UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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|_| Preliminary Proxy Statement
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|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-12
City National Bancshares Corporation
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(Name of Registrant as Specified In Its Charter)
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CITY NATIONAL BANCSHARES CORPORATION
900 Broad Street
Newark, New Jersey 07102
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on Thursday, May 21, 2009
Notice is hereby given that the Annual Meeting of Stockholders of City National
Bancshares Corporation (the "Corporation") will be held at City National Bank of
New Jersey located at 900 Broad Street, Newark, New Jersey, on Thursday, May 21,
2009, at 6:00 p.m. for the following purposes:
1. To elect one (1) director for a term of three (3) years or
until his successors are elected and qualified; and
2. To ratify the appointment of KPMG LLP as the Corporation's
registered independent public accountants for the fiscal year
ending December 31, 2009.
Stockholders of record at the close of business on April 10, 2009 are entitled
to notice of and to vote at the meeting.
The Corporation's Proxy Statement and its 2008 Annual Report to Stockholders
accompany this Notice.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. IT IS IMPORTANT
THAT YOUR SHARES ARE REPRESENTED AT THE MEETING. ACCORDINGLY, PLEASE SIGN, DATE
AND MAIL THE ENCLOSED PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE, WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING. IF YOU DO ATTEND THE MEETING, YOU MAY REVOKE
YOUR PROXY AND VOTE YOUR SHARES IN PERSON.
By order of the Board of Directors
/s/ Lemar C. Whigham
Lemar C. Whigham
Secretary
Newark, New Jersey
March 26, 2009
CITY NATIONAL BANCSHARES CORPORATION
900 Broad Street
Newark, New Jersey 07102
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 21, 2009
Introduction
The enclosed proxy is solicited by and on behalf of the Board of Directors of
City National Bancshares Corporation (the "Corporation") for use at the Annual
Meeting of Stockholders to be held on Thursday, May 21, 2009, at 6:00 p.m., at
City National Bank of New Jersey located at 900 Broad Street, Newark, New Jersey
or at any adjournment thereof.
Voting and Revocability of Proxy
The enclosed proxy is for use at the meeting if you do not attend the meeting,
or if you wish to vote your shares by proxy even if you attend the meeting. You
may revoke your proxy anytime before its exercise by (i) giving written notice
to the Secretary of the Corporation, (ii) submitting a proxy having a later
date, or (iii) appearing at the meeting and requesting to vote in person. Where
a choice or abstention is specified in the form of proxy with respect to a
matter being voted upon, the shares represented by proxy will be voted in
accordance with such specification. If a proxy is signed but no specification is
given, the shares will be voted for the director nominees named herein and in
favor of the other proposal described below.
This Proxy Statement and the enclosed proxy and 2008 Annual Report to
Stockholders are being first mailed to our stockholders on or about May 1, 2009.
The Corporation will bear the cost of preparing this Proxy Statement and of
soliciting proxies in the enclosed form. Proxies may be solicited by our
employees, either personally, by letter or by telephone. Such employees will not
be specifically compensated for soliciting said proxies.
Only holders of record of the Corporation's common stock at the close of
business on April 10, 2009 (the "Record Date"), are entitled to notice of, and
to vote at, the meeting. At the close of business on the Record Date, there were
outstanding and entitled to vote, 131,290 shares of common stock, each of which
is entitled to one vote. The presence in person or by proxy of a majority of the
outstanding shares of common stock will constitute a quorum for the purposes of
the meeting.
For purposes of counting votes, abstentions and broker non-votes (i.e., shares
held by brokers that they can't vote because they haven't received voting
instructions from their customers with respect to matters voted on) will be
treated as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. For purposes of determining the votes cast
on any matter at the meeting, only "FOR" and "AGAINST" votes are included.
The Corporation will reimburse brokerage firms and other custodians, nominees
and fiduciaries for their expense incurred in sending proxies and proxy
materials to beneficial owners of the Corporation's common stock.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors of the Corporation is divided into three classes of
approximately equal size. Directors are elected for three-year terms on a
staggered basis, so that the term of office of one class will expire each year
at the annual meeting of stockholders when a successor is elected and qualified
and terms of office of the other classes will extend for additional periods of
one and two years, respectively.
Voting Procedures
Directors are elected by a plurality of votes cast. Shares cannot be voted for a
greater number of persons than the number of nominees named herein. Should any
nominee be unavailable for election by reason of death or other unexpected
occurrence, the enclosed proxy, to the extent permitted by applicable law, may
be voted with discretionary authority in connection with the nomination by the
Board and the election of any substitute nominee. PROXIES, UNLESS INDICATED TO
THE CONTRARY, WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEES NAMED BELOW TO
SERVE FOR THREE (3) YEAR TERMS EXPIRING AT THE 2012 ANNUAL MEETING OF
STOCKHOLDERS.
Douglas Anderson, Eugene Giscombe and Louis Prezeau, currently serving as
directors of the Corporation, are being nominated to serve as directors with
terms expiring at the 2012 Annual Meeting of Stockholders and until their
respective successors are duly elected and qualified.
Information is presented below relating to the principal occupation, the
business experience, the number of shares of the Corporation beneficially owned
and the period during which each director has served on the Board of Directors
of the Corporation and the Board of Directors of City National Bank of New
Jersey (the "Bank"), as well as the number of shares of such common stock
beneficially owned by all directors and executive officers as a group.
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Director Term Principal Occupations During Past Five Years; Other Public Company
Name of Director Age Since Ends Directorships
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Douglas E. Anderson 59 1989 2011 Retired Executive Vice President, JPMorgan Chase Bank
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Barbara Bell Coleman 58 1995 2010 President, BBC Associates, L.L.C. (consulting services); director, Hilton
Hotels Corp.
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Eugene Giscombe 68 1991 2011 President, Giscombe Henderson, Inc. (property management firm); President,
103 East 125th Street Corporation (property holding company)
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Louis E. Prezeau 66 1989 2011 President and Chief Executive Officer, City National Bank of New Jersey and
City National Bancshares Corporation
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Lemar C. Whigham 65 1989 2010 President, L & W Enterprises (vending machine operations)
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H. O'Neil Williams 62 2009 2009 Managing Partner, Mitchell & Titus, LLP (CPA Firm)
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The Board has nominated and recommends a vote "FOR" the election of the
nominated slate of directors.
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PROPOSAL 2
APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The accounting firm of KPMG LLP served as the independent registered public
accountants for the Corporation for the year ended December 31, 2008. Services
provided included the examination of the consolidated financial statements and
preparation of the tax returns.
The Board has appointed KPMG LLP as the independent registered public
accountants for the Corporation and the Bank for 2009. Stockholder ratification
of the appointment is not required under the laws of the State of New Jersey,
but the Board has decided to ascertain the position of the stockholders on the
appointment. The Board may reconsider the appointment if it is not ratified. The
affirmative vote of a majority of the shares voted at the meeting is required
for ratification.
Representatives of KPMG LLP are expected to be present at the meeting and will
be allowed to make a statement if they so desire. Additionally, they will be
available to respond to appropriate questions from stockholders during the
meeting.
The Corporation incurred the following fees for services provided by KPMG LLP:
2008 2007
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Audit fees $135,000 $135,000
Tax service fees 36,550 21,500
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$171,550 $156,500
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All audit, as well as non-audit, services to be performed by the independent
accountants to the Corporation must be pre-approved by the Audit Committee in
order to assure that the provision of such services does not impair the
auditor's independence. During 2008, the Audit Committee pre-approved all of the
services provided by KPMG LLP. The Audit Committee has considered the provisions
of these services by KPMG LLP and has determined that the services are
compatible with maintaining KPMG LLP's independence.
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The Board recommends a vote "FOR" ratification of the selection of KPMG LLP as
independent registered public accountants for 2009.
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CORPORATE GOVERNANCE
General
The business and affairs of the Corporation are managed under the direction of
the Board of Directors. Board members are kept informed of the Corporation's
business by participating in meetings of the Board and its committees and
through discussions with corporate officers. All members also served as members
of the Corporation's subsidiary bank, City National Bank of New Jersey, during
2008. It is the Corporation's policy that all directors attend the annual
meeting, absent extenuating circumstances.
3
Director Independence
The Board has determined that all the directors with the exception of Louis E.
Prezeau are "independent" within the meaning of the NASDAQ listing standards. In
reviewing the independence of these directors, the Board considered that
transactions with the Bank were made in the ordinary course of business,
including loans that were made in accordance with Federal Reserve Regulation O.
Stockholder Communications with Directors
Stockholders and other interested parties may send written communications to the
Board of Directors, an individual director or the non-management directors as a
group by mailing them to the aforementioned individuals, c/o Assistant
Secretary, City National Bank of New Jersey, 900 Broad Street, Newark, New
Jersey, 07102. All communications will be forwarded to the appropriate party,
unless the communication is a personal or similar grievance, an abusive or
inappropriate communication or a communication not related to the duties or
responsibilities of the aforementioned parties, in which case the Assistant
Secretary has the authority to disregard the communication.
Meetings of the Board of Directors and Committees
During 2008, the Board of Directors held thirteen meetings. A quorum was present
at all meetings and no director attended fewer than 75% of the meetings held by
the Board and committees of which such director was a member.
All directors of the Corporation are also directors of the Bank. Regular
meetings of the Corporation's and the Bank's Boards of Directors are held
monthly. Additional meetings are held when deemed necessary. In addition to
meeting as a group to review the Corporation's business, certain members of the
Board also serve on certain standing committees of the Bank's Board of
Directors. These committees, which are described below, serve similar functions
for the Corporation.
Because of the relatively small size of the Corporation's Board, there is no
standing Nominating Committee or nominating committee charter. The individual
members of the entire Board, exclusive of interested directors, make the
specific recommendations for Board nominees, including the director nominees
herein. Qualifications for prospective directors are reviewed by the entire
Board.
The Board has not formulated specific criteria for nominees, but it considers
qualifications that include, but are not limited to, ability to serve, conflicts
of interest, and other relevant factors. In consideration of the fiduciary
requirements of a Board member, and the relationship of the Corporation and its
subsidiaries to the communities it serves, the Committee places emphasis on
character, ethics, financial stability, business acumen, and community
involvement among other criteria it may consider. In addition, as a bank holding
company, the Corporation is regulated by the Federal Reserve Board ("FRB") and
the Bank, as a national banking association, is regulated by the Office of the
Comptroller of the Currency ("OCC"). Directors and director-nominees are subject
to various laws and regulations pertaining to bank holding companies and
national banks, including a minimum stock ownership requirement.
The Board may consider recommendations from shareholders nominated in accordance
with the Corporation's Bylaws by submitting such nominations to the President of
the Corporation and the Bank, the Office of the Comptroller of the Currency and
the Federal Reserve. For additional information regarding the requirements for
shareholder nominations of director nominees, see the Corporation's By-laws,
copies of which are available upon request. The Corporation has not paid a third
party to assist in identifying, evaluating, or otherwise assisting in the
nomination process.
The Audit and Examining Committee reviews significant auditing and accounting
matters, the adequacy of the system of internal controls and examination reports
of the internal auditor, regulatory agencies and independent public accountants.
Messrs. Anderson, Giscombe, Williams and Whigham currently serve as members of
the Committee as well as Ms. Barbara Bell Coleman. Mr. Neil Williams serves as
Chairperson of the Committee. The Committee met four times during 2008. All
directors on the Audit and Examining Committee are considered independent under
Securities and Exchange Commission rules applicable to audit committees.
The Audit and Examining Committee operates pursuant to a charter, which gives
the Committee the authority and responsibility for the appointment, retention,
compensation and oversight of the Corporation's independent registered public
accounting firm, including pre-approval of all audit and non-audit services to
be performed by the Corporation's independent registered public accounting firm
(see "Proposal 2 - Appointment of Independent Registered Public Accounting Firm"
elsewhere in this Proxy). The Audit and Examining Committee acts as an
intermediary between the Corporation and the independent auditor and reviews the
reports of the independent auditor. A copy of the charter was attached as an
exhibit to the Corporation's Proxy Statement for the 2002 Annual Meeting and is
available to any stockholder upon request in accordance with the request
procedures set forth in the section titled "Stockholder Communications with
Directors" set forth elsewhere in this Proxy.
4
The Loan and Discount Committee reviews all loan policy changes and requests for
policy exceptions and loans approved by management. Messrs. Anderson, Giscombe,
Prezeau and Whigham and Ms. Coleman currently serve as members of the Committee.
Mr. Anderson serves as Chairperson of the Committee. The Committee met 12 times
during 2008.
The Investment Committee reviews overall interest rate risk management and all
investment policy changes, along with purchases and sales of investments.
Messrs. Anderson, Giscombe, Prezeau and Whigham currently serve as members of
the Committee. Mr. Prezeau serves as Chairperson of the Committee. The Committee
met four times during 2008.
The Personnel/Director and Management Review Committee deals in broad terms with
personnel matters and reviews director and executive officer compensation.
Messrs. Giscombe, Prezeau (the chairman and chief executive officer of the
Corporation), Whigham and Ms. Coleman currently serve as members of the
Committee. Ms. Coleman serves as Chairperson of the Committee. All of these
individuals deal daily with issues related to attracting, retaining, and
measuring employee performance. The Committee recommends to the Board of
Directors the annual salary levels and any bonuses to be paid to any Corporation
or Bank executive officers. The Committee also makes recommendations regarding
other compensation related matters. The Committee has not delegated this
authority. The Committee does not engage consultants. The Committee does not
have a charter although it will evaluate whether a charter will be useful in the
conduct of its duties in future deliberations. The executive officers do not
play a role in the compensation process, except for the chief executive officer,
Mr. Prezeau, who presents information regarding the other executive officers to
the Committee for their consideration. Mr. Prezeau is not present while the
Committee deliberates on his compensation package. The Committee met once during
2008. See the "Compensation Discussion and Analysis" section for more
information regarding the role of the Committee.
The Building and Grounds Committee considers branch expansion and matters
concerning Bank premises. Messrs. Giscombe, Prezeau and Whigham currently serve
as members of the Committee. Mr. Giscombe serves as Chairperson of the
Committee. The Committee did not meet during 2008.
The Marketing Committee oversees the Bank's marketing plan and strategies. Ms.
Coleman and Messrs. Anderson, Giscombe, Prezeau and Whigham currently serve as
members of the Committee. Ms. Coleman serves as Chairperson of the Committee.
The Committee held four meetings during 2008.
Code of Ethics and Conduct
The Corporation has adopted a Code of Ethics and Conduct which applies to all
the Corporation's officers and employees. Interested parties may obtain a copy
of such Code of Ethics and Conduct, without charge, by written request in the
same manner as provided in the section "Stockholder Communications with
Directors" set forth elsewhere in this Proxy.
DIRECTOR COMPENSATION
Each director of the Corporation receives an annual retainer of $4,000 and a
$600 fee for each board meeting attended except for the chairperson, who
receives $700, and the secretary, who receives $650. Committee chairpersons
receive $350 for each meeting attended other than the chairperson of the Loan
and Discount Committee who receives $400 per meeting. Other committee members
receive $300 for each meeting attended, except for Audit Committee members, who
receive $400 for each meeting attended. Directors are eligible to receive
bonuses based on the overall earnings performance of the Corporation for the
previous fiscal year as determined by the chief executive officer of the
Corporation.
Compensation Table
Annual compensation paid to directors in 2008 is presented in the table below
and includes the annual retainer and meeting and committee fees. In addition,
there is a Directors Retirement Plan.
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Change in Pension Value
Fees Earned and Non-Qualified
or Paid in Deferred Compensation All Other
Name Cash (1) Earnings (2) Compensation (3) Total
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Douglas Anderson** $21,550 $5,221 $2,500 $29,271
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Barbara Bell Coleman 17,750 4,418 2,500 24,668
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Eugene Giscombe* 20,600 2,587 2,500 25,687
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Louis E. Prezeau 18,000 4,089 2,500 24,589
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Lemar C. Whigham 16,750 8,680 2,500 31,930
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*Chairman
**Vice Chairman
(1) Includes committee meeting fees, attendance fees and annual retainer
fees.
5
(2) Represents the change in the net present value of pension and director
retirement plan benefits during 2007 taking into account the age of
each director, a present value factor, an interest discount factor and
time remaining until retirement.
(3) Represents bonuses paid for achieving overall 2007 earnings targets.
Director Retirement Plan
Effective January 1, 1997, the Corporation instituted a director retirement
plan. Under this plan, a director who attains the age of at least 65 and has
completed five years of service on the Board, shall receive a lump sum benefit
equal to 50% of the aggregate amount of the director's fees paid to such
director during the then last full fiscal year of the Corporation (the "normal
retirement benefit"). If the director ceases service on the Board prior to
attaining the age of 65 but after completing at least five years of service on
the Board, the director shall receive an annual benefit equal to the normal
retirement benefit payable over the same period of time multiplied by a fraction
the numerator of which is the director's years of service prior to termination
of employment and the denominator of which is the years of service the director
would have had the director remained employed until age 65.
Upon a change in control of the Corporation (which is defined in the director
retirement plan as the acquisition by a non-affiliate of the Corporation of 30%
or more of the Corporation's outstanding common stock which is followed by (a)
the termination of a director for any reason, or (b) the failure of such
director to be elected, for whatever reason, for an immediately succeeding term
upon the natural expiration of his/her term) followed by a termination of the
director's status as a member of the Board for any reason or a failure for
whatever reason for the director to be nominated and elected to an immediately
succeeding term, the director shall receive a benefit equal to the present value
(discounted at the rate of 4%) of a theoretical series of 120 monthly payments,
with each payment equal to 1/12 of the normal retirement benefit without regard
as to whether the director otherwise qualified for the normal retirement
benefit.
If a director dies while in active service on the Board, the designated
beneficiary of such director shall receive the greater of the normal retirement
benefit accrued by the Corporation for such director as of the date of such
director's death or the normal retirement benefit described above.
The Corporation may amend or terminate this plan at any time prior to
termination of service by the director, provided that all benefits accrued by
the Corporation as of the date of such termination or amendment shall be fully
vested; and, provided further, that the plan may not be amended or terminated
after a change in control (as defined) unless the director consents thereto.
STOCK OWNERSHIP OF MANAGEMENT
AND PRINCIPAL SHAREHOLDERS
The following table presents information about the beneficial ownership of the
Corporation's common stock at March 31, 2009 by each person who is known by the
Corporation to beneficially own more than five percent (5%) of the issued and
outstanding common stock, each director and each of the Corporation's executive
officers for whom individual information is required to be set forth in this
proxy statement under rules of the Securities and Exchange Commission, and by
directors and all executive officers as a group.
6
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COMMON STOCK
Number of
Shares
Beneficially Percent of
Name of Beneficial Owner Owned Class
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Douglas Anderson, Director 929 (1) *
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Barbara Bell Coleman, Director 1,177 *
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Eugene Giscombe, Director 10,580 (2) 8.06%
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Louis E. Prezeau, Director, President and CEO 23,218 (3) 17.68%
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Lemar C. Whigham, Director 9,624 (4) 7.33%
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H. O'Neil Williams, Director 210 *
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Raul Oseguera, Senior Vice President 750 *
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Stanley M. Weeks, Executive Vice President 408 *
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Edward R. Wright, Senior Vice President 5,000 3.81%
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Directors and named executive officers as a group (9 persons) 51,898 39.52%
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Carolyn M. Whigham, 5% stockholder 8,495 6.47%
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(1) Includes 664 shares held by his sons.
(2) Includes 780 shares held by his wife.
(3) Includes 2,375 shares held by his sons, 110 shares held by his daughter
and 1,402 shares held by his wife.
(4) Includes 1,064 shares held by his wife. * Less than 1%
THE EXECUTIVE OFFICERS
Listed below is certain information concerning the current executive officers of
the Corporation.
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In Office
Name Age Since Office and Business Experience
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Louis E. Prezeau 66 1989 President and Chief Executive Officer, City National Bancshares Corporation
and City National Bank of New Jersey
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Stanley Weeks 52 1994 Executive Vice President and Chief Credit Officer, City National Bank of
New Jersey; 1984-1994, Vice President, First Fidelity Bank, N.A.
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Edward R. Wright 63 1994 Senior Vice President and Chief Financial Officer, City National Bancshares
Corporation and City National Bank of New Jersey; 1978-1994, Executive Vice
President and Chief Financial Officer, Rock Financial Corporation
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Raul Oseguera 43 1990 Senior Vice President, City National Bank of New Jersey, Vice President,
City National Bank of New Jersey
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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
The Board of Directors, through its Personnel/Director and Management Review
Committee, is responsible for establishing and monitoring compensation levels.
The primary factors that affect compensation are the Corporation's operating
results, the individual's job performance and peer group compensation
comparisons. The key components of executive compensation are base salary and
annual bonuses, which are performance based, and retirement and welfare
benefits, which are non-performance based.
Salary
The primary factors that affect executive officers compensation are the
responsibilities of the position, the individual's job performance, the
operating results of the Corporation and peer group compensation comparisons.
Salary levels are reviewed annually and adjustments are made in the year
following the year being reviewed. The only employment contract is with the
President and CEO.
7
Cash Bonus
The performance bonus of the President and CEO is based on the ROE of the
Corporation, with no bonuses awarded if the ROE is less than 10%, although the
Board has the discretion to increase the calculated bonus amount based on other
factors, such as asset growth and the receipt of awards under various federal
programs available to qualified financial institutions, and has done so in each
of the past four years. Cash bonuses for other executive officers are based on
their job performances, the performance of their particular areas of
responsibility and the overall performance of the Corporation compared to
budgeted projections.
Non-performance Based Compensation Elements
Certain executive officers participate in a supplemental employee retirement
plan (the "Plan"). Executive officers are eligible to participate in the plan
after one year of service with the Corporation. Upon reaching "normal retirement
age" as defined, executives will receive a lump sum payment based on an annual
benefit equal to 40% of the annual base salary received by the executive during
the last complete fiscal year of his or her service as an employee (the "normal
retirement benefit") except in the case of Mr. Prezeau, who will receive 60%. If
the executive dies while in active service to the Corporation, the beneficiary
of the executive will receive an amount equal to the greater of that part of the
normal retirement benefit accrued by the Corporation for the executive as of the
date of the executive's death or the projected retirement benefit calculated
based on the executive's age and other assumptions regarding increases in base
salary. This death benefit is payable to the beneficiary in equal monthly
installments over 15 years.
If the executive's employment with the Corporation is terminated for any reason
(other than death) prior to the executive attaining the age of 65, the executive
shall receive the same benefit payable over the same period of time multiplied
by a fraction the numerator of which is the executive's years of service prior
to termination of employment and the denominator of which is the years of
service the executive would have had had the executive's employment terminated
when he was 65.
Upon a change in control of the Corporation (which is defined in the Plan as a
change in the ownership or effective control of the Corporation, as defined in
Internal Revenue Code Section 409A) followed at any time during the succeeding
12 months by a cessation in the executive's employment for reasons other than
death, disability or retirement, the executive shall receive a lump sum payment
equal to the present value of the stream of payments the executive would have
received had he qualified for the normal retirement benefit.
The following table provides information related to the Plan for the executive
officers as of the year ended December 31, 2008.
Pension Benefits Table
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Present Value of
Number of Years of Accumulated Benefits Payments During Last
Name Credited Service (Accrued 12-31-08) Fiscal Year
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Louis E. Prezeau 19 $1,377,261 $--
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Louis E. Prezeau(1) 19 $ 62,386 $--
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Stanley M. Weeks 14 $ 129,454 $--
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Edward R. Wright 14 $ 344,301 $--
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Raul Oseguera 18 $ 48,089 $--
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(1) This item relates to Mr. Prezeau's benefits under the Directors Retirement
Plan.
The following table sets forth the severance amounts and benefits that would be
paid to each of the executive officers if employment with the Bank had been
terminated on December 31, 2008. These payments are considered estimates as they
contain certain assumptions regarding discount rate, vesting, life expectancy
and salary.
8
Severance Benefits Table
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Dismissal Without Cause or
Resignation for Good
Retirement or Reason (Following a
Resignation Before Normal Dismissal Without Cause (No Change-in-Control)
Name Retirement Date Change-in-Control)
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Louis E. Prezeau $ 146,400(1) $ 268,000 $1,440,855
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Stanley M. Weeks $ -(2) $ - $ 432,137
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Edward R. Wright $ 42,738(1) $ - $ 505,917
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Raul Oseguera $ -(2) $ - $ 428,971
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(1) Represents annual payout over fifteen years.
(2) Not entitled to benefits because such benefits were not vested at December
31, 2008.
Other Benefits
Executive officers are eligible to participate (as are all officers and
employees who meet service requirements under the several plans) in other
components of the benefit package described below.
>> 401(k) plan
>> Medical and dental health insurance plans
>> Life insurance plans.
9
Summary Compensation Table
The following table summarizes compensation in 2008 for services to the
Corporation and the Bank paid to the Chief Executive Officer, Chief Financial
Officer and to the three other executive officers of the Corporation.
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Change in
Pension Value
and Non-
Qualified
Deferred
Name and Compensation All Other
Principal Position Salary Bonus Earnings (1) Compensation Total
- ----------------------------------------------------------------------------------------------------------
Louis E. Prezeau $268,000 $52,500 $122,577 $22,065 (2) $465,142
President and Chief Executive
Officer, City National Bancshares
Corporation and City National Bank of
New Jersey
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Stanley M. Weeks $155,000 $19,100 $21,652 $8,674 (3) $204,426
Executive Vice President and Chief
Credit Officer, City National Bank of
New Jersey
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Edward R. Wright $131,500 $15,630 $56,912 $9,464 (4) $213,506
Senior Vice President and Chief
Financial Officer, City National
Bancshares Corporation and City
National Bank of New Jersey
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Veronica T. Gilbert $121,500 $12,430 $13,444 $7,321 (5) $154,695
Senior Vice President, City National
Bank of New Jersey
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Raul Oseguera $111,500 $17,230 $20,828 $6,875 (6) $156,433
Senior Vice President, City National
of Bank New Jersey
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Note: Ms. Gilbert resigned her position effective March 6, 2009. Her duties and
responsibilities have been assumed by the remaining executive officers.
(1) Represents the change in the net present value of benefits during 2008
taking into consideration each executive's age, an interest rate discount
factor and their remaining time until retirement.
(2) Includes payments made under the Corporation's profit sharing plan of
$7,777, insurance premiums paid on a life insurance policy on the life of
Mr. Prezeau of $3,200, and $11,088 representing Mr. Prezeau's personal use
of a Bank-leased automobile, respectively.
(3) Includes payments made under the Corporation's profit sharing plan of
$3,874 and automobile allowance payments of $4,800.
(4) Includes payments made under the Corporation's profit sharing plan of
$3,464 and automobile allowance payments of $6,000.
(5) Includes payments made under the Corporation's profit sharing plan of
$2,521 and automobile allowance payments of $4,800.
(6) Includes payments made under the Corporation's profit sharing plan of
$3,875 and automobile allowance payments of $3,000.
Prezeau Employment Agreement
Effective as of May 2006, the Bank and the Corporation renewed an employment
agreement (the "Agreement") with Mr. Prezeau to serve as the President and Chief
Executive Officer of both entities. The Agreement is for a term of three years.
Under the Agreement, Mr. Prezeau is to receive an annual salary of $268,000,
which may be increased from time to time at the discretion of the Board.
Additionally, Mr. Prezeau is to receive an annual performance bonus at least
equal to:
>> 10% of the amount of earnings, as defined, of the Corporation for
each year that exceed 10% but are less than 15% of the amount of the
Corporation's common stockholders' equity, plus;
>> 20% of the amount of earnings, as defined, of the Corporation for
such year that exceeds 15% of the amount of the Corporation's common
stockholders' equity.
The performance bonus shall be paid in cash or common stock of the Corporation,
at the election of Mr. Prezeau.
Upon the completion of his annual performance review, Mr. Prezeau may be granted
shares of the Corporation's common stock or option to purchase such stock at a
price to be determined at the time the stock or option is granted. The agreement
10
further specifies that in the event Mr. Prezeau is terminated without cause
("cause" is defined as breach of fiduciary duty involving personal honesty,
commission of a felony or misdemeanor involving dishonesty of moral turpitude,
commission of embezzlement or fraud against the Corporation or its affiliates,
in each case which is material in amount or in an injury to the Corporation or
its reputation, continuous or habitual alcohol or drug abuse, habitual unexcused
absence or continuous gross negligence or willful disregard for his duties
required under the Agreement), Mr. Prezeau shall receive in one lump sum in
addition to all other amounts accrued and payable under this Agreement, an
amount equal to two times his then applicable base salary plus an amount equal
to his most recently earned performance bonus. If such a termination without
cause were to have occurred at December 31, 2008, he would have been entitled to
a lump sum payment of $616,000.
If the Corporation and the Bank do not offer to renew the Agreement upon its
termination under terms satisfactory to Mr. Prezeau, then Mr. Prezeau shall
receive a lump sum amount equal to two times his then applicable base salary
plus an amount equal to his most recently earned performance bonus. If the
contract had not been renewed under terms satisfactory to Mr. Prezeau at
December 31, 2008, he would have been entitled to a lump sum payment of
$616,000.
If Mr. Prezeau terminates his employment due to a "change in control" (which is
defined as a change of control that requires approval under the Change in Bank
Control Act, 12 U.S.C. Section 1817(j), and which is not approved by the Board
of Directors prior to such change in control) of the Corporation, then Mr.
Prezeau shall receive a lump sum amount equal to two times his then applicable
base salary plus an amount equal to his most recently earned performance bonus.
Had a change of control occurred at December 31, 2008, and Mr. Prezeau's
agreement terminated, he would have been entitled to a lump sum payment of
$616,000.
Upon termination of the employment agreement in circumstances other than the
foregoing, Mr. Prezeau is entitled to receive accrued and unpaid salary, bonuses
and other vested compensation and benefits thereunder as of such termination
date.
Mr. Prezeau is also entitled to fringe, medical, health and life insurance
benefits, including life insurance for an amount of up to three times his base
salary then in effect and the use of an automobile. Upon termination of such
agreement, subject to certain exceptions, Mr. Prezeau is entitled to continue
life and health coverage for a period of two (2) years.
REPORT OF THE AUDIT COMMITTEE
In connection with the December 31, 2008 financial statements, the Audit
Committee: (1) reviewed and discussed the audited financial statements with
management; (2) discussed with the independent public accountants the matters
required by Statement on Auditing Standards No. 61, Communications with Audit
Committees, as amended, by the Auditing Standards Board of the American
Institute of Certified Public Accountants; and (3) received and discussed with
the independent auditors the matters required by Independence Standards Board
Statement No. 1, Independence Discussions with Audit Committee, as amended, by
the Independence Standards Board.
Based upon these reviews and discussions, the Audit Committee recommended to the
Board of Directors that the audited financial statements be included in the
Annual Report on Form 10-K filed with the Securities Exchange Committee.
Eugene Giscombe
Lemar Whigham
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
All members of the Personnel/Director and Management Review Committee (see
section titled "Meetings of the Board of Directors and Committees" elsewhere in
this Proxy), or their affiliates, engaged in loan transactions with the Bank
during 2008. All such loans were made in the ordinary course of business on
substantially the same terms including interest rates and collateral, as those
prevailing at the time for comparable loans with others and did not involve more
than the normal risk of collectibility or present other unfavorable features.
REPORT OF THE PERSONNEL/DIRECTOR AND MANAGEMENT REVIEW COMMITTEE
We have reviewed and discussed the Compensation Discussion and Analysis with
management and, based upon that discussion, we recommend that the section be
included in the Corporation's proxy materials.
Eugene Giscombe
Lemar Whigham
11
Barbara Bell Coleman
Louis E. Prezeau
TRANSACTIONS WITH MANAGEMENT
The Bank has made loans to its directors and executive officers and their
associates, and assuming continued compliance with generally applicable credit
standards, it expects to continue to make such loans. These loans were made in
the ordinary course of business on substantially the same terms including
interest rates and collateral, as those prevailing at the time for comparable
loans with others and did not involve more than the normal risk of
collectibility or present other unfavorable features.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Corporation's executive officers and directors, and any persons owning ten
percent or more of the Corporation's common stock, to file in their personal
capacities initial statements of beneficial ownership, statements of changes in
beneficial ownership and annual statements of beneficial ownership with the SEC.
The rules of the SEC regarding the filing of such statements require that late
filings of such statements be disclosed in the proxy statement. As there were no
copies of Forms 3, 4 and 5, and amendments thereto furnished to or prepared by
the Corporation during the year ended December 31, 2007, the Corporation
believes that no director, executive officer or greater than ten percent
shareholder failed to file on a timely basis the reports required by Section
16(a) of the Securities Exchange Act of 1934, as amended, during, or with
respect to the year ended December 31, 2008.
STOCKHOLDER PROPOSALS
Stockholders who intend to present proposals at the 2010 Annual Meeting of
Stockholders must present a written proposal to the Corporation by December 21,
2009 (in accordance with the section titled "Stockholder Communications with
Directors" contained elsewhere in this Proxy), for inclusion in the
Corporation's proxy statement.
OTHER MATTERS
Management knows of no other business scheduled for consideration at the
meeting. Should any matter properly come before the meeting or any adjournment
thereof, it is intended that proxies will vote in accordance with their best
judgment.
By order of the Board of Directors
/s/ Lemar C. Whigham
Lemar C. Whigham
Secretary
April 15, 2009
12
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
REVOCABLE PROXY
CITY NATIONAL BANCSHARES CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS ON MAY 21, 2009
The undersigned hereby appoints Edward R. Wright and Stanley Weeks, and
each of them, as the undersigned's true and lawful agents and proxies with full
power of substitution in each, to represent the undersigned at the Annual
Meeting of Stockholders of CITY NATIONAL BANCSHARES CORPORATION to be held at
the Corporation's headquarters located at 900 Broad Street, Newark, New Jersey
on Thursday, May 21, 2009 at 6:00 p.m., and at any adjournments thereof, on all
matters coming before such meeting.
With- For All
For hold Except
1. The election of one director listed (except [_] [_] [_]
marked to the contrary below):
M. O'Neil Williams
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except"and write that nominee's name in the space provided below.
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For Against Abstain
2. The ratification of the appointment of KPMG LLP as [_] [_] [_]
the Corporation's indepenent registered auditors
for the fiscal year ending December 31, 2009.
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any postponement or
adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE
VOTED IN ACCORDANCE WITH THE SPECIFICATIONS APPEARING ON THIS CARD. IF A CHOICE
IS NOT INDICATED WITH RESPECT TO ITEMS 1 OR 2. THIS PROXY WILL BE VOTED "FOR"
SUCH ITEM. THE PROXIES WILL USE THEIR DISCRETION WITH RESPECT TO ANY OTHER
MATTER PROPERLY BROUGHT BEFORE THE MEETING OR ANY POSTPONEMENT OR ADJOURNMENT
THEREOF. THIS PROXY IS REVOCABLE AT ANY TIME BEFORE IT IS EXERCISED.
Receipt herewith of the Company's Annual Report and notice of meeting and
proxy statement dated ________________ is hereby acknowledged.
Joint owners must EACH sign. Please sign EXACTLY as your name(s) appear(s)
on this card. When signing as attorney, executor, administrator, trustee,
guardian, partner, or corporate officer please give FULL title.
------------------------
Please be sure to date and sign | Date |
this proxy card in the box below. | |
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| |
| |
- -------Sign above---------------------------------------------------------------
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Detach above card, sign, date and mail in postage paid envelope provided.
CITY NATIONAL BANCSHARES CORPORATION
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PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
- --------------------------------------------------------------------------------
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
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- ---------------------------------- PROXY MATERIALS ARE
AVAILABLE ON-LINE AT:
- ---------------------------------- ------------------------------------
- ---------------------------------- http://www.cfpproxy.com/5364
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