or more of service on such date was awarded 5,529 shares of Common
Stock. To the extent shares in the Plan Share Reserve are available for grants
under the RRP, each subsequently elected and qualified outside director will be
granted an award equal to 2,764 shares of Common Stock. If sufficient shares are
not available to fulfill the grant of awards to outside directors and thereafter
shares become available, such persons shall receive an amount of shares of
Common Stock determined by dividing pro rata among such persons the number of
shares available. Pursuant to the foregoing provisions of the RRP, three outside
directors elected subsequent to the effective date of the RRP were each granted
1,105 shares on March 13, 1998. Awards to directors begin vesting in five equal
annual installments on the first anniversary of the effective date of the award.
Awards will be 100% vested upon termination of service as a director due to
death or disability of the director or, to the extent not prohibited by the OTS,
upon a change in control of the Company or the Bank. In the event that a
director terminates service with the Company or the Bank before his or her
Awards have been fully vested, the director's non-vested awards will be
forfeited.
DIRECTORS' RETIREMENT PLAN. The Bank maintains the Directors'
Retirement Plan for certain qualified directors. Pursuant to the Directors'
Retirement Plan, each director who has served on the Bank's Board of Directors
for a minimum of three consecutive terms of three years each, and has served
continuously as a director until his or her normal retirement age or disability,
is entitled to receive a quarterly payment equal to the amount of the quarterly
retainer fee in effect at his or her date of retirement or disability for a
period of 10 years. The Directors' Retirement Plan provides that payments will
be accelerated upon the death of the Participant.
EXECUTIVE COMPENSATION
THE REPORT OF THE COMPENSATION COMMITTEE AND THE STOCK PERFORMANCE
GRAPH SHALL NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT
INCORPORATING BY REFERENCE THIS PROXY STATEMENT INTO ANY FILING UNDER THE
SECURITIES ACT OF 1933 OR THE EXCHANGE ACT, EXCEPT TO THE EXTENT THAT THE
COMPANY SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE, AND SHALL NOT
OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION. Under rules
established by the Securities and Exchange Commission ("SEC"), the Company is
required to provide certain data and information in regard to the compensation
and benefits provided to the Company's Chief Executive Officer and other
executive officers of the Company. The disclosure requirements for the Chief
Executive Officer and other executive officers include the use of tables and a
report explaining the rationale and considerations that led to fundamental
executive compensation decisions affecting those individuals. In fulfillment of
this requirement, the Compensation/Benefits Committee, at the direction of the
Board of Directors, has prepared the following report for inclusion in this
proxy statement.
GENERAL. The Compensation/Benefits Committee of the Board of Directors
is responsible for establishing the compensation levels and benefits for
executive officers of the Bank who also
10
<PAGE>
serve as executive officers of the Company and for reviewing recommendations of
management for compensation and benefits for other officers and employees of the
Bank. The Company does not pay any cash compensation to the executive officers
of the Company for serving as such. The Compensation/Benefits Committee consists
of Messrs. Henrichsen, Banks, Manfre and Hoffmann, who are outside directors.
COMPENSATION POLICIES. The Compensation/Benefits Committee has the
following goals for compensation programs impacting the executive officers of
the Company and the Bank.
o to provide motivation for the executive officers to enhance
shareholder value by linking their compensation to the value
of the Company's stock;
o to retain the executive officers who have led the Company to
high performance levels and allow the Bank to attract high
quality executive officers in the future by providing total
compensation opportunities which are consistent with
competitive norms of the industry and the Company's level of
performance; and
o to maintain reasonable "fixed" compensation costs by targeting
base salaries at a competitive average.
In addition, in order to align the interests and performance of its executive
officers with the long term interests of its stockholders, the Company and the
Bank have adopted plans which reward the executives for delivering long term
value to the Company and the Bank.
The executive compensation package available to executive officers is
composed of the following components:
o Base Salary; and
o Long Term Incentive Compensation, Including Stock Options and
Stock Awards.
Mr. Delk has employment agreements with the Company and the Bank which specify a
minimum base salary and require periodic review of such salary. In addition,
executive officers participate in other benefit plans available to all employees
including the Employee Stock Ownership Plan and the 401 (k) Plan.
BASE SALARY. In determining salary levels, the Compensation/Benefits
Committee considers the entire compensation package, including the equity
compensation to be provided under the Company's stock plans, of the executive
officers. The Compensation/Benefits Committee meets in the first quarter of each
year to determine the level of any salary increase to take effect immediately
after such determination is made. The Compensation/Benefits Committee determines
the level of salary increase after reviewing the qualifications and experience
of the executive officers of the Bank, the compensation paid to persons having
similar duties and responsibilities at other institutions, and the size of the
Bank and the complexity of its operations.
11
<PAGE>
Although the Compensation/Benefits Committee's policy in regard to base
salary is subjective and no specific formula is used for decision making, the
Compensation/Benefits Committee considered the overall performance of the
Company, including the fact that the Company posted earnings, and the
performance of the individual executive officer.
BONUS AWARDS. Although the Bank has paid bonuses to executive officers
in prior years, it is the current policy of the Compensation/Benefits Committee
that bonuses will not constitute part of the compensation package of the
executive officers.
INCENTIVE COMPENSATION. The Company and the Bank have adopted the
Incentive Option Plan and the Performance Equity Program, respectively, under
which executive officers may receive grants and awards. The
Compensation/Benefits Committee believes that stock ownership is a significant
incentive in building stockholders' wealth and aligning the interests of
employees and stockholders. Stock options and stock awards under such plans were
allocated based upon regulatory practices and policies, the practices of other
recently converted institutions as verified by external surveys and based upon
the executive officers' level of responsibility and contributions to the Company
and the Bank. Certain performance awards under the Performance Equity Program
were made during the year which lapsed because certain performance goals were
not met. All grants and awards have vesting periods of 20% per year beginning
one year after the effective date of the award. See "Summary Compensation
Table."
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER AND CHIEF OPERATING
OFFICER. After taking into consideration the factors discussed above including
the entire compensation package, qualifications and experience, size of the Bank
and complexity of its operations, the Compensation Committee determined to
increase Mr. Friend's base salary to $64,444, and determined to increase Mr.
Delk's base salary to $101,200 for fiscal 1997. As discussed above, no bonuses
were paid in 1997. Messrs. Friend and Delk received stock options and stock
awards under the same policies discussed in "Incentive Compensation" above. Such
grants are listed in the "Summary Compensation Table." In making its
determinations, the Compensation Committee also considered the outstanding
grants and awards to Messrs. Friend and Delk as well as the appreciation of such
awards.
COMPENSATION/BENEFITS COMMITTEE
Donald K. Henrichsen
Edward K. Banks
Gary L. Manfre
Stephen G. Hoffmann
<PAGE>
STOCK PERFORMANCE GRAPH. The following graph shows a comparison of
cumulative total shareholder return on the Company's Common Stock, based on the
market price of the Common Stock with the cumulative total return of companies
in the Nasdaq National Market and Nasdaq Bank Stocks for the period beginning on
February 15, 1995, the day the Company's Common Stock began trading, through
December 31, 1997. The graph was derived from a limited period of time and
reflects the market's reaction to the initial public offering of the Common
Stock, and, as a result, may not be indicative of possible future performance of
the Company's Common Stock. The data was supplied by the Center for Research in
Security Prices ("CRSP") of the University of Chicago Graduate School of
Business.
COMPARISON OF CUMULATIVE TOTAL RETURNS
Monterey Bay Bancorp, Inc.
February 15, 1995 - December 31, 1997
[GRAPH APPEARS HERE--SEE PLOT POINTS BELOW]
- --------------------------------------------------------------------------------
Summary
<TABLE>
<CAPTION>
2/15/95 6/30/95 12/29/95 6/28/96 12/31/96 6/30/97 12/31/97
------- ------- -------- ------- -------- ------- --------
<S><C>
Monterey Bay Bancorp 100.000 116.901 130.986 133.803 166.869 191.535 222.3
CRSP Nasdaq Market Index 100.000 117.568 133.330 150.951 163.990 183.542 201.3
CRSP Nasdaq Bank Stocks 100.000 112.873 139.072 147.005 183.860 229.629 307.3
</TABLE>
Notes:
A. The lines represent semi-annual index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the semi-annual interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index for all series was set to $100.00 on 2/15/95.
- --------------------------------------------------------------------------------
13
<PAGE>
Summary Compensation Table. The following table shows, for the years ended
December 31, 1997, 1996 and 1995, the cash compensation paid by the Bank, as
well as certain other compensation paid or accrued for those years, to the chief
executive officer and the most highly compensated executive officer of the
Company and the Bank in fiscal year 1997 ("Named Executive Officer"). No other
executive officer of the Company and the Bank received salary and other annual
compensation in excess of $100,000 in fiscal year 1997. The Company does not pay
any cash compensation.
<TABLE>
<CAPTION>
Long-Term Compensation
---------------------------------------------------------
Annual Compensation(1) Awards Payouts
- --------------------------------------------------------------------------------------------------------------------------------
Other Restricted Securities
Annual Stock Underlying LTIP All Other
Name and Principal Compensation Awards Options Payouts Compensation
Positions Year Salary($) Bonus ($) $(2) ($)(3) (#)(4) (#)(5) ($)(6)
- --------------------------------------------------------------------------------------------------------------------------------
<S><C>
Eugene R. Friend 1997 $ 64,444 $ - $ - $ - - - $20,845
Chief Executive 1996 63,000 - - - - - 13,777
Officer 1995 61,960 - - 62,865 11,500 - 10,091
Marshall G. Delk 1997 $101,200 $ - $ - $ - - - $40,268
President and 1996 99,330 - - - - - 28,143
Chief Operating 1995 94,823 - - 326,888 57,500 - 20,555(7)
Officer
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
(1) Under Annual Compensation, the column titled "Salary" includes amounts
deferred by the named executive officer pursuant to the Bank's 401(k) Plan
pursuant to which employees may defer up to 15% of their compensation, up
to the maximum limits under the Internal Revenue Code of 1986 as amended.
(2) For fiscal years ending in 1997, 1996 and 1995, there were no (a)
perquisites over the lesser of $50,000 or 10% of the individual's total
salary and bonus for the year; (b) payments of above-market preferential
earnings on deferred compensation; (c) payments of earnings with respect
to long-term incentive plans prior to settlement or maturation; (d) tax
payment reimbursements; or (e) preferential discounts on stock.
(3) Pursuant to the Performance Equity Program, Messrs. Friend and Delk were
awarded an aggregate of 5,529 and 28,750 shares of common stock,
respectively, which had a market value of $11.37 per share on the date of
grant, August 24, 1995. Base awards to Messrs. Friend and Delk began vesting
in five equal annual installments on August 24, 1996, the first anniversary
date of the effective date of the award. Similarly, the vesting of
performance and high performance awards to Mr. Delk began to vest in five
equal annual installments on August 24, 1996; however, such vesting is
subject to the attainment of certain performance goals, some of which were
not met during fiscal year 1995, resulting in the lapse of 2,012 shares, and
some of which were not met in fiscal year 1996, resulting in the lapse of
671 shares. When shares become vested and are distributed, the recipient
will also receive an amount equal to accumulated dividends (if any). All
awards vest immediately upon termination of employment due to death or
disability or, to the extent not prohibited by the OTS, upon the occurrence
of a change in control. As of December 31, 1997, the market value of the
remaining shares held
14
<PAGE>
by Messrs. Friend and Delk was $64,682 and $336,375,
respectively.
(4) Includes options awarded under the Incentive Option Plan. Options granted
to Messrs. Friend and Delk began vesting in five equal annual installments
on August 24, 1996, the first anniversary date of the effective date of
the award. To the extent not already exercisable, the options become
exercisable upon death or disability or, to the extent not prohibited by
the OTS, upon the occurrence of a change in control.
(5) For 1997, 1996 and 1995, the Bank had no long-term incentive plans, for the
named executive officers accordingly, there were no payouts or awards under
any long-term incentive plan.
(6) Pursuant to the ESOP, Messrs. Friend and Delk were allocated 1,069 and
2,065 shares of Common Stock, respectively, as of December 31, 1997. Dollar
amounts reflect market value of $19.50 as of December 31, 1997, the date of
allocation.
(7) Also includes $4,536 contributed by the Bank pursuant to the Monterey Bay
Bank 401(k) Plan.
Employment Agreements. The Bank and the Company have entered into
employment agreements with Mr. Delk (the "Executive"). These employment
agreements are intended to ensure that the Bank and the Company will be able to
maintain a stable and competent management base. The continued success of the
Bank and the Company depends, to a significant degree, on Mr. Delk's skills and
competence.
The Bank's and the Company's employment agreements (collectively, the
"Employment Agreements") are substantially similar. The Employment Agreements
provide for two year terms. The Company's employment agreement provides for
automatic daily extensions such that the remaining term of the agreement shall
be two years after notice of non-renewal is provided by either the Board of
Directors or the Executive. The Bank's employment agreement provides that,
commencing on the first anniversary date and continuing each anniversary date
thereafter, the Board of Directors may extend the agreement for an additional
year so that the remaining term shall be two years, unless notice of non-renewal
is given by the Board of Directors after conducting a performance evaluation of
the Executive. The Employment Agreements provide that the Executive's base
salary will be reviewed annually. In this regard, for fiscal 1998, the base
salary of Mr. Delk is $107,462. In addition to base salary, the employment
agreements provide for, among other things, participation in stock benefit plans
and other fringe benefits applicable to executive personnel.
The Employment Agreements provide for termination of the Executive by
the Bank or the Company for cause as defined in the Employment Agreements at any
time. In the event the Bank or the Company chooses to terminate the Executive's
employment for reasons other than for cause, or in the event of the Executive's
resignation from the Bank and the Company upon (i) failure to re-elect the
Executive to his current offices, (ii) a material change in the Executive's
functions, duties or responsibilities, (iii) a relocation of the Executive's
principal place of employment by more than fifty miles, (iv) liquidation or
dissolution of the Bank or the Company, or (v) a breach of the Employment
Agreement by the Bank or the Company, the Executive or, in the event of death,
his beneficiary would be entitled to severance pay in an amount equal to the
remaining salary payments under the
15
<PAGE>
Employment Agreement, including base salary, bonuses, other payments and health
benefits due under the remaining term of the Employment Agreement to the
Executive.
Under the Company's agreement, if termination, voluntary or
involuntary, follows a change in control of the Bank or the Company, as defined
in the Employment Agreement, the Executive or, in the event of death, his
beneficiary, would be entitled to a severance payment equal to the greater of
(i) the payments due for the remaining term of the agreement or (ii) three times
the average of the three preceding years' annual compensation, including bonuses
and any other cash compensation paid or to be paid to the Executive during such
years, and the amount of any contributions made or to be made to any employee
benefit plan. In addition, the Bank and the Company would continue the
Executive's life, health, and disability coverage for thirty-six months. The
Bank's agreement has a similar change in control provision, however, the
Executive would only be entitled to receive a severance payment under one
agreement. Payments to the Executive under the Bank's employment agreement are
guaranteed by the Company in the event that payments or benefits are not paid by
the Bank. In the event of a change in control based upon the past three fiscal
years' salary and bonus, Mr. Delk would receive approximately $299,889 in
severance payments in addition to other cash and non-cash benefits provided for
under the Employment Agreements.
INCENTIVE STOCK OPTION PLAN
The Company maintains the Incentive Stock Option Plan, which provides
discretionary awards to officers and key employees as determined by a committee
of disinterested directors who administer the plan. No options or stock
appreciation rights were granted to the Named Executive Officer during the year
ended December 31, 1997.
The following table provides certain information with respect to the
number of shares of Common Stock represented by outstanding options held by the
Named Executive Officers as of December 31, 1997. Also reported are the value
for "in-the-money" options which represent the positive spread between the
exercise price of any such existing stock options and the year-end price of the
Common Stock. 27,600 options were exercisable by the Named Executive Officers in
fiscal 1997.
FISCAL YEAR END OPTION/SAR VALUES
Securities Underlying Number Value of Unexercised In-the-
of Unexercised Options/SARs Money Options/SARs at
at Fiscal Year End (#) Fiscal Year End ($)(1)
---------------------------- ----------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Eugene R. Friend... 4,600 6,900 $ 37,398 $ 56,097
Marshall G. Delk... 23,000 34,500 186,990 280,485
(1) Market value of underlying securities at fiscal year end ($19.50) minus the
exercise or base price ($11.37) per share. Options vest at an annual rate
of 20% of the original amount granted and began vesting on August 24, 1996.
16
<PAGE>
SALARY CONTINUATION PLAN. The Bank maintains a salary continuation plan for
the benefit of certain officers of the Bank (the "Salary Continuation Plan").
Officers participating in the Salary Continuation Plan are entitled to receive a
monthly payment (determined by the Board of Directors) for a period of 10 years
upon retirement. Participating officers must be employed by the Bank through the
age specified in individual plans to receive plan benefits. The Salary
Continuation Plan provides that payments will be accelerated upon the death of a
Participant.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
All loans outstanding by the Bank to its directors and officers were made
in the ordinary course of business, on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions by the Bank with other persons and did not involve more than the
normal risk of collectibility or present other unfavorable features.
PROPOSAL 2. RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended December 31,
1997 were Deloitte & Touche LLP. The Company's Board of Directors has
reappointed Deloitte & Touche LLP to continue as independent auditors for the
Bank and the Company for the fiscal year ending December 31, 1998, subject to
ratification of such appointment by the stockholders.
Representatives of Deloitte & Touche LLP will be present at the Annual
Meeting. They will be given an opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions from
stockholders present at the Annual Meeting.
Unless marked to the contrary, the shares represented by the enclosed proxy
card will be voted FOR ratification of the appointment of Deloitte & Touche LLP
as the independent auditors of the Company for the fiscal year ending December
31, 1998.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY.
ADDITIONAL INFORMATION
STOCKHOLDER PROPOSALS
To be considered for inclusion in the Company's proxy statement and form
of proxy relating to the 1999 Annual Meeting of Stockholders, a stockholder
proposal must be received by the Secretary of the Company at the address set
forth on the Notice to the Proxy Statement not later than December 14, 1998. Any
such proposal will be subject to 17 C.F.R. 240.14a-8 of the Rules and
Regulations under the Exchange Act.
17
<PAGE>
The Bylaws of the Company provide an advance notice procedure for a
stockholder to properly bring business before an Annual Meeting. The stockholder
must give written advance notice to the Secretary of the Company not less than
ninety (90) days before the date originally fixed for such meeting, provided,
however, that in the event that less than one hundred (100) days notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be received not later than the close
of business on the tenth day following the date on which the Company's notice to
stockholders of the annual meeting date was mailed or such public disclosure was
made. The advance notice by stockholder must include the stockholder's name and
address, as they appear on the Company's record of stockholders, a brief
description of the proposed business, the reason for conducting such business at
the Annual Meeting, the class and number of shares of the Company's capital
stock that are beneficially owned by such stockholder and any material interest
of such stockholder in the proposed business. In the case of nominations to the
Board of Directors, certain information regarding the nominee must be provided.
Nothing in this paragraph shall be deemed to require the Company to include in
its proxy statement or the proxy relating to an annual meeting any stockholder
proposal which does not meet all of the requirements for inclusion established
by the SEC in effect at the time such proposal is received.
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING
The Board of Directors knows of no business which will be presented for
consideration at the Meeting other than as stated in the Notice of Annual
Meeting of Stockholders. If, however, other matters are properly brought before
the Annual Meeting, it is the intention of the persons named in the accompanying
proxy to vote the shares represented thereby on such matters in accordance with
their best judgment.
Whether or not you intend to be present at the Annual Meeting, you are
urged to return your proxy card promptly. If you are then present at the Annual
Meeting and wish to vote your shares in person, your original proxy may be
revoked by voting at the Annual Meeting.
By Order of the Board of Directors
/s/ Carlene F. Anderson
___________________________________
Carlene F. Anderson
Corporate Secretary
April 13, 1998
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE
REQUESTED TO SIGN, DATE AND PROMPTLY RETURN THE
ACCOMPANYING PROXY CARD IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
18
<PAGE>
REVOCABLE PROXY
MONTEREY BAY BANCORP, INC.
ANNUAL MEETING OF SHAREHOLDERS
May 21, 1998
11:00 a.m. Pacific Time
The undersigned hereby appoints the Board of Directors of Monterey Bay
Bancorp, Inc. (the "Company") to act as proxy for the undersigned, and to vote
all shares of Common Stock of the Company which the undersigned is entitled to
vote only at the Annual Meeting of Shareholders, to be held on May 21, 1998, at
11:00 a.m. Pacific Time, at the Watsonville Women's Club located at 12 Brennan
Street, Watsonville, California, and at any and all adjournments thereof, as
set forth on the reverse side.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF MONTEREY BAY BANCORP, INC.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE PROPOSALS
PRESENTED.
(Continued, and to be marked, dated and signed, on the other side)
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<S><C>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF MONTEREY BAY BANCORP, INC. Please mark [X]
your votes as
indicated in
this example
VOTE
1. The election as directors of all nominees listed FOR WITHHELD 2. The ratification of the FOR AGAINST ABSTAIN
(except as marked to the contrary below). [ ] [ ] appointment of Deloitte & [ ] [ ] [ ]
Touche LLP as independent
auditors of Monterey Bay
Bancorp, Inc. for the fiscal
year ending December 31, 1998.
P.W. Bachan, Edward K. Banks, Nicholas C. Biase and Louis Resetar, Jr.
INSTRUCTION: To withhold your vote for any individual nominee, write
that nominee's name on the line provided below:
____________________________________________________________________
This proxy is revocable and will be voted as
directed, but if no instructions are specified,
this proxy will be voted FOR each of the proposals
listed. If any other business is presented at the
Annual Meeting, including whether or not to adjourn
the meeting, this proxy will be voted by the Board
of Directors in their best judgment. At the present
time, the Board of Directors knows of no other
business to be presented at the Annual Meeting.
----- The undersigned acknowledges receipt from the
| Company prior to the execution of this proxy of a
| Notice of Annual Meeting of Shareholders and of a
Proxy Statement dated April 13, 1998 and of the
Annual Report to Shareholders.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS
PROXY PROMPTLY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
Signature(s)_________________________________________________________________________ Dated:______________________________
NOTE: Please sign exactly as your name appears on this card. When signing as attorney, executor, administrator, trustee or
guardian, please give your full title. If shares are held jointly, each holder may sign but only one signature is
required.
</TABLE>
