SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. __)
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
[X] Definitive Proxy Statement Commission Only (as permitted by
[ ] Definitive Additional Materials Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
WESTAMERICA BANCORPORATION
----------------------------------------------------------
(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 transactions applies:
(2) Aggregate number of securities to which transactions 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:
[WESTAMERICA BANCORPORATION LOGO][GRAPHIC OMITTED]
1108 Fifth Avenue
San Rafael, California 94901
March 20, 200021, 2001
To Our Shareholders:
TheYou are cordially invited to attend the Annual Meeting of Shareholders of
Westamerica BancorporationBancorporation. It will be held at 2:1:00 p.m. on Thursday, April 27, 2000,26,
2001, at the Fairfield Center for Creative Arts, 1035 West Texas Street,
Fairfield, CA,California, as stated in the formal notice accompanying this letter.
We hope you will plan to attend.
At the Annual Meeting, the shareholders will be asked to elect directors
and to approve the selection of independent auditors. PleaseWe will also review
operating results for the past year and present other information concerning
Westamerica.
In order to ensure your shares are voted at the meeting, please sign and
return the enclosed proxy as promptly as possible so
thator vote through the telephone procedure. This
year we are pleased to offer our record holders of common stock, holding stock
registered in their own names, the option of voting through the Internet.
Internet voting procedures are described on your shares may be represented at the Annual Meeting.proxy card. If you attend the
meeting, you may vote in person even though you previously returned your proxy.
We look forward to seeing you at the Annual Meeting on Thursday, April 27, 2000,26,
2001, at the Fairfield Center for Creative Arts, Fairfield, California.
Sincerely,
/s/ DAVIDDavid L. PAYNE
----------------------------------------Payne
DAVID L. PAYNE
Chairman of the Board, President and
Chief Executive Officer
WESTAMERICA BANCORPORATION
1108 Fifth Avenue
San Rafael, California 94901
------------
Notice of Annual Meeting of Shareholders--April 27, 2000
To the Shareholders of WESTAMERICA BANCORPORATION:
The Annual Meeting of Shareholders will be heldNOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Date and Time:
Thursday, April 26, 2001, at the1:00 p.m.
Place:
Fairfield Center for Creative Arts
1035 West Texas Street
Fairfield, California
on Thursday, April 27, 2000, at 2:00
p.m. forItems of Business:
1. To elect 13 directors to serve until the purpose of:
1. Electing 13 directors;2002 Annual Meeting of
Shareholders;
2. ApprovingTo ratify the selectionBoard's appointment of KPMG LLP as independent auditors
for 2000;2001;
and
3. TransactingTo transact such other business as may properly come before the
Annual Meeting.Meeting and any adjournments or postponements.
Who May Vote?
Shareholders of record at the close of business on February 25, 2000,March 9, 2001 are
entitled to notice of and to vote at the Annual Meeting or any postponement or
adjournment thereof.
YouAdmission to the Meeting:
Admission to the meeting will require a ticket. If you are cordially inviteda shareholder of
record and plan to attend, please check the Annual Meeting.appropriate box on the proxy card
and an admission ticket will be mailed to you. If you do not expectare a shareholder whose
shares are held through an intermediary such as a bank or broker and you plan to
be present,attend, please complete, sign and daterequest a ticket by writing to the accompanying proxy and mail itShareholder Relations
Department A-2B at once in the enclosed envelope. No postage is
necessary if mailed within the United States.Westamerica Bancorporation, P.O. Box 1250, Suisun City,
California 94585. Evidence of your ownership, which you can obtain from your
bank, broker or other intermediary, must accompany your letter.
Annual Report:
Westamerica Bancorporation's Annual Report for the fiscal year ended
December 31, 19992000 is enclosed. The Annual Report contains financial and other
information about the activities of Westamerica Bancorporation, but it is not to
be deemed a part of the proxy soliciting materials.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Kris Irvine
----------------------------------------
Kris Irvine
Assistant Corporate Secretary
Dated: March 20, 200021, 2001
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO COMPLETE, SIGN, DATE AND PROMPTLY RETURN YOUR PROXY SO THAT
YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
----
GENERAL ...................................................................-----
General
Voting Information ............................................... 1
ELECTION OF DIRECTORS .....................................................Shareholder Proposal Guidelines .................................. 2
CERTAIN INFORMATION ABOUT THE BOARD OF DIRECTORS AND
CERTAIN COMMITTEES OF THE BOARD ..........................................Stock Ownership .................................................. 2
Section 16(a) Beneficial Ownership Reporting Compliance .......... 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT ........................................................... 5
EXECUTIVE COMPENSATION ....................................................Proposal 1 -- Election of Directors
Board of Directors
Nominees ......................................................... 4
Meetings and Committees of the Board ............................. 6
Compensation of Non-Employee Directors ........................... 7
OTHER ARRANGEMENTS ........................................................ 9
BOARD COMPENSATION COMMITTEE REPORTCorporation Transactions with Directors and Management ........... 7
Board Compensation Committee Report .............................. 7
Executive Compensation
Summary Compensation Table ....................................... 10
TOTAL RETURN PERFORMANCE CHARTStock Options Granted ............................................ 13
APPROVAL OF AUDITORS ...................................................... 13
OTHER MATTERS .............................................................11
Stock Options Exercised and Year-End Stock Option Values ......... 12
Other Compensation Arrangements .................................. 12
Investment Performance
Five-Year Investment Performance Graph ........................... 14
iProposal 2 -- Ratification of Auditors .............................. 14
Audit Committee Report .............................................. 15
Other Matters ....................................................... 16
Appendix -- Audit Committee Charter ................................. A-1
(i)
WESTAMERICA BANCORPORATION
1108 Fifth Avenue
San Rafael, California 94901
------------
PROXY STATEMENT
March 20, 200021, 2001
------------
GENERAL
Purpose This Proxy Statement and the accompanying proxy statement is furnished in connection withcard are being
mailed to shareholders of Westamerica Bancorporation ("Westamerica" or the
solicitation
of proxies by the"Corporation") beginning on or about March 21, 2001. The Westamerica Board of
Directors (the "Board") of Westamerica Bancorporation
(the "Corporation") for useis soliciting proxies to be used at the 2001 Annual Meeting of
Shareholders toWestamerica shareholders, which will be held at 2:1:00 p.m., Thursday, April 27, 2000,26,
2001, at the Fairfield Center for Creative Arts, 1035 West Texas Street,
Fairfield, California, forCalifornia. Proxies are solicited to give all shareholders of record
an opportunity to vote on matters to be presented at the purposes set forth inAnnual Meeting. In the
accompanying Noticefollowing pages of this Proxy Statement, you will find information on matters to
be voted on at the Annual Meeting or any adjournment or postponement of Shareholders (the "Meeting"). This proxy statement and proxythat
meeting.
Voting Information
Who Can Vote You are being mailedentitled to shareholders on or about March 20, 2000.
Voting Rights and Vote Required. Shareholdersvote if you were a shareholder of record
of the
Corporation's commonWestamerica stock atas of the close of business on February 25, 2000, the
record date, are entitled to voteMarch 9, 2001. Your shares
can be voted at the Meeting. On that date, approximately
36,574,930meeting only if you are present or represented by a valid
proxy.
Shares Outstanding A majority of the outstanding shares of Westamerica
stock must be present, either in person or represented by proxy, to conduct the
Corporation's commonAnnual Meeting of Shareholders. On March 9, 2001, approximately 36,034,608
shares of Westamerica stock were outstanding.
Proxy Card The determination of shareholders entitledBoard has designated Arthur C. Latno, Jr., Ronald A. Nelson
and Edward B. Sylvester to serve as Proxies for the Annual Meeting. As Proxies
they will vote the shares represented by proxies at the MeetingAnnual Meeting. If you
sign the proxy card but do not specify how you want your shares to be voted,
your shares will be voted by the Proxies in favor of the election of all of the
director nominees and in accordance with the number of
votes to which they are entitled was madedirectors' recommendations on the
basisother proposals listed on the proxy card. The Proxies will vote in their
discretion on any other matter that may properly come before the meeting.
Required Votes -- Election of the Corporation's
records as of the record date.Director Nominees Each share is entitled to
one vote, except that with respect toin the election of directors where a shareholder may cumulate
votes as to candidates nominated prior to voting, if anybut only when a shareholder
gives notice of intent to cumulate votes at the Meeting prior to the voting.voting at the meeting. If
any shareholder gives such notice, all shareholders may cumulate their votes for
nominees. Under cumulative voting, each share carries as many votes as the
number of directors to be elected, and the shareholder may cast all of such
votes for a single nominee or distribute them in any manner among as many
nominees as desired. In the election of directors, the 13 nominees receiving the
highest number of votes will be elected.
Approval of the selection of the independent
auditors will require theVotes Required -- Other Matters The affirmative vote of a majority of the
shares representedpresent (in person or by proxy and votingentitled to vote at the Meeting. AbstentionsAnnual
Meeting) is needed to ratify the appointment of KPMG LLP as the Westamerica's
independent auditors for 2001. Any other matters properly considered at the
meeting will not count as votes in
favor of the election of directors or any of the other proposals.
Quorum. Abe determined by a majority of the shares entitled to vote, represented either
in person or by a properly executed proxy, will constitute a quorum at the
Meeting. Shares which abstain from voting and "broker non-votes" (shares as to
which brokerage firms have not received voting instructions from their clients
and therefore do not have the authority to vote the shares at the Meeting) will
be counted for purposesvotes cast.
1
Tabulation of determining a quorum only.
Voting of Proxies.Votes The shares represented by all properly executed proxies
received in time for the Meetingmeeting will be voted in accordance with the
shareholders' choices specified therein;on their ballot; provided, however, that where
no choices have been specified, the shares will be voted to approve the
selection of KPMG LLP as independent auditors. When exercising the powers
granted to proxy holders under the caption "ELECTION OF DIRECTORS," the shares
will be voted for the election of directors in the manner described therein.
The Board knowsBrokerage firms that have not received voting instructions from their
clients do not have the authority to vote such shares at the Annual Meeting
(so-called "broker non-votes"). In such cases, those shares will be counted for
the purpose of nodetermining if a quorum is present, but will not be included in
the vote totals with respect to those matters to be brought before the Annual Meeting
other
thanand, therefore, will have no effect on the votes. Abstentions will not count as
votes in favor of the election of directors and the selection of independent auditors for
2000. If, however,or any other matters of which the Board is not now aware are
properly presented for action, it is the intention of the other proposals and
will be counted for purposes of determining a quorum only.
How You Can Vote You may vote by proxy holders namedor in person at the meeting. To vote
by proxy, you may select one of the following options:
Vote by Telephone: You can vote your shares by telephone by calling the
toll-free telephone number shown on your proxy card. Telephone voting is
available 24 hours a day, seven days a week. Easy-to-follow voice prompts allow
you to vote your shares and confirm that your instructions have been properly
recorded. Our telephone voting procedures are designed to authenticate the
shareholder by using individual control numbers. If you vote by telephone, you
do NOT need to return your proxy card.
Vote by Internet: You can also choose to vote on the Internet. The web site
for Internet voting is shown on your proxy card. Internet voting is available 24
hours a day, seven days a week. You will be given the opportunity to confirm
that your instructions have been properly recorded. If you vote on the Internet,
you do NOT need to return your proxy card.
Vote by Mail: If you choose to vote by mail, simply mark your proxy card,
date and sign it, and return it in the enclosed formpostage-paid envelope provided.
Revocation of Proxy If you vote by proxy, to vote suchyou may revoke that proxy on such matters in accordance with
their best business judgment.
1
Revocability of Proxy. The delivery of the enclosed proxy does not
preclude the shareholder delivering the proxy from voting in person or changing
the proxy should the shareholder so desire. The proxy may be revoked by a
written directive to the Corporation, by another proxy subsequently executed and
presented at the Meeting at any
time before it is voted at the Annual Meeting. You may do this by (a) signing
another proxy card with a later date and returning it to us prior to the
actualmeeting, (b) voting again by telephone or by attendanceon the Internet prior to the meeting,
or (c) attending the meeting in person and voting at the Meeting.casting a ballot.
Shareholder Proposals.Proposal Guidelines
To be considered for inclusion in the Corporation's proxy statement for
next year's annual meeting, shareholder proposals must be received at the
Corporation's executive offices at 1108 Fifth Avenue, San Rafael, California
94901, no later than November 20, 2000.
ELECTION OF DIRECTORS
The number of directors of the Board to be elected at the Meeting to
hold office for the ensuing year and until their successors are elected and
qualified is 13. It is the intention of the proxy holders named in the enclosed
proxy to vote such proxies (except those containing contrary instructions) for
the 13 nominees named below. The Board does not anticipate that any of the
nominees will be unable to serve as a director, but if that should occur before
the Meeting, the proxy holders reserve the right to substitute another person as
nominee and vote for such person of their choice in the place and stead of any
nominee unable so to serve. The proxy holders reserve the right to cumulate
votes for the election of directors and cast all of such votes for any one or
more of the nominees, to the exclusion of the others, and in such order of
preference as the proxy holders may determine in their discretion.
Nominees. The nominees for election to the office of director of the
Board are named and certain information with respect to them is given below. The
information has been furnished to the Corporation by the respective nominees.
All of the nominees have engaged in their indicated principal occupation for
more than five years, unless otherwise indicated.
Director
Name of Nominee Principal Occupation Since
- --------------------------- --------------------------------------------------------------- ----------
Etta Allen ............... Mrs. Allen, born in 1929, is President and owner 1988
of Allen Heating and Sheet Metal of Greenbrae,
California, and President and owner of Sunny Slope
Vineyard, Glen Ellen, CA.
Louis E. Bartolini ....... Mr. Bartolini, born in 1932, retired in 1988 as a 1991
Vice President and financial consultant with
Merrill Lynch, Pierce, Fen- ner & Smith, Inc. He
currently devotes some of his time to serving on
various community service boards.
Don Emerson .............. Mr. Emerson, born in 1928, was President of Calso 1979
Company (the holding company that owns the formula
and name "Calso Water," a carbonated mineral
water) through 1981. He presently devotes his time
to personal investments.
Louis H. Herwaldt........ Mr. Herwaldt, born in 1932, is Chief Executive 1997
Officer of Herwaldt Automotive Group, Inc. Prior
to 1996, Mr. Herwaldt had been President of
Herwaldt Oldsmobile-GMC Truck since 1969,
President of Saturn of Fresno since 1991, and
President of Herwaldt Motors since 1993. Mr.
Herwaldt served as a director of ValliCorp
Holdings, Inc., which merged with and into the
Corporation in 1997.
2
Director
Name of Nominee Principal Occupation Since
- --------------------------- --------------------------------------------------------------- ----------
Arthur C. Latno, Jr. ...... Mr. Latno, born in 1929, was an Executive Vice 1985
President for Pacific Telesis Group (formerly
Pacific Telephone Co.) in San Francisco, CA. Mr.
Latno retired from that company in November of
1992. He currently devotes some of his time to
serving on various community service boards.
Patrick D. Lynch ........... Mr. Lynch, born in 1933, currently serves as a 1986
consultant to several private high technology
firms.
Catherine Cope
MacMillan ................ Ms. MacMillan, born in 1947, is General Counsel 1985
for Nob Hill Properties, Inc., the owner of the
Huntington Hotel in San Francisco, CA. Prior to
1999 she was President and owner of the Firehouse
Restaurant in Sacramento, CA.
Patrick J. Mon Pere ....... Mr. Mon Pere, born in 1931, is the owner and 1997
President/Chief Executive Officer of Patrick James
Inc., a men's retail cloth- ing firm. Mr. Mon Pere
served as a director of ValliCorp Holdings, Inc.,
which merged with and into the Corporation in
1997.
Ronald A. Nelson ........... Schulz Creative Associates, a general partner in 1988
various Schulz partnerships and trustee for
various Schulz trusts and the Schulz Foundation
through 1995. He now devotes his time to personal
investments.
Carl R. Otto .............. Mr. Otto, born in 1946, is the President and Chief 1992
Executive Officer of John F. Otto, Inc., a general
contracting firm in Sacramento, CA.
David L. Payne ............ Mr. Payne, born in 1955, is the Chairman of the 1984
Board, President and Chief Executive Officer of
the Corporation. Mr. Payne is President and Chief
Executive Officer of Gibson Printing and
Publishing Company and Gibson Radio and Publishing
Company, which are newspaper, commercial printing
and real estate investment companies headquartered
in Vallejo, CA.
Michael J. Ryan, Jr ........ Mr. Ryan, born in 1930, has been involved in Ryan 1997
Farms, a diversified farming venture, as well as
investments and real estate since 1957. Mr. Ryan
served as a director of ValliCorp Holdings, Inc.,
which merged with and into the Corporation in
1997.
Edward B. Sylvester ........ Mr. Sylvester, born in 1936, is the President of 1979
Sylvester Engineering, Inc., a civil engineering
and planning firm with offices in Nevada City and
Truckee, California.
3
CERTAIN INFORMATION ABOUT THE BOARD OF DIRECTORS
AND CERTAIN COMMITTEES OF THE BOARD
The Board held a total of 13 meetings during 1999. Every director
attended at least 75% of the aggregate of: (i) the 13 Board meetings or that
number of Board meetings held during the period in which they served; and (ii)
the total number of meetings of any Committee of the Board on which such
director served.
Committees of the Board. The Board has an Executive Committee, the
members of which are D. L. Payne, Chairman; D. Emerson, A. C. Latno, Jr., P. D.
Lynch and E. B. Sylvester. The Board delegates to the Executive Committee,
subject to the limitations of the California General Corporation Law, any powers
and authority of the Board in the management of the business and affairs of the
Corporation. The Executive Committee held 12 meetings in 1999.
The Board has an Audit Committee, the members of which are R. A.
Nelson, Chairman; L. E. Bartolini, C. C. MacMillan, P. J. Mon Pere and C. R.
Otto. The Audit Committee reviews with the Corporation's independent auditors
and management the Corporation's accounting principles, policies and practices
and its reporting policies and practices. The Audit Committee reviews with the
independent auditors the plan and results of the auditing engagement and reviews
the scope and results of the procedures of the Corporation's internal Audit
Department. The Audit Committee reviews the adequacy of the Corporation's
internal accounting procedures with the Corporation's internal audit staff and
with the Board. The Audit Committee reviews the reports of examinations
conducted by bank regulatory authorities. The Audit Committee held five meetings
in 1999.
The Board has an Employee Benefits and Compensation Committee, the
members of which are P. D. Lynch, Chairman; E. Allen, D. Emerson, R. A. Nelson
and M. J. Ryan, Jr. The Employee Benefits and Compensation Committee administers
and carries out the terms of the Corporation's employee stock option plans as
well as the tax deferred savings and retirement and profit-sharing plans. The
Employee Benefits and Compensation Committee administers the Corporation's
compensation programs and reviews and recommends to the Board the compensation
level for the executive officers of the Corporation and its subsidiaries. The
Employee Benefits and Compensation Committee also reviews the performance of and
recommends promotions for the executive officers of the Corporation. The
Employee Benefits and Compensation Committee held five meetings in 1999.
The Board has a Nominating Committee for the election of directors, the
members of which are A. C. Latno, Chairman; D. Emerson, Jr., P. D. Lynch, D. L.
Payne and E. B. Sylvester. The Nominating Committee is responsible for reviewing
the fees paid to directors for attendance at Board and Committee meetings and
making recommendations with respect thereto. The Nominating Committee will
consider shareholder nominations for election to the Board submitted in
accordance with section 2.14 of the Bylaws of the Corporation ("Section 2.14").
Section 2.14 requires that nominations be submitted in writing to the Secretary
(or Assistant Secretary) of the Corporation within not less than 14 days nor
more than 50 days prior to any meeting at which directors will be elected and
that nominations contain certain specified information regarding the nominee and
the nominating shareholder. Nominations not made in accordance with Section 2.14
may be disregarded by the chairperson of the Meeting in his or her sole
discretion. The Nominating Committee held one meeting in 1999.
The Board has a Loan and Investment Committee, the members of which are
E. B. Sylvester, Chairman; E. Allen, L. H. Herwaldt, A. C. Latno, Jr. and C. C.
MacMillan. The Loan and Investment Committee is responsible for reviewing major
loans and investment policies and for monitoring the activities related to the
Community Reinvestment Act. The Loan and Investment Committee held 12 meetings
in 1999.
Directors' Fees. During 1999, non-employee directors of the Corporation
received an annual retainer of $14,000. Each director received $1,000 for each
meeting of the Board that he or she attended.
During 1999, each non-employee director received $500 for each
Committee meeting of the Board attended. The Chairman of each Committee received
an additional $250, for a total of $750, for each Committee meeting attended.
The Chairman of the Board, D. L. Payne, is compensated as an employee and did
not receive an annual retainer or directors' fees.
4
Indebtedness of Directors and Management. Certain of the directors,
executive officers and their associates have had banking transactions with
subsidiaries of the Corporation in the ordinary course of business. All
outstanding loans and commitments included in such transactions were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons, did not
involve more than a normal risk of collectibility and did not present other
unfavorable features.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT19, 2001.
Stock Ownership
Security Ownership of Certain Beneficial Owners. ToBased on a Schedule 13G
filing, shareholders beneficially holding more than 5% of Westamerica common
stock outstanding as of December 31, 2000, were:
Number of Shares Percent of
Name and Address of Beneficial Owner Title of Class Beneficially Owned Class
- -------------------------------------- ---------------- -------------------- -----------
U. S. Bancorp
601 2nd Avenue. South
Minneapolis, MN 55402-4302 Common 1,871,800(1) 5.13%
- ------------
(1) The Schedule 13G disclosed that the reporting person held sole voting power
over 90,300 shares and sole dispositive power over 1,869,200 shares.
2
Security Ownership of Directors and Management. The following table shows
the best knowledgenumber of common shares and the percentage of the common shares beneficially
owned (as defined below) by each of the current directors, by each of the
nominees for election to the office of director, by the Chief Executive Officer
and the four other most highly compensated executive officers during 2000 and by
all directors and executive officers of the Corporation as a group as of the date of this proxy statement, no person or entity
was the beneficial owner of more than 5% of the Corporation's outstanding
shares.March
9, 2001. For the purpose of this disclosure and the disclosure of ownership of shares by directors
and management below, shares are considered to be "beneficially" owned if the
person, directly or indirectly, has or shares the power to vote or direct the
voting of the shares, the power to dispose of or direct the disposition of the
shares, or the right to acquire beneficial ownership (as so defined)of shares within 60 days of
February 25, 2000.March 9, 2001.
Security Ownership of Directors and Management. The following table
shows the number of common shares and the percentage of the common shares
beneficially owned (as defined above) by each of the current directors, by each
of the nominees for election to the office of director, by the Chief Executive
Officer and the four other most highly compensated executive officers during
1999 and by all directors and executive officers of the Corporation as a group
as of February 25, 2000.
Amount and Nature of Beneficial Ownership
-----------------------------------------------------------------------------------------------------------------------------------------
Sole Shared Voting Right to
Voting and and Acquire Within % of
Investment Investment 60 Days of Shares of
Name Power Power Feb 25, 2000(1)Mar. 9, 2001(1) Total Class(2)
- -------------------------------------------------------------------- ----------------- ------------------ ----------------- ------------ --------------- ----------------- ----------- ---------------------
Etta Allen(3) ................... 10,683 10,683....................... 10,692 10,692 *
Louis E. Bartolini ................................ 1,800 1,800 *
Don Emerson ..................... 68,650 68,650......................... 68,778 68,778 0.2%
Louis H. Herwaldt .................................. 30,000 30,000 *
Arthur C. Latno, Jr.(4) ......... 3,181 3,181............. 3,202 3,202 *
Patrick D. Lynch .................................... 1,000 1,000 *
Catherine Cope MacMillan(5) ..... 3,006 3,006......... 3,080 3,080 *
Patrick J. Mon Pere .............................. 220,829 9,909 230,7386,780 227,609 0.6%
Ronald A. Nelson .................................... 44,000 44,000 0.1%
Carl R. Otto ............................................ 6,000 6,000 *
David L. Payne(6) ............... 607,105 11,062 560,690 1,178,857 3.2%Payne ...................... 78,268 539,884 (6) 775,917 1,394,069 3.9%
Michael J. Ryan, Jr. ................ 56,685 (7) ......... 56,785 9,387 66,1722,085 58,770 0.2%
Edward B. Sylvester .............................. 82,500 82,500 0.2%
Jennifer J. Finger .............. 76 575 17,170 17,821 *.................. 179 972 43,534 44,685 0.1%
Robert W. Entwisle(8) ........... 1,535 306 145,440 147,281 0.4%Entwisle .................. 3,174 (8) 700 53,514 57,388 0.2%
Hans T. Y. Tjian(9) ............. 85,055 17,091 163,660 265,806 0.7%Tjian .................... 78,279 (9) 17,821 127,755 223,855 0.6%
Thomas S. Lenz(10) .............. 2,180 218 45,757 48,155Lenz ...................... 12 (10) 403 18,390 18,805 0.1%
All 20 Directors and Executive
Officers as a Group ............ 1,271,553 44,537 1,129,393 2,445,483 6.7%................. 709,795 575,703 1,149,875 2,435,373 6.8%
- ------------
* Indicates that the percentagebeneficial ownership of the outstanding shares beneficially owned
is less than one-tenth of one percent (0.1%).
of the Corporation's common shares.
(1) During 1996, the Corporation adopted the Westamerica Bancorporation
Deferral Plan that allows recipients of restricted performance shares to
defer income into succeeding years. The plan includes restricted
performance shares vested as of January 27, 2000,25, 2001, whether or not deferred
by the executive into the Westamerica Bancorporation Deferral Plan.
5
(2) In calculatingIncalculating the percentage of ownership, all shares which the identified
person or persons have the right to acquire by exercise of options are
deemed to be outstanding for the purpose of computing the percentage of the
class owned by such person, but are not deemed to be outstanding for the
purpose of computing the percentage of the class owned by any other person.
(3) Includes 10,350 shares held in a trust as to which Mrs. Allen is trustee.
(4) Includes 1,200 shares owned by Mr. Latno's wife, as to which Mr. Latno
disclaims beneficial ownership.
(5) Includes 2,1002,140 shares held in a trust as to which Ms. MacMillan is trustee.
(6) Includes 528,837 shares owned by Gibson Radio and Publishing Company, of
which Mr. Payne is President and Chief Executive Officer, as to which Mr.
Payne disclaims beneficial ownership.
(7) Held in a trust, as to which Mr. Ryan is co-trustee with sole voting and
investment power.
3
(8) Includes five shares heldHeld in a trust, as to which Mr. Entwisle is co-trustee with sole voting
and investment power.
(9) Held in a trust, as to which Mr. Tjian is co-trustee with sole voting and
investment power.
(10) Held in a trust, as to which Mr. Lenz is co-trustee with sole voting and
investment power.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Corporation's directors and executive officers and
persons who own more than 10% or more of a registered class of the Corporation's equity
securities to file with the Securities and Exchange Commission (the "SEC") and
the National Association of Securities Dealers initial reports of ownership and
reports of changes in ownership of Common Stock and other equity securities of
the Corporation. Such persons are required by SEC regulation to furnish the
Corporation with copies of all Section 16(a) forms they file.
To the Corporation's knowledge, based solely on a review of the copies of
such reports furnished to the Corporation and written representations that no
other reports were required, during the fiscal year ended December 31, 1999,2000, all
Section 16(a) filing requirements applicable to itswere complied with by Westamerica's officers,
directors and 10% shareholders.
PROPOSAL 1 -- ELECTION OF DIRECTORS
The number of directors of the Board to be elected at the Annual Meeting to
hold office for the ensuing year and until their successors are elected and
qualified is 13. It is the intention of the proxy holders named in the enclosed
proxy to vote such proxies (except those containing contrary instructions) for
the 13 nominees named below. The Board does not anticipate that any of the
nominees will be unable to serve as a director, but if that should occur before
the meeting, the proxy holders reserve the right to substitute another person as
nominee and vote for such person as directed by the Corporation's Board of
Directors. The proxy holders reserve the right to cumulate votes for the
election of directors and cast all of such votes for any one or more of the
nominees, to the exclusion of the others, and in such order of preference as the
proxy holders may determine in their discretion.
Nominees
The nominees for election to the office of director of the Board are named
and certain information with respect to them is given below. The information has
been furnished to the Corporation by the respective nominees. All of the
nominees have engaged in their indicated principal occupation for more than five
years, unless otherwise indicated.
Director
Name of Nominee Principal Occupation Since
- ---------------------------- -------------------------------------------------------- ---------
Etta Allen ................. Mrs. Allen, born in 1929, is President and owner of 1988
Allen Heating and Sheet Metal of Greenbrae,
Califor- nia, and President and owner of Sunny
Slope Vine- yard, Glen Ellen, California.
Louis E. Bartolini ......... Mr. Bartolini, born in 1932, retired in 1988 as a Vice 1991
President and financial consultant with Merrill Lynch,
Pierce, Fenner & Smith, Inc. He currently devotes
some of his time to serving on various community ser-
vice boards.
Don Emerson ................ Mr. Emerson, born in 1928, was President of Calso 1979
Company (the holding company that owns the formula
and name "Calso Water," a carbonated mineral water)
through 1981. He presently devotes his time to per-
sonal investments.
4
Director
Name of Nominee Principal Occupation Since
- ------------------------------ ----------------------------------------------------------- ---------
Louis H. Herwaldt ............ Mr. Herwaldt, born in 1932, is Chief Executive Officer 1997
of Herwaldt Automotive Group, Inc. Prior to 1996, Mr.
Herwaldt had been President of Herwaldt Oldsmobile-
GMC Truck since 1969, President of Saturn of Fresno
since 1991, and President of Herwaldt Motors since
1993. Mr. Herwaldt served as a director of ValliCorp
Holdings, Inc., which merged with and into the Corpo-
ration in 1997.
Arthur C. Latno, Jr. ......... Mr. Latno, born in 1929, was an Executive Vice Presi- 1985
dent for Pacific Telesis Group (formerly Pacific Tele-
phone Co.) in San Francisco, California. Mr. Latno
retired from that company in November of 1992. He
currently devotes some of his time to serving on vari-
ous community service boards.
Patrick D. Lynch ............. Mr. Lynch, born in 1933, currently serves as a consult- 1986
ant to several private high technology firms.
Catherine Cope Ms. MacMillan, born in 1947, is General Counsel for 1985
MacMillan ................... Nob Hill Properties, Inc., the owner of the Huntington
Hotel in San Francisco, California. Prior to 1999 she
was President and owner of the Firehouse Restaurant
in Sacramento, California.
Patrick J. Mon Pere .......... Mr. Mon Pere, born in 1931, is the owner and 1997
President/Chief Executive Officer of Patrick James
Inc., a men's retail clothing firm. Mr. Mon Pere served
as a director of ValliCorp Holdings, Inc., which merged
with and into the Corporation in 1997.
Ronald A. Nelson ............. Mr. Nelson, born in 1942, was Vice President of 1988
Charles M. Schulz Creative Associates, a general part-
ner in various Schulz partnerships and trustee for vari-
ous Schulz trusts and the Schulz Foundation through
1995. He now devotes his time to personal invest-
ments.
Carl R. Otto ................. Mr. Otto, born in 1946, is the President and Chief Ex- 1992
ecutive Officer of John F. Otto, Inc., a general contract-
ing firm in Sacramento, California.
David L. Payne ............... Mr. Payne, born in 1955, is the Chairman of the Board, 1984
President and Chief Executive Officer of the Corpora-
tion. Mr. Payne is President and Chief Executive Of-
ficer of Gibson Printing and Publishing Company and
Gibson Radio and Publishing Company, which are
newspaper, commercial printing and real estate invest-
ment companies headquartered in Vallejo, California
Michael J. Ryan, Jr. ......... Mr. Ryan, born in 1930, has been involved in Ryan 1997
Farms, a diversified farming venture, as well as invest-
ments and real estate since 1957. Mr. Ryan served as
a director of ValliCorp Holdings, Inc., which merged
with and into the Corporation in 1997.
Edward B. Sylvester .......... Mr. Sylvester, born in 1936, is the President of 1979
Sylvester Engineering, Inc. and SCO Planning and En-
gineering, Inc., civil engineering and planning firms
with offices in Nevada City and Truckee, California.
5
Meetings and Committees of the Board
Meetings
The Board held a total of 13 meetings during 2000. Every director attended
at least 75% of the aggregate of: (i) the 13 Board meetings or that number of
Board meetings held during the period in which they served; and (ii) the total
number of meetings of any Committee of the Board on which such director served.
Committees of the Board
Executive Committee:
Members: D. L. Payne, Chairman; D. Emerson, A. C. Latno, Jr., P. D. Lynch
and E. B. Sylvester.
Number of Meetings in 2000: Twelve
Functions: The Board delegates to the Executive Committee, subject to the
limitations of the California General Corporation Law, any powers and authority
of the Board in the management of the business and affairs of the Corporation.
Audit Committee:
Members: R. A. Nelson, Chairman; L. E. Bartolini, C. C. MacMillan, P. J.
Mon Pere and C. R. Otto.
Number of meetings in 2000: Five
Functions: The Audit Committee reviews with the Corporation's independent
auditors and management the Corporation's accounting principles, policies and
practices and its reporting policies and practices. The Audit Committee reviews
with the independent auditors the plan and results of the auditing engagement
and reviews the scope and results of the procedures of the Corporation's
internal Audit Department. The Audit Committee reviews the adequacy of the
Corporation's internal accounting procedures with the Corporation's internal
audit staff and with the Board. The Audit Committee reviews the reports of
examinations conducted by bank regulatory authorities. For additional functions
required by new rules established by the SEC in 1999 and 2000, please see the
Audit Committee Report that follows.
Employee Benefits and Compensation Committee:
Members: P. D. Lynch, Chairman; E. Allen, D. Emerson, R. A. Nelson and M.
J. Ryan, Jr.
Number of Meetings in 2000: Five
Functions: The Employee Benefits and Compensation Committee administers and
carries out the terms of the Corporation's employee stock option plans as well
as the tax deferred savings and retirement and profit-sharing plans. The
Employee Benefits and Compensation Committee administers the Corporation's
compensation programs and reviews and recommends to the Board the compensation
level for the executive officers of the Corporation and its subsidiaries. The
Employee Benefits and Compensation Committee also reviews the performance of and
recommends promotions for the executive officers of the Corporation.
Nominating Committee:
Members: A. C. Latno, Jr., Chairman; D. Emerson, P. D. Lynch, D. L. Payne
and E. B. Sylvester.
Number of Meetings in 2000: One
Functions: The Nominating Committee is responsible for reviewing the fees
paid to directors for attendance at Board and Committee meetings and making
recommendations with respect thereto. The Nominating Committee will consider
shareholder nominations for election
6
to the Board submitted in accordance with section 2.14 of the Bylaws of the
Corporation ("Section 2.14"). Section 2.14 requires that nominations be
submitted in writing to the Secretary (or Assistant Secretary) of the
Corporation within not less than 14 days nor more than 50 days prior to any
meeting at which directors will be elected and that nominations contain certain
specified information regarding the nominee and the nominating shareholder.
Nominations not made in accordance with Section 2.14 may be disregarded by the
chairperson of the Meeting in his or her sole discretion.
Loan and Investment Committee:
Members: E. B. Sylvester, Chairman; E. Allen, L. H. Herwaldt, A. C. Latno,
Jr. and C. C. MacMillan.
Number of Meetings in 2000: Twelve
Functions: The Loan and Investment Committee is responsible for reviewing
major loans and investment policies and for monitoring the activities related
to the Community Reinvestment Act.
Compensation of Non-Employee Directors
During 2000, non-employee directors of the Corporation received an annual
retainer of $14,000. Each non-employee director received $1,000 for each meeting
of the Board that he or she attended.
During 2000, each non-employee director received $500 for each Committee
meeting of the Board attended. The Chairman of each Committee received an
additional $250, for a total of $750, for each Committee meeting attended. The
Chairman of the Board, D. L. Payne, is compensated as an employee and did not
receive an annual retainer or directors' fees.
Corporation Transactions with Directors and Management
Certain of the directors, executive officers and their associates have had
banking transactions with subsidiaries of the Corporation in the ordinary course
of business. Except as described below, all outstanding loans and commitments
included in such transactions were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons, did not involve more than a normal
risk of collectibility and did not present other unfavorable features. As part
of Westamerica's Employee Loan Program, all employees, including corporate
officers, are eligible to receive mortgage loans at one percent below the bank's
prevailing interest rate.
Board Compensation Committee Report
Overview The Employee Benefits and Compensation Committee of the Board of
Directors (the "Committee") is comprised solely of directors who are not current
or former employees of Westamerica Bancorporation. It oversees the executive
compensation program and determines annual compensation for executives based on
performance. This executive compensation program and annual evaluation process
establishes a competitive base salary for each executive and offers incentive
compensation which can provide additional compensation if established
performance measures are achieved.
Compensation Objectives and Policies The Committee seeks to ensure that:
o rewards are closely linked to company-wide, division and individual
performance;
o the interests of the Corporation's employees are aligned with those of
its shareholders were complied with.
6through potential stock ownership; and
o compensation and benefits are set at levels that enable the Corporation
to attract and retain highly qualified employees.
7
In determining total compensation, the Committee obtains competitive market
data, comparing the Corporation's compensation practices to those of a peer
group of companies. The group is comprised of companies in the banking industry
with which the Corporation competes for executive talent and which are generally
comparable with respect to business activities.
Base Salary and Bonus. Each named executive officer receives a monthly base
salary, and is eligible to receive an annual cash bonus. Over time, the
Committee intends to limit base salaries, creating an increasing reliance on
annual cash bonuses to achieve targeted total cash compensation, thus increasing
the percentage of total compensation dependent upon meeting specific performance
objectives.
Corporate performance measures are established each year based on the
Corporation's business objectives. Specific criteria for each corporate
objective are established for "Threshold," "Target," and "Outstanding"
performance. Achievement of these annual performance measures determines between
55% and 80% of the annual cash bonuses to be paid to each named executive, with
the remaining 45% and 20% determined by individual and division performance.
This furthers the Committee's goal of linking management compensation to
shareholder interests.
Stock Options and Restricted Performance Shares. Each named executive
officer is also eligible to receive an annual grant of stock options. All named
executive officers, except the Chief Executive Officer, are also eligible to
receive an annual grant of restricted performance shares. Stock options priced
at 100% of fair market value generally vest over three years and expire in an
additional seven to nine years. Restricted performance shares generally vest
three years after grant but only have value if performance goals are met. Stock
grants and deferred compensation awards depend on achievement of annual
corporate objectives.
Performance Criteria. Specific criteria for each corporate objective are
established for "Threshold," "Target," and "Outstanding" performance. During
2000 corporate performance measures for cash bonuses and stock options included
meeting predetermined target levels for:
o return on equity, return on assets, earnings per share;
o credit quality measures; and
o revenue-per-share growth.
It also included:
o holding non-interest expenses below a predetermined level;
o maintaining satisfactory audit results; and
o improving assets and revenue per employee to specified levels.
Additional corporate performance objectives for a three-year period are
established by the Committee to accompany each grant of restricted performance
shares. Whether each grant vests three years following the date of grant is
determined by achievement of these pre-established, three-year performance
objectives which include, but are not limited to:
o return on equity, earnings per share growth, and revenue per share
growth;
o asset quality, service quality; and
o client satisfaction.
Compensation of Chief Executive Officer Mr. Payne's 2000 base salary
remained at $272,016 and annual cash bonus rose to $400,000, reflecting the
Committee's desire to limit base salaries and expand performance-based
compensation as noted above. His bonus earned in 2000 (included in the Summary
Compensation Table below) was related 80% to the achievement of the corporate
goals listed above and 20% to the achievement of individual
8
management goals. Individual management goals achieved in 2000 included
satisfactory results from regulatory examinations, satisfactory internal
controls, satisfactory progress on acquisitions, the completion of the merger of
First Counties Bank into Westamerica Bank, and the consolidation of the
Corporation's subsidiary, Bank of Lake County, into Westamerica Bank. Pursuant
to the 1995 Stock Option Plan, Mr. Payne was granted 168,780 nonqualified stock
options in January 2001 which was related to achievement of the 2000 performance
measures. Compared to the corporate objectives, the Corporation:
o exceeded its profitability objectives;
o improved credit quality measures to better than established levels;
o outperformed non-interest expense and control goals;
o increased new sources of non-interest revenues;
o maintained satisfactory audit results; and
o improved efficiency measures to better than targeted levels.
The Chief Executive Officer's receipt, pursuant to the 1995 Stock Option
Plan, of 261,500 nonqualified stock options in January 2000 was related to
achievement of the 1999 corporate performance measures. Compared to the
corporate objectives, the Corporation:
o exceeded its targeted profitability objectives;
o improved credit quality measures to better than established levels;
o outperformed non-interest expense and control goals; and
o improved efficiency measures to better than targeted levels.
Mr. Payne is not eligible for restricted performance shares.
In December 1998, the Corporation provided Mr. Payne with a deferred
compensation agreement for additional corporate contributions to remain with the
company because of his leadership capabilities and his role in the development
of potential acquisition targets. He must also attain certain performance goals
that include shareholder returns, overall financial performance, merger and
acquisition activities, results of regulatory audit and loan review
examinations, asset quality and revenue growth. On a quarterly basis throughout
2000 the Committee determined that Mr. Payne substantially met all the
pre-established objectives during 2000, and the Corporation contributed $236,520
to his deferred compensation account. The deferred compensation will be
distributed to him in a lump sum upon his continuous employment through January
1, 2004.
Other. In 1993, the Internal Revenue Code ("IRC") was amended to add
section 162(m). Section 162(m) places a limit of $1,000,000 on the amount of
compensation that may be deducted by the Corporation in any year with respect to
certain of the Corporation's highest paid executives. The Corporation intends
generally to qualify compensation paid to executive officers for deductibility
under the IRC, including section 162(m), but reserves the right to pay
compensation that is not deductible under section 162(m).
The Employee Benefits and Compensation Committee believes that the
foregoing compensation programs and policies provide competitive levels of
compensation, encourage long-term performance and promote management retention
while further aligning shareholders' and managements' interests in the
performance of the Corporation and the Corporation's Common Stock.
The Employee Benefits and Compensation Committee:
Patrick D. Lynch, Chairman
Etta Allen Ronald A. Nelson
Don Emerson Michael J. Ryan, Jr.
9
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth the compensation of the
Corporation's Chief Executive Officer and the four other most highly compensated
executive officers for services in all capacities to the Corporation,
Westamerica Bank ("WAB") and other subsidiaries during 2000, 1999, 1998
and 1997:
1998:
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
------------------------------------------ -----------------------------------------------------
Name and Restricted Securities
Principal Stock Underlying All Other
Position Year Salary Bonus(1) Other(2) Awards(3)(4) Options(3) Compensation(5)
-------- ----- --------------------- ------ -------- ------------------- ------------ ---------- ----------------------------- ------------ -------------------------
David L. Payne, 19992000 $272,016 $ 350,000400,000 $ 1,4401,786 $ 0 192,090261,500 $ 270,494(6)266,192 (6)(7)
Chairman, 1999 272,016 350,000 1,440 0 192,090 270,494
President & CEO 1998 272,016 300,000 1,089 0 192,090 32,391(6)
President & CEO 1997 272,016 300,000 1,200 0 96,000 32,743(6)32,391
Jennifer J. Finger,(8) 1999 $129,984 2000 $130,016 $ 91,20090,600 $ 0 $ 133,747 25,770135,120 36,040 $ 17,35418,228
SVP & CFO 1999 129,984 91,200 0 133,747 25,770 17,354
1998 129,988 86,600 0 48,201 0 27,816(9)
1997 42,915 28,800 0 0 0 3,473(9)12,870 27,816
Robert W. Entwisle, 19992000 $134,280 $ 73,70050,000 $12,000 $ 121,680 32,470 $ 18,563
SVP 1999 134,280 73,700 12,000 120,269 23,220 $ 18,511
SVP
1998 134,280 75,500 13,089 130,832 23,220 18,511
1997 134,280 72,300 13,096 120,698 25,800 18,354
Hans T. Y. Tjian, 19992000 $130,008 $ 101,90084,500 $12,000 $ 159,120 40,034 $ 20,961
SVP 1999 130,008 101,900 12,000 108,518 20,910 $ 19,429
SVP
1998 130,008 74,200 12,000 117,060 20,910 20,255
1997 130,008 75,600 12,000 108,570 23,250 19,850
Thomas S. Lenz 19992000 $120,960 $ 68,00069,200 $ 0 $ 68,429 14,660109,680 29,250 $ 12,68214,618
SVP & Chief Credit 1999 120,960 68,000 0 68,429 14,660 12,682
Administrator 1998 105,360 59,500 0 66,892 13,200 9,227
Administrator 1997 98,160 53,800 0 60,060 12,600 17,899
- ----------------------------
(1) Includes bonuses in the year in which they were earned.
(2) Includes for the years 1998-2000 (i) monthly auto allowance for each individualMr.
Entwisle and the amount of any
taxable perquisites.Mr. Tjian, and (ii) annual marketing conference for Mr.
Payne.
(3) The Corporation grants restricted performance shares and stock options in
the first quarter of each year based on corporate performance in the prior
calendar year. As with all outstanding shares of common stock, dividends are
paid on vested restricted performance shares. At December 31, 19992000 these
individuals held the following unvested restricted performance shares with
the following fair market values, based on athe closing price of $27.94the
Corporation's Common Stock on December 29, 2000 of $43.00 per share: Finger
(5,340(10,970 shares valued at $149,200)$471,710); Entwisle (13,740(12,540 shares valued at
$383,896)$539,220); Tjian (12,350(13,340 shares valued at $345,059)$573,620); and Lenz (7,140(8,590 shares
valued at $199,492)$369,370). The following table sets forth the restricted
performance share grants that were made on the following dates to the named
individuals:
Jan. 22, 1997 Jan. 21, 1998 Jan. 28, 1999 Jan. 25, 2000
Market Price: Market Price: Market Price
$19.25/Share $32.79/Share $34.56/Share $24.00/Share
--------------- --------------- --------------
David L. Payne ............. 0 0 0
Jennifer J. Finger 0......... 1,470 3,870 5,630
Robert W. Entwisle 6,270......... 3,990 3,480 5,070
Hans T. Y. Tjian 5,640........... 3,570 3,140 6,630
Thomas S. Lenz 3,120............. 2,040 1,980 4,570
Mr. Payne's 1995, 1996 and 1997 restricted performance shares were canceled by
the Employee Benefits and Compensation Committee on October 22, 1997, with Mr.
Payne's consent, in exchange for Mr. Payne receiving the right to receive a
nonqualified pension from the Corporation at age 55. See "Other Compensation
Arrangements--Pension Agreement."
710
(4) Restricted performance share grants based on corporate performance in 19992000
were made on January 25, 20002001 (on which date the market price was $24.00$39.41 per
share) to the named individuals as follows: Payne--0; Finger--5,630;
Entwisle--5,070; Tjian--6,630;Finger--3,540;
Entwisle--3,190; Tjian--3,190; and Lenz--4,570.Lenz--2,880.
(5) Includes 19992000 matching contributions made by the Corporation under the Tax
Deferred Savings/Retirement Plan ("ESOP") for the accounts of Messrs.
Payne, Entwisle, Tjian, Lenz and Ms. Finger in the amountamounts of: Payne--$0;
Finger--$9,600;10,200; Entwisle--$9,600;10,200; Tjian--$9,274;9,960; and Lenz--$4,694;7,349; and
includes 19992000 contributions made by the Corporation under the profitProfit
Sharing/Retirement Plan for the accounts of Messrs. Payne, Entwisle, Tjian
and Lenz, and Ms. Finger in the amounts of: Payne--$7,200;7,650; Finger--$7,200;7,650;
Entwisle--$7,200;7,650; Tjian--$6,804;7,650; and Lenz--$5,937;5,749; and includes 19992000
insurance premiums paid by the Corporation for the accounts of Messrs.
Payne, Entwisle, Tjian and Lenz and Ms. Finger in the amounts of:
Payne--$800;889; Finger--$554;378; Entwisle--$1,711;713; Tjian--$3,351; and
Lenz--$2,051.1,520.
(6) Includes the dollar value of the benefit to Mr. Payne of the remainder of
the premium payable by the Corporation with respect to a split dollar life
insurance policy for Mr. Payne (projected on an actuarial basis) in the
amountsamount of $21,987, $21,411,and $19,468$17,883 for 1997, 1998 and 1999,
respectively;2000; and bonus paid to Mr. Payne which he used to pay
his portion of split dollar life insurance premiums in the amountsamount of $2,548, $2,772,
and $3,026$3,250
for 1997,2000.
(7) Includes deferred compensation of $236,520 pursuant to a 1998 and 1999, respectively.
(7)deferred
compensation agreement. See "Other Compensation Arrangements--Deferred
Compensation Agreement."
(8) Ms. Finger began her employment in September, 1997.
(9) Includes relocation expenses of $10,670 in 1998 and $3,330 in 1997.
The following table describes stock options that were granted pursuant to
the Westamerica Bancorporation 1995 Stock Option Plan (the "1995 Stock Option
Plan") to the Corporation's Chief Executive Officer and the four other most
highly compensated executive officers in the fiscal year ended December 31,
1999.2000. All of these grants were made on January 24, 1999,25, 2000, based on achievement of
19981999 corporate performance objectives.
OPTION GRANTS IN LAST FISCAL YEAR
Number Percent
of Securities of Total
Underlying Options Granted
Options to All Employees Exercise Expiration Present
Name Granted(1) in Fiscal Year Price Date Value(2)
- -------------------------------------------------- --------------- ------------------ -------------- ------------ ------------ -------------------------
David L. Payne ......... 192,090............. 261,500 29% $ 34.5625024.00000 1/24/2009 $1,073,78325/2010 $2,709,140
Jennifer J. Finger ..... 25,770......... 36,040 4 34.5625024.00000 1/24/2009 144,05425/2010 373,374
Robert W. Entwisle ..... 23,220......... 32,470 4 34.5625024.00000 1/24/2009 129,80025/2010 336,389
Hans T. Y. Tjian ....... 20,910 3 34.56250........... 36,252 4 24.00000 1/24/2009 116,88725/2010 375,571
Thomas S. Lenz ......... 14,660 2 34.56250............. 29,250 3 24.00000 1/24/2009 81,94925/2010 303,030
- ----------------------------
(1) All options are nonqualified stock options, which vest ratably over a
three-year period commencing one year after the grant date. All options have
an exercise price equal to the market value on the date of grant. The terms
of all of the Corporation's stock option plans provide that options may
become exercisable in full in the event of a Change of Control as defined in
each stock option plan.
(2) A Modified RollRoll-Geske option pricing model using standard assumptions,
including 12.0%13.0% annual dividend growth, a risk-free rate equal to the
six-year U.S. Treasury yield of 6.34%6.60%, volatility of 37.00%33.20% and a six-year
maturity was used to derive the per share option value of $5.59.$10.36.
811
The following table sets forth the stock options exercised in 19992000 and the
December 31, 19992000 unexercised value of both vested and unvested stock options
for the Corporation's Chief Executive Officer and the four other most highly
compensated executive officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND DECEMBERAggregated Option Exercises In Last Fiscal Year And
December 31, 1999 OPTION VALUES2000 Option Values
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-The-Money Options
Shares December 31, 19992000 at December 31, 1999(1)2000(1)
Shares ------------------------------- ------------------------------
Acquired Value ------------------------------- -------------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------------------------- ------------- ---------- ------------- --------------- ------------- -----------------------------
David L. Payne ............ -- -- 400,630 352,150 $5,006,172 $ 278,080560,690 453,590 $12,682,899 $6,702,646
Jennifer J. Finger ........ -- -- 4,290 34,350 -- --17,170 68,480 160,066 873,510
Robert W. Entwisle ........ 12,600 $360,423 115,090 47,300 1,733,022 74,73437,470 $875,970 107,970 68,230 2,649,619 826,555
Hans T. Y. Tjian .......... 15,000 426,706 112,170 42,600 1,753,405 67,34830,840 676,169 108,660 74,284 2,784,018 949,417
Thomas S. Lenz ............ 7,169 141,736 12,800 27,660 72,996 36,49815,720 214,913 13,687 52,013 131,067 683,126
- ----------------------------
(1) Based on the closing price of the Corporation's Common Stock of $27.94$43.00 per
share on December 31, 1999.29, 2000.
OTHER ARRANGEMENTSOther Compensation Arrangements
Certain Employment Contracts
WAB entered into an employment agreement with Mr. Entwisle, dated January
7, 1987, withproviding for an annual base salary of $134,280. The agreement is
"evergreen" in the sense that the term of the agreement is automatically
extended for one additional month upon completion of each additional month of
employment unless WAB gives Mr. Entwisle one year's notice of intent to
terminate.
WAB may terminate Mr. Entwisle's employment without cause and Mr. Entwisle
may terminate his employment for "good reason," as defined in the agreements.agreement.
Under such circumstances, however, Mr. Entwisle would be entitled to severance
pay equal to the sum of: (i) one time his base salary; (ii) his maximum
bonus(es) had he remained employed one additional year past the date of
termination; and (iii) an amount equal to his automobile allowance for the one
year preceding the date of termination. The agreement with Mr. Entwisle provides
for the payment of liquidated damages upon termination of employment by WAB
without cause or termination by Mr. Entwisle for "good reason." Under the terms
of the agreement, the amount of liquidated damages is reduced by any severance
pay received by Mr. Entwisle and he is under a duty to mitigate his damages.
Hans T. Y. Tjian accepted a position with WAB as Senior Vice President and
Manager of Operations and Systems Administration under the terms set forth in a
letter agreement dated April 14, 1989. Under the terms of this agreement, Mr.
Tjian is entitled to: (i) receive an annual salary of $130,008; (ii) receive a
car allowance of $1,000 per month; (iii) participate in WAB's executive bonus
plan; (iv) participate in the Corporation's Stock Option Plan; and (v) vacation
leave. In addition, Mr. Tjian is entitled to receive severance pay equal to his
annual base salary for one year if his position is eliminated as a result of a
Change of Control.Control (as defined in the agreement).
Pension Agreement
During 1997, the Corporation entered into a nonqualified pension agreement
("Pension Agreement") with Mr. Payne in consideration of Mr. Payne's agreement
that restricted performance shares granted in 1995, 1996 and 1997 would be
canceled. The pension was to be calculated as a percentage of Mr. Payne's three
year average compensation (salary and bonus) preceding the earlier of retirement
or age 55. In January 2000 the percentage was
12
determined by the Employee Benefits and Compensation Committee (the "Committee")
based on the Corporation's achievement of certain performance goals which had
first been established for Mr. Payne's 1995, 1996, and 1997 restricted
performance shares.
9
Under the terms of the Pension Agreement and the percentage
of compensation provisions determined by the Committee, Mr. Payne's annual
pension will be $511,950. The vested portion of the pension will be paid to Mr.
Payne as a 20-year certain pension commencing at age 55. Mr. Payne will be fully
vested in the pension based on continuous employment through December 31, 2002.
As part of the pension agreement,Pension Agreement, if Mr. Payne becomes subject to an excise
tax as a result of the accelerated vesting of the pension in connection with a
Change of Control (as defined in the Pension Agreement), Mr. Payne will also
receive a cash payment equal to the sum of (i) the portion of any excise tax due
attributable to the vested pension in excess of the portion of any excise tax
that would be due if Mr. Payne's restricted performance shares had not been
canceled, and (ii) the amount necessary to restore Mr. Payne to the same
after-tax position as if no such excise tax had been imposed.
Deferred Compensation Agreement
In December 1998, the Corporation entered into a deferred compensation
agreement with Mr. Payne for additional discretionary deferred compensation to
provide an incentive to remain with the companyCorporation through his retirement. The
deferred compensation will be delivered in the form of discretionary monthly
company contributions to be deposited in a non-qualified deferred compensation
plan. The Committee will periodically review the accumulated deferred
compensation balance, including investment performance, to determine if the
additional discretionary company contributions are necessary to provide to Mr.
Payne with an appropriate level of retirement benefits. The amount of such
additional company contributions will be determined quarterly by the Committee
and be based on Mr. Payne's attaining of certain performance goals to include,
but not be limited to, shareholder returns, overall financial performance,
merger and acquisition activities, loan review examinations, asset quality and
related reserves, and revenue growth.
Mr. Payne's deferred compensation award will be paid in a lump sum and be
contingent upon his continuous employment through December 31, 2003.January 1, 2004. The agreement
allows for accelerated payment only in the event of death, disability,
termination without cause, and termination as a result of a Change of Control
(as defined in the 1995 Stock Option Plan). Deferred compensation of $236,520
was deposited in the non-qualified discretionary plan in 19992000 as the Committee
determined that Mr. Payne had achieved the quarterly performance goals. The
accumulated deferred compensation account balance was $246,842$456,430 on December 31,
1999.
BOARD COMPENSATION COMMITTEE REPORT
The Board, operating through its Employee Benefits and Compensation
Committee, has established an executive compensation program and determines
annual compensation for executives based on performance. This executive
compensation program and annual evaluation process establishes a competitive
base salary for each executive and offers incentive compensation which can
provide additional compensation if established performance measures are
achieved. This additional compensation can be in the form of short-term annual
cash bonuses, long-term stock options, and either long-term restricted
performance shares or supplemental deferred compensation benefits.
In determining total compensation, the Committee obtains competitive
market data, comparing the Company's compensation practices to those of a peer
group of companies. The group is comprised of companies in the banking industry
with which the Company competes for executive talent and which are generally
comparable with respect to business activities. Each named executive officer
receives a monthly base salary, and is eligible to receive an annual cash bonus,
an annual grant of stock options and an annual grant of restricted performance
shares. The program was recently amended to include Company contributions to a
non-qualified deferred compensation plan for the Chief Executive Officer. Over
time, the Committee intends to limit base salaries, creating an increasing
reliance on annual cash bonuses to achieve targeted total cash compensation,
thus increasing the percentage of total compensation dependent upon meeting
specific performance objectives. This furthers the Committee's goal of linking
management compensation to shareholder interests.
Corporate performance measures are established each year based on the
Corporation's business objectives. Actual stock grants and deferred compensation
awards depend on achievement of these
102000.
13
annual corporate objectives. Specific criteria for each corporate objective are
established for "Threshold," "Target," and "Outstanding" performance.
Achievement of these annual performance measures also determines between 55% and
80% of the annual cash bonuses to be paid to each named executive, with the
remaining 45% and 20% determined by individual and division performance.
Corporate performance measures for 1999, which determined January 2000
cash bonuses and option grants, were to:
* reach target levels of return on equity, return on assets and
earnings per share;
* maintain credit quality measures at established levels;
* develop new sources of fee income;
* hold non-interest expenses below a specified level;
* maintain satisfactory audit results;
* improve assets per employee and revenues per employee to specified
levels; and
* achieve Y2K compliance.
Corporate performance measures for 1998, which determined January 1999
cash bonuses, option grants and restricted performance share grants, were to:
* reach target levels of return on equity, return on assets and
earnings per share;
* maintain credit quality measures at established levels;
* hold non-interest expenses below a specified level;
* maintain satisfactory audit results; and
* improve assets per employee and revenues per employee to specified
levels.
Additional corporate performance objectives for a three-year period are
established by the Employee Benefits and Compensation Committee to accompany
each grant of restricted performance shares. Whether each grant vests three
years following the date of grant is determined by achievement of these
pre-established, three-year performance objectives which include, but are not
limited to, return on equity, earnings per share growth, revenue per share
growth, asset quality, service quality and client satisfaction.
The Chief Executive Officer's base salary in 1999 of $272,016 was
established at a level judged to be competitive with comparable positions at
other financial institutions. The Chief Executive Officer's $350,000 bonus
earned in 1999 (included in the Summary Compensation Table listed above) was
related 80% to the achievement of the 1999 corporate goals listed above and 20%
to the achievement of individual management goals. The Chief Executive Officer's
receipt, pursuant to the 1995 Stock Option Plan, of 261,500 nonqualified stock
options in January 2000 was related to achievement of the 1999 performance
measures listed above. Individual management goals achieved in 1999 included
satisfactory results from regulatory examinations, satisfactory internal
controls, satisfactory Y2K performance, satisfactory progress on acquisitions,
and development of a management succession plan. Compared to the 1999 corporate
objectives listed above, the Corporation:
* exceeded its profitability objectives;
* improved credit quality measures to better than established levels;
* outperformed non-interest expense and control goals;
* increased new sources of non-interest income revenues;
* maintained satisfactory audit results;
* improved efficiency measures to better than targeted levels; and
* met Y2K performance goals.
In December 1998, the Corporation provided Mr. Payne with a deferred
compensation agreement for additional corporate contributions to remain with the
company through his retirement because of his leadership capabilities and his
role in the development of potential acquisition targets. He must also attain
11
certain performance goals that include, overall shareholder returns, financial
performance, loan review examination, asset quality, and revenue growth. In
January the Committee determined that Mr. Payne substantially met all the
pre-established objectives in 1999 and the company contributed $236,520 to his
deferred compensation account. The additional company contributions will be
distributed to him in a lump sum upon his continuous employment through December
31, 2003.
The Chief Executive Officer's receipt, pursuant to the 1995 Stock
Option Plan, of 192,090 nonqualified stock options in January 1999 was related
to achievement of the 1998 corporate performance measures listed above. Compared
to the 1998 corporate objectives listed above, the Corporation:
* exceeded its targeted profitability objectives;
* improved credit quality measures to better than established levels;
* outperformed non-interest expense and control goals; and
* improved efficiency measures to better than targeted levels.
Other. In 1993, the Internal Revenue Code ("IRC") was amended to add
section 162(m). Section 162(m) places a limit of $1,000,000 on the amount of
compensation that may be deducted by the Corporation in any year with respect to
certain of the Corporation's highest paid executives. The Corporation intends
generally to qualify compensation paid to executive officers for deductibility
under the IRC, including section 162(m), but reserves the right to pay
compensation that is not deductible under section 162(m).
The Employee Benefits and Compensation Committee believes that the
foregoing compensation programs and policies provide competitive levels of
compensation, encourage long-term performance and promote management retention
while further aligning shareholders' and managements' interests in the
performance of the Corporation and the Corporation's Common Stock.
THE EMPLOYEE BENEFITS AND COMPENSATION COMMITTEE:
PATRICK D. LYNCH, CHAIRMAN RONALD A. NELSON
ETTA ALLEN MICHAEL J. RYAN, JR.
DON J. EMERSON
12
[The following descriptive data is supplied in accordance with Rule 304(d) of
Regulation S-T]
Total Return Performance(1)INVESTMENT PERFORMANCE
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN(1)
[GRAPHIC OMITTED]
Period Ending
------------------------------------------------------ --------------------------------------------------------------------------------
Index 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/991995 1996 1997 1998 1999 2000
- --------------------------------------------------------------------------------
Westamerica Bancorporation 100.00 148.49 202.02 363.25 398.14 308.54100 133.53 238.92 257.61 195.84 301.78
S&P & P 500 100.00 137.58 169.03 225.44 289.79 350.78
Western100 122.87 158.14 202.36 240.92 216.49
NASDAQ Bank Monitor(2) 100.00 142.80 177.12 324.96 341.20 341.20Index 100 126.16 206.37 182.08 167.54 192.13
(1) Assumes $100 invested on December 31, 19941995 in the Corporation's Common
Stock, the S&P 500 composite stock index and SNL Securities' WesternNASDAQ's Bank Monitor index, with reinvestment of dividends.
(2) Source: SNL Securities.
APPROVALIndex
PROPOSAL 2 -- RATIFICATION OF AUDITORS
The Board, upon the recommendation of the Audit Committee, has selectedapproved the
selection of the firm of KPMG LLP as independent auditor for the Corporation for
2001, to report on the 2000consolidated financial statements of the Corporation, and
to perform such other appropriate accounting services as may be required by the
Board. The Board recommends that the shareholders vote in favor of ratifying and
approving the selection of KPMG LLP for the purposes set forth above. Should the
shareholders vote negatively, the Board would consider a change in auditors for
the next fiscal year.
14
Audit Fees
The aggregate fees billed by KPMG LLP for professional services rendered
for the audit of the Corporation's annual financial statements for the most
recent fiscal year subject to(2000) and the approvalreviews of the shareholders.financial statements included
in the Corporation's Forms 10-Q in 2000 was $277,000.
Financial Information Systems Design and Implementation Fees
KPMG LLP has informedrendered no professional services for financial information
systems design and implementation for the Corporation that it has had no
connection duringmost recent fiscal year (2000).
All Other Fees
The aggregate fees billed for services rendered by KPMG LLP other than for
the past three yearsservices described above, including tax consulting and other non-audit
services, for the most recent fiscal year (2000) was $113,100.
The Audit Committee considered whether the provision of the services other
than the audit services is compatible with the Corporation or its subsidiaries
in the capacity of promoter, underwriter, voting trustee, director, officer or
employee.maintaining KPMG LLP's independence.
Representatives of KPMG LLP will be present at the Annual Meeting with the
opportunity to make a statement if they desire to do so and to respond to
appropriate questions.
13AUDIT COMMITTEE REPORT
Notwithstanding anything to the contrary set forth in any of the
Corporation's previous or future filings under the Securities Act or the
Exchange Act that might incorporate any proxy statement or future filings with
the SEC, in whole or in part, the following report shall not be deemed to be
incorporated by reference into such filing.
The Audit Committee of the Board of Directors is composed of five outside
(non-employee) directors, all of whom meet the NASD listing standards for
director independence. The Audit Committee operates under a written charter
adopted by the Board of Directors (see Appendix), as required by the applicable
NASD listing standards.
Management is responsible for the Corporation's internal controls and the
financial reporting process. The independent auditors are responsible for
performing an independent audit of the Corporation's consolidated financial
statements in accordance with auditing standards generally accepted in the
United States and to issue an opinion thereon. The Audit Committee's
responsibility is to monitor and oversee these processes. In this context, the
Audit Committee has met and held discussions with management and the independent
auditors. Management represented to the Audit Committee that the Corporation's
consolidated financial statements were prepared in accordance with accounting
principles generally accepted in the United States, and the Audit Committee has
reviewed and discussed the consolidated financial statements with management and
the independent auditors. The Audit Committee discussed with the independent
auditors matters required to be discussed by Statement on Auditing Standards No.
61 (Communication with Audit Committees).
In performing its functions, the Audit Committee acts only in an oversight
capacity and necessarily relies on the work and assurances of the Corporation's
management, which has the primary responsibility for financial statements and
reports, and of the independent auditors, who, in their report, express an
opinion on the conformity of the Corporation's annual financial statements to
generally accepted accounting principles.
The Corporation's independent auditors also provided to the Audit Committee
the written disclosures and the letter from the independent auditors required by
the Independence Standards Board Standard No. 1 (Independence Discussions with
Audit Committees). The Audit Committee discussed with the independent auditors
that firm's independence.
15
Based on the Audit Committee's discussion with management and the
independent auditors and the Audit Committee's review of the representation of
management and the report of the independent auditors to the Audit Committee,
the Audit Committee recommended that the Board of Directors include the audited
consolidated financial statements in the Corporation's Annual Report on Form
10-K for the year ended December 31, 2000, to be filed with the Securities and
Exchange Commission.
Ronald A. Nelson, Chairman
Louis E. Bartolini Catherine C. MacMillan
Patrick J. Mon Pere Carl R. Otto
OTHER MATTERS
Management of the Corporation does not know of any matters to be presented
at the Annual Meeting other than those specifically referred to herein. If any
other matters should properly come before the Meetingmeeting or any postponement or
adjournment thereof, the persons named in the enclosed proxy intend to vote
thereon in accordance with their best business judgment.
For a matter to be properly brought before the Meetingmeeting by a shareholder,
section 2.02 of the Corporation's Bylaws ("Section 2.02") provides that the
shareholder must deliver or mail a written notice to the Secretary (or Assistant
Secretary) of the Corporation not less than 14 days nor more than 50 days prior
to the Meeting.meeting. Section 2.02 also provides that the notice must set forth as to
each matter that the shareholder proposes to bring before the Meetingmeeting a brief
description of the business desired to be brought before the Meetingmeeting and the
reasons for conducting such business at the Meeting,meeting, the name and residence
address of the shareholder proposing such business, the number of shares of the
Corporation's common stock that are owned by the shareholder and any material
interest of the shareholder in such business.
The cost of the solicitation of proxies in the accompanying form will be
borne by the Corporation. The Corporation has retained the services of Corporate
Investor Communications, Inc. to assist in the proxy distribution at a cost not
to exceed $2,000 plus reasonable out-of-pocket expenses. The Corporation will
reimburse banks, brokers and others holding stock in their names or names of
nominees or otherwise for reasonable out-of-pocket expenses incurred in sending
proxies and proxy materials to the beneficial owners of such stock.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Kris Irvine
----------------------------------------
Kris Irvine
Assistant Corporate Secretary
Dated: March 20, 2000
1421, 2001
16
Appendix A
Audit Committee Charter
(Approved by the Board or Directors 4/27/00)
The Audit Committee is appointed by the Board to assist the Board in monitoring
(1) the integrity of the financial statements, (2) the compliance by the company
with legal and regulatory requirements and (3) the independence and performance
of the company's internal and external auditors.
The members of the Audit Committee shall meet the independence and experience
requirements of the Nasdaq. The members of the Audit Committee shall be
appointed by the Board on the recommendation of the Chairman of the Board. The
Audit Committee shall have no fewer than three members.
The Audit Committee shall have the authority to retain special legal, accounting
or other consultants to advise the Committee. The Audit Committee may request
any officer or employee of the company or the company's outside counsel or
independent auditor to attend a meeting of the Committee.
The Audit Committee shall make regular reports to the Board of Directors.
The Audit Committee shall:
1. Review and reassess the adequacy of this Charter annually and recommend any
proposed changes to the Board for approval.
2. Review the annual audited financial statements with management, including
major issues regarding accounting and auditing principles and practices as
well as the adequacy of internal controls that could significantly affect
the company's financial statements.
3. Review with management and the independent auditor any significant
financial reporting issues and judgments made in connection with the
preparation of the company's financial statements.
4. Review with management and the independent auditor the company's quarterly
financial statements prior to the release of quarterly earnings. The review
may be conducted by a member of the Committee who has been delegated
authority by the Committee to perform the review.
5. Meet periodically with management to review the company's major financial
risk exposures.
6. Review major changes to the company auditing and accounting principles and
practices as suggested by the independent auditor, internal auditors or
management.
7. Recommend to the Board the appointment of the independent auditor, which
firm is ultimately accountable to the Audit Committee and the Board.
8. Approve the fees to be paid to the independent auditor.
9. Receive periodic reports from the independent auditor regarding the
auditor's independence, and discuss such reports with the auditor. If so
determined by the Audit Committee, recommend that the Board take
appropriate action to satisfy itself of the independence of the auditor.
10. Evaluate together with the Board the performance of the independent auditor
and, if so determined by the Audit Committee, recommend that the Board
replace the independent auditor.
11. Review the appointment and replacement of the senior internal auditing
executive.
A-1
12. Review the significant reports to management prepared by the internal
auditing department and management's responses.
13. Meet with the independent auditor prior to the audit to review the planning
and staffing of the audit.
14. Obtain from the independent auditor assurance that Section 10A of the
Private Securities Litigation Reform Act of 1995 has not been implicated.
15. Obtain reports from management, the company's senior internal auditing
executive and the independent auditor that the company's subsidiary
affiliated entities are in conformity with applicable regulatory and legal
requirements.
16. Discuss with the independent auditor the matters required to be discussed
by SAS 61 relating to the audit.
17. Review with the independent auditor any problems or difficulties the
auditor may have encountered and any management letter provided by the
auditor and the company's response to that letter. Such reviews should
include:
a) Any difficulties encountered in the course of the audit work, including
any restrictions on the scope of activities or access to required
information.
b) Any changes required in the planned scope of the internal audit.
c) The internal audit department responsibilities, budgeting and staffing.
18. Prepare the report required by the rules of the Securities and Exchange
Commission to be included in the company's annual proxy statement.
19. Advise the board with respect to the company's policies and procedures
regarding compliance with applicable laws and regulations and with the
company's code of conduct.
20. Review with appropriate members of management or appropriate legal counsel
legal matters that may have a material impact on the financial statements,
the company's compliance policies and any material reports or inquiries
received from regulators or governmental agencies.
21. Meet at least annually with the senior internal audit officer, or other
members of management if needed, in separate executive sessions.
While the Audit Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Audit Committee to plan or conduct audits, or
to determine that the company's financial statements are complete and accurate
and are in accordance with generally accepted accounting principles. This is the
responsibility of management and the independent auditor. Nor is it the duty of
the Audit Committee to conduct investigations, to resolve disagreements, if any,
between management and the independent auditor or to assure compliance with laws
and regulations and the company's Code of Conduct.
A-2