UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
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 [_]
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[_] Preliminary Proxy Statement [_] Soliciting Material Pursuant to
[_] Confidential, For Use of the Section 240.14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
PRIVATEBANCORP, INC.
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(Name of Registrant as Specified In Its Charter)
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[PRIVATEBANCORP, INC. LOGO]
March 17, 2004
Dear Stockholders:
You are cordially invited to attend the 2004 Annual Meeting of
Stockholders of PrivateBancorp, Inc. which will be held at The Standard Club,
320 South Plymouth Court, Chicago, Illinois 60604, on Thursday, April 22, 2004,
at 3:00 p.m. local time.
The attached Notice of Annual Meeting of Stockholders and Proxy
Statement describe the formal business to be conducted at the meeting. Directors
and officers of PrivateBancorp, Inc. as well as representatives of Ernst & Young
LLP will be present at the meeting to respond to any questions that our
stockholders may have regarding the business to be transacted.
The Board of Directors of PrivateBancorp, Inc. has determined that the
specific proposals to be considered at the meeting are in the best interests of
the Company and its stockholders. For the reasons set forth in the Proxy
Statement, the Board unanimously recommends a vote "FOR" each of these matters.
YOUR VOTE IS IMPORTANT. PLEASE SIGN AND RETURN THE ENCLOSED PROXY CARD
PROMPTLY IN THE POSTAGE-PAID ENVELOPE. YOUR COOPERATION IS APPRECIATED SINCE A
MAJORITY OF THE COMMON STOCK MUST BE REPRESENTED, EITHER IN PERSON OR BY PROXY,
TO CONSTITUTE A QUORUM FOR THE CONDUCT OF BUSINESS.
On behalf of the Board of Directors and all the employees of the
Company, The PrivateBank and Trust Company, The PrivateBank (St. Louis) and
Lodestar Investment Counsel, I thank you for your continued support.
Sincerely,
/s/ Ralph B. Mandell
Ralph B. Mandell
Chairman of the Board,
President and Chief Executive Officer
PRIVATEBANCORP, INC.
TEN NORTH DEARBORN STREET
CHICAGO, ILLINOIS 60602
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 22, 2004
NOTICE IS HEREBY GIVEN that the 2004 Annual Meeting of Stockholders of
PrivateBancorp, Inc. will be held at The Standard Club, 320 South Plymouth
Court, Chicago, Illinois 60604, on Thursday, April 22, 2004, at 3:00 p.m. local
time.
The meeting is for the purpose of considering and voting upon the
following matters:
1. Election of six Class III directors to hold office for a
three-year term;
2. Amendment of the Company's Amended and Restated Certificate of
Incorporation increasing the number of authorized shares of
common stock from 24,000,000 to 39,000,000; and
3. Such other business as may properly come before the meeting,
including whether or not to adjourn the meeting, and any
adjournment of the meeting.
The Board of Directors has fixed March 8, 2004 as the record date for
determining stockholders entitled to notice of, and to vote at, the meeting and
at any adjournments thereof. Only record holders of the common stock of the
Company as of the close of business on the record date will be entitled to vote
at the meeting. In the event there are not sufficient shares represented for a
quorum, the meeting may be adjourned in order to permit further solicitation of
proxies by the Company. A list of stockholders entitled to vote at the meeting
will be available for inspection at the Company's offices located at The
PrivateBank and Trust Company, Ten North Dearborn Street, Chicago, Illinois
60602, for a period of ten days prior to the meeting and will also be available
at the meeting.
By order of the Board of Directors,
/s/ Dennis L. Klaeser
Dennis L. Klaeser
Secretary
March 17, 2004
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED FORM OF PROXY
IN THE ENVELOPE PROVIDED.
PRIVATEBANCORP, INC.
TEN NORTH DEARBORN STREET
CHICAGO, ILLINOIS 60602
PROXY STATEMENT
FOR THE 2004 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD THURSDAY, APRIL 22, 2004
SOLICITATION AND VOTING OF PROXIES
These proxy materials are furnished in connection with the solicitation
by the Board of Directors of PrivateBancorp, Inc. ("the Company"), a Delaware
corporation, of proxies to be used at the 2004 Annual Meeting of Stockholders of
the Company and at any adjournment of such meeting. The meeting is scheduled to
be held on April 22, 2004, at 3:00 p.m. local time, at The Standard Club, 320
South Plymouth Court, Chicago, Illinois 60604. The Company anticipates first
mailing this proxy statement, together with its 2003 Annual Report on Form 10-K,
including audited consolidated financial statements for the fiscal year ended
December 31, 2003, and a proxy card to record holders of common stock of the
Company on or about March 17, 2004.
Stockholders are requested to vote by completing the enclosed proxy
card and returning it signed and dated in the enclosed postage-paid envelope.
Stockholders are urged to indicate their vote in the spaces provided on the
proxy card. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN
ACCORDANCE WITH THE DIRECTIONS GIVEN BY THE STOCKHOLDERS ON THE PROXY CARD. WHEN
NO INSTRUCTIONS ARE INDICATED, SIGNED PROXY CARDS WILL BE VOTED FOR EACH OF THE
PROPOSALS.
Other than the matters listed in the attached Notice of Annual Meeting
of Stockholders, the Board of Directors knows of no additional matters that will
be presented for consideration at the meeting. Execution of a proxy, however,
confers on the designated proxy holders discretionary authority to vote the
shares in accordance with their best judgment on such other business, if any,
that may properly come before the meeting and at any adjournments of the
meeting, including whether or not to adjourn the meeting.
A proxy may be revoked at any time prior to its exercise by: (1) filing
a written notice of revocation with the Secretary of the Company; (2) delivering
to the Company a duly executed proxy bearing a later date; or (3) attending the
meeting and voting in person. However, if you are a stockholder whose shares are
not registered in your own name, you will need appropriate documentation from
your record holder to vote personally at the meeting.
COST OF PROXY SOLICITATION
The cost of solicitation of proxies on behalf of management will be
borne by the Company. In addition to the solicitation of proxies by mail,
proxies may be solicited personally or by telephone by directors, officers and
other employees of the Company, The PrivateBank (Chicago) and The PrivateBank
(St. Louis). The Company has retained Investorcom, Inc. to assist in the
solicitation of proxies for a fee of $4,000 plus out-of-pocket expenses. The
Company will also request persons, firms and corporations holding shares in
their names, or in the name of their nominees, which are beneficially owned by
others, to send proxy materials to and obtain proxies from such beneficial
owners, and will reimburse such holders for their reasonable expenses in doing
so.
VOTING SECURITIES AND STOCKHOLDERS ENTITLED TO VOTE
The Board of Directors has fixed the close of business on March 8,
2004, as the record date for determining stockholders entitled to notice of, and
to vote at, the meeting. On the record date, the Company had outstanding
9,930,549 shares of common stock. Each outstanding share of common stock
entitles the holder to one vote. The Company's Amended and Restated By-laws
state that a majority of the outstanding shares of the Company entitled to vote
on a matter, present in person or represented by proxy, shall constitute a
quorum for the consideration of such matters at any meeting of stockholders.
Abstentions and broker non-votes are counted as shares present for the purpose
of determining whether the shares represented at the meeting constitute a
quorum. In the event that there are not sufficient votes to constitute a quorum,
the meeting may be adjourned in order to permit the further solicitation of
proxies. Proxies received from stockholders in proper form will be voted at the
meeting and, if specified, as directed by the stockholder.
As to the election of directors, the proxy card being provided by the
Board of Directors enables a stockholder of record to vote "FOR" election of
nominees proposed by the Board, or to "WITHHOLD" authority to vote "FOR" one or
more of the nominees being proposed. Directors are elected by a plurality of
votes cast, without regard to either (1) broker non-votes, or (2) proxies as to
which authority to vote for one or more of the nominees being proposed is
withheld.
As to the approval of the proposed amendment to the Company's Amended
and Restated Certificate of Incorporation under Proposal 2, the proxy card being
provided by the Board of Directors enables a stockholder to check the
appropriate box on the proxy card to: (1) vote "FOR" the amendment; (2) vote
"AGAINST" the amendment; or (3) "ABSTAIN" from voting on the amendment. Approval
of the amendment requires the affirmative vote of a majority of the outstanding
shares of common stock of the Company. Accordingly, proxies marked "ABSTAIN" as
to this proposal and broker non-votes will have the same effect as votes cast
"AGAINST" the amendment.
With respect to all other matters that may properly come before the
meeting, unless otherwise required by law, such matters may be approved by the
affirmative vote of the holders of a majority of the shares of common stock of
the Company present at the meeting, in person or by proxy, and entitled to vote.
Your vote is important. Because many stockholders may not be able to
personally attend the meeting, it is necessary that a large number be
represented by proxy. Prompt return of your proxy card in the postage-paid
envelope provided will be appreciated.
PROPOSAL 1. ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of 16 members,
divided into three classes, who are elected to hold office for staggered
three-year terms as provided in the Company's Amended and Restated By-laws.
There are six persons currently serving as Class III Directors whose term will
expire at the 2004 Annual Meeting. The term of the five persons currently
serving as Class I Directors expires at the annual stockholder meeting to be
held in 2005. The term of the five Class II Directors expires at the annual
stockholder meeting to be held in 2006. Of the 16 members of the Board, 11
directors have been determined by the Board to be "independent" within the
meaning of the Nasdaq rules.
Two directors previously serving as Class I Directors, Naomi T. Borwell
and Alvin J. Gottlieb, retired from the Board in December 2003 and have been
named directors emeriti. Upon the recommendation of the Nominating and Corporate
Governance Committee (the "Nominating Committee"), the Board of Directors
appointed Cheryl Mayberry McKissack and Edward W. Rabin to fill
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the vacancies left by these two retiring directors. Also in December 2003, the
Board amended the by-laws to increase the size of the Board to 16 members from
15, and appointed William R. Rybak as a Class III Director. The Board has
designated Mr. Rybak the Company's "audit committee financial expert."
The six persons named below, all of whom are currently serving as
directors and are "independent", have been nominated by the Board upon the
recommendation of the Nominating Committee for election as Class III Directors
to serve for a term to end at the annual meeting of stockholders in the year
2007, or until their successors are elected and qualified. All of the nominees
have indicated a willingness to serve, and the Board of Directors has no reason
to believe that any of the nominees will not be available for election. However,
if any nominee is not available for election, proxies may be voted for the
election of such other person selected by the Board of Directors. To be elected
as a director, each nominee must receive the affirmative vote of a plurality of
the shares present in person or represented by proxy and entitled to vote at the
meeting. Stockholders of the Company have no cumulative voting rights with
respect to the election of directors.
The names, ages and certain background information of the director
nominees and the persons continuing to serve on the Board of Directors of the
Company are set forth below.
NOMINEES FOR CLASS III DIRECTORS TO SERVE UNTIL 2007
ROBERT F. COLEMAN (59), a director since 1990, is a principal of Robert
F. Coleman & Associates, a law firm located in Chicago, Illinois. He
concentrates his practice on business and professional litigation.
JAMES M. GUYETTE (58), has been a director since 1990. Since 1997, he
has been president and chief executive officer of Rolls Royce North America,
Inc. Mr. Guyette served as executive vice president of UAL Corporation, the
parent company of United Air Lines, Inc., from 1985 to 1995 when he retired
after more than 25 years of employment with that company. He is currently a
director of Priceline.com, an Internet-based transactional service offering
travel and personal finance products and services (Nasdaq: PCLN), Rolls-Royce
plc (London) and Pembroke Capital (Dublin), a financial services and asset
management company serving the aviation industry, and was formerly a director of
First United Financial Services and United Airlines Employees Credit Union.
PHILIP M. KAYMAN (62), a director since 1990, has been a senior partner
with the law firm of Neal, Gerber & Eisenberg in Chicago, Illinois since the
firm's founding in 1986. He concentrates his practice on real estate law.
THOMAS F. MEAGHER (73), has been a director since 1996. Mr. Meagher has
been the chairman and chief executive officer of Howell Tractor and Equipment
Co., a distributor of heavy equipment located in Elk Grove Village, Illinois,
since 1980. He has had an extensive career in the transportation industry and
currently serves on the Estate Committee of Trans World Airlines, Inc.
WILLIAM J. PODL (59), has been a director since August 1999. Mr. Podl
was an organizer of Towne Square Financial Corporation, which was purchased by
the Company in August 1999. Mr. Podl founded Doran Scales, Inc., located in
Batavia, Illinois, in 1976, and is currently chairman and chief executive
officer of that company. Mr. Podl also serves as president of Martec Research,
Ltd., an affiliate of Doran Scales, Inc.
WILLIAM R. RYBAK (52), has been a director since December 2003. Mr.
Rybak retired from VanKampen Investments, Inc. in 2000, where he served as
executive vice president and chief financial officer since 1986. Mr. Rybak was
previously a partner with the accounting firm of KPMG LLP (formerly Peat,
Marwick, Mitchell & Co.) since 1982, and is a certified public accountant. Mr.
Rybak is
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currently a member of the board of directors of Howe Barnes Investments, Inc.,
an investment services firm located in Chicago, and the Calamos Mutual Funds.
Mr. Rybak previously served as a director of Alliance Bancorp, Inc. and its
predecessor, Hinsdale Financial Corp., from 1986 until 2001.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF
EACH OF THESE NOMINEES FOR CLASS III DIRECTORS.
CLASS I DIRECTORS SERVING UNTIL 2005
RALPH B. MANDELL (63), a director since 1989, is a co-founder of
PrivateBancorp and The PrivateBank (Chicago). He has served as Chairman and
Chief Executive Officer of PrivateBancorp and The PrivateBank (Chicago) since
1994 and assumed the additional title of President of both entities in March
1999. From inception of the Company until 1994, Mr. Mandell had the title of
Co-Chairman. Prior to starting The PrivateBank (Chicago) and PrivateBancorp, Mr.
Mandell was the chief operating officer of First United Financial Services,
Inc., from 1985 to 1989, and served as its president from 1988 to 1989. First
United, a company that was traded on the Nasdaq National Market, was sold to
First Chicago Corporation in 1987. Mr. Mandell also served as president of Oak
Park Trust & Savings Bank, a subsidiary of First United, from 1985 until 1988.
Prior thereto, he had served as executive vice president of Oak Park Trust &
Savings Bank since 1979.
WILLIAM A. CASTELLANO (62), has been a director since 1991. He is the
chairman and founder of Worknet, Inc., located in Naperville, Illinois, since
1996. Worknet provides computer networking hosting, engineering and support
services to businesses. Mr. Castellano was also the founder and chairman of
Workspace, Inc., a provider of office furniture to Chicago area companies, from
1995 to 2001. He was the founder and served as the chief executive officer of
Chrysler Systems Leasing from 1977 to 1991.
WILLIAM R. LANGLEY (63), a director since 1989, is a co-founder of
PrivateBancorp and The PrivateBank (Chicago). Mr. Langley held the title of
Co-Chairman of PrivateBancorp, and was active in day-to-day management of the
Company until 1995 when he retired. Prior to the formation of PrivateBancorp,
Mr. Langley had served as chief executive officer of First United Financial
Services, Inc. from 1985 to 1987, and as chairman from 1987 to 1989. First
United, a company that was traded on the Nasdaq National Market, was sold to
First Chicago Corporation in 1987. Prior to that, he had also served as chairman
and president of Oak Park Trust & Savings Bank, a subsidiary of First United,
where he had been employed since 1965.
CHERYL MAYBERRY MCKISSACK (47), a director since December 2003, is the
founder, chairperson and chief executive officer of NIA Enterprises, LLC, a
Chicago-based database, systems integration and marketing services firm. Prior
to founding NIA Enterprises in 2000, she served as worldwide senior vice
president and general manager of Open Port Technology from 1997 to 2000. Ms.
McKissack currently serves on the board of directors of Deluxe Corporation
(NYSE: DLX), a company that designs, manufactures and distributes printed
checks. She is also the former chair and a current board member of the
Information Technology Resource Center, a non-profit organization providing
technology planning, training and support to other non-profit organizations, and
a board member of LINK Unlimited, a non-profit organization that provides
academic, social and career opportunities for inner-city youth located in
Chicago.
EDWARD W. RABIN, JR. (56), a director since December 2003, is president
of Hyatt Hotels Corporation. Between 1989 and 2003, Mr. Rabin served as
executive vice president for Hyatt Hotels Corporation, and added the title of
chief operating officer on January 1, 2000. Prior to his appointment in 1985 as
senior vice president--operations for Hyatt, in which capacity he was
responsible for the management of Hyatt's commercial hotels in the U.S., Mr.
Rabin held various Hyatt Hotels Corporation
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vice president positions. Mr. Rabin is a director of SMG Corporation, one of the
largest owners and operators of stadiums, arenas and convention centers.
CLASS II DIRECTORS SERVING UNTIL 2006
DONALD L. BEAL (57), a director since 1991, has been the owner of
Kar-Don, Inc. d/b/a Arrow Lumber Company, located in Chicago, Illinois, since
1980. Prior to that, Mr. Beal served as vice president of Hyde Park Bank & Trust
with responsibilities including commercial lending and personal banking. Mr.
Beal is also the sole owner of Ashland Investment, Inc.
WILLIAM A. GOLDSTEIN (64), is the chief executive officer of Lodestar
Investment Counsel, LLC, an investment advisory firm acquired by the Company in
2002, and has over 40 years of experience in the investment industry. Mr.
Goldstein was appointed to the Board of Directors of The PrivateBank (Chicago)
in January 2003 and to the Board of Directors of PrivateBancorp in April 2003.
Mr. Goldstein is also an executive officer of the Company. Prior to founding
Lodestar in 1989, he was a principal in the founding of Burton J. Vincent,
Chesley & Co. where he served as executive vice president and director. In 1983
the firm was acquired by Prescott, Ball & Turben (a subsidiary of Kemper
Corporation). There Mr. Goldstein was chairman and director of Prescott Asset
Management and president of Selected Special Shares, a publicly traded mutual
fund.
JOHN E. GORMAN (58), has been a director since 1994. Since 1982, Mr.
Gorman has been a general partner of the Jorman Group, a privately-owned
organization with diversified business holdings.
RICHARD C. JENSEN (58), has been a director since January 2000. Mr.
Jensen has been a Managing Director of The PrivateBank (Chicago) since November
1999. He became Chairman, Chief Executive Officer and a Managing Director of The
PrivateBank (St. Louis) upon its receipt of its banking charter in June 2000.
From May 1998 until joining us, Mr. Jensen served as chairman and chief
executive officer of Missouri Holdings, Inc. From March to May 1998, he served
as president and chief executive officer of Royal Banks of Missouri. For the
previous 18 years, Mr. Jensen served in various executive positions with Nations
Bank and its predecessor, Boatmen's Bank, in St. Louis.
MICHAEL B. SUSMAN (65), has been a director since 1990. He has been a
partner in the law firm of Spitzer, Addis, Susman & Enders, located in Chicago,
Illinois, since 1974. Since 1987, Mr. Susman has served as president and
director of Henry R. Ferris & Company, Genealogical Researchers.
DIRECTOR INDEPENDENCE
The Board of Directors has determined that Messrs. Beal, Coleman,
Gorman, Guyette, Kayman, Langley, Meagher, Podl, Rabin, Rybak and Ms. McKissack
are "independent" directors, in accordance with the Nasdaq listing standards.
DIRECTOR NOMINATION PROCEDURES
The Board of Directors has delegated responsibility to the Nominating
Committee to identify and select director nominees who are in a position to
exercise independent judgment, provide effective oversight of management and
serve the best interests of stockholders. The Nominating Committee, comprised
entirely of independent directors, recommends to the full Board for approval the
proposed slate of director nominees for election at the annual meeting of
stockholders.
In selecting director nominees, the Nominating Committee will consider,
among other factors, the existing composition of the Board and the committee's
evaluation of the mix of Board members appropriate for the perceived needs of
the Company. The Committee seeks a range of experience,
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knowledge and judgment and a diversity of perspectives on the Board to enhance
the Board effectiveness. The Committee also believes continuity in leadership
and board tenure maximizes the Board's ability to exercise meaningful board
oversight. Because qualified incumbent directors are generally uniquely
positioned to provide stockholders the benefit of continuity of leadership and
seasoned judgment gained through experience as a director of the Company, the
Nominating Committee will generally consider as potential candidates those
incumbent directors interested in standing for re-election who the committee
believes have satisfied director performance expectations, including regular
attendance at, preparation for and meaningful participation in Board and
committee meetings.
Under its policies, the Nominating Committee also considers the
following in selecting the proposed nominee slate:
o at all times, at least a majority of directors must be
"independent" in the opinion of the Board as determined in
accordance with Nasdaq standards;
o at all times at least three members of the Board must satisfy
the heightened standards of independence for Audit Committee
members; and
o at all times the Board should have at least one member who
satisfies the criteria to be designated by the Board as an
"audit committee financial expert."
Policies approved by the Board recognize the following characteristics
and skills as minimum qualifications for any potential director candidate:
o highest personal and professional ethics and integrity;
commitment to the Company's values;
o ability and willingness to devote sufficient time and
attention to fulfilling Board duties and responsibilities;
o relevant business, professional or managerial skills and
experience; mature wisdom;
o communication, leadership and team building skills;
o comprehension of the Company's business plans and strategies;
financial sophistication;
o ability to assist in the formulation of business strategies
and to monitor and guide expectations;
o ability and willingness to exercise independent judgment and
express tough opinions;
o collegial personality; nonconfrontational and constructive,
but able to challenge, ask questions and assess responses;
o good health and mental alertness; and
o alignment of personal interests with long-term interests of
stockholders.
Stockholder Director Nominee Recommendations. It is generally the
policy of the Nominating Committee to consider stockholder recommendations of
proposed director nominees if such recommendations are serious and timely
received. To be timely, recommendations must be received in writing at the
principal executive offices of the Company, addressed to the Nominating and
Corporate Governance Committee, at least 120 days prior to the anniversary date
of mailing of the Company's
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proxy statement for the prior year's annual meeting.
In addition, any stockholder director nominee recommendation must include the
following information:
o the proposed nominee's name and qualifications and the reason
for such recommendation;
o the name and record address of the stockholder(s) proposing
such nominee;
o the number of shares of stock of the Company which are
beneficially owned by such stockholder(s); and
o a description of any financial or other relationship between
the stockholder(s) and such nominee or between the nominee and
the Company or any of its subsidiaries.
BOARD COMMITTEES
Members of the Company's Board of Directors have been appointed to
serve on various committees of the Board. The Board of Directors currently has
five standing committees: (1) the Compensation Committee; (2) the Nominating and
Corporate Governance Committee; (3) the Audit Committee; (4) the Executive and
Planning Committee; and (5) the Information Technology Committee. Each of the
Compensation Committee, Nominating and Corporate Governance Committee and Audit
Committee are comprised entirely of "independent" directors in accordance with
the Nasdaq rules.
COMPENSATION COMMITTEE. The Compensation Committee is responsible for
reviewing the performance of the Chief Executive Officer; reviewing and
recommending the compensation of the Company's officers, including the Chief
Executive Officer; recommending and approving stock option grants and restricted
stock and other awards under the Company's Incentive Compensation Plan to
management; reviewing and recommending compensation programs including stock
option grants, 401(k) contributions and annual bonuses; reviewing and
recommending director compensation; advising the Chief Executive Officer on
miscellaneous compensation issues; and advising management regarding management
succession planning issues. The Compensation Committee also advises and assists
management in formulating policies regarding compensation. The current members
of the Compensation Committee are Messrs. Guyette (Chairman), Gorman, Meagher,
Rabin and Ms. McKissack.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE. The Nominating Committee
was newly formed as a separate committee in 2003 and was renamed the Nominating
and Corporate Governance Committee in 2004 (the "Nominating Committee"). The
Nominating Committee is responsible for proposing to the Board a slate of
nominees for election as directors by stockholders at each annual meeting. The
Committee is also responsible for taking a leadership role in shaping the
Company's corporate governance practices. In carrying out its duties, the
Nominating Committee has also been delegated the responsibility to: determine
criteria for the selection and qualification of the Board members; recommend for
Board approval persons to fill vacancies on the Board which occur between annual
meetings; evaluate, at least annually, each Board member's "independence" and
make recommendations, at least annually, regarding each Board member's
"independence" status consistent with then applicable legal requirements; make
recommendations regarding director orientation and continuing education;
consider the effectiveness of corporate governance practices and policies
followed by the Company and the Board; and conduct at least annually a
performance assessment of the Board.
The Board of Directors has adopted a charter for the Nominating
Committee, which is posted under the Investor Relations portion of the Company's
website at www.privatebancorp.com. The current members of the Nominating
Committee are Messrs. Guyette (Chairman), Gorman, Meagher, Rabin and Ms.
McKissack.
7
AUDIT COMMITTEE. The Audit Committee is responsible for supervising the
Company's accounting, reporting and financial control practices. Generally, the
Audit Committee is responsible for the quality and integrity of the Company's
financial information and reporting functions, the adequacy and effectiveness of
the Company's system of internal accounting and financial controls, and the
independent audit process, and annually reviews the qualifications of the
independent public accountants. The independent public accountants are
responsible for auditing the Company's financial statements and expressing an
opinion as to their conformity with generally accepted accounting principles. In
addition to being "independent" directors within the meaning of the Nasdaq
listing standards, as currently in effect, all members of the Audit Committee
satisfy the heightened independence standards under the SEC rules, as currently
in effect. The Board of Directors has determined that Mr. Rybak is an "audit
committee financial expert" as that term is defined in SEC rules. The members of
the Audit Committee are Messrs. Coleman (Chairman), Beal, Guyette, Langley, Podl
and Rybak.
EXECUTIVE AND PLANNING COMMITTEE. The Executive and Planning Committee
is responsible for studying strategic issues prior to submission to the entire
Board of Directors for approval. The Executive and Planning Committee consists
of Messrs. Mandell (Chairman), Castellano, Coleman, Gorman, Guyette, Kayman and
Langley.
INFORMATION TECHNOLOGY COMMITTEE. The Information Technology Committee
reports to the Audit Committee regarding its responsibilities related to the
Company's information technology infrastructure. The Information Technology
Committee has oversight responsibility related to the quality and integrity of
the Company's information technology functions. This Committee is composed
entirely of outside directors who are not officers of the Company. The members
of the Information Technology Committee are Messrs. Podl (Chairman), Castellano,
Coleman, Kayman, Langley, Susman and Ms. McKissack.
BOARD MEETINGS
During 2003, the Board of Directors met 13 times. In addition, the
Compensation Committee met five times, the Nominating Committee met five times,
the Audit Committee met 21 times and the Information Technology Committee met
four times. The Executive and Planning Committee did not hold any meetings in
2003. Each of the directors of the Company attended at least 75% of the total
number of meetings held of the Board and Board committees on which such director
served during fiscal year 2003, with the exception of Messrs. Guyette and
Gottlieb. The Board of Directors will meet in regularly scheduled "executive
sessions" at least twice annually, at its June or July meeting and again at its
December meeting. The Board's policy is that the chairman of the Nominating
Committee, or in his absence the chairman of the Audit Committee, presides at
executive sessions of the Board.
BOARD OF DIRECTORS' COMPENSATION
During 2003, the director compensation payable to non-employee members
of the Company's Board of Directors was comprised of a cash retainer of $10,000
and options to purchase 1,500 shares of the Company's common stock at a price of
$34.46 per share granted under the Company's Incentive Compensation Plan.
Options are granted each year in amounts determined at the discretion of the
Board. The options become fully vested at the end of the year of grant, subject
to a full year of service. Non-employee members of the Company's Board of
Directors are eligible to participate in the Company's Deferred Compensation
Plan, which has been implemented as part of the Incentive Compensation Plan.
This program allows the directors to defer receipt of amounts payable to them
and to elect to receive deferred payment in the form of cash or stock.
Non-employee Board members also receive fees of $300 for each Board
meeting attended, and $200 for each Board committee meeting attended. Each
committee Chairman receives an additional
8
$3,000 retainer, except the Audit Committee Chairman, who receives $5,000.
During 2003, the Audit Committee Chairman received additional cash fees of
$15,000 as compensation for his additional supervisory duties and
responsibilities imposed by the Sarbanes-Oxley Act of 2002 and Nasdaq listing
standards.
Each of the Directors of the Company is also a director of The
PrivateBank (Chicago). Outside directors do not receive any additional
compensation for serving on the bank's board of directors other than fees paid
for attendance at the bank's board meetings and board committee meetings. The
amount of these fees is the same as the fees paid for attendance at the
Company's Board and Board committee meetings. Total fees payable to the
Company's outside directors for service in 2003 were $134,100, which includes
fees paid for attendance at board and board committee meetings of The
PrivateBank (Chicago).
STOCKHOLDER COMMUNICATIONS WITH DIRECTORS
Generally, stockholders who have questions or concerns regarding the
Company should contact the Company's Investor Relations department at
(312) 683-7100 or visit the Investor Relations page on the Company's website at
www.privatebancorp.com. However, any stockholder who wishes to communicate
directly with the Board of Directors, or one or more individual directors, may
direct correspondence in writing to the Board, any committee of the Board or any
named directors, c/o the Secretary of the Company at PrivateBancorp, Inc., Ten
North Dearborn, Chicago, Illinois 60602. The Company's policy is to forward
written communications so received from stockholders to the appropriate
directors.
Policies adopted by the Board of Directors encourage directors to
attend the Company's annual meeting of stockholders each year. All of the 15
directors then serving attended the Company's 2003 annual meeting.
9
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the beneficial ownership of the
Company's common stock as of February 25, 2004, with respect to (1) each
Director, nominee for director and named executive officer of the Company; and
(2) all Directors and executive officers of the Company as a group. Other than
Mr. Mandell, the Company does not know of any stockholder who holds in excess of
5% of any class of the Company's voting securities.
AMOUNT OF
COMMON TOTAL
SHARES CURRENTLY AMOUNT OF TOTAL
BENEFICIALLY RESTRICTED EXERCISABLE BENEFICIAL PERCENTAGE
OWNED STOCK OPTIONS OWNERSHIP(1) OWNERSHIP(1)
------------ ---------- ----------- ------------ ------------
DIRECTORS
Ralph B. Mandell**...................... 429,322(2) 23,500(3) 75,862 528,684 5.30%
Donald L. Beal.......................... 34,306(4) -- 18,240 52,546 *
William A. Castellano................... 253,680(5) -- 1,500 255,180 2.58
Robert F. Coleman....................... 55,960(6) -- 24,720 80,680 *
William Goldstein....................... 223,169 -- 1,500 224,669 2.26
John E. Gorman.......................... -- -- -- -- *
James M. Guyette........................ 39,380 -- 13,740 53,120 *
Richard C. Jensen**..................... 42,084(7) 9,800(8) 11,250 63,134 *
Philip M. Kayman........................ 39,800 -- 21,480 61,280 *
William R. Langley...................... 204,960 -- 46,800 251,760 2.53
Cheryl Mayberry McKissack............... -- -- -- -- *
Thomas F. Meagher....................... 40,620 -- 6,000 46,620 *
William J. Podl......................... 57,334 -- 1,500 58,834 *
Edward W. Rabin, Jr..................... 1,500 -- -- 1,500 *
William R. Rybak........................ -- -- -- -- *
Michael B. Susman....................... 42,780 -- 16,395 59,175 *
--------- ------ ------- --------- -----
Total Directors (16) persons 1,464,895 33,300 237,488 1,735,682 17.13%
NON-DIRECTOR NAMED EXECUTIVE OFFICERS
Dennis L. Klaeser....................... 8,352 5,000(9) -- 13,352 *
Gary S. Collins......................... 101,941(10) 12,100(3) 22,950 136,991 1.38%
Hugh H. McLean.......................... 127,476 13,000(11) 22,950 163,426 1.64
--------- ------ ------- --------- -----
Total Directors and Executive
Officers (21) persons............. 1,720,332 74,650 289,450 2,084,432 20.47%
========= ====== ======= ========= =====
<FN>
- ------------------
* Less than 1%
** Denotes person who serves as a director and who is also a named
executive officer.
(1) Beneficial ownership is determined in accordance with SEC Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended.
(2) Includes 34,500 shares held by Mr. Mandell's spouse. Mr. Mandell's
business address is c/o The PrivateBank and Trust Company, Ten North
Dearborn, Chicago, Illinois 60602.
(3) Shares vest at various dates between 2003 and 2006, and are subject to
forfeiture until such time as they vest.
(4) Includes 13,296 shares held by Mr. Beal's spouse and children.
(5) Includes 5,475 shares held by Mr. Castellano's children and 10,050
shares held by WMC Investment Ltd. Partnership.
(6) Includes 1,200 shares held by Mr. Coleman's spouse and 8,641 shares
held by the Robert F. Coleman & Associates Retirement Savings Plan of
which Mr. Coleman is trustee.
(7) Includes 22,084 shares held in trusts under which Mr. Jensen and his
spouse are trustees.
(8) Shares vest at various dates between 2005 and 2006, and are subject to
forfeiture until such time as they vest.
(9) Shares vest in 2008, and are subject to forfeiture until such time as
they vest.
(10) Includes 4,362 shares held by Mr. Collins' spouse and children.
(11) Shares vest at various dates between 2003 and 2006, and are subject to
forfeiture until such time as they vest.
</FN>
10
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation paid by the Company and
its subsidiaries to the Chairman, President and Chief Executive Officer and the
four other most highly paid executive officers (the "Named Executive Officers")
who served as such at December 31, 2003.
SUMMARY COMPENSATION TABLE
----------------------------------------------------------------------------------------
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
-------------------------------------- -----------------------------
OTHER
ANNUAL SECURITIES ALL OTHER
NAME AND SALARY BONUS COMPENSATION RESTRICTED UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR ($) ($)(1) ($)(2) STOCK($)(3) OPTIONS(#)(4) ($)
- ------------------------------ ---- ------- ------- ------------ -------------- ------------- ------------
Ralph B. Mandell(4)........... 2003 390,000 670,000 26,169 241,220(5) 14,000 6,000(6)
Chairman, President and CEO 2002 310,000 585,000 19,194 -- -- 60,040(6)
2001 290,000 300,000 19,122 42,375(7) 9,750 57,440(6)
Dennis Klaeser(8)............. 2003 146,250 230,000 5,391 172,300(9) 9,000 --
Secretary/Treasurer and CFO
Richard C. Jensen............. 2003 182,000 135,000 10,332 68,920(11) 4,000 6,000(10)
Managing Director 2002 170,000 130,000 9,672 -- -- 6,000(10)
2001 160,000 60,000 9,636 24,013(12) 6,000 3,400(10)
Hugh H. McLean(4)............. 2003 190,000 245,000 13,994 86,150(13) 4,500 6,000(10)
Managing Director 2002 175,000 230,000 11,850 -- -- 6,000(10)
2001 155,000 105,000 11,778 28,250(14) 6,000 3,400(10)
Gary S. Collins(4)............ 2003 190,000 245,000 18,092 86,150(13) 4,500 6,000(10)
Managing Director 2002 175,000 230,000 15,925 -- -- 6,000(10)
2001 155,000 105,000 16,253 28,250(14) 6,000 3,400(10)
<FN>
- ------------------
(1) Bonuses for 2003, 2002 and 2001 were determined in December of the
respective years and paid in the following January. In addition, during
2002, one-time cash bonuses were paid to Mr. Mandell - $40,000; Mr.
Jensen - $30,000; Mr. McLean - $30,000 and Mr. Collins - $30,000.
(2) Represents automobile allowances, life insurance premiums and club
membership dues and fees paid by the Company.
(3) Reflects restricted stock awards under the Company's Stock Incentive
Plan (2001) and Incentive Compensation Plan (2003). The Company has
paid regular dividends on all shares of restricted stock outstanding.
These shares of restricted stock are subject to forfeiture in the event
the officer's employment terminates before the fifth anniversary of the
grant date and become immediately vested in the event of a change in
control. The number and value of the aggregate restricted stock
holdings of each of the above named persons as of December 31, 2003,
based on the closing price of $45.29 for the Company's common stock on
that date, were as follows: Mr. Mandell - 23,500 shares, $1,064,315;
Mr. Klaeser - 5,000 shares, $226,450; Mr. McLean - 13,000 shares,
$588,770; Mr. Collins - 12,100 shares, $548,009; and Mr. Jensen - 9,800
shares, $443,842.
(4) Options to purchase shares of common stock granted in 2001 have an
exercise price of $9.417 and vest over a four year period. Vesting is
accelerated in the event of a change in control. No options were granted
to the persons identified in this table in 2002. Options to purchase
shares of common stock granted in 2003 have an exercise price of $34.46
and vest over a four year period.
(5) Represents an award of 7,000 shares of restricted stock at a value of
$34.46 per share, the closing price of the Company's common stock on the
date of grant.
(6) Represents (a) matching contributions to the Company's 401(k) Plan, and
(b) dollar value-benefit of accrued imputed interest (assuming full
forgiveness of cumulative accrued interest) relating to a loan from the
Company in connection with Mr. Mandell's 1998 stock purchase
transaction. This loan was repaid in full by Mr. Mandell on December
30, 2002.
(7) Represents an award of 4,500 shares of restricted stock at a value of
$9.417 per share, the closing price of the Company's common stock on
the date of grant.
(8) Dennis Klaeser joined the Company in April 2003. Mr. Klaeser's salary
for 2003 reflects his compensation for this partial year of service.
(9) Represents an award of 5,000 shares of restricted stock at a value of
$34.46 per share, the closing price of the Company's common stock on
the date of grant.
(10) Represents matching contributions to the Company's 401(k) plan made by
the Company for the benefit of the executive officer.
</FN>
(footnotes continue on following page)
11
(11) Represents an award of 2,000 shares of restricted stock at a value of
$34.46 per share, the closing price of the Company's common stock on
the date of grant.
(12) Represents an award of 2,550 shares of restricted stock at a value of
$9.417 per share, the closing price of the Company's common stock on
the date of grant.
(13) Represents an award of 2,500 shares of restricted stock at a value of
$34.46 per share, the closing price of the Company's common stock on
the date of grant.
(14) Represents an award of 3,000 shares of restricted stock at a value of
$9.417 per share, the closing price of the Company's common stock on
the date of grant.
OPTION GRANTS IN LAST FISCAL YEAR
The table below summarizes certain information about the options to
purchase the Company's common stock which were granted in 2003 by the Company
for each Named Executive Officer. All options were granted with a per share
exercise price equal to the fair market value of the Company's common stock on
the grant date.
OPTION GRANTS IN LAST FISCAL YEAR
% OF
TOTAL POTENTIAL
OPTIONS REALIZABLE VALUE
NUMBER OF GRANTED AT ASSUMED ANNUAL
SHARES TO RATES OF STOCK
UNDERLYING EMPLOYEES EXERCISE PRICE APPRECIATION
OPTIONS IN OR BASE FOR OPTION TERM
GRANTED FISCAL PRICE EXPIRATION -------------------
NAME (#) YEAR ($/SH) DATE 5% ($) 10% ($)
- ----------------------- ---------- --------- -------- ---------- -------- --------
Ralph B. Mandell....... 14,000 7.42% $34.46 08/28/13 $303,404 $768,885
Dennis L. Klaeser...... 9,000 4.77 34.46 08/28/13 195,045 494,283
Richard C. Jensen...... 4,000 2.12 34.46 08/28/13 86,687 219,681
Hugh H. McLean......... 4,500 2.38 34.46 08/28/13 97,523 247,142
Gary S. Collins........ 4,500 2.38 34.46 08/28/13 97,523 247,142
AGGREGATED OPTION EXERCISES AND YEAR-END VALUES
The following table summarizes for each Named Executive Officer the
number of shares of common stock subject to outstanding options and the value of
such options that were unexercised at December 31, 2003.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
SHARES NUMBER OF
ACQUIRED SECURITIES UNDERLYING VALUE OF UNEXERCISED
ON VALUE UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
EXERCISE REALIZED AT AT DECEMBER 31,
NAME (#) ($) DECEMBER 31, 2003 (#) 2003($)(2)
- ---------------------- ---------- -------- --------------------- -----------------------
EXERCISABLE/ EXERCISABLE/
UNEXERCISABLE(1) UNEXERCISABLE(1)
--------------------- -----------------------
Ralph B. Mandell...... 13,200 $288,069 73,425 / 21,125 $2,780,861 / $409,843
Dennis L. Klaeser..... -- -- -- / 9,000 -- / 97,470
Richard C. Jensen..... -- -- 9,750 / 9,250 357,640 / 234,280
Hugh H. McLean........ 24,000 421,440 21,450 / 8,850 741,555 / 206,359
Gary S. Collins....... 19,200 386,352 21,450 / 8,850 741,555 / 206,359
<FN>
- ------------------
(1) The numbers and amounts in the above table represent shares of common
stock subject to options granted by the Company that were unexercised as
of December 31, 2003.
(2) The estimated fair market value of the Company's common stock at
December 31, 2003 was $45.29 per share.
</FN>
12
EMPLOYMENT AGREEMENTS
RALPH B. MANDELL. The Company has entered into an employment agreement
with Ralph B. Mandell, the Company's Chairman, President and Chief Executive
Officer, which was automatically renewed for an additional two years on July 1,
2003. The agreement, which has a term of two years, expires on June 30, 2005.
The term of the agreement is automatically renewed for successive two-year
terms, unless either party gives 90-days' advance notice of an intention to
terminate the agreement. The agreement provides for an annual base salary of
$290,000, which is subject to review from time to time, and may be increased
when and to the extent the Board, in its discretion, determines. The Board
increased Mr. Mandell's salary to $390,000 in 2003 and to $410,000 for 2004. Mr.
Mandell may receive a discretionary bonus to the extent determined by the Board
of Directors and is entitled to participate in benefit plans and other fringe
benefits available to the Company's managing directors.
Under the agreement, Mr. Mandell's employment may be terminated by the
Company at any time for "cause," as defined in the agreement, in which case, or
if he resigns from the Company without "good reason," the agreement immediately
terminates, and he would be entitled only to unpaid benefits accrued during the
term of his employment. If Mr. Mandell chooses to resign with good reason, or
the Company chooses to terminate his employment without cause, he is also
entitled to receive severance in the amount equal to 150% of his then current
base annual salary, plus the average of the sum of the bonuses he earned during
the previous three years, in addition to a pro rata bonus for the year of
termination based on the prior year's bonus amount, if any. The agreement also
provides for death benefits equal to six months of his then current annual base
salary.
In the event that Mr. Mandell is terminated after a change in control
(as defined in the agreement) of the Company, he will be entitled to a lump sum
payment equal to three times the sum of (1) his annual base salary; (2) the
greater of (a) his bonus amount, if any, for the prior year or (b) his average
bonus, if any, for the three preceding years; and (3) the sum of the
contributions that would have been made by the Company to him during the year
under benefit plans and the annual value of any other executive perquisites. The
agreement also entitles Mr. Mandell to receive gross up payments to cover any
federal excise taxes payable by him in the event the change in control benefits
are deemed to constitute "excess parachute payments" under Section 280G of the
Internal Revenue Code. If a change in control of the Company had occurred and
Mr. Mandell was terminated effective January 1, 2004, based on his 2003
compensation he would have been entitled to a lump-sum payment of approximately
$3.4 million under the agreement. This amount does not include gross up
payments, if any, that the Company may be obligated to pay to Mr. Mandell to
cover any excise taxes payable by him.
The agreement also contains non-solicitation provisions, which prohibit
Mr. Mandell from soliciting, either for his own account or for the benefit of
any entity located within a 25 mile radius of the Company or any of its
subsidiaries, any of its clients or employees. These non-solicitation provisions
remain in effect for a period of two years after the termination of his
employment.
OTHER EXECUTIVES. The Company has also entered into employment
agreements with (1) Richard C. Jensen, one of the Company's directors, and the
chairman, chief executive officer and a managing director of The PrivateBank
(St. Louis), (2) Dennis L. Klaeser, the Company's Chief Financial Officer, (3)
Hugh H. McLean, a managing director and vice chairman of The PrivateBank
(Chicago) and (4) Gary S. Collins, a managing director and vice chairman of The
PrivateBank (Chicago) (collectively referred to as the "Executives"). The
Company had previously entered into a three-year agreement with Mr. Jensen,
which expired on June 30, 2003.
Each of these agreements became effective on October 1, 2003, and has a
term of one year. The agreements are automatically renewed for an additional
year, unless either party gives 90-days' advance notice of an intention to
terminate the agreement. In the event of a change in control (as defined in the
13
agreement), the agreements are automatically extended to a date two years from
the date of the change in control. Except as discussed below, the terms and
provisions of the Executives' agreements are substantially similar to those of
the employment agreement with Mr. Mandell.
Mr. Jensen's annual base salary for 2003 was $182,000, and is $190,000
for 2004; Mr. Klaeser's annual base salary for 2003 was $190,000, and is
$205,000 for 2004; and each of Messrs. McLean's and Collins' annual base salary
for 2003 was $190,000, and is $200,000 for 2004. Each executive's base salary is
subject to periodic review from time to time, and may be increased when and to
the extent the Board, in its discretion, determines.
If the Executive chooses to resign with good reason, or the Company
chooses to terminate his employment without cause, he is entitled to receive
severance in the amount equal to 100% of his then current annual base salary,
plus the average of the sum of any bonuses he earned during the previous three
years, in addition to a pro rata bonus for the year of termination based on the
prior year's bonus amount, if any;
In the event the Executive is terminated after a change of control (as
defined in the agreement) of the Company, he will be entitled to unpaid benefits
accrued during the term of his employment, a pro rata bonus for the year of
termination based on the prior year's bonus amount, if any, and a lump-sum
payment equal to two times the sum of: (a) his annual base salary; plus (b) the
greater of (i) his bonus amount, if any, for the prior year or (ii) his average
bonus, if any, for the three preceding years; and (c) the sum of contributions
that would have been made by the Company to him during the year under benefit
plans and the annual value of any other executive perquisites. The agreement
also entitles the Executive to receive gross up payments to cover any federal
excise taxes payable by him in the event the change in control benefits are
deemed to constitute "excess parachute payments" under Section 280G of the
Internal Revenue Code. If a change in control of the Company had occurred and
the Executive was terminated effective January 1, 2004, based on 2003
compensation, the Executives would have been entitled to lump-sum payments as
follows: Mr. Jensen, $691,391; Mr. Klaeser, $901,942; Mr. McLean, $933,219; and
Mr. Collins, $933,219. This amount does not include gross up payments, if any,
that the Company may be obligated to pay to the Executive to cover any excise
taxes payable by him. The Executive will also be entitled to outplacement
counseling services for a reasonable period of time following such termination
as agreed between the Executive and the Company; and
Each agreement also contains certain non-solicitation provisions, which
prohibit the Executive from soliciting, either for his own account or for the
benefit of any entity located within a 50-mile radius of the Company or any of
its subsidiaries, any of the Company's or its subsidiaries' clients or
employees. These non-solicitation provisions remain in effect for a period of
one year after the termination of his employment.
WILLIAM A. GOLDSTEIN. In December 2002, The PrivateBank (Chicago)
acquired a controlling interest in Lodestar Investment Counsel, LLC
("Lodestar"). William Goldstein, the chief executive officer of Lodestar and a
director of the Company, was president and a shareholder of Lodestar before the
acquisition. Mr. Goldstein and his family trust have a majority interest in the
corporation that continues to hold a 20% interest in Lodestar. In connection
with the transaction, Mr. Goldstein entered into an employment agreement with
Lodestar. The agreement, which has a term of five years, expires on December 30,
2007. Under the provisions of the agreement, Mr. Goldstein is entitled to an
annual base salary of $100,000 subject to adjustment by the Board. Mr. Goldstein
is eligible to receive an annual bonus equal to at least 35% of the revenues
attributable to his designated accounts and is entitled to participate in
benefit plans and other fringe benefits available to Lodestar's executives.
Under the agreement, Mr. Goldstein's employment may be terminated by
Lodestar at any time for "cause," as defined in the agreement, in which case, or
if he resigns from Lodestar without "good reason,"
14
the agreement immediately terminates, and he would be entitled only to unpaid
benefits accrued during the term of his employment. If Mr. Goldstein chooses to
resign with good reason, or Lodestar chooses to terminate his employment without
cause, he is also entitled to receive severance in the amount equal to his then
current annual base salary, plus a bonus for the year of termination equal to
the prior year's bonus amount, if any.
The agreement also contains certain non-solicitation provisions, which
prohibit Mr. Goldstein from soliciting, either for his own account or for the
benefit of any entity located within a 25-mile radius of any place of business
of Lodestar, any clients or employees of Lodestar or engage in any business
which is similar to or in competition with Lodestar, for up to 18 months
following his termination. Mr. Goldstein is also prohibited from accepting any
business from any clients of Lodestar for up to two years following his
termination.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Throughout 2003, the Compensation Committee of the Board of Directors
("Committee") was comprised entirely of non-management directors. Among the
Committee's duties are the responsibility for reviewing chief executive officer
compensation and business expenses and making recommendations for approval to
the full Board, as well as the review and approval of the compensation and
benefit policies and programs for other senior executives. The Committee also
advises and assists management in formulating policies regarding overall
compensation.
OBJECTIVES
Under the direction of the Committee, the Company's compensation
policies are designed to align the interests of the executives with those of the
stockholders. The goal of the policies is to improve profitability and long-term
stockholder value by rewarding the executives based on criteria set for
individual and corporate performance. The compensation program and policies are
also designed to aid in the attraction, motivation and retention of key
personnel.
The Committee uses third-party consultants and compensation surveys to
help construct and maintain a competitive compensation program. Consultants are
chosen based on their experience in compensation matters and their experience in
the financial services industry. During 2003, the Committee engaged Frederic W.
Cook & Co. as its compensation consultant. Among other things, the Committee
used the consultants for assistance in comparing compensation levels and the
Company's compensation programs to those of selected peer group companies.
PERFORMANCE CRITERIA
The Committee uses a combination of base salary, cash incentive
compensation and equity-based incentive compensation as its total compensation
package. Annual corporate and individual performance goals are set each year in
conjunction with the Board's approval of the annual profit plan. The annual
profit plan establishes the performance benchmark for both earnings and asset
growth.
The chief executive officer's performance goals are set by the
Committee and are based upon a combination of objective and subjective
performance criteria. Objective criteria include the achievement of net income
and earnings per share targets and growth in assets, loans and trust assets
under administration. Subjective criteria include strategy, leadership, ethics,
effectiveness, planning and execution of strategic initiatives.
The performance goals of the other senior executives are set by the
chief executive officer. These goals are based upon both corporate and personal
performance. Corporate goals are based upon
15
achievement of the same earnings and growth targets as for the chief executive
officer. Individual performance goals are based upon a combination of personal
objective and subjective performance criteria.
BASE SALARY
In considering annual base salary increases, the Committee in
conjunction with the chief executive officer, reviews the performance of each of
its senior executives individually. The Committee periodically compares base
salary data with information obtained from third party consultants and
compensation surveys. Base salary levels historically have been targeted to be
generally at the mid-points of comparable executive compensation at peer
companies identified by the Committee, as the Committee feels that a significant
portion of total compensation should be at risk. The Committee recognizes that
it is difficult to make exact comparisons for every position since specific
talents and responsibilities of each senior executive make his position unique.
In general, competitive trends of the industry and in the Company's peer group
are followed. In December of each year, the Committee approves annual base
salaries for the executive officers for the following year.
CASH INCENTIVE COMPENSATION
Cash incentive compensation is based on both corporate goal achievement
and individual performance. When performance goals are set, the Committee
assigns a percentage of the salary of the chief executive officer as his target
annual cash incentive compensation award. The chief executive officer recommends
target percentages for each of the other senior executives which are reviewed
and approved by the Committee. These target percentages may be slightly above
those set by peer companies as identified by third party consultants and
compensation surveys. Bonuses paid will be at, above or below the target
percentage depending upon the degree to which individual and corporate goals are
met, consistent with the Committee's "at risk" compensation philosophy.
In December of each year, the Committee approves annual cash incentive
compensation amounts, based on performance reviews and the achievement of
projected corporate and individual performance levels. Bonuses awarded are
payable in January of the following year. Also, goals and target cash incentive
compensation percentages are set for the following year in conjunction with the
Board's approval of the annual profit plan.
EQUITY-BASED INCENTIVE COMPENSATION
All senior executives are participants in the Company's Incentive
Compensation Plan adopted and approved by stockholders in 2003. At its
discretion, the Committee reviews and recommends for full Board approval the
grant to the chief executive officer and other senior executives of stock-based
awards under the plan. The Committee considers recommendations from the chief
executive officer regarding awards for the other senior executives. These awards
are based on past performance and the expectation that each executive officer's
future performance will positively impact stockholder value. The Committee
believes that by using equity-based incentive compensation for its executive
officers in addition to base salary and cash incentive compensation awards, the
interests of management are best aligned with the interests of the Company's
stockholders. During 2003, the Committee made awards to executive officers under
the Incentive Compensation Plan in the form of stock options, all designated as
incentive stock options, and restricted stock awards. The options were granted
at market value, vest over four years and expire ten years from the date of
grant. The restricted stock awards vest five years from the date of grant.
Prior to 2002, the Committee made awards under the terms of the Stock
Incentive Plan, previously approved by stockholders, in the form of stock
options, restricted stock, or a combination of both. No awards were granted to
executives in 2002 because there were no shares remaining available for
16
grant under that plan. In 1992, certain executive officers were granted
non-qualified stock options as replacement for a portion of compensation
forfeited in that year. Since then, all stock options granted to executive
officers under the Stock Incentive Plan were designated as incentive stock
options, and except in 1998, have been granted at the then current market price
of the Company's common stock with a ten-year life and four-year vesting
schedule. In 1998, the Committee granted incentive stock options as "premium
priced options" at 125% of market value with five-year cliff vesting. Vesting of
these options was accelerated when total returns exceeded specified hurdles over
the specified period of time. Restricted stock awards have generally been
granted with five-year cliff vesting.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The Committee reviews the performance of Mr. Ralph B. Mandell, the
Company's chief executive officer, by evaluating the achievement of corporate
and personal objectives set each year in conjunction with the Board's approval
of the annual profit plan. The Committee considered the effect of significant
corporate developments and initiatives in evaluating overall corporate
performance in 2003. Factors which influenced the Committee's evaluation of
performance for 2003 included, among other achievements, successful completion
of the $61.0 million public stock offering, significant growth in earnings per
share in 2003, return on average equity in excess of 15%, growth in assets,
loans and trust assets under administration, as well as significant appreciation
during the year in the market price of the Company's common stock. For 2003, Mr.
Mandell received base salary of $390,000 and a year-end cash bonus of $670,000
which was paid in January, 2004. The bonus amount was determined and paid in
accordance with the terms of the Company's cash incentive program under the
Incentive Compensation Plan. Mr. Mandell was also awarded long-term compensation
in the form of options to purchase 14,000 shares of common stock at $34.46 per
share, the market price at the time of grant, that vest over four years and
7,000 shares of restricted stock with five-year cliff vesting. Based on the
Committee's recommendation, the Board increased Mr. Mandell's base salary to
$410,000 for 2004.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code limits the tax
deductibility of executive compensation for officers of public companies.
Section 162(m) generally disallows the ordinary business expense deduction for
compensation in excess of $1,000,000 paid to a company's chief executive officer
and each of the next four most highly compensated executive officers. However,
certain performance-based compensation is excluded from the Section 162(m)
limits if paid pursuant to plans approved by stockholders of the Company.
As a result of stockholder approval of the Company's cash incentive
compensation program in 2003 as part of the Incentive Compensation Plan, a
significant portion of the Company's executive compensation for 2003 qualifies
for treatment as performance-based compensation under Section 162(m).
Accordingly, there was no limit on the deductibility of the Company's executive
compensation expense for federal income tax purposes in 2003, and the Committee
does not currently anticipate that the Company will exceed the Section 162(m)
limit in the future. However, it is possible that the Committee or the Board may
determine that it is appropriate to compensate executives above the limit in
circumstances of outstanding corporate and executive achievement.
Messrs. Rabin and Gorman and Ms. McKissack were appointed to the
Compensation Committee in 2003 and did not participate in the Committee's
deliberations regarding Mr. Mandell's 2003 compensation.
17
The report is submitted by the Compensation Committee.
James M. Guyette (Chairman)
John E. Gorman
Thomas F. Meagher
Cheryl Mayberry McKissack
Edward W. Rabin, Jr.
The foregoing Compensation Committee Report shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, except to the
extent that the Company specifically incorporates this information by reference,
and shall not otherwise be deemed filed under such Acts.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Guyette, Gorman, Meagher, Rabin and Ms. McKissack each serve on
the Compensation Committee of the Board of Directors of the Company. Each of
these individuals has engaged in certain transactions as clients of the banks,
in the ordinary course of the banks' business, including borrowings, during the
last year, all of which transactions are or were on substantially the same terms
(including interest rates and collateral on loans) as those prevailing at the
time for comparable transactions with unaffiliated persons. In the opinion of
management, none of these transactions involved more than the normal risk of
collectability or presented any other unfavorable features. In addition, Mr.
Ralph B. Mandell, the Company's Chairman, President and Chief Executive Officer,
serves on the compensation committee of The PrivateBank (St. Louis), which is
responsible for determining the compensation of the senior officers of that
bank. Mr. Richard C. Jensen, Chairman, Chief Executive Officer and a Managing
Director of The PrivateBank (St. Louis), is a director of the Company. Mr.
Mandell serves on the Board of Managers of Lodestar, which oversees compensation
decisions, and Mr. Goldstein, a director of the Company, is the chief executive
officer of Lodestar.
18
PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return on the
common stock of the Company for the period beginning June 30, 1999 and ending
December 31, 2003, with the cumulative total return on the Russell 2000 Index
and a peer group index, the CRSP Index for Nasdaq Bank Stocks, over the same
period, assuming the investment of $100 in the Company's common stock, the
Russell 2000 Index and the CRSP Index for Nasdaq Bank Stocks on June 30, 1999,
and the reinvestment of all dividends.
[GRAPHIC OMITTED]
6/30/99 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
------- -------- -------- -------- -------- --------
PrivateBancorp, Inc..................... $100.00 $ 63.81 $ 43.89 $ 95.07 $184.22 $332.13
CRSP Index for Nasdaq Bank Stocks....... 100.00 93.44 106.80 116.43 118.49 131.25
Russell 2000 Index ..................... 100.00 110.18 105.42 106.50 83.52 121.41
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934 requires the
Company's directors and certain executive officers and certain other beneficial
owners of the Company's common stock to periodically file notices of changes in
beneficial ownership of common stock with the Securities and Exchange Commission
and the Nasdaq National Market. To the best of the Company's knowledge, based
solely on copies of such reports received by it, the Company believes that for
2003 all required filings were timely filed by each of its directors and
executive officers, except: (1) a Form 4 filed by Mr. McLean reporting open
market purchases on February 3, 2003 (which were reported on February 7, 2003);
(2) a Form 4 filed by Mr. Susman reporting an option exercise on January 27,
2003 (which was reported on February 27, 2003) and a Form 4 reporting the
allocation of deferred compensation on June 30, 2003 (which was reported on
October 2, 2003); (3) a Form 4 filed by Mr. Guyette reporting the
allocation of deferred compensation on June 30, 2003 (which was reported on
October 2, 2003); (4) a Form 4 filed by Mr. Kayman reporting the allocation of
deferred compensation on June 30, 2003 (which was reported on October 2, 2003);
(5) a Form 4 filed by Mr. Mandell reporting a gift on December 12, 2002, the
acquisition of restricted stock on August 28, 2003 and an option grant on August
28, 2003 (which were reported on November 10, 2003); (6) a Form 4 filed by Ms.
Jackson reporting an open market purchase on November 3, 2003 (which was
reported on November 12, 2003); (7) each of Mr. Rabin and Ms. McKissack filed a
late Form 3, which were filed on January 15, 2004; and (8) a Form 4 filed by
each director and executive officer who served in 2003, except Messrs. Rabin,
Rybak and Ms. McKissack, reporting an option grant and/or acquisition of
restricted stock on August 28, 2003 (which were filed on September 26, 2003).
19
TRANSACTIONS WITH RELATED PERSONS
Some of the Company's executive officers and directors are, and have
been during the preceding year, clients of the banks, and some of the Company's
executive officers and directors are direct or indirect owners of 10% or more of
the stock of corporations which are, or have been in the past, clients of the
banks. As such clients, they have had transactions in the ordinary course of
business of the banks, including borrowings, all of which transactions are or
were on substantially the same terms (including interest rates and collateral on
loans) as those prevailing at the time for comparable transactions with
nonaffiliated persons. In the opinion of management, none of the transactions
involved more than the normal risk of collectability or presented any other
unfavorable features. At December 31, 2003, the Company had $18.4 million in
loans outstanding to certain directors and executive officers and their business
interests of the Company and to certain executive officers of the banks.
During 2003, The PrivateBank (Chicago) acquired phone and video
conferencing equipment and related services with a total cost of $595,833
through Worknet, Inc., an information technology company. William Castellano,
who is one of the Company's directors, is an affiliate of that company.
During 2003, the Company incurred professional fees for services
provided by the law firm of Spitzer, Addis, Susman & Enders in the amount of
approximately $262,000. Michael B. Susman, who is one of our directors, is a
partner of that firm.
During 2003, the Company paid approximately $132,000 to a firm
providing investment management services related to the bank's investment
portfolio. John Gorman, who is one of the Company's directors, is a partner of
that firm.
Mr. Mandell's daughter-in-law is employed by The PrivateBank (Chicago)
as a Managing Director. In 2003, she was paid an aggregate salary and bonus of
$125,000, granted options to purchase 1,500 shares of the Company's common stock
at an exercise price of $34.46 per share and awarded 750 shares of restricted
stock. Mr. Goldstein's son-in-law is employed as a Managing Director of
Lodestar. He received an aggregate salary and bonus of $182,661 in 2003.
PROPOSAL 2. APPROVAL OF AN AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION INCREASING THE
NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
At a meeting of the Board of Directors held on February 26, 2004, the
Board of Directors unanimously approved and is recommending to the Company's
stockholders for approval an amendment to the Company's Amended and Restated
Certificate of Incorporation that would increase the number of authorized shares
of common stock from the 24,000,000 shares presently authorized to 39,000,000
shares.
As approved by the Board, subject to stockholder approval at the
Meeting, the first paragraph of Article FOURTH of PrivateBancorp, Inc.'s Amended
and Restated Certificate of Incorporation would be amended to read as follows:
"The total number of shares of stock which the Corporation shall have
authority to issue is forty million (40,000,000) divided into two
classes as follows: one million (1,000,000) of which shall be Preferred
Stock, without par value, and thirty-nine million (39,000,000) of which
shall be Common Stock, without par value."
20
PURPOSE OF CHARTER AMENDMENT
The Amended and Restated Certificate of Incorporation currently
authorizes the issuance of up to 24,000,000 shares of common stock and 1,000,000
shares of preferred stock. As of the record date, the Company had 9,930,549
shares of common stock outstanding and 869,664 shares of common stock reserved
for issuance to current or former directors, officers and employees under
compensation and benefit plans, leaving only 13,199,787 shares of common stock
authorized, unissued and unreserved and available for other corporate purposes.
Of the shares outstanding, the Company issued 1,955,000 shares in July 2003 to
raise additional capital to support its continued growth.
The Board of Directors considers the proposed increase in the number of
authorized shares desirable because it would give the Board greater flexibility
to declare common stock splits or stock dividends when considered desirable and
still leave sufficient shares available for issuance in connection with
potential acquisitions, financings, employee benefits and for other general
corporate purposes.
The Company's growth strategy includes the pursuit of further
acquisitions of asset management firms and other fee-income businesses. The
Company may also pursue selective acquisitions to expand its banking franchise
to other geographic markets. The Board of Directors believes it is important to
have the flexibility to use common stock or a combination of cash and stock as
consideration in potential acquisitions. The Company may also desire to issue
common stock from time to time in the future to raise additional capital
necessary to support future growth of the Company.
Approving an increase in the number of authorized shares at this time
would avoid the additional expense and delay incidental to obtaining stockholder
approval to increase the number of authorized shares at the time of any planned
transaction of the type described above, unless stockholder approval is
otherwise required for a particular issuance by applicable law. The proposed
amendment to the Amended and Restated Certificate of Incorporation would
increase the authorized, unissued and unreserved common stock remaining
available for issuance from 13,199,787 to 28,199,787 shares.
Authorized, unissued and unreserved common stock may be issued from
time to time for any proper purpose without further action of the stockholders,
except as required by the Amended and Restated Certificate of Incorporation,
applicable law or the listing requirements of the Nasdaq National Market, on
which the common stock is listed.
Each share of common stock authorized for issuance has the same rights
and is identical in all respects with each other share of common stock. Newly
authorized shares of common stock will not affect the rights, such as voting and
liquidation rights, of the shares of common stock currently outstanding. Under
Delaware law and the Company's charter, stockholders do not have preemptive
rights to purchase subsequently issued shares of common stock.
The ability of the Board of Directors to issue additional shares of
common stock without additional stockholder approval may be deemed to have an
anti-takeover effect. The amendment, however, is not being proposed in order to
prevent a change in control, and is not in response to any present attempt known
to the Board to acquire control of the Board of Directors, to obtain
representation on the Board of Directors or to take significant action which
affects control of the Company. Although the Company has no such plans, the
Company could use the additional shares of common stock to oppose a hostile
takeover attempt or to delay or prevent changes of control or changes in or
removal of management of the Company. For example, if the amendment is approved,
the Board of Directors could strategically issue shares in private placements
that could frustrate takeovers or other transactions that do not favor the
current Board of Directors and management, even if those transactions are at
substantial market premiums and are favored by stockholders of the Company. Any
issuance of additional shares also could have the effect of diluting the
earnings per share and book value per share of the outstanding
21
shares of the Company's common stock as well as stock ownership and voting
rights of stockholders, including persons seeking to obtain control of the
Company. The Board of Directors does not, however, intend to issue any
additional shares of common stock except on terms which it deems to be in the
best interests of the Company and its stockholders.
The Company's charter and By-laws currently contain a number of
provisions that may prevent, deter or delay a change in control of the Company.
The Company's Board of Directors is divided into three classes, and each class
is elected for staggered three-year terms. Staggered terms of directors may
reduce the possibility of a change in control of the Company, even though a
change in control might be in the best interest of the stockholders. In
addition, the Board of Directors also has the authority to set the designations,
powers, preferences, rights, qualifications, limitations and restrictions of any
class or series of preferred stock of the Company which could be used for
anti-takeover purposes. Delaware law also permits adoption of additional
anti-takeover measures.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF AN
AMENDMENT TO THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION INCREASING
THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company's independent public accountants for the fiscal year ended
December 31, 2003 were Ernst & Young LLP. The Company's Audit Committee has
selected Ernst & Young as the Company's independent public accountants for the
fiscal year ending December 31, 2004, subject to the Committee's review and
approval of the proposed engagement terms and 2004 audit plan. Under its
charter, the Audit Committee is solely responsible for reviewing the
qualifications of the Company's independent public accountants, and selecting
the independent public accountants for the current fiscal year.
Management has invited representatives of Ernst & Young to be present
at the meeting, and expects that they will attend. If present, these
representatives will have the opportunity to make a statement if they desire to
do so, and will be available to respond to appropriate questions from
stockholders.
CHANGE IN ACCOUNTANTS
On May 23, 2002, the Audit Committee of the Board of Directors of the
Company approved a change in the Company's auditors. The Board of Directors
ratified the Audit Committee's engagement of Ernst & Young to serve as the
Company's independent public accountants and replacement of Arthur Andersen LLP
as the Company's independent public accountants, effective immediately. Andersen
had been the Company's independent public accountants since 1991.
Andersen's reports on the consolidated financial statements of the
Company and its subsidiaries for the two fiscal years ended December 31, 2001
did not contain any adverse opinion or disclaimer of opinion, nor were they
qualified or modified as to uncertainty, audit scope or accounting principles.
During the Company's two fiscal years ended December 31, 2001 and the
subsequent interim period through May 23, 2002, there were no disagreements
between the Company and Andersen on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to Andersen's satisfaction, would have caused
them to make reference to the subject matter of the disagreement in connection
with their reports on the
22
Company's consolidated financial statements for such years; and there were no
reportable events as described in Item 304(a)(1)(v) of Regulation S-K.
The Company requested that Andersen furnish a letter addressed to
the SEC stating its agreement with the statements set forth above. A copy of
such letter, dated May 24, 2002, was filed as Exhibit 16 to the Company's
Current Report on Form 8-K dated May 24, 2002.
During the Company's two fiscal years ended December 31, 2001 and the
subsequent interim period through May 23, 2002, the Company did not consult with
Ernst & Young with respect to the application of accounting principles to a
specified transaction, either completed or proposed, or the type of audit
opinion that might be rendered on the Company's consolidated financial
statements, or any other matters or reportable events as set forth in Items
304(a)(2)(i) and (ii) of Regulation S-K.
PRINCIPAL ACCOUNTING FIRM FEES
The following table sets forth the aggregate fees billed to the Company
for professional services provided by Ernst & Young for the fiscal years ended
December 31, 2002 and 2003, respectively:
2002 2003
-------- --------
Audit Fees................. $132,500 $244,000
Audit Related Fees......... -- --
Tax Fees................... -- --
All Other Fees............. -- --
-------- --------
Total................... $132,500 $244,000
======== ========
PRE-APPROVAL PROCEDURES
The full Audit Committee considers any proposed engagement of the
independent public accountants to render audit or permissible non-audit services
for pre-approval. The Audit Committee has not adopted pre-approval policies and
procedures delegating this responsibility to particular committee members,
although it may in the future.
All of the services provided by the independent public accountants
in 2003 were pre-approved by the Audit Committee.
AUDIT COMMITTEE REPORT
The Audit Committee of the Company's Board of Directors is currently
comprised of six outside directors, all of whom are "independent" within the
meaning of the Nasdaq rules and satisfy the heightened independence standards
under the SEC rules. The Committee operates under a written charter adopted by
it. The Board appoints the Audit Committee and its chairman, with the Committee
to consist of no fewer than three directors. The Board has designated Mr. Rybak
as the "audit committee financial expert." The Committee assists the Board,
through review and recommendation, in its oversight responsibility related to
the quality and integrity of the Company's financial information and reporting
functions, the adequacy and effectiveness of the Company's system of internal
accounting and financial controls, and the independent audit process.
The responsibility for the quality and integrity of the Company's
financial statements and the completeness and accuracy of its internal controls
and financial reporting process rests with the Company's management. The
Company's independent public accountants for 2003, Ernst & Young, are
responsible for performing an audit and expressing an opinion as to whether the
Company's financial
23
statements are fairly presented, in all material respects, in conformity with
generally accepted accounting principles.
The Audit Committee reviewed and discussed with management and Ernst &
Young the audited financial statements of the Company for the year ended
December 31, 2003. The Audit Committee also reviewed and discussed with Ernst &
Young the matters required to be discussed by Statement on Auditing Standards
No. 61, as amended ("Communication with Audit Committees"), as currently in
effect.
Ernst & Young also provided to the Committee the written disclosures
and the letter required by Independence Standards Board Standard No. 1
("Independence Discussions with Audit Committees"), as currently in effect. The
disclosures described the relationships and fee arrangements between the firm
and the Company. Consistent with Independence Standards Board Standard No. 1 and
the SEC's auditor independence rules, the Audit Committee considered at a
meeting held on March 3, 2004, whether these relationships and arrangements are
compatible with maintaining Ernst & Young's independence, and has discussed with
representatives of Ernst & Young that firm's independence from the Company.
Based on the above-mentioned reviews and discussions with management
and Ernst & Young, the Audit Committee, exercising its business judgment,
recommended to the Board of Directors that the Company's audited financial
statements be included in its Annual Report on Form 10-K for the year ended
December 31, 2003, for filing with the SEC.
This report is submitted on behalf of the members of the Audit
Committee:
Robert F. Coleman (Chair)
Donald L. Beal
James M. Guyette
William R. Langley
William J. Podl
William R. Rybak
The foregoing Audit Committee Report shall not be deemed incorporated
by reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
STOCKHOLDER PROPOSALS
To be considered for inclusion in the Company's proxy and form of proxy
relating to the 2005 Annual Meeting of Stockholders, a stockholder's proposal
must be received prior to November 17, 2004, by the Secretary of the Company at
the Company's executive offices at Ten North Dearborn, Chicago, Illinois 60602.
Any such proposal will be subject to Rule 14a-8 under the Securities Exchange
Act of 1934.
24
HOUSEHOLDING
The SEC has adopted amendments to the proxy rules permitting companies
and intermediaries to satisfy delivery requirements for proxy statements with
respect to two or more stockholders sharing the same address by delivering a
single proxy statement to those stockholders. This method of delivery, often
referred to as "householding," should reduce the amount of duplicate information
that stockholders receive and lower printing and mailing costs for companies. We
are not householding materials for our stockholders in connection with the
Annual Meeting, however, we have been informed that certain intermediaries will
household proxy materials.
If a broker or other nominee holds your shares, this means that:
o Only one annual report and proxy statement will be delivered
to multiple stockholders sharing an address unless you notify
ADP at (888) 603-5847 or Householding Department, 51 Mercedes
Way, Edgewood, NY 11717, to inform them of your request. Be
sure to include your name, the name of your brokerage firm and
your account number.
o You can contact us by calling (312) 683-7100 or by writing to
PrivateBancorp, Inc., Ten North Dearborn, Chicago, IL 60602,
Attention: Corporate Secretary, to request a separate copy of
the annual report and proxy statement for the Annual Meeting
and for future meetings or you can contact your broker to make
the same request.
o You can request delivery of a single copy of annual reports or
proxy statements from your broker if you share the same
address as another stockholder.
NOTICE OF BUSINESS TO BE CONDUCTED AT AN
ANNUAL MEETING OF STOCKHOLDERS
Pursuant to the Company's Amended and Restated By-laws, the only
business that may be conducted at an annual meeting of stockholders is business
brought by or at the direction of the Board of Directors and proper matters
submitted in advance by a stockholder. The Amended and Restated By-laws of the
Company set forth the advance notice procedures for a stockholder to properly
bring business before an annual meeting. To be timely, a stockholder must give
the required information to the Secretary of the Company not less than 120 days
prior to the annual meeting date. If the 2005 annual meeting is held on April
21, 2005, the date contemplated under the existing Amended and Restated By-laws,
the deadline for advance notice by a stockholder would be December 23, 2004. In
the event the Company publicly announces or discloses that the date of the 2005
Annual Meeting of Stockholders is to be held on any other date, notice by the
stockholder will be timely if received not later than 120 days prior to the
meeting date; provided however, that in the event that less than 130 days notice
or prior public disclosure of the meeting date is given or made, notice by the
stockholder will be timely if received by the close of business on the tenth
(10th) day following the date on which the Company's notice to stockholders of
the annual meeting date was mailed or such public disclosure was made.
The advance notice by a stockholder must include the name and address
of the stockholder proposing the business, a brief description of the proposed
business, the number of shares of stock of the Company which the stockholder
beneficially owns and any material interest of the stockholder in such business.
In the case of nomination to the Board of Directors, certain information
regarding the nominee must be provided. These requirements apply to any matter
that a stockholder wishes to raise at an annual meeting, including any matters
raised outside of the procedures of Rule 14a-8 under the Securities Exchange
Act. Nothing in this paragraph shall be deemed to require the Company to include
in its proxy
25
statement or the proxy relating to an annual meeting any stockholder proposal
which does not meet all of the requirements for inclusion established by the
Securities and Exchange Commission in effect at the time such proposal is
received.
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING
The Board of Directors knows of no other matter which will be presented
for consideration at the meeting other than as stated in the Notice of Annual
Meeting of Stockholders. If, however, other matters are properly brought before
the meeting, it is the intention of the persons named in the accompanying proxy
to vote the shares represented thereby on such matters in accordance with their
best judgment.
Whether or not you intend to be present at the meeting, you are urged
to return your proxy card promptly. If you are a record holder and are present
at the meeting and wish to vote your shares in person, your proxy may be revoked
by voting at the meeting. However, if you are a stockholder whose shares are not
registered in your own name, you will need additional documentation from your
record holder to vote personally at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Dennis L. Klaeser
Dennis L. Klaeser
Secretary
26
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[LOGO OF PRIVATEBANCORP INC.]
Ten North Dearborn Street
Chicago, Illinois 60602
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Please complete, date, sign and mail the
detached proxy card in the enclosed postage-prepaid envelope.
DETACH PROXY CARD HERE
- -------------------------------------------------------------------------------
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder(s). If no direction is made, this proxy
will be voted "FOR ALL" of the six (6) Class III nominees for director and "FOR"
approval of the amendment to the Amended and Restated Certificate of
Incorporation.
If any other business is presented at the Annual Meeting, including
whether or not to adjourn the meeting, this proxy will be voted, to the extent
legally permissible, by those named in this proxy in their best judgment. At the
present time, the Board of Directors knows of no other business to be presented
at the Annual Meeting.
Signature _____________________________
Signature _____________________________
Date _____________________________, 2004
Please sign exactly as name (or names) appears above. When shares are
held by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by authorized officer. If a
partnership, please sign in partnership name by authorized person.
[LOGO OF PRIVATEBANCORP INC.]
If you personally plan to attend the Meeting of Stockholders please check the
box below and list the names of attendees on the reverse side.
Return this stub in the enclosed envelope with your completed proxy card.
I/We do plan to attend the 2004 meeting. |_|
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
REVOCABLE PROXY -- PRIVATEBANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS, APRIL 22, 2004
- -------------------------------------------------------------------------------
The undersigned stockholder(s) of PrivateBancorp, Inc., a Delaware corporation
(the "Company"), does (do) hereby constitute and appoint Gary S. Collins and/or
Hugh H. McLean, and each of them, the true and lawful attorney of the
undersigned with full power of substitution, to appear and act as the proxy or
proxies of the undersigned at the Annual Meeting of Stockholders of the Company
to be held at The Standard Club, 320 South Plymouth Court, Chicago, Illinois on
April 22, 2004, at 3:00 p.m. and at any adjournment thereof, and to vote all the
shares of PrivateBancorp, Inc. standing in the name of the undersigned, or which
the undersigned may be entitled to vote, as fully as the undersigned might or
could do if personally present, as set forth below. PLEASE MARK VOTE IN THE
APPROPRIATE BOX IN THE FOLLOWING MANNER USING DARK INK ONLY.
1. The election of six (6) Class III directors of the Company's
Board of Directors to serve until the annual meeting of
stockholders in 2007.
Robert F. Coleman James M. Guyette Philip M. Kayman Thomas F.
Meagher William J. Podl William R. Rybak
FOR WITHHOLD FOR ALL
ALL FOR ALL EXCEPT
|_| |_| |_|
INSTRUCTION: To withhold your vote for any individual nominee,
insert that nominee's name on the line provided below.
_____________________________________________________________
2. The amendment to the Amended and Restated Certificate of
Incorporation, increasing the number of authorized shares of
common stock from 24,000,000 to 39,000,000.
|_| FOR |_| AGAINST |_| ABSTAIN
The Board of Directors of the Company has determined that the matters to be
considered at the Annual Meeting are in the best interests of the Company and
its stockholders. For the reasons set forth in the Proxy Statement, the Board
unanimously recommends that you vote FOR each of its nominees for director and
FOR the amendment to the Amended and Restated Certificate of Incorporation.
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUEST FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A SELF-ADDRESSED,
POSTAGE-PREPAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
PLEASE LIST
NAMES OF PERSONS ATTENDING
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