SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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 toss. 240.14a-12
SJNB FINANCIAL CORP.
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)and 0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount
on which the filing fee is calculated and state how it was
determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
Notice of Annual Meeting of Shareholders
May 23, 2001
April 18, 2001
Dear Shareholder:
You are cordially invited to attend the 2001 Annual Meeting of Shareholders of
SJNB Financial Corp. to be held on May 23, 2001, at 11:00 a.m., in the
Quicksilver Room at The Silicon Valley Capital Club, 50 West San Fernando
Street, Suite 1700, San Jose, California.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE RETURN ENVELOPE PROVIDED. THE BOARD OF
DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" EACH OF THE PROPOSALS DESCRIBED IN THE
ATTACHED PROXY STATEMENT AND ON THE PROXY.
Sincerely yours,
s/R.A. Archer s/J.R. Kenny
Robert A. Archer James R. Kenny
Chairman of the Board President, Chief Executive Officer
and Secretary
SJNB FINANCIAL CORP.
One North Market Street
San Jose, California 95113
(408) 947-7562
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be Held on May 23, 2001
To the Shareholders of SJNB Financial Corp.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of SJNB Financial
Corp. will be held in the Quicksilver Room at The Silicon Valley Capital Club,
50 West San Fernando Street, Suite 1700, San Jose, California on May 23, 2001,
at 11:00 a.m., for the following purposes:
1. To elect the following five Class II directors of the Corporation to
serve until the 2004 Annual Meeting of Shareholders and until their
respective successors shall be elected and qualified:
Ray S. Akamine Arthur K. Lund
Rod Diridon, Sr. Douglas L. Shen
Robert G. Egan
2. To approve the Senior Management Bonus Plan to enable bonuses paid under
the Bonus Plan to qualify as deductible, performance-based compensation
under Section 162(m) of the Internal Revenue Code.
3. To ratify the appointment of KPMG LLP as the Corporation's independent
public accountants for the year ending December 31, 2001.
4. To consider and transact such other business as may properly come before
the Annual Meeting.
The close of business on April 9, 2001 is the record date for the determination
of Shareholders entitled to notice of and to vote at the Annual Meeting or any
postponements or adjournments thereof.
Whether or not you plan to attend the Annual Meeting, YOU MAY VOTE BY
COMPLETING, SIGNING AND RETURNING THE ENCLOSED PROXY PROMPTLY. Any Shareholder
present at the Annual Meeting may vote personally on all matters brought before
the Annual Meeting, in which event your proxy will not be used.
By Order of the Board of Directors,
s/ R.A. Archer s/ J.R. Kenny
Robert A. Archer James R. Kenny
Chairman of the Board President & Chief Executive Officer
April 18, 2001
(Approximate mailing date of proxy materials)
TABLE OF CONTENTS
PAGE
GENERAL INFORMATION 1
Revocability of Proxies 1
Solicitation of Proxies 1
Outstanding Securities and Voting Rights 1
Proposals of Shareholders 2
ELECTION OF DIRECTORS 2
Nominees to the Board of Directors 2
Nominations for Directors 5
Certain Committees of the Board of Directors 5
Compensation of Directors 6
Meetings of the Board of Directors 7
Executive Officers 7
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT 7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS 9
EXECUTIVE COMPENSATION AND TRANSACTIONS WITH
MANAGEMENT AND OTHERS 9
Summary Compensation Table 9
Compensation Committee Report 10
Stock Performance Chart 12
Stock Option Plans 12
Employment Agreements 13
Supplemental Compensation Agreements 14
Transactions with Management and Others 14
Section 16(a) Beneficial Ownership Reporting Compliance 14
APPROVAL OF THE SENIOR MANAGEMENT BONUS PLAN 15
Approval of the Senior Management Bonus Plan 15
Required Approval 16
Recommendation of Management 16
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS 16
Ratification of KPMG LLP 16
Audit and Other Fees Paid to KPMG LLP 16
Required Approval 16
Recommendation of Management 16
AUDIT COMMITTEE REPORT 17
OTHER MATTERS 18
ANNUAL REPORT ON FORM 10-K 18
APPENDIX A: SENIOR MANAGEMENT BONUS PLAN A-1
APPENDIX B: AUDIT COMMITTEE CHARTER B-1
PROXY STATEMENT
OF
SJNB FINANCIAL CORP.
One North Market Street
San Jose, California 95113
(408) 947-7562
Annual Meeting of Shareholders
May 23, 2001
INTRODUCTION
These proxy materials are furnished in connection with the solicitation of
proxies by the Board of Directors of SJNB Financial Corp. (the "Corporation"), a
California corporation, for use at the Annual Meeting of Shareholders (the
"Meeting") to be held on May 23, 2001, at 11:00 a.m., in the Quicksilver Room at
The Silicon Valley Capital Club, 50 West San Fernando Street, Suite 1700, San
Jose, California, and any postponements or adjournments thereof. These proxy
materials were mailed to Shareholders on or about April 18, 2001.
GENERAL INFORMATION
Revocability of Proxies
A proxy for voting your shares at the Meeting is enclosed. Any Shareholder
giving the enclosed proxy has the right to revoke it at any time before it is
exercised by filing with the Corporation's Secretary, James R. Kenny, a written
notice of revocation or a duly executed proxy bearing a later date. A
Shareholder may also revoke a proxy by attending the Meeting and advising the
Chairman of his or her election to vote in person.
Solicitation of Proxies
This proxy solicitation is made by the Board of Directors of the Corporation and
the cost of the solicitation is being borne by the Corporation. Solicitation is
being made by this Proxy Statement and may also be made by employees or agents
of the Corporation who may communicate with Shareholders or their
representatives in person, by telephone or by additional mailings. The
Corporation may, in its discretion, engage the services of a proxy solicitation
firm to assist in the solicitation of proxies. The total expense of this
solicitation will be borne by the Corporation and will include reimbursement
paid to brokerage firms and others for their expenses in forwarding soliciting
material and such expenses as may be paid to any proxy solicitation firm engaged
by the Corporation.
Outstanding Securities and Voting Rights
Only those Shareholders of record of the Corporation's common stock ("Common
Stock") as of the record date, April 9, 2001, will be entitled to notice of and
to vote in person or by proxy at the Meeting or any postponement or adjournment
thereof, unless a new record date is set for a postponed or adjourned meeting.
As of April 9, 2001, the Corporation had one class of securities issued and
outstanding, consisting of 3,801,417 shares of Common Stock. Approximately 2,600
shareholders hold such shares of record. All of the shares are voting shares and
entitled to vote at the Meeting. Each share of Common Stock is entitled to one
vote at the Meeting.
In the election of directors, the five (5) Class II candidates receiving the
highest number of votes will be elected. Approval of each of the other proposals
requires the affirmative vote of a majority of the shares of Common Stock
represented at the Meeting and entitled to vote with respect to each such
matter.
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. If, by the
time scheduled for the Meeting, a quorum of shareholders of the Corporation is
not present or if a quorum is present but sufficient votes in favor of any of
the proposals have not been received, the Meeting may be held for purposes of
voting on those proposals for which sufficient votes have been received, and the
persons named as proxies may propose one or more adjournments of the Meeting to
permit further solicitation of proxies with respect to any of the proposals for
which sufficient votes have not been received. If a Shareholder withholds
authority to vote for directors on the enclosed proxy, or attends the Meeting,
elects to vote in person, but abstains from voting in the election of directors,
that Shareholder's shares will not be counted in determining the candidates
receiving the highest number of votes. For shares present at the Meeting in
person or by proxy, an abstention with respect to Proposals No. 2 or No. 3 will
be treated the same as a vote against such matter. Generally 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 considered in determining if a quorum is present at the Meeting
but will be disregarded in determining votes cast.
If the enclosed proxy is completed in the appropriate spaces, signed, dated and
returned, the proxy will be voted as specified in the proxy. If no specification
is made on an executed proxy, it will be voted FOR the election of the Class II
directors nominated by the Board, FOR the approval of the Senior Management
Bonus Plan and FOR the ratification of the appointment of KPMG LLP as the
Corporation's independent public accountants.
The proxy also confers discretionary authority to vote the shares represented on
any matter that was not known at the time this Proxy Statement was mailed which
may properly be presented for action at the Meeting and may include: approval of
minutes of the prior annual meeting which will not constitute ratification of
the actions taken at such meeting; action with respect to procedural matters
pertaining to the conduct of the Meeting; and election of any person to any
office for which a bona fide nominee is named herein if such nominee is unable
to serve or for good cause will not serve. Management of the Corporation is not
aware of any other matters to come before the Meeting. If, however, any other
matters of which the Board is not now aware are properly presented for action,
it is the intention of the proxy holders named in the enclosed proxy to vote
such proxy on such matters in accordance with their best business judgment.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE ELECTION OF
THE CLASS II DIRECTORS NOMINATED BY THE BOARD, FOR THE APPROVAL OF THE SENIOR
MANAGEMENT BONUS PLAN AND FOR THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS
THE CORPORATION'S INDEPENDENT PUBLIC ACCOUNTANTS.
Proposals of Shareholders
Under certain circumstances, Shareholders are entitled to present proposals at
shareholder meetings. For any such proposal to be considered for inclusion in
the proxy statement prepared for next year's Annual Meeting, the proposal must
be received at the Corporation's executive offices at One North Market Street,
San Jose, California, 95113 prior to December 17, 2001. Any such proposal
received by the Corporation's principal executive offices after such date will
be considered untimely and may be excluded from the proxy statement and form of
proxy. The deadline for submission of shareholder proposals to be presented at
next year's Annual Meeting, but which will not be included in the proxy
statement and form of proxy relating to such meeting, is March 3, 2002. Any such
proposal received by the Corporation's principal executive offices after such
date will be considered untimely.
ELECTION OF DIRECTORS
Nominees to the Board of Directors
The Bylaws of the Corporation provide that the number of directors of the
Corporation shall be no less than nine and no more than seventeen, with the
exact number within such range to be fixed by amendment of the Bylaws adopted by
the Shareholders or by the Board of Directors. The number of directors is
presently fixed at sixteen.
The Company has three groups of directors, each of whom is elected for a
three-year term. Class II directors will be elected this year. Class III
directors will be elected in 2002 and Class I directors will be elected in 2003.
If any nominee should become unable or unwilling to serve as a director, the
proxies will be voted for such substitute nominee as shall be designated by the
Board of Directors. The Board of Directors presently has no knowledge that any
of the nominees will be unable or unwilling to serve. The five nominees
receiving the highest number of votes at the Meeting shall be elected.
The following persons are the nominees of the Board of Directors for election as
Class II directors to serve for a three-year term until the Annual Meeting of
Shareholders to be held in the year 2004 and until their successors are duly
elected and qualified.
Ray S. Akamine Arthur K. Lund
Rod Diridon, Sr. Douglas L. Shen
Robert G. Egan
The following table sets forth certain information with respect to: (1) those
persons nominated by the Board of Directors for election as Class II directors;
and (2) the Class I and Class III directors who will continue in office after
the Meeting until the expiration of their respective terms. The information
below is based on data furnished by each such nominee or director. Each member
of the Corporation's Board of Directors also serves as a director of San Jose
National Bank ("SJNB" or the "Bank").
Nominees for Election as Class II Directors:
First Elected a Principal Business Experience
Name Director(1) Age During the Past Five Years
---- ----------- --- - --------------------------
Ray S. Akamine 1994 53 Chief Financial Officer of Hill View Packing Company
in San Jose since April 1998. Prior to that time, he
served as Chief Financial Officer of Consolidated
Factors in Monterey, California from November 1995 to
March 1998.
Rod Diridon, Sr. 1994 62 Executive Director of the Norman Y. Mineta
International Institute for Surface Transportation
Policy Studies at the College of Business at San Jose
State University since 1994.
Robert G. Egan 2000 60 Managing Broker with Coldwell Banker Real Estate in
Saratoga, California since 1985.
Arthur K. Lund 1982 67 A practicing attorney at law and a member of Hoge
Fenton Jones & Appel in San Jose ince March 2000.
Prior to that, he was a member of Rosenblum, Parish &
Issacs from 1992 to March 2000.
Douglas L. Shen 1994 61 A self-employed dentist since 1966. His office is
located in San Jose, California.
Class I Directors, Continuing in Office
First Elected a Principal Business Experience
Name Director(1) Age During the Past Five Years
---- ----------- --- - --------------------------
Albert V. Bruno 1994 56 Professor of Marketing at Santa Clara University
since 1971 and Director, Center for Innovation and
Entrepreneurship, since 1998.
F. Jack Gorry 1988 67 Private consultant in telecommunication trends and
technology since 1992.
William D. Kron 2000 57 Director of Sales at Silicon Energy Corporation since
1999. Prior thereto, he was a Marketing Agent for
IBM.
V. Ronald Mancuso 2000 62 Retired Dentist since 1999. Private dental practice
in Saratoga from August 1967 through 1999.
Richard L. Mount 2000 56 Private consultant in bank management since 2000.
Chairman, President and Chief Executive Officer of
Saratoga Bancorp and President,Chief Executive Officer
and Director of Saratoga National Bank from 1982
through 1999.
Louis Oneal 1982 67 A practicing attorney at law and a member of The Law
Offices of Louis Oneal in San Jose since 1997. From
1991 to 1996 he was a member of the Law Offices of
Oneal & Oneal.
Class III Directors, Continuing in Office
Victor E. Aboukhater 2000 58 Since 1986, he has managed his personal investment
portfolio of real estate and securities.
Robert A. Archer 1982 67 Chairman of the Board of the Corporation and SJNB
since 1993. President and a principal stockholder of
Coast Counties Truck and Equipment Company, a heavy
duty truck dealership and service facility in San
Jose, which he has owned and operated for more than
30 years.
James R. Kenny 1991 56 President, Chief Executive Officer and Secretary of
the Corporation and SJNB since September 1991.
Diane P. Rubino 1987 51 President of Hill View Packing Company since 1993.
Gary S. Vandeweghe 1982 61 A practicing attorney at law with Olimpia, Whalen &
Lively since April 1996. From December 1995 to April
1996, he was a member of the Law Offices of Gary S.
Vandeweghe.
- -------------------
<FN>
(1) Includes service as a director of SJNB prior to the organization of
SJNB Financial Corp. Directors Akamine, Bruno, Diridon and Shen were
directors of Business Bancorp and California Business Bank prior to the
merger in October 1994. Directors Aboukhater, Egan, Kron, Mancuso and
Mount were directors of Saratoga Bancorp and Saratoga National Bank
prior to the merger in January 2000.
</FN>
There is no family relationship among any of the Corporation's executive
officers, directors or nominees for director.
Nominations for Directors
The Corporation's Bylaws provide that nominations for a director may be made by
Shareholders, provided that certain informational requirements concerning the
identities of the nominating Shareholder and the nominee are complied with in
advance of the meeting. This provision is intended to provide advance notice to
management of any attempt to effect an election contest or a change in control
of the Board of Directors, and may have the effect of precluding third party
nominations if not followed. Specifically, the Bylaws provide that nominations
for directors, other than those made by or on behalf of existing management,
must be made in writing and mailed or delivered to the President of the
Corporation, no less than 14 nor more than 50 days prior to any meeting of
Shareholders called for the election of directors, except that if less than 21
days' notice of the meeting is given, such nomination must be mailed or
delivered to the President by the close of business on the seventh day following
the date on which the notice was mailed. The written nomination must include the
following information, to the extent known by the nominating Shareholder: (a)
the name and address of each proposed nominee; (b) the principal occupation of
each proposed nominee; (c) the total number of shares of Common Stock of the
Corporation that will be voted for each proposed nominee; (d) the name and
residence address of the nominating Shareholder; and (e) the number of shares of
Common Stock of the Corporation owned by the nominating Shareholder.
The Bylaws provide that nominations not made in accordance with the above
procedure may, at his discretion, be disregarded by the Chairman of the Meeting
and, upon his instructions, the inspectors of election shall disregard all votes
cast for each such nominee.
Certain Committees of the Board of Directors
The Board of Directors of the Corporation has a standing Audit Committee and
Compensation Committee.
The Audit Committee of the Corporation is chaired by Gary S. Vandeweghe and the
members are Ray S. Akamine, Rod Diridon, Sr., F. Jack Gorry, William D. Kron, V.
Ronald Mancuso, Diane P. Rubino and Douglas L. Shen. The Audit Committee met
three times in 2000 for the purpose of reviewing the scope of and planning for
the annual audit, and reviewing the results of internal operations audits of the
Corporation and the Bank and the compliance with consumer laws, regulatory
agency reports and securities reports.
The Compensation Committee is chaired by Albert V. Bruno and the members are
Robert A. Archer, Robert G. Egan, F. Jack Gorry, William D. Kron, Arthur K.
Lund, Louis Oneal, Diane P. Rubino and Douglas L. Shen. The Compensation
Committee met eight times in 2000 for the purpose of setting compensation levels
of senior officers and directors, reviewing and approving bonus plans and
payments, and reviewing and approving employee benefit plans, including stock
option, insurance and retirement plans. In addition, the Compensation Committee
reviews and approves the Corporation's Compensation Policy.
The Corporation does not have a standing nominating committee. The Board of
Directors of the Corporation performs the functions of such committee.
Nominations by Shareholders can be made only by complying with the Corporation's
Bylaws and the notice provisions discussed above.
Compensation of Directors
In 2000, the non-employee directors of the Corporation were paid an annual
retainer of $18,000. In addition, each non-employee director was paid $500 for
attendance at each meeting of standing committees of the Corporation of which he
or she is a member. Directors of the Corporation do not receive additional fees
for attendance at the Corporation's Board meetings. In addition, the 1996 Stock
Option Plan provides for automatic annual grants to each non-employee director
on March 1 of each year of options to purchase 5,000 shares of Common Stock.
During 2000 the directors elected to forego the automatic annual option grant.
During 2000 the Corporation entered into supplemental compensation agreements
providing nonqualified defined benefit retirement income for the non-employee
directors of the Corporation. Non-employee directors, who were directors of
Saratoga Bancorp and Saratoga National Bank, had previously established
supplemental compensation agreements with Saratoga (which the Corporation
assumed as Saratoga's successor) providing nonqualified defined benefit
retirement income. Directors Egan and Mancuso elected to enter into the
Corporation's supplemental compensation agreement and forfeited their interest
in the previous agreement entered into with Saratoga. Directors Aboukhater and
Kron have maintained their original Saratoga supplemental compensation
arrangements (described below).
In connection with these agreements, the Corporation also purchased single
premium life insurance policies for each participant. At the director's death,
80% of the difference between the life insurance benefit and the then cash
surrender value will be paid to the participant's heirs. Generally, the defined
benefit for retirement vested as to 50% at the date of the agreements with an
additional 10% of such amount vesting in each year thereafter. For those
directors for which mandatory retirement (age 70) was within five years, vesting
was in equal periods until retirement. The supplemental compensation agreements
provide that each non-employee director will receive $23,877 annually (adjusted
annually by 2%) over their lifetime commencing on the third anniversary of their
retirement. In addition, the Corporation has agreed to compensate each director
$22,500 (adjusted annually by 2%) for the first three years subsequent to
retirement for serving as a "director emeritus," where each director acts in a
limited capacity for the Corporation. In the event of a director becoming
disabled prior to retirement, the supplemental compensation agreements provide
that such director shall be entitled to 100% of the annual retirement benefit if
he or she elects payments to commence at age 70, or a reduced annual retirement
benefit prior to age 70 (reduced by 5% per year for the difference between the
director's age at the time such payments are elected and 70). If a director is
terminated for reasons other than cause or a "change of control", the director
shall be entitled to be paid the vested amount of his or her annual retirement
benefits, including director emeritus payments, over his or her lifetime. Upon
voluntary termination by a director prior to age 70 and at a time when his or
her annual retirement benefit is not 100% vested, or upon termination for cause,
the director forfeits any benefits he or she may have under the supplemental
compensation agreement. Upon voluntary termination by a director prior to age 60
and at a time when his or her annual retirement is 100% vested, the director
shall be entitled to receive director emeritus and reduced annual retirement
benefits (reduced by 5% per year for the difference between the director's age
at the time of such voluntary termination and 70). The defined annual retirement
benefit becomes 100% vested upon the occurrence of a "change of control" (as
defined in the supplemental compensation agreement), and each participant shall
be entitled to receive the full amount of such benefit commencing at age 62.
In 1998, Messrs. Aboukhater and Kron, while directors of Saratoga Bancorp and
Saratoga National Bank, entered into supplemental compensation agreements with
Saratoga (which the Corporation assumed as Saratoga's successor). These
supplemental compensation agreements provide nonqualified defined benefit
retirement income for the participants, which retirement benefits became 100%
vested upon the merger of Saratoga and the Corporation in January 2000. In
connection with these agreements, single premium life insurance policies were
purchased for each participant. At the director's death, an amount equal to the
total proceeds less the then cash surrender value will be paid to the
participant's heirs. Based upon current projections, the supplemental
compensation agreements provide that each of Messrs. Aboukhater and Kron will
receive approximately $20,000 annually over their lifetime in equal monthly
installments. Each participant is entitled to receive the full amount of such
benefit commencing the month following the month in which each such participant
attains the age of 62 (or the month following the month in which the director
attains 55 years of age, if requested in writing by the director).
Meetings of the Board of Directors
The Corporation's Board of Directors held a total of 11 regular meetings in
2000. Every director attended at least 75% of: (i) the Corporation's 11 Board
meetings; and (ii) all of the meetings of any committee of the Corporation's
Board on which such director served, except for Mr. Vandeweghe and Mr. Mancuso.
Executive Officers
The executive officers of the Corporation and SJNB include James R. Kenny,
President, Chief Executive Officer and Secretary, about whom information is
provided above, and the following persons:
Principal Occupation
Name and Position(s) Age During the Past Five Years
Eugene E. Blakeslee 55 Executive Vice President and Chief Financial
Executive Vice President and Chief Officer of the Corporation and SJNB since
Financial Officer of the Corporation and September 1991.
SJNB
Frederic H. Charpiot 54 Senior Vice President and Chief Credit Officer
Senior Vice President and Chief Credit of SJNB since October 1991.
Officer of SJNB
Margo F. Culcasi 53 Senior Vice President/Liability Management of
Senior Vice President/Liability Management SJNB since February 1993.
of SJNB
Judith Doering-Nielsen 55 Senior Vice President and Senior Lending Officer
Senior Vice President and Senior Lending of SJNB since October 1991.
Officer of SJNB
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table sets forth information as of April 9, 2001, pertaining to
beneficial ownership of the Corporation's Common Stock by each current director
of the Corporation, each nominee to be elected to the Board of Directors, the
Chief Executive Officer, the four other most highly compensated executive
officers and all directors and officers(1) of the Corporation and SJNB as a
group. The information contained herein has been obtained from the Corporation's
records, from information furnished directly by the individual to the
Corporation, or from various filings made by the named individuals with the
Securities and Exchange Commission (the "SEC").
The table should be read with the understanding that more than one person may be
the beneficial owner or possess certain attributes of beneficial ownership with
respect to the same securities. Careful attention should be given to the
footnote references set forth in the column "Amount and Nature of Beneficial
Ownership." In addition, shares issuable pursuant to options which may be
exercised within 60 days of April 9, 2001, are deemed to be issued and
outstanding and have been treated as outstanding in calculating the percentage
ownership of those individuals possessing such interest, but not for any other
individuals. Thus, the total number of shares considered to be outstanding for
the purposes of this table may vary depending upon the individual's particular
circumstance.
Amount and Nature of Beneficial
Ownership (2)
----------------------------------------
Right to Acquire
Shares of Common within 60 days Percent of Outstanding
Name of Stock Beneficially of April 9, 2001 Common Stock
Beneficial Owner Owned
- ----------------- ------------------ ----------------- ----------------------
Victor E. Aboukhater 13,631 17,500 *
Ray S. Akamine 10,600 16,000 *
Robert A. Archer 53,253 (3) 16,000 1.81%
Albert V. Bruno 17,165 16,000 *
Rod Diridon, Sr. 6,949 16,000 *
Robert G. Egan 22,782 17,500 1.06%
F. Jack Gorry 6,000 16,000 *
James R. Kenny 152,119 (4) 14,400 4.36%
William D. Kron 9,756 17,500 *
Arthur K. Lund 65,558(5)(6) 16,000 2.14%
V. Ronald Mancuso 68,131 (7) 17,500 2.24%
Richard L. Mount 123,694 (8) ---- 3.25%
Louis Oneal 62,204 (5) 16,000 2.05%
Diane P. Rubino 20,287 11,000 *
Douglas L. Shen 69,495 16,000 2.24%
Gary S. Vandeweghe 33,503 16,000 1.30%
Eugene E. Blakeslee 121,148 (4) 7,200 3.37%
Frederic H. Charpiot 84,313 (4) 10,650 2.49%
Margo F. Culcasi 8,245 14,500 *
Judith Doering-Nielsen 17,608 16,000 *
Directors and Executive Officers as a
group (20 persons) 783,369 287,660 26.18%
* Less than 1% of the outstanding Common Stock. ------------------------
<FN>
(1) As used throughout this Proxy Statement, the terms "officer" and
"executive officer" refer to the Corporation and SJNB's President and Chief
Executive Officer, and Executive Vice President and Chief Financial
Officer, and SJNB's Chief Credit Officer, Senior Lending Officer and Senior
Vice President/Liability Management.
(2) Includes shares beneficially owned, directly and indirectly, together
with associates. Subject to applicable community property laws and shared
voting or investment power with a spouse, the persons listed have sole
voting and investment power with respect to such shares unless otherwise
noted.
(3) Includes 3,720 shares owned of record by a trust of which Mr. Archer is
a trustee and beneficiary.
(4) Includes 66,245 shares held in the SJNB Cash or Deferred Profit Sharing
Plan (the "401(k)") of which Messrs. Kenny, Blakeslee and Charpiot are
trustees and beneficiaries and with regard to which shares Messrs. Kenny,
Blakeslee and Charpiot have sole or shared voting power. Messrs. Kenny,
Blakeslee and Charpiot each disclaim beneficial ownership of the 401(k)
shares, other than such shares allocated to their respective personal
accounts in the 401(k): 4,571, 3,679, and 2,545, respectively.
(5) Includes 51,884 shares owned of record by a trust of which Messrs. Lund
and Oneal are trustees, as to which shares they disclaim beneficial
ownership.
(6) Includes 3,782 shares owned of record by a trust of which Mr. Lund is the
trustee and beneficiary.
(7) Includes 13,585 shares owned of record by a trust of which Mr. Mancuso is
the trustee and beneficiary.
(8) Includes 122,935 shares owned of record by a trust of which Mr. Mount is the
trustee and beneficiary.
</FN>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Information herein regarding ownership of the Corporation's Common Stock by
entities or persons known by the Corporation to be the beneficial owner of more
than 5% of the Corporation's Common Stock is based solely on copies of Schedules
provided to the Corporation by such entities or persons which have also been
filed with the SEC.
Based on a Schedule 13G filed with the SEC on February 12, 2001, as of December
31, 2000, Banc Fund III L.P., Bank Fund III Trust, Banc Fund IV L.P. and Banc
Fund V L.P., 208 S. LaSalle Street, Chicago IL, 60604, collectively reported
beneficial ownership of 318,170 shares of the Corporation's Common Stock, or
8.49% of shares outstanding as of December 31, 2000. Each of such entities
reported that it had sole voting power with respect to the following shares of
Corporation Common Stock: Banc Fund III L.P., 20,218 shares; Bank Fund III
Trust, 61,970 shares; Banc Fund IV L.P., 106,354 shares; and Banc Fund V L.P.,
129,628 shares. The manager of these entities reported voting and dispositive
power with respect to 318,170 of these shares.
Other than as described above, the Corporation knows of no other person who
beneficially owned more than five percent of the Corporation's Common Stock as
of April 9, 2001.
EXECUTIVE COMPENSATION AND TRANSACTIONS WITH MANAGEMENT AND OTHERS
Summary Compensation Table
The following table sets forth the cash compensation paid to or allocated for
the Chief Executive Officer of the Corporation and the four other most highly
compensated executive officers for services rendered in all capacities to the
Corporation and SJNB during 2000, 1999 and 1998.
Summary Compensation Table
Long-Term
Compensation
Annual Compensation Securities All Other
Name and Principal Position Year Salary(1) Bonus Underlying Options(2) Compensation(3)
- --------------------------- ---- --------- ----- --------------------- ---------------
James R. Kenny 2000 $200,000 $230,000 ----- $61,588
President, Chief Executive 1999 200,000 164,000 12,000 5,000
Officer and Secretary of the 1998 193,333 130,000 24,000 5,000
Corporation and SJNB
Eugene E. Blakeslee 2000 $150,000 $160,000 ----- $38,681
Executive Vice President and 1999 150,000 120,000 6,000 5,000
Chief Financial Officer of the 1998 142,833 95,000 12,000 5,000
Corporation and SJNB
Frederic H. Charpiot 2000 $120,000 $110,000 5,000 $23,288
Senior Vice President and Chief 1999 120,000 90,000 5,000 5,000
Credit Officer of SJNB 1998 113,333 72,000 10,000 5,000
Margo F. Culcasi 2000 $120,000 $110,000 5,000 $24,525
Senior Vice President/ 1999 122,062 90,000 5,000 5,000
Liability Management of SJNB 1998 112,500 72,000 10,000 5,000
Judith Doering-Nielsen 2000 $120,000 $110,000 5,000 $33,111
Senior Vice President and Senior 1999 120,992 90,000 5,000 5,000
Lending Officer of SJNB 1998 114,167 72,000 10,000 5,000
<FN>
(1) Salary amounts include compensation deferred at the election of the
executive in the year earned. For each year, excludes perquisites and
other personal benefits which, in the aggregate, do not exceed the
lesser of $50,000 or 10% of the total annual salary and bonus reported
for each such executive officer.
(2) On June 28, 2000, the following options were granted to the named
executive officers at an exercise price equal to the market price of
the Common Stock on the date of such grant: Mr. Charpiot, 5,000; Ms.
Culcasi, 5,000; and Ms. Doering-Nielsen, 5,000. See "Compensation
Committee Report" and "Stock Option Plans" below.
(3) Includes the Bank's accrual in 2000 for the future estimated benefit
under the supplemental compensation agreements (See "Supplemental
Compensation Agreements") for Messrs. Kenny, Blakeslee and Charpiot and
Mmes. Culcasi and Doering-Nielsen in the amounts of $56,338, $33,431,
$18,038, $19,275 and $27,861, respectively; and includes the Bank's
contributions in 2000 to defined contribution plans of $5,250 for each
of the above-named executives.
</FN>
Compensation Committee Report
The Corporation's compensation program and policies applicable to its executive
officers are administered by the Compensation Committee of the Board of
Directors. The Compensation Committee is made up entirely of non-employee
directors. The programs and policies are designed to enhance shareholder value
by aligning the financial interests of the executive officers of the Corporation
with those of its Shareholders.
It is the Corporation's policy generally to qualify compensation paid to
executive officers for deductibility under Section 162(m) of the Internal
Revenue Code. Section 162(m) generally prohibits the Corporation from deducting
the compensation of its Chief Executive Officer and four other most highly
compensated executive officers in excess of $1,000,000 unless that compensation
is based on the satisfaction of one or more pre-established business performance
goals, the amount of the compensation is subject to a maximum, and the maximum
compensation amount and the business criteria on which the performance goals are
based have been approved by shareholders. At the 1996 Annual Meeting, the
Corporation obtained Shareholder approval of the 1996 Stock Option Plan of SJNB
Financial Corp. which contains limitations necessary to qualify awards under
such plan as performance-based compensation and to maximize the tax
deductibility of such awards. The Shareholders also approved an amendment to the
1996 Stock Option Plan at the 1998 Annual Meeting. The Corporation's Senior
Management Bonus Plan is being submitted for Shareholder approval at this year's
Meeting. The Corporation reserves the discretion to pay compensation to its
executive officers that may not be deductible.
There are four primary components of executive compensation: Base Salary,
Bonuses, Stock Options and Supplemental Compensation.
Base Salary
Base salaries for fiscal 2000 reported herein were determined by the
Compensation Committee. The Compensation Committee reviews salaries recommended
by the Chief Executive Officer for executive officers other than the Chief
Executive Officer. In conducting its review, the Compensation Committee takes
into consideration the overall performance of the Corporation and the Chief
Executive Officer's evaluation of individual executive officer performance.
Final decisions on base salary adjustments for executives other than the Chief
Executive Officer are made in conjunction with the Chief Executive Officer. The
Compensation Committee independently determines the base salary for the Chief
Executive Officer by: (a) examining the Corporation's performance against its
preset goals, (b) examining the Corporation's performance within the banking
industry, (c) evaluating the overall performance of the Chief Executive Officer
and (d) comparing the base salary of the Chief Executive Officer to that of
other chief executive officers in the banking industry. Based upon the data and
performance, the Chief Executive Officer's annual base salary remained at
$200,000 for 2000.
Bonuses
The Corporation's Senior Management Bonus Plan ("Bonus Plan") is a cash-based
incentive bonus program. The Bonus Plan provides for a maximum annual payment to
each named executive officer of a performance-based cash bonus that is related
to a percentage of the Corporation's pre-tax net earnings provided that such net
earnings, before extraordinary items, equal or exceed one percent (1%) of the
Corporation's average assets. If the performance goals are met, the Chief
Executive Officer's bonus may not be adjusted. The amount of bonus to be paid to
the other four most highly compensated executive officers may be adjusted
downward based on the recommendation of the Chief Executive Officer and
objective and subjective factors. Under the Bonus Plan, the Chief Executive
Officer was awarded a bonus of $230,000 for performance in 2000.
The Corporation's Bonus Plan has been in place, largely unchanged, since 1991
based on a philosophy that links achieving above average financial performance
to the receipt of performance-based compensation. Since the Corporation's policy
is to qualify compensation for deductibility under Section 162(m) of the
Internal Revenue Code, the Corporation is submitting its Bonus Plan, in the form
attached to this Proxy Statement as Appendix A, to the Shareholders for approval
to qualify bonuses paid to its most highly compensated officers as
"performance-based compensation" as defined in the Internal Revenue Code.
Stock Options
The Compensation Committee annually grants options under the 1996 Stock Option
Plan, as amended, with an exercise price equal to or greater than the fair
market value on the date of grant. The grants are intended to retain and
motivate key executives and to provide a direct link with the interests of the
Shareholders of the Corporation. The Compensation Committee, in making its
determination as to grant levels, takes into consideration: (i) prior award
levels, (ii) total awards received to date by the individual executive, (iii)
the total stock award to be made and the executive's percentage participation in
the award, (iv) the executive's direct ownership of the Corporation's shares,
(v) the number of options vested and unvested and (vi) the options outstanding
as a percentage of total shares outstanding. The 1996 Stock Option Plan limits
the total number of shares subject to options that may be granted to a
participant in any year to not more than 100,000 shares.
The Compensation Committee believes that stock options are a critical component
of the compensation offered by the Corporation to promote the long-term
retention of its employees, motivate high levels of performance and recognize
employee contributions to the success of the Corporation. No options were
awarded to the Chief Executive Officer during 2000.
Supplemental Compensation
During 2000 the Corporation entered into supplemental compensation agreements
providing nonqualified defined benefit retirement income for certain executive
officers of the Corporation, including the Chief Executive Officer and the other
executive officers named in the Summary Compensation Table. In connection with
these agreements, the Corporation also purchased single premium life insurance
policies for each participant. At the participant's death, 80% of the difference
between the life insurance benefit and the then cash surrender value will be
paid to the participant's heirs. Generally, the defined benefit for retirement
vested as to 50% at the date of the agreements with an additional 10% of such
amount vesting in each year thereafter. The supplemental compensation agreements
provide for a range of defined lifetime benefits for the participating
executives of $72,500 to $182,000 annually (adjusted annually by 2%) payable in
equal monthly installments; retirement is at age 65. The defined annual
executive retirement benefit becomes 100% vested upon the occurrence of a
"change of control" (as defined in the supplemental compensation agreement), and
each participant shall be entitled to receive the full amount of such benefit
commencing at age 62, or, at the executive's request, after attaining the age of
60 (reduced by 5% per year for the difference between the executive officer's
age at the time such payments are elected and 62). In addition, the defined
annual executive retirement benefit becomes 100% vested upon the executive
officer's death or "disability" (as defined in the supplemental compensation
agreement).
The Compensation Committee believes that such supplemental compensation will
promote the long-term retention of its executives and recognizes their
contributions to the success to the Corporation.
The foregoing report has been furnished by the Compensation Committee of the
Board of Directors of the Corporation:
Albert V. Bruno, Chairman
Robert A. Archer
Robert G. Egan
F. Jack Gorry
William D. Kron
Arthur K. Lund
Louis Oneal
Diane P. Rubino
Douglas L. Shen
STOCK PERFORMANCE CHART(1)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Nasdaq Nasdaq-Banks SJNB
December 29, 1995 100 100 100
December 31, 1996 123.027 132.035 143.632
December 31, 1997 150.682 221.059 258.595
December 31, 1998 212.459 219.637 219.705
December 31, 1999 394.821 211.147 243.443
December 29, 2000 237.368 240.911 296.678
(1) Assumes $100 invested on December 31, 1995 in the Corporation's Common
Stock, the NASDAQ-Total U.S. index (Source: Nasdaq Amex) and the NASDAQ-Banks
index (Source: Nasdaq Amex), with reinvestment of dividends.
Stock Option Plans
The following table provides certain information concerning options granted to
the executive officers named in the Summary Compensation Table in the fiscal
year ended December 31, 2000:
Option Grants in Last Fiscal Year
Percent of Potential Realizable
Total Value at Assumed Annual
Number of Options Rates of Stock Price
Securities Granted to Appreciation for Option
Underlying Employees Exercise Expiration Term
Name Options in 2000 Price Date 5% 10%
- ---- ------- ------- ----- ---- -- ---
Frederic H. Charpiot 5,000 5.37% $27.88 06/28/10 $87,652 $222,128
Margo F. Culcasi 5,000 5.37 27.88 06/28/10 87,652 222,128
Judith Doering-Nielsen 5,000 5.37 27.88 06/28/10 87,652 222,128
The following table sets forth the stock options exercised in 2000 and the
December 31, 2000 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 Fiscal Year-End Option Values
Number of Securities Value of Unexercised
Underlying Unexercised In-the Money Options at
Shares Options at 12/31/00 12/31/00 (1)
Acquired Value --------------------- ------------ -------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
------------- ------------ ------------ --------------- ------------ -------------
James R. Kenny 25,000 $667,188 12,000 12,000 $114,408 $112,752
Eugene E. Blakeslee 20,000 533,750 6,000 6,000 57,204 56,376
Frederic H. Charpiot ----- ----- 19,560 10,000 461,475 90,080
Margo F. Culcasi 2,200 44,797 13,500 10,000 278,764 90,080
Judith Doering-Nielsen ----- ----- 15,000 10,000 319,545 90,080
<FN>
(1) Fair market value of the Corporation's Common Stock on December 29, 2000,
was $36.50.
</FN>
Employment Agreements
Mr. Kenny is employed by the Corporation and SJNB pursuant to an employment
agreement dated March 27, 1996, as amended October 4, 2000, which provides for a
current annual salary of $200,000. The term of the agreement is three years,
with annual one-year extensions each year thereafter. In addition, Mr. Kenny is
to receive an incentive bonus of 1.5% of the Corporation's pre-tax, pre-bonus
net earnings before extraordinary items, provided that the Corporation's net
earnings before extraordinary items in any year during the term of the agreement
are equal to or exceed 1% of average assets. Mr. Kenny may also receive stock
options. Pursuant to the agreement, the Corporation provides an automobile for
Mr. Kenny, as well as public liability and property damage insurance. Mr. Kenny
also receives $250,000 in term life insurance coverage. In the event that Mr.
Kenny is involuntarily terminated for reasons other than dishonesty or
malfeasance, he is entitled to receive a lump sum payment equal to twenty-four
months' salary, incentive or bonus payments accrued, if any, plus two times the
annual average of the last three years of incentive compensation, plus personal
insurance and outplacement services for three years. In the event of a "change
in control" that within two years thereafter results in his termination of
employment or an adverse change in his position, salary or benefits (as further
described in the agreement), Mr. Kenny will receive a lump sum payment in an
amount equal to three times his annual salary, plus the proportionate amount of
his targeted annual incentive, plus three times the average annual bonus paid to
Mr. Kenny for the three years prior to termination, plus immediate vesting of
all unvested stock options granted to Mr. Kenny, plus personal insurance and
outplacement services for three years. In the event that any payment by the
Corporation to the executive officer (whether payable pursuant to the terms of
his employment agreement or otherwise) would be subject to excise tax (or any
interest and penalties thereon) under the Internal Revenue Code, then the
officer shall be entitled to receive a gross-up payment in an amount which,
after payment of all taxes (including income taxes and excise taxes imposed on
the gross-up payment), penalties and interest, is equal to the excise tax
imposed upon the payments received.
Mr. Blakeslee is employed by the Corporation and SJNB pursuant to an employment
agreement dated March 27, 1996, as amended October 4, 2000, which provides for a
current annual salary of $150,000. The term of the agreement is one year, with
automatic extensions each year thereafter. In addition, Mr. Blakeslee is
entitled to participate in the Corporation's senior management bonus plan, stock
option plan or other arrangements authorized and approved by the Board of
Directors. Mr. Blakeslee's agreement also requires that the Corporation provide
an automobile for Mr. Blakeslee, as well as public liability and property damage
insurance. In the event that Mr. Blakeslee is involuntarily terminated for
reasons other than dishonesty or malfeasance, he is entitled to receive a lump
sum payment equal to twelve months' salary, incentive or bonus payments accrued,
if any, plus the annual average of the last three years of incentive
compensation, plus personal insurance and outplacement services for two years.
In the event of a "change in control" that within two years thereafter results
in his termination of employment or an adverse change in his position, salary or
benefits (as further described in the agreement), Mr. Blakeslee will receive a
lump sum payment in an amount equal to two times his annual salary, plus the
proportionate amount of his targeted annual incentive, plus two times the
average annual bonus paid to Mr. Blakeslee for the three years prior to
termination, plus immediate vesting of all unvested stock options granted to Mr.
Blakeslee, plus personal insurance and outplacement services for two years. In
the event that any payment by the Corporation to the executive officer (whether
payable pursuant to the terms of his employment agreement or otherwise) would be
subject to excise tax (or any interest and penalties thereon) under the Internal
Revenue Code, then the officer shall be entitled to receive a gross-up payment
in an amount which, after payment of all taxes (including income taxes and
excise taxes imposed on the gross-up payment), penalties and interest, is equal
to the excise tax imposed upon the payments received.
Supplemental Compensation Agreements
During 2000 the Corporation entered into supplemental compensation agreements
providing nonqualified defined benefit retirement income for certain executive
officers of the Corporation, including the Chief Executive Officer, the Chief
Financial Officer and the other executive officers named in the Summary
Compensation Table. In connection with these agreements, the Corporation also
purchased single premium life insurance policies for each participant. At the
participant's death, 80% of the difference between the life insurance benefit
and the then cash surrender value will be paid to the participant's heirs.
Generally, the defined benefit for retirement vested as to 50% at the date of
the agreements with an additional 10% of such amount vesting in each year
thereafter. The supplemental compensation agreements provide for a range of
defined lifetime benefits for the participating executives of $72,500 to
$182,000 annually (adjusted annually by 2%) payable in equal monthly
installments; retirement is at age 65.
The defined annual executive retirement benefit becomes 100% vested upon the
occurrence of a "change of control" (as defined in the supplemental compensation
agreement), and each participant shall be entitled to receive the full amount of
such benefit commencing at age 62, or, at the executive's request, after
attaining the age of 60 (reduced by 5% per year for the difference between the
executive officer's age at the time such payments are elected and 62). In
addition, the defined annual executive retirement benefit becomes 100% vested
upon the executive officer's death or "disability" (as defined in the
supplemental compensation agreement). If an executive officer is terminated for
reasons other than cause or a "change of control", the executive officer shall
be entitled to be paid the vested amount of his or her annual retirement
benefits after attaining the age of 65 or, at the executive's request, after
attaining the age of 60 (reduced by 5% per year for the difference between the
executive officer's age at the time such payments are elected and 65). Upon
voluntary termination by an executive officer at a time when his or her annual
retirement benefit is not 100% vested, or upon termination for cause, the
executive officer forfeits any benefits he or she may have under the
supplemental compensation agreement.
Transactions with Management and Others
SJNB has had, in the ordinary course of business, and expects to have in the
future, banking transactions with certain of its directors and executive
officers and members of their immediate families and corporations or other
organizations associated with them. All loans and commitments to lend 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 of similar creditworthiness, and on terms not
involving more than a normal risk of collectibility or presenting other
unfavorable features.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires the Corporation's directors, executive officers and any persons
beneficially owning ten percent or more of the Corporation's common stock to
timely file initial reports of ownership and reports of changes in that
ownership with the SEC and the Nasdaq National Market. Such persons are required
by SEC regulation to send copies of such reports to the Corporation. Except as
described below, 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, 2000, the Corporation
believes all such filing requirements applicable to its directors, executive
officers and ten percent shareholders were met.
Douglas L. Shen, a director, failed to timely file two Form 4's required to be
filed by October 10, 2000 and January 10, 2001 reporting automatic dividend
reinvestments of 303 shares of the Corporation's Common Stock on September 6,
2000 and 338 shares of the Corporation's Common Stock on December 5, 2000,
respectively. Corrected reports reflecting these transactions were filed on
behalf of Dr. Shen on January 24, 2001.
Proposal No. 2:
Approval of the Senior Management Bonus Plan
Approval of the Senior Management Bonus Plan
The Corporation is seeking approval of the Bonus Plan, which is attached as
Appendix A, in accordance with Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"). The Bonus Plan has been adopted by the Board of
Directors of the Corporation, which recommended presentation of the Bonus Plan
to the Corporation's Shareholders for approval.
PURPOSE: The Bonus Plan is a performance-based incentive compensation plan for
the Chief Executive Officer and the other named executive officers set forth in
the Summary Compensation Table in accordance with Section 162(m) of the Code.
Section 162(m) of the Code generally disallows any federal income tax deductions
for annual compensation in excess of one million dollars paid to any officer
required to be named in the Summary Compensation Table. An exception exists,
however, and the Corporation may obtain federal income tax deductions, for
certain qualified "performance-based" compensation. Compensation paid under the
Bonus Plan is designed to qualify as "performance-based" compensation. One of
the requirements necessary to qualify compensation as "performance-based" under
Section 162(m) is that the material terms of any performance goal under which
compensation is to be paid must be disclosed to and approved by the Shareholders
of the Corporation.
The Bonus Plan is consistent with the Corporation's emphasis on
performance-based compensation and its current compensation philosophy, as more
fully described in the Compensation Committee Report. The objective of the Bonus
Plan is to create an incentive program to (a) attract and retain employees who
will strive for excellence and (b) motivate those individuals to set and achieve
above-average performance objectives by providing them with rewards for
contributions to the operating profits and earning power of the Corporation.
SUMMARY OF THE PLAN: The Bonus Plan is administered by the Compensation
Committee of the Board of Directors. In 2000, participants included the
Corporation's Chief Executive Officer, Chief Financial Officer, and the other
executive officers named in the Summary Compensation Table.
Since 1991, the Compensation Committee has awarded cash bonuses to executive
officers upon the attainment of certain objective financial performance
criteria. The Bonus Plan is substantially similar to the bonus plan administered
by the Compensation Committee since 1991. Under the Bonus Plan, no awards may be
granted unless the Corporation achieves net earnings, before extraordinary
items, equal to or exceeding one percent (1%) of the Corporations average assets
for such year. Upon achievement of this goal, the Corporation's President and
Chief Executive Officer and the other four most highly compensated executive
officers of the Corporation determined under Securities and Exchange Commission
rules qualify for cash bonuses that are based on pre-established measures of the
Corporation's pre-tax, pre-bonus net earnings before extraordinary items. If the
Corporation achieves the net earnings performance requirement, the Chief
Executive Officer is entitled to receive 1.5% of the Corporation's pre-tax,
pre-bonus net earnings before extraordinary items. If the net earnings
performance requirement is attained, the maximum amount which can be paid to any
other participant cannot exceed 1% of the Corporation's pre-tax, pre-bonus net
earnings before extraordinary items. With respect to such other participants,
the Compensation Committee may not increase the amount of any award due under
the Bonus Plan, but may, in its discretion, based on recommendations of the
Chief Executive Officer, and other objective and subjective criteria, including
an evaluation of the personal performance of each officer, reduce the actual
award granted to the other executive officers participating in the Bonus Plan.
Neither the Compensation Committee nor the Board of Directors is precluded by
the Bonus Plan from authorizing other forms of incentive compensation for any
employee. Individual bonuses earned under the Bonus Plan are made in cash, and
payments are made at the time established by the Compensation Committee. The
Board or a Committee of the Board may, at any time, amend the Bonus Plan;
however, no amendment which requires shareholder approval for bonuses paid under
the Bonus Plan to be deductible may be made without Shareholder approval. The
Board has the right to terminate the Bonus Plan at any time.
Required Approval
The affirmative vote of a majority of the shares present in person or
represented and voted at the Meeting is required to approve the Bonus Plan.
Recommendation of Management
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE APPROVAL OF
THE SENIOR MANAGEMENT BONUS PLAN.
Proposal No. 3:
Ratification of Appointment of INDEPENDENT PUBLIC ACCOUNTANTS
Ratification of KPMG LLP
The Board of Directors has appointed KPMG LLP to serve as independent public
accountants for the Corporation and its subsidiary for the year ending December
31, 2001. The Audit Committee recommended the appointment of KPMG LLP. KPMG LLP
examined the financial statements of the Corporation and SJNB for the year ended
December 31, 2000.
In the event the Shareholders do not ratify the appointment, the adverse vote
will be deemed to be an indication to the Board of Directors that it should
consider appointing other independent public accountants for 2002. Because of
the difficulty and expense of making any substitution of accounting firms after
the beginning of the current year, it is the intention of the Board of Directors
that the appointment of KPMG LLP for the year 2001 will stand unless for other
reasons the Board of Directors deems it necessary or appropriate to make a
change. The Board of Directors also retains the power to appoint another
independent public accounting firm to replace an accounting firm ratified by the
Shareholders in the event the Board of Directors determines that the interests
of the Corporation require such a change.
Representatives of KPMG LLP are expected to be present at the Meeting and will
have an opportunity to make a statement if they desire to do so, and will be
available to respond to appropriate questions.
Audit and Other Fees Paid to KPMG LLP
The Audit Committee has considered whether the information technology and other
non-audit services provided by KPMG LLP are compatible with maintaining the
auditor's independence. A summary of the fees paid to KPMG LLP for services in
fiscal year 2000 appears below.
- ----------------------- ------------------------- ----------------------------------- -----------------------
Financial Information Systems
Audit Fees Design and Implementation Fees All Other Fees
---------- ------------------------------ --------------
KPMG LLP $124,000 None $87,885
- ----------------------- ------------------------- ----------------------------------- -----------------------
Required Approval
The affirmative vote of a majority of the shares present in person or
represented and voting at the Meeting is required for ratification of the
appointment of KPMG LLP as the Corporation's independent public accountants.
Recommendation of Management
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
RATIFICATION OF THE APPPOINTMENT OF KPMG LLP TO SERVE AS INDEPENDENT PUBLIC
ACCOUNTS FOR THE CORPORATION AND ITS SUBSIDIARY FOR 2001.
AUDIT 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 eight 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 B), 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.
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.
Gary S. Vandeweghe, Chairman
Ray S. Akamine
Rod Diridon, Sr.
F. Jack Gorry
William D. Kron
V. Ronald Mancuso
Diane P. Rubino
Douglas L. Shen
OTHER MATTERS
The Board of Directors knows of no other matters which will be brought before
the Meeting, but if such matters are properly presented to the Meeting, proxies
solicited hereby will be voted in accordance with the judgment of the persons
holding such proxies.
ANNUAL REPORT ON FORM 10-K
A copy of the Corporation's Annual Report on Form 10-K for the year ended
December 31, 2000, is included in the Corporation's Annual Report to
Shareholders.
By Order of the Board of Directors,
s/J.R. Kenny
James R. Kenny,
Secretary
April 18, 2001
Appendix A
SJNB FINANCIAL CORP.
SENIOR MANAGEMENT BONUS PLAN
SECTION 1: PURPOSE
The Senior Management Bonus Plan (the "Plan") is intended to provide cash
bonuses to certain selected employees of SJNB Financial Corp. and its
subsidiaries (the "Company") upon attainment of certain annual performance goals
as provided under the Plan effective as of January 1, 2001. The Plan is
administered by the Compensation Committee of the Board of Directors of the
Company (the "Committee").
The object of the Plan is to create an incentive program to (a) attract and
retain employees who will strive for excellence and (b) motivate those
individuals to set and achieve above-average objectives by providing them with
rewards for contributions to the operating profits and earning power of the
Company.
SECTION 2: ELIGIBILITY
The following individuals are eligible to participate in the Plan:
(a) The President and Chief Executive Officer of the Company; and
(b) Other individuals who, as of the last day of a taxable year, are
among the four highest paid executive officers of the Company
(excluding the Chief Executive Officer) determined under Securities
and Exchange Commission rules.
SECTION 3: CASH BONUS AWARDS
(a) The President and Chief Executive Officer of the Company
(i) Performance Goal
The performance goal for the President and Chief Executive
Officer of the Company is hereby set as the attainment by the
Company in any fiscal year of net earnings before extraordinary
items equal to or exceeding one percent (1%) of the average
assets of the Company for such year.
(ii) Bonus Amount
Upon the achievement of the performance goal described in the
preceding sentence, the Committee shall grant the President and
Chief Executive Officer of the Company an incentive bonus for
such year in an amount equal to one and one-half percent (1.5%)
of the Company's pre-tax, pre-bonus net earnings before
extraordinary items.
(b) Other participants
(i) Performance Goal
The performance goal for each participant is hereby set as the
attainment by the Company in any fiscal year of net earnings
before extraordinary items equal to or exceeding one percent (1%)
of the average assets of the Company for such year.
(ii) Bonus Amount
Upon achievement of the performance goal as described in the
preceding sentence, the Committee shall grant each participant an
incentive bonus for such year in an amount equal to one percent
(1%) of the Company's pre-tax, pre-bonus net earnings before
extraordinary items.
(iii) Discretionary Reduction of Award by Committee
Notwithstanding the foregoing paragraph, the Committee shall
obtain from the President and Chief Executive Officer bonus
recommendations for the other participants in the Plan and may in
its sole discretion decrease, but not increase, the bonus amount
payable to any other participant. In exercising this discretion,
the Committee may consider both objective and subjective factors
including, without limitation, the Company's overall performance
in relation to other peer banks, general economic or market
conditions, the Chief Executive Officer's views and other
subjective criteria with respect to the personal performance of
said participants.
SECTION 4: ADMINISTRATION
(a) The final authority and responsibility for administration of
the Plan resides exclusively with the Committee. The Committee,
in its sole discretion, shall establish, adopt and revise such
rules, interpretations and computations and shall take such other
actions to administer the Plan as it may deem appropriate. Any
decision of the Committee with respect to the Plan shall be
conclusive and binding on all participants (or former
participants) and their executors and estate.
(b) Awards shall be paid in cash, less applicable employment
taxes and federal, state, and foreign withholding taxes.
Employees and beneficiaries (including former employees) shall
make appropriate arrangements with the Company for the
satisfaction of any federal, state or local income tax
withholding requirements and Social Security or other employment
tax requirements applicable to the provision of benefits under
this Plan. Awards shall be paid at the time established by the
Committee in the exercise of its absolute discretion. All awards
paid shall be final.
(c) The Committee may retain such attorneys, actuaries,
accountants, consultants, or other persons to render advice or to
perform services with regard to its responsibilities under the
Plan as it shall determine to be necessary or desirable. Any of
the Company's duties and responsibilities under the Plan shall be
carried out by its directors, officers, and employees, acting on
behalf of and in the name of the Committee.
SECTION 5: GENERAL PROVISIONS
(a) No Employment Rights
Nothing contained in the Plan shall give any person a right to
remain in the employ of the Company or shall affect the right of
the Company to terminate such person's employment with or without
cause.
(b) Assignment
No funds, assets, or other property of the Company, and no
obligation or liability of the Company under this Plan, will be
subject to any claim of any participant, nor will any participant
have any right or power to pledge, encumber or assign any
incentive award provided for in the Plan.
(c) No Vesting
The right to receive any payment of an incentive award shall not
vest in any employee, or the estate of the employee, until such
payment is actually made in accordance with the terms and
conditions of the Plan.
(d) Validity
Any provision of this Plan that is determined to be invalid, void
or unenforceable shall be ineffective without invalidating the
remaining provisions of this Plan. The Plan shall be interpreted
to be in compliance with the requirements under section 162(m) of
the Internal Revenue Code of 1986, as amended, and regulations
thereunder, so that payments under the Plan will be treated as
"Performance-Based Compensation."
(e) Arbitration
This Plan is made, and shall in all respects be interpreted,
enforced and governed by and under the laws of the United States,
as appropriate, and the State of California. Any dispute arising
out of or relating to this Plan including its meaning or
interpretation will be resolved solely by arbitration before an
experienced employment arbitrator selected in accordance with the
model employment arbitration procedures of the American
Arbitration Association. The location of the arbitration will be
in San Jose, California. The provisions of this paragraph are
exclusive for all purposes and applicable to any and all disputes
between a participant and the Plan. Any decision or award by an
arbitrator shall affect the Plan solely as to its obligations to
the participant who requests arbitration. The arbitrator's
decision will have no impact on the Plan's relationship to any
other participant, nor will it require the Company to interpret
the Plan in any particular manner.
(f) Benefits Unfunded and Unsecured
The rights of a participant, or any designated beneficiary of the
participant, shall be solely those of an unsecured general
creditor of the Company, and the Company's obligation shall be an
unfunded and unsecured promise to pay.
(g) Non-exclusive Method of Incentive Compensation
This Plan shall not be deemed the exclusive method of
providing incentive compensation for an employee of the
Company, nor shall it preclude the Committee or the Board of
Directors from authorizing or approving other forms of
incentive compensation.
(h) Amendment and Termination
The Board of Directors or a designated committee of the Board of
Directors (including the Committee) may amend any provision of
the Plan at any time; provided that no amendment which requires
shareholder approval in order for bonuses paid pursuant to the
Plan to be deductible under the Internal Revenue Code of 1986, as
amended, may be made without the approval of the shareholders of
the Company. The Board of Directors shall also have the right to
terminate the Plan at any time.
IN WITNESS WHEREOF, the undersigned have executed this Senior Management Bonus
Plan, at San Jose, California, as of this 26th day of March 2001.
SJNB FINANCIAL CORP.
By: s/James R. Kenny
---------------------------------------
James R. Kenny,
President, Chief Executive Officer and Secretary
By: s/Eugene E. Blakeslee
---------------------------------------
Eugene E. Blakeslee,
Executive Vice President and Chief
Financial Officer
Appendix B
Audit Committee of the
Board of Directors
of
SJNB Financial Corp.
AUDIT CHARTER
ORGANIZATION
There shall be a committee of the Board of Directors to be known as the Audit
Committee. The Audit Committee shall be composed of directors who are
independent of the management of SJNB Financial Corp. and subsidiaries (the
"Corporation") and are free of any relationship that would interfere with their
exercise of independent judgment as a committee member. (See Attachment A for
definitions of independence.)
STATEMENT OF POLICY
The Audit Committee shall provide assistance to the corporate directors in
fulfilling their responsibility to the shareholders, potential shareholders, and
investment community relating to corporate accounting, reporting practices of
the Corporation, and the quality and integrity of financial reports of the
Corporation and the evaluation of all internal and external reviews of internal
controls of bank operations and credit quality. In so doing, it is the
responsibility of the Audit Committee to maintain free and open means of
communication between the directors, the independent auditors or those employed
to perform the functions of internal auditors, the internal auditors, and the
financial management of the Corporation.
COMPOSITION
The Audit Committee shall be comprised of three or more directors as determined
by the Board, and meet the definition set forth under the section "Organization"
above. All members of the Committee must be able to read and understand
fundamental financial statements, including a company's balance sheet, income
statement, and cash flow statement. At least one director must have past
employment experience in finance or accounting, requisite professional
certification in accounting, or other comparable experience or background,
including a current or past position as a chief executive or financial officer
or senior officer with financial oversight responsibilities. Committee members
may enhance their familiarity with finance and accounting by participating in
educational programs conducted by the Corporation or an outside consultant.
The members of the Committee shall be appointed by the Chairman of the Board at
the annual organizational meeting of the Board and serve until their successors
shall be duly elected and qualified. Unless a Chair is appointed, the members of
the Committee may designate a Chair by majority vote of the full Committee
membership.
MEETINGS
The Committee shall meet at least four times annually, or more frequently as
circumstances dictate. As part of its job to foster open communication, the
Committee should meet at least annually with management, the auditors
responsible for Compliance, Operations, Bank Information Systems, Credit
Quality, CRA and the independent accountants in separate executive sessions to
discuss any matters that the Committee or each of these groups believe should be
discussed privately.
RESPONSIBILITIES
In carrying out its responsibilities, the Audit Committee believes its policies
and procedures should remain flexible, in order to best react to changing
conditions and to ensure to the directors and shareholders that the corporate
accounting and reporting practices of the Corporation are in accordance with all
requirements and are of the highest quality. (For the purpose of the discussion
below CPA's are the firm of nationally recognized independent auditors while
external auditors refers to the use of independent bank auditors hired to
perform the internal audit functions.)
In carrying out the responsibilities, the Audit Committee will:
Documents/Reports Review
o Review and update this Charter periodically, at least annually, as
conditions dictate.
o Review the organization's annual financial statements and any
reports or other financial information submitted to any governmental
body, or the public, including any certification, report, opinion, or
review rendered by the independent accountants.
o Review the regular internal reports to management prepared by the
external auditors who are performing the duties of the internal
auditing department and management's response thereto.
o Review with financial management and the independent accountants
(CPA) the 10-Q and 10-K prior to their filing. A designated member
(preferably the Chairman) of the Committee, if appropriate, may
represent the entire Committee for purposes of this review.
Independent Accountants and Internal Audit Function
o Annually review and recommend to the directors a nationally
recognized firm of independent auditors (CPA's) to be selected to
audit the financial statements of the Corporation and its divisions
and subsidiaries. The Committee shall consider independence and
effectiveness and approve fees and other compensation to be paid to
the CPA's.
o Annually meet with the CPA's and financial management of the
Corporation to review the scope of the proposed audit for the current
year and the significant audit procedures to be utilized, and at the
conclusion review with the CPA's the results of such audit, including
any comments or recommendations of the independent auditors as to the
adequacy of the internal controls and fullness and accuracy of the
financial statements.
o Periodically review with the CPA's, internal auditors (or external
auditors who perform the function of internal audit), and financial
and accounting personnel, the adequacy and effectiveness of the
accounting and financial controls of the Corporation and elicit any
recommendations for the improvement of such internal control
procedures or particular areas where new or more detailed controls of
procedures are desirable.
o Periodically review the internal audit function of the Corporation
including the independence and authority of its reporting obligations
and those of the external auditors used to perform such functions, the
proposed audit plans for the coming year, and the coordination of such
plans with the independent auditors.
o Receive prior to each meeting, a summary of findings from completed
audits performed by those external auditors performing internal audit
functions and a progress report on the proposed internal audit plan,
with explanations for any material deviations from the original plan.
Financial Reporting Processes
o In consultation with the CPA's and the independent auditors
performing the function of the internal auditor, review the integrity
of the organization's financial reporting processes, both internal and
external. Consider the CPA's and independent auditor's judgments about
the quality and appropriateness of the Corporation's accounting
principles as applied in its financial reporting.
o Consider and approve, if appropriate, major changes to the
Corporation's auditing and accounting principles and practices as
suggested by the CPA's and independent auditors performing the
function of the internal auditor, or management.
o Review any significant disagreement among management and the CPA's
and independent auditors performing the function of the internal
auditor in connection with the preparation of the financial
statements.
o At least annually, provide sufficient opportunity for the external
auditors which perform the internal audit function to meet with the
members of the Audit Committee without members of management present.
Among the items to be discussed in these meetings should be these
independent accountants' evaluation of the Corporation's financial,
accounting, and auditing personnel, and the cooperation that the
independent accountants received during the course of the audit.
Ethical and Legal Compliance
o As necessary, review accounting and financial human resources
succession planning within the Corporation.
o Review management's monitoring of the Corporation's compliance with
the organization's Insider Trading and Conflict of Interest policies,
and ensure that management has the proper review system in place to
ensure that the Corporation's financial statements, reports and other
financial information disseminated to governmental organizations and
the public satisfy legal requirements. Review, with the organization's
counsel, legal compliance matters including corporate securities
trading policies or any legal matter that could have a significant
impact on the organization's financial statements.
o Submit the minutes of all meetings of the Audit Committee to, or
discuss the matters discussed at each Committee meeting with, the
Board of Directors.
o Report annually to the Board of Directors regarding its
responsibilities in compliance with its charter.
o Investigate any matter brought to its attention within the scope of
its duties, with the power to retain outside counsel if, in its
judgment, that is appropriate.
SPECIFIC GOALS
The specific goals are:
A. To provide CPA's and external auditors with sufficient authority to
monitor internal controls, to adequately test and report accounting
and auditing deficiencies to the Audit Committee.
B. To require sufficient scope and timing of audits to control and
possibly reduce the overall audit costs.
C. To require the CPA's to submit an engagement letter, to render an
opinion on annual financial statements and to provide conclusions as
to the adequacy of controls and procedures used by the Company.
D. To require the external auditors performing the internal audit
functions to submit an engagement letter that defines their scope and
frequency and the estimated cost for their services.
E. To ensure that corrective actions recommended by the auditors are
implemented by Corporation management.
Authority
The Audit Committee will retain qualified external auditors for the performance
of the external audit function who will remain independent of all line functions
and report directly to the Audit Committee.
The Audit Committee will provide a sufficient budget for external auditors to
properly conduct ongoing audits of the Corporation.
ATTACHMENT A
DEFINITIONS OF INDEPENDENCE
Members of the Audit Committee shall not be considered independent if, among
other things, he or she had:
o been employed by the Corporation or its affiliates in the current or past
three years;
o accepted any compensation from the Corporation or any of its affiliates
in excess of $60,000 during the previous fiscal year (except for board
service, benefits under a tax-qualified retirement plan, or
non-discretionary compensation);
o any immediate family member who is, or has been in any of the past three
years, employed by the Corporation or any of its affiliates as an executive
officer;
o been a partner in, or a controlling shareholder or an executive officer
of, any for-profit business to which the Corporation made, or from which it
received payments for services (other than those which arise solely from
investments in the Corporation's securities) that exceed five percent of
the organization's consolidated gross revenues for that year, or $200,000,
whichever is more, in any of the past three years;
o been employed as an executive of another entity where any of the
company's executives serve on that entity's compensation committee.
As amended at the Audit Committee meeting of April 17, 2001
SJNB FINANCIAL CORP./SAN JOSE NATIONAL BANK
CORPORATE OFFICES
One North Market Street San Jose CA 95113
(408) 947-7562
www.sjnb.com
Member FDIC
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF SJNB FINANCIAL
CORP.
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Shareholders of SJNB Financial Corp., a California corporation (the
"Corporation") dated April 18, 2001, and revoking any proxy heretofore given,
hereby constitutes and appoints Douglas L. Shen, Diane P. Rubino and F. Jack
Gorry, or any of them, with full power of substitution, as attorney and proxy to
appear and vote all of the shares of common stock of the Corporation standing in
the name of the undersigned which the undersigned could vote if personally
present and acting at the Annual Meeting of Shareholders of the Corporation to
be held in the Quicksilver Room at the Silicon Valley Capital Club, 50 West San
Fernando Street, Suite 1700, San Jose, California on May 23, 2001 at 11:00 a.m.
local time, or at any adjournments or postponements thereof, upon the following
items as set forth in the Notice of Annual Meeting and more fully described in
the Proxy Statement.
1. Election of Class II Directors.
FOR ALL nominees (except as marked to the contrary below)
WITHHOLD AUTHORITY
Ray S. Akamine, Rod Diridon Sr., Robert G. Egan, Arthur K. Lund, Douglas L. Shen
(Instructions: To withhold a vote for one or more nominees, strike a line
through that nominee's name. To vote for all nominees except one whose name is
struck, check "FOR." To vote against all nominees named above, check "WITHHOLD
AUTHORITY.")
2. To approve the Senior Management Bonus Plan to enable bonuses paid under the
Bonus Plan to qualify as deductible, performance-based compensation under
Section 162(m) of the Internal Revenue Code.
FOR AGAINST ABSTAIN
3. Ratification of Accountants. To ratify the appointment of KPMG LLP as
independent public accountants for the Corporation for 2001.
FOR AGAINST ABSTAIN
4. Other Business. The proxies are authorized to vote in their discretion on
such other matters as may properly come before the meeting or any adjournment
or postponement thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER HEREIN SPECIFIED
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS INDICATED, THIS PROXY WILL BE
VOTED FOR ALL NOMINEES LISTED IN PROPOSAL 1, IN FAVOR OF PROPOSAL 2, IN FAVOR OF
PROPOSAL 3 AND IN ACCORDANCE WITH THE DISCRETION OF THE PROXIES ON ANY OTHER
MATTERS TO COME BEFORE THE ANNUAL MEETING.
Dated , 2001
--------------------------------
--------------------------------
(Signature)
--------------------------------
(Signature)
(This proxy should be marked, dated, signed by the Shareholder(s)exactly as
his or her name appears hereon and returned promptly in the enclosed
envelope. Executors, administrators, guardians, officers of the corporation
and others signing in a fiduciary capacity should state their full titles
as such. If shares are held by joint tenants or as community property, both
should sign.)
DO NOT FOLD, STAPLE OR MUTILATE
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO
MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY, USING THE ENCLOSED
ENVELOPE.