[GRAPHIC OMITTED]
April 27, 2000
Dear Shareholders:
The 2000 Annual Meeting of Shareholders Federal Trust Corporation is
being held on Friday, May 26, 2000 at 10:00 a.m. at The Farmers' Market, 200
West New England Street, Winter Park, Florida. As stated in the enclosed Notice
of Annual Meeting of Shareholders and Proxy Statement dated April 21, 2000,
there are three items which you are being asked to consider and vote on:
* The election of one Class I Director, for a three-year term;
* The ratification of the appointment of the independent auditors for
Federal Trust Corporation for the year ending December 31, 2000;
* A proposal that would allow us to adjourn the Annual
Meeting to continue to solicit proxies to obtain the
necessary votes if we have not received sufficient
proxies to approve one or more of the above
proposals.
At the Annual Meeting we will also go over some of management's
thoughts for this year. Members of the Board of Directors will be present to
greet you, along with our executive officers and employees. We hope you are able
to make plans to attend the Annual Meeting.
YOUR VOTE IS IMPORTANT. In order to assist us with the tabulation of
the proxies, we would ask that you mark your vote for each of the proposals and
return the enclosed Proxy Card in the envelope provided, as soon as possible.
On behalf of the Board of Directors and all the employees of Federal
Trust Corporation, we look forward to seeing you at the Annual Meeting.
Sincerely,
/s/ James V. Suskiewich
James V. Suskiewich
Chairman of the Board
FEDERAL TRUST CORPORATION
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 26, 2000
-------------------------
OUR SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Shareholders
("Annual Meeting") of Federal Trust Corporation will be held at The Farmers'
Market, 200 West New England Street, Winter Park, Florida on Friday, May 26,
2000 at 10:00 a.m. Eastern Time to consider and vote upon the following matters:
Proposal I. Election of one Class I Director, Kenneth W.
Hill, for a three-year term;
Proposal II. Ratification of the selection of KPMG Peat
Marwick LLP as the independent auditors for
the fiscal year ending December 31, 2000;
and
Proposal III. A proposal that would allow the
adjournment of the Annual Meeting to solicit
additional proxies in the event that there
are not sufficient votes to approve any one
or more of the Proposals.
Information relating to the above matters is set forth in the attached
Proxy Statement. Only those shareholders who were shareholders of record at the
close of business on March 31, 2000, are entitled to receive notice of and to
vote at the Annual Meeting, or at any adjournments thereof.
Shareholders are cordially invited to attend the Annual Meeting in
person, but we urge you to complete, sign, and date the enclosed proxy and
return it in the envelope provided as promptly as possible.
By Order of the Board of Directors
/s/ James V. Suskiewich
JAMES V. SUSKIEWICH
Chairman of the Board
Winter Park, Florida
April 21, 2000
[GRAPHIC OMITTED]
PROXY STATEMENT
2000 ANNUAL MEETING OF SHAREHOLDERS
General Information
DATE: Friday, May 26, 2000
TIME: 10:00 a.m. (Eastern Time)
LOCATION: The Farmers Market
200 West New England Street
Winter Park, Florida
This Proxy Statement and accompanying Proxy Card are being furnished to
shareholders of Federal Trust Corporation ("Federal Trust"), the parent company
of Federal Trust Bank (the "Bank"), in connection with the solicitation by the
Board of Directors of proxies to be used at the 2000 Annual Meeting of
Shareholders, or at any adjournments thereof (the "Annual Meeting"). Please note
that Federal Trust and the Bank are collectively referred to as the "Company" in
this Proxy Statement.
Solicitation and Voting of Proxies
Regardless of the number of shares of common stock that you may own, it
is important that as a shareholder, you be represented at the Annual Meeting. We
would ask that you complete the enclosed Proxy Card and return it signed and
dated in the enclosed prepaid envelope. Please remember to indicate the way you
wish to vote in the box or space provided on the Proxy Card. Proxies solicited
by the Board of Directors will be voted in accordance with the directions given.
Where no instructions are indicated, proxies will be voted:
"FOR" the Class I Director nominee;
"FOR" the ratification of KPMG Peat Marwick LLP as our auditors for the
fiscal year ending December 31, 2000; and
"FOR" the adjournment of the Annual Meeting to solicit additional
proxies in the event that there are not sufficient votes to approve any
one or more of the foregoing Proposals.
Securities Entitled to Vote
The securities that can be voted at the 2000 Annual Meeting are
4,947,911 shares of common stock. Only shareholders of record as of the close of
business on March 31, 2000 (the "Record Date") are entitled to receive notice
of, and to vote at, the Annual Meeting. The holders of the common stock are
entitled to one vote for each share owned on each matter submitted to the
shareholders. On the Record Date, there were no other classes of capital stock
outstanding.
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Voting Procedures
According to our Bylaws, a majority of shares entitled to vote and be
represented in person or by proxy at a meeting of the shareholders constitutes a
quorum. Under the Florida Business Corporation Act ("Act"), directors are
elected by a plurality of the votes cast by the shares entitled to vote in the
election at a meeting at which a quorum is present. Other matters are approved
if affirmative votes cast by the holders of the shares represented at a meeting
at which a quorum is present and entitled to vote on the subject matter exceed
votes opposing the action unless a greater number of affirmative votes or voting
by classes is required by the Act or Federal Trust's Amended and Restated
Articles of Incorporation.
If your shares are held in street name, your brokerage firm may, under
certain circumstances, vote your shares. Brokerage firms have authority under
New York Stock Exchange rules to vote customers' unvoted shares on certain
"routine" matters, including election of directors. There are no non-routine
matters being considered at this Annual Meeting. If you do not execute your
proxy, your brokerage firm may either vote your shares or leave your shares
unvoted.
We encourage you to provide instructions to your brokerage firm for
voting your proxy. This ensures your shares will be voted at the Annual Meeting.
When a brokerage firm votes its customer's unvoted shares on routine matters,
these shares are counted for purposes of establishing a quorum to conduct
business at the meeting.
Revocation of Proxy
Your presence at this Annual Meeting will not automatically revoke your
Proxy. You may revoke a Proxy at any time prior to the polls closing at the
Annual Meeting by:
* filing a written notice of revocation with our Corporate
Secretary; * delivering to us a duly executed Proxy Card
bearing a later date; or * attending the Annual Meeting and
voting in person.
Costs of Solicitation
Federal Trust will bear the entire cost of preparing, assembling,
printing and mailing this Proxy Statement, the accompanying Proxy Card, the 1999
Annual Report, and any additional material that may be furnished to
shareholders. In addition to the use of the mails, proxies may be solicited by
direct communication with certain shareholders or their representatives,
including without limitation, telephone, telegraph or personal contact by our
officers and employees who will not be specifically compensated for their
services in this regard. We have retained Regan & Associates, Inc., New York,
New York, to aid in the solicitation of shareholders, brokers, banks and others
institutional investors for an estimated fee of $4,500. Arrangements have been
made with brokerage houses, nominees and other custodians and fiduciaries to
send proxy materials to their principals and their reasonable expenses will be
reimbursed on request.
-2-
Security Ownership of Certain Beneficial Owners
As of the Record Date, except for the following, we know of no person
that beneficially owns more than 5% of the outstanding shares of Federal Trust's
common stock as of the Record Date.
Name and Address
of Beneficial Owner Number of Shares Percent of Class
William R. Hough & Co. 495,241* 9.96%
100 Second Avenue South, Suite 800
St. Petersburg, Florida 33701
* Includes 247,641 shares owned by WRH Mortgage, Inc. and 244,600 shares
owned by William R. Hough & Co. as disclosed in the Form 4 filed with the
Securities and Exchange Commission ("SEC") on July 1, 1998.
Section 16(a) of the Securities Act of 1934 requires our directors,
certain officers and 10% stockholders, if any, to file reports of ownership and
changes in ownership with the SEC. Such officers, directors and 10%
stockholders, if any, are required by SEC regulations to furnish Federal Trust
with copies of all Section 16(a) reports they file, including reports on Form 5
which are filed with the SEC annually.
Based solely on our review of the copies of the forms we have received,
or written representations from certain reporting persons that no reports on
Form 5 were required for those persons, it is our belief that during 1999 all
filings applicable to our officers, directors and 10% stockholders were made
timely.
PROPOSAL I
ELECTION OF ONE CLASS I DIRECTOR
Our Board of Directors is currently composed of five members, who are
divided into three classes. Every year, members of one class of directors are
elected for three-year terms. This year, one Class I director is to be elected.
The nominee for this year's Annual Meeting is Kenneth W. Hill. Should Mr. Hill,
for any reason, be unable to serve, the shares represented by all valid proxies
will be voted for such other person as may be recommended by the Board of
Directors.
Information Concerning Directors
The following table sets forth the names and ages of all of our
directors, including the sole nominee, a description of their positions and
offices with Federal Trust, a brief description of their principal occupation
and business experience during the last five years, and certain other
information including the number of shares of common stock they beneficially
owned as of the Record Date. Except as otherwise indicated below, this table
includes all shares of common stock for which the director has sole voting and
investment power, has shared voting and investment power with a spouse, or holds
in an IRA or other retirement program.
-3-
NOMINEE - CLASS I DIRECTOR
Photo Kenneth W. Hill, age 66, has 25,000 shares of common stock
been a director of Federal Trust Less than 1% of the outstanding
since 1997 and director of the common stock
Bank since 1995. Mr. Hill, from
1983 through 1995, was the Vice
President and Trust Officer of
SunBank, N.A. Orlando, Florida.
Mr. Hill resides in Orlando,
Florida.
CONTINUING CLASS II DIRECTORS
Photo George W. Foster, age 70, is a 11,343 shares of common stock
retired banker and has been a Less than 1% of outstanding
director of Federal Trust since common stock
1997. From 1990 through 1993,
he served as President and CEO of
the Bank, and as a director of the
Bank since 1990. Mr. Foster
resides in Longwood, Florida.
Photo Aubrey H. Wright, Jr., age 53, 100,100(1) shares of common stock
has been a director of Federal 1.99% of outstanding common stock
Trust since 1995. He has been the
Chief Financial Officer of Federal
Trust since April 1994, and Senior
Vice President, CFO and a director
of the Bank since June 1993. Mr.
Wright resides in Winter Park,
Florida.
CONTINUING CLASS III DIRECTORS
Photo Dr. Samuel C. Certo, age 52, has 52,000(2) shares of common stock
been a director of Federal Trust 1.04% of the outstanding common
since 1997 and a director of the stock
Bank since 1996. He is the former
Dean and a Professor of Manage-
ment in the Crummer Graduate
School of Business at Rollins
College in Winter Park. Since
1986, Dr. Certo serves as a
business consultant and has
published textbooks in the areas of
management and strategic
management and has been
involved in executive education
for the past 20 years. Dr. Certo
resides in Longwood, Florida.
-4-
Photo James V. Suskiewich, age 52, has 225,351(3) shares of common stock
been a director of Federal Trust 4.45% of common stock outstanding
since 1994 and is currently
Chairman of the Board. He has
served as President and Chief
Executive Officer ("CEO") of the
Company since July 1996. Since
January 1993, he has been
President, CEO and a director of
the Bank. Mr. Suskiewich resides
in Apopka, Florida.
Directors, executive officers and 551,781
(4)(5) shares of common stock affiliates
as a group (10 persons) 11.15%(5) of the
outstanding common stock(2)
(1) Includes 70,000 shares covered under stock options.
(2) Includes 25,000 shares covered under stock options.
(3) Includes 46,409 shares held as trustee under Federal Trust's ESOP with
respect to which Mr. Suskiewich exercises sole voting and investment power,
and 120,000 shares covered under stock options.
(4) Includes 10,000 shares owned by Dennis J. Harward (a director of the Bank),
48,065 shares owned by Louis E. Laubscher, Vice President and Chief Loan
Officer for the Bank (and 30,000 shares covered under stock options); 9,442
shares owned by Jennifer B. Brodnax, Vice President/Operations for the Bank
(and 15,000 shares covered under stock options); 10,351 shares owned by
Kevin L. Kranz, Vice President/Loan Servicing for the Bank (and 15,000
shares covered under stock options); and 10,127 shares owned by Thomas J.
Punzak, Vice President/Accounting for the Bank (and 15,000 shares covered
under stock options).
(5) Includes 265,000 shares covered under stock options. Percentage based on
5,237,911 shares, of which 4,947,911 shares were outstanding as of the
Record Date and 265,000 shares covered under stock options.
The Board of Directors recommends that you vote "FOR"
the Directors' Slate.
- --------------------------------------------------------------------------------
Meetings, Committees and Compensation of Directors
The Board of Directors of Federal Trust conducts its business through
meetings of the full Board. There are no individual committees. During the
fiscal year ended December 31, 1999, the Board of Directors met nine times. Each
director attended 100% of the meetings of the Board of Directors.
EXECUTIVE COMPENSATION
Summary Compensation Table
Compensation. The following table sets forth, for the fiscal years
ended December 31, 1999, 1998, and 1997, the total compensation paid to or
accrued by the Chief Executive Officer ("CEO") and the other two executive
officers of the Company, whose aggregate salaries and bonuses exceeded $100,000
per year.
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Annual Compensation (1)
- -----------------------------------------------------------------------------------------------------
Name and Other Annual Restricted Stock
Principal Position(1) Year Salary Bonus (2) Directors' Fees Compensation(3) Awards(4) Options(5)
- ------------------------ ---- ------ --------- --------------- --------------- ------------------ ----------
James V. Suskiewich, 1999 $149,615 $34,000 $17,500 $47,818 $ 3,024 $ -
President/CEO of the Company 1998 145,807 31,000 13,750 39,080 22,562 120,000
President/CEO of 1997 134,441 41,000 17,000 21,446 - -
the Bank
Aubrey H. Wright, Jr. 1999 94,000 12,000 12,500 26,206 2,011 -
CFO of the Company 1998 93,254 12,000 11,000 20,488 14,321 70,000
Senior Vice President/ 1997 84,808 18,500 9,500 8,291 - -
CFO of the Bank
Louis E. Laubscher 1999 80,000 23,500 - 4,161 11,390 -
Vice President/Chief Lending 1998 77,053 46,505 - 4,049 - 30,000
Officer of the Bank 1997 74,038 29,966 - 3,908 - -
<FN>
(1) Includes all compensation in the year earned whether received or
deferred at the election of the executive.
(2) Includes $23,500, $45,505 and $28,966 in incentive bonuses for
Mr. Laubscher based on resolutions of non-performing loans
and REOs in 1999, 1998 and 1997, respectively.
(3) Includes the estimated value of:
James V. Suskiewich 1999 1998 1997
------------------- -------- ------- ----
Health & Life insurance premiums $ 4,244 $ 4,244 $ 4,126
Use of Company automobile 5,337 5,829 5,924
Social/Country Club Dues 5,117 4,531 5,600
Supplemental Retirement Plan 33,120 24,476 5,796
------- ------ ------
Total: $47,818 $ 39,080 $21,446
====== ====== ======
Aubrey H. Wright, Jr. 1999 1998 1997
--------------------- -------- ------- -----
Health & Life insurance premiums $ 4,222 $ 4,974 $ 5,477
Supplemental Retirement Plan 21,984 15,514 2,814
------ ------ ------
Total: $26,206 $ 20,488 $ 8,291
====== ====== ======
Louis E. Laubscher 1999 1998 1997
------------------- -------- ------- -----
Health & Life insurance premiums $ 4,161 $ 4,049 $ 3,908
======= ====== ======
(4) Includes value of fully vested participation in Federal Trust's
Employee Stock Ownership Plan ("ESOP"). In 1990, Federal Trust
adopted an ESOP which provides that the Company can make a
contribution to a trust fund for the purpose of purchasing shares
of Federal Trust's common stock on behalf of the participants. The
Company pays the entire cost of the ESOP and all salaried
employees of the Company who have completed six months of service
are eligible to participate. The ESOP is qualified under Section
497(e)(7) of the Internal Revenue Code of 1986, as amended
("Internal Revenue Code") under which subsidiaries may act as
participating employees. In addition, the ESOP meets all
applicable requirements of the Tax Replacement Act of 1986 and is
qualified under Section 401(c) of the Internal Revenue Code.
(5) On January 30, 1998, the Board of Directors adopted the 1998 Key
Employee Stock Compensation Program ("Program") for the benefit of
officers and other key employees of the Company. The Program is
comprised of four parts: an Incentive Stock Option Plan, a
Compensatory Stock Option Plan, a Stock Appreciation Rights Plan
and a Performance Plan. The Program provides for a maximum of
325,000 shares of authorized common stock to be reserved for
future issuance pursuant to stock options granted under one of the
four enumerated parts of the Program. The Program was subject to
approval by the shareholders, which was obtained at the 1998
Annual Meeting of Shareholders. The exercise price of each option
is $4.00 per share, the fair market value of the common stock on
January 30, 1998. The closing price for the common stock on March
27, 2000, was $2.63 per share. The stock options vest at the rate
of 20% per year and a stock option may be exercised at any time on
or after six months after the date of grant until ten years after
the date of grant. Unless terminated, this Program shall remain in
effect for a period of ten years ending on the tenth anniversary
of the effective date of the Program.
</FN>
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Employee Stock Ownership Plan ("ESOP"). All full-time salaried
employees of the Company are participants in the ESOP. Executive officers are
eligible to participate in the ESOP, but directors are not eligible unless they
are also full-time salaried employees. A participant's interest in the ESOP is
vested after five years of service and there is no vesting prior to that period
of time. As of December 31, 1999, ten employees had vested interests in the
ESOP. Mr. Suskiewich, Mr. Wright and Mr. Laubscher are now fully vested in the
ESOP.
ESOP contributions are determined annually by the respective Boards of
Directors, taking into consideration prevailing financial conditions, the
Company's fiscal requirements and other factors deemed relevant by the Board. In
general, contributions of up to 15% of total compensation paid to employees
during the year can be made to the ESOP. The contribution made on behalf of each
participant equals the proportion that each such participant's compensation for
the year bears to the total compensation of all participants for such year. In
1999 and 1998, cash contributions of $7,300 and $50,782, respectively, were made
to the ESOP. At December 31, 1999, the Bank had accrued $100,000 for its 1999
ESOP contribution, which was funded in February 2000.
Options and Long-term Compensation
1993 Stock Option Plan for Directors. On May 5, 1993, the Board of
Directors of Federal Trust approved a Stock Option Plan for Directors (the "1993
Plan"). The 1993 Plan provided that a maximum of 176,968 shares of common stock
(the "Option Shares") were to be made available to directors and former
directors of the Company. Options for all the Option Shares were issued on May
6, 1993. The options were for a term of ten years from the date of grant. The
options were issued at an exercise price of $6.40 per share, determined at the
time of issuance to be the fair market value of the underlying common stock
subject to the option on the date the option was granted. Options held by an
active director were canceled immediately if such director was removed for
"cause" as defined in the 1993 Plan.
On March 7, 1997, the Board of Directors rescinded the 1993 Plan. No
stock options or stock appreciation rights were granted after January 1, 1997.
1998 Directors' Stock Option Plan. The 1998 Directors' Stock Option
Plan (the "1998 Plan") was approved by the shareholders of Federal Trust at the
1998 Annual Meeting of Shareholders. The 1998 Plan authorizes the granting of
non-statutory stock options (options which do not qualify as incentive stock
options).
Each non-employee director was granted an option to purchase 25,000
shares of common stock on the Effective Date (as defined in the 1998 Plan). New
directors elected or appointed to either of the Company's Boards of Directors
may be granted options to purchase shares of common stock, as determined by the
respective Boards of Directors in their sole discretion.
The per share exercise price at which the shares of common stock may be
purchased upon exercise of a granted option will be equal to the fair market
value of a share of common stock as of the date of grant. The exercise price for
the options that have been granted to date is $4.00 per share, the fair market
price of the common stock on January 30, 1998. The closing price for the common
stock on March 27, 2000, was $2.63 per share. For the purposes of the 1998 Plan,
the fair market value of a share of common stock is the closing sale price of a
share of common stock on the date the option granted (or, if such day is not a
trading day on the U.S. markets, on the nearest preceding trading day), as
-7-
reported with respect to the principal market (or the composite of the markets,
if more than one), or national quotation system in which such shares are then
traded. If no such closing prices are reported, the fair market value will be
the mean between the closing high bid and low asked prices of a share of common
stock on the principal market or national quotation system then in use, or if no
such quotations are available, the price furnished by a professional securities
dealer making a market in such shares selected by the Board.
An option may be exercised at any time on or after six months after the
date of grant up until ten years after the date of grant. Unless terminated, the
1998 Plan shall remain in effect for a period of ten years, ending on the tenth
anniversary of the Effective Date.
Director Compensation
Beginning on July 1, 1998, each director of the Company receives a
director's fee of $750 for each quarter of service. Directors receive no
per-meeting fees.
Report of Board of Directors
Compensation for our executive officers is determined by the respective
Boards of Directors, excluding any director who is also an executive officer.
Current directors who are not executive officers of the Company are George W.
Foster, Dr. Samuel C. Certo and Kenneth W. Hill. Initially, the Bank's
CEO/President determines the salary range recommendations for all employees,
including executives other than himself. The CEO/President then presents his
recommendations to the respective Boards, which review and analyze information
that has been submitted. Thereafter, the Boards determine the compensation of
their respective executive officers, including the compensation of the
CEO/President.
Executive Compensation Policies and Program. Our executive compensation
program is designed to:
* Attract and retain qualified management; * Enhance short-term
financial goals; and * Enhance long-term shareholder value.
We strive to pay each executive officer the base salary that would be
paid on the open market for a fully qualified officer of that position. The
respective Boards of Directors determine the level of base salary and any
incentive bonus plan for the CEO/President of Federal Trust and the Bank and
certain senior executive officers, based upon competitive norms, derived from
annual surveys published by the Florida Bankers' Association and private
companies specializing in executive compensation analysis for financial
institutions. Such surveys provide information regarding compensation of
financial institution officers and employees based on size and geographic
location of the financial institution and serve as a benchmark for determining
executive salaries. Our executive salaries and bonus ranges are set at or near
the median for executives at similar financial institutions. Changes to base
salaries and discretionary bonus awards are based upon an evaluation of the
officer's responsibilities and individual performance standards, along with the
Company's overall performance for the year end. Each officer is given the
opportunity to earn an annual performance bonus, generally in the range of
approximately 10-40% of his or her base salary. In fiscal year 1999, bonuses
were paid to executive officers for: (i) the Company's overall performance
(based on the discretionary evaluation); (ii) the Company achieving its eighth,
ninth, tenth and eleventh consecutive profitable quarters; (iii) the timely
relocation of the administrative offices to Sanford; and (iv) the negotiation of
a new corporate and branch office in Winter Park, Florida.
-8-
Compensation of the Chief Executive Officer. Federal Trust's President
and CEO does not receive compensation, but is compensated in his position as
President and CEO of the Bank. Federal Trust reimburses the Bank for the time
that the President and CEO spends on holding company matters.
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
James V. Suskiewich, Federal Trust's President and CEO, who also is the
President and CEO of the Bank, along with Aubrey H. Wright, Jr. Chief Financial
Officer, who is also the Senior Vice President and Chief Financial Officer of
the Bank, are both members of the Boards of Directors for Federal Trust and the
Bank. Mr. Suskiewich and Mr. Wright participated in deliberations of the
respective Boards regarding executive compensation, but did not participate in
any deliberations regarding their individual compensation.
Employment Contracts
Federal Trust and the Bank have jointly entered into employment
agreements with two of their executive officers, James V. Suskiewich, President
and CEO and Aubrey H. Wright, Jr., Senior Vice President and CFO. The Bank has
also entered into an employment agreement with Louis E. Laubscher, its Vice
President and Chief Loan Officer. The following is a summary of the three
employment agreements.
James V. Suskiewich. Mr. Suskiewich's employment agreement was
significantly amended and re- executed on December 18, 1998. Pursuant to its
terms, Mr. Suskiewich is to receive a base salary, plus reimbursement of
reasonable business expenses. In addition, for any quarter in which the Bank's
after-tax earnings are at least 0.50% of its average quarterly assets on an
annualized basis, Mr. Suskiewich is to receive a bonus equal to 3% of the Bank's
quarterly net, pre-tax income. Mr. Suskiewich is also entitled to discretionary
performance bonuses to be paid annually for the duration of the agreement. For
the year ended December 31, 1999, Mr. Suskiewich received a bonus of $34,000.
The original term of Mr. Suskiewich's employment agreement was three
years. Each day during the term of the agreement, the agreement automatically
renews for one additional day. Therefore, at all times, Mr. Suskiewich's
agreement has a three-year term. The respective Boards of Directors review the
agreement annually to determine whether the agreement should continue to be
extended. Any party to the agreement may cease the automatic renewals by
notifying the other parties of their intent to not renew. In addition, any party
may terminate the agreement by delivering to the other parties a notice of
termination. The date of termination is either 60 or 90 days (depending on the
reason for termination) after delivery of the notice.
Mr. Suskiewich's employment agreement provides for termination by the
Company for reasons other than for "cause" and by Mr. Suskiewich for "good
reason," as those terms are defined in the agreement. In the event the
employment agreement is terminated by the Company for reasons other than for
"cause" or by Mr. Suskiewich for "good reason," he shall be entitled to
severance payments. The severance payment would be in a lump sum equal to the
total annual compensation for the remainder of the term of the employment
agreement, the performance bonus due for the quarter of termination, an
annualized portion of any long term incentives to later come due, and the amount
of annual club dues for the year of termination multiplied by the amount of time
remaining on the term of his employment agreement.
-9-
In the event of a change in control of Federal Trust or the Bank, Mr.
Suskiewich will be entitled to a special incentive bonus equal to three times
his annual salary multiplied by the price/book value ratio at which Federal
Trust or the Bank is acquired. The agreement also includes a "gross up" payment
clause, should the severance payments received be subject to federal excise
taxes under Section 4999 of the Internal Revenue Code. Under this scenario,
Federal Trust and/or the Bank would increase Mr. Suskiewich's severance payment
so that the net proceeds from such payments will equal the amount of severance
payments due under the terms of the employment agreement.
The employment agreement also permits Mr. Suskiewich to terminate his
employment voluntarily. In the event of voluntary termination, except as
previously described herein, all rights and benefits under the contract shall
immediately terminate upon the effective date of such termination.
Aubrey H. Wright, Jr. Mr. Wright's employment agreement became
effective on September 1, 1995, and had an original term of three years. By
September 15th of each subsequent year, Federal Trust and the Bank are to review
Mr. Wright's performance to determine whether the term of the agreement should
be extended for an additional year. Under the employment agreement, Mr. Wright
is entitled to receive a base salary, plus reimbursement of reasonable business
expenses. In addition, for any quarter in which the Bank meets the "Well
Capitalized" definition under federal banking regulations and its quarterly
after-tax earnings are at least 0.50% of its average quarterly assets on an
annualized basis, Mr. Wright is to receive a bonus equal to 1% of the Bank's
quarterly net, pre-tax income. He is also entitled to discretionary performance
bonuses payable annually for the duration of the employment agreement. For the
year ended December 31, 1999, Mr. Wright received a bonus of $12,000.
In the event Mr. Wright's employment is terminated for reasons other
than for "just cause" or he terminates his employment for "good reason," as
those terms are defined in his employment agreement, he shall receive as a
severance payment the total annual compensation due for the remainder of the
term of his employment agreement plus any incentive bonus which he would then be
entitled. In the event of a change in control of Federal Trust or the Bank, Mr.
Wright will be entitled to a special incentive bonus equal to two times his
annual salary then in effect, multiplied by the price/book value ratio at which
Federal Trust or the Bank is acquired. However, if he accepts employment with
the acquiror, he shall instead receive a bonus of 50% of his salary then in
effect, multiplied by the price/book value ratio at which Federal Trust or the
Bank is acquired.
The employment agreement permits Mr. Wright to terminate his employment
voluntarily. In the event of voluntary termination, except as previously
described herein, all rights and benefits under the contract shall immediately
terminate upon the effective date of such termination.
Louis E. Laubscher. Mr. Laubscher's employment agreement became
effective on February 1, 1999. The agreement replaces a previous Employee
Severance Agreement between Mr. Laubscher and the Bank. Under the terms of the
employment agreement, Mr. Laubscher is entitled to receive a base salary, plus
reimbursement of reasonable business expenses. He is also entitled to
discretionary performance bonuses payable annually for the duration of the
agreement and to participate in any bonus and incentive programs adopted by the
Bank. For the year ended December 31, 1999, Mr. Laubscher received a performance
bonus of $23,500.
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The original term of Mr. Laubscher's employment agreement is one year.
Each day during its term, however, the agreement automatically renews for one
additional day so that the agreement, at all times, has a one year term. Either
party to the agreement may cease the automatic renewals by notifying the other
party of their intent to not renew. In addition, either party may terminate the
agreement by delivering the other party a notice of termination. A termination
is effective 30 days after delivery of the notice.
Mr. Laubscher's employment agreement provides for termination by the
Bank for reasons other than for "just cause," as well as by Mr. Laubscher for
"good reason," as those terms are defined in the employment agreement. In the
event his employment agreement is terminated by the Bank for reasons other than
for "just cause" or by Mr. Laubscher for "good reason," he would be entitled to
severance payments.
In the event Mr. Laubscher's employment is terminated by the Bank for
other than "just cause" or by Mr. Laubscher for "good reason," he will be
entitled to his annual base salary and any bonus he would have then been
entitled to under the agreement. In the event of termination due to a change in
control, he will be entitled to a sum equal to two-times his annual base salary.
Mr. Laubscher will receive these sums in semi-monthly instalments. Furthermore,
for the longer of one year or the remaining term of the agreement, the Bank is
to maintain in full force and effect any benefit plans or programs Mr. Laubscher
was entitled to participate in at the time of his termination.
In addition, the employment agreement permits Mr. Laubscher to
terminate his employment voluntarily. In the event of voluntary termination,
except as previously described herein, all rights and benefits under the
contract shall immediately terminate upon the effective date of such
termination.
1998 Key Employee Incentive Stock Compensation Program
The 1998 Key Employee Stock Compensation Program ("Program") was
approved by the shareholders at the 1998 Annual Meeting of Shareholders. The
Program is for the benefit of officers and other key employees of the Company.
The Program is comprised of four parts: an Incentive Stock Option Plan, a
Compensatory Stock Option Plan, a Stock Appreciation Rights Plan and a
Performance Plan.
The Program provides for a maximum of 325,000 shares of authorized
common stock to be reserved for future issuance pursuant to the exercise of
stock options ("Options") granted under the Program, unless otherwise adjusted.
Stock appreciation rights, which enable the recipient on exercise to elect
payment wholly or partially in cash based upon increases in the market value of
the stock from the date of the grant, may also be awarded under the Program.
Options granted under the Program are exercisable in one or more
installments and may be exercisable on a cumulative basis, as determined by a
committee formed to administer the Program. Options granted are exercisable for
a term not longer than ten years. Options are not transferable and will
terminate within a period of time following termination of employment. In the
event of a change in control or a threatened change in control, all Options
granted before such event shall become immediately exercisable; provided,
however, that no Options shall be exercisable for a period of six months from
the date of grant. The term "control" generally means the acquisition of 10% or
more of the voting securities of Federal Trust by any person or group of persons
acting as a group. This provision may have the effect of deterring hostile
changes in control by increasing the costs of acquiring control.
-11-
Options granted under the Program will be either "incentive stock
options" within the meaning of Section 422A of the Internal Revenue Code, as
amended, which are designed to result in beneficial tax treatment to the
employee but no tax deduction to Federal Trust, or "compensatory stock options"
which do not give the employee certain benefits of an incentive stock option,
but will entitle Federal Trust to a tax deduction when the Options are
exercised. The Option exercise price of incentive stock options may not be less
than the fair market value of common stock on the date the Option is granted.
Compensatory stock options may be exercisable at a price equal to or less than
the fair market value of a share of common stock at the time of the grant of the
Option. At December 31, 1999, no compensatory stock options had been granted.
A committee consisting of not less than three directors of the Company
(none of whom is a full-time officer or other salaried employee of Federal Trust
or the Bank) has been given authority to administer the Program and to grant
options, stock appreciation rights and share awards thereunder. The current
Program Administrators are George W. Foster, Kenneth W. Hill and Dr. Samuel C.
Certo. The Program Administrators may make grants under the Program at its
discretion from time to time to full-time employees of the Company, including
those who are directors and officers. Directors who are not full-time salaried
employees are not eligible to participate in the Program.
The following table shows the incentive stock options granted under the
Program to certain officers of the Company. No consideration has been received
by Federal Trust in return for the grant of the Options, although consideration
would be received upon exercise of the Options. The exercise price of each
Option is $4.00 per share, the fair market value of the common stock on January
30, 1998, based upon the "bid price" on that date. For financial reporting
purposes, there will be no charge to the income of Federal Trust in connection
with the grant or exercise of an Option. As of March 27, 2000, the market value
of the common stock was $2.63 per share.
Number of Shares
Subject to
Name Title Options Granted
------------------- ----------------------------- ------------------
James V. Suskiewich President/CEO 120,000
Aubrey H. Wright, Jr. Senior Vice President/CFO 70,000
Louis E. Laubscher Vice President/CLO 30,000
Jennifer B. Brodnax Vice President/Operations 15,000
Kevin L. Kranz Vice President/Loan Servicing 15,000
Thomas J. Punzak Vice President/Accounting 15,000
------
Total 265,000
=======
The grant of stock appreciation rights would require charges to the
income of Federal Trust based on the amount of the appreciation, if any, in the
average market price of the common stock to which the appreciation rights are
related over the option price of those shares. In the event of a decline in the
market price of our common stock subsequent to a charge against earnings related
to the estimated costs of stock appreciation rights, a reversal of prior charges
is made in the amount of such decline (but not to exceed aggregate prior
increases). Share awards also require a charge to income equal to the amount of
the award when it becomes likely that the shares will be awarded, with
subsequent increases or decreases in the market price of the common stock prior
to the actual awarding of the shares treated in the same manner as stock
appreciation rights. No stock appreciation rights or share awards have been
granted or are presently intended to be granted under the Program.
-12-
The terms of the Program may be amended by the Program Administrators
except that no amendment may increase the maximum number of shares included in
the Program, change the exercise price of incentive stock options, increase the
maximum term established for any Option, stock appreciation right or share
award, or permit any grant to a person who is not a full-time employee of the
Company.
TRANSACTIONS WITH MANAGEMENT
Indebtedness of Management
In 1999, the Boards of Directors of Federal Trust and the Bank amended
their loan policies to allow, on occasion, loans to be made to directors,
officers and employees. Loans made by the Bank are also subject to the
provisions of Section 22(h) of the Federal Reserve Act. Any credit extended by
the Bank to directors, executive officers and, to the extent otherwise
permitted, principal shareholders, or any affiliates thereof must be: (i) on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions by the Bank with
non-affiliated parties; and (ii) not involve more than the normal risk of
repayment or present other unfavorable features.
In February of this year, Federal Trust loaned five of the Company's
directors and officers funds to purchase Federal Trust common stock in the open
market. The aggregate amount loaned was $222,477. The largest single loan is
$50,440. All five loans are at 8% interest and require only interest payments
for three years, at which time the principal comes due. Each of these loans is
secured by the Federal Trust common stock purchased with the loans' proceeds.
Transactions With Certain Related Persons
Since January 1, 1990, Federal Trust has leased its main office
from John Martin Bell, a former director and major shareholder. The original
term of the lease was for ten years, however the size of the leased premises and
amount of annual rent have been modified from time to time. The rent for 1999
was $316,504. Although the lease provides for two ten-year extension periods,
Federal Trust has notified the landlord of its intent to not renew. The lease
will expire on December 31, 2000, at which time Federal Trust will relocate its
main office to a two-story building, which is being constructed on the corner of
Morse Boulevard and Pennsylvania Avenue in Winter Park, Florida.
When a transaction involves Federal Trust and an officer, director,
principal shareholder or affiliate, it is Federal Trust's policy that the
transaction must be on terms no less favorable to Federal Trust than could be
obtained from an unaffiliated party. Any such transactions must be approved in
advance by a majority of Federal Trust's independent and disinterested
directors. The transactions disclosed above are consistent with this policy.
-13-
PROPOSAL II
RATIFICATION OF APPOINTMENT OF THE INDEPENDENT AUDITORS
The Board of Directors has appointed KPMG Peat Marwick LLP, to audit
the accounts of the Company for the 2000 fiscal year. KPMG Peat Marwick LLP, has
served as our independent auditor since the fiscal year ending December 31,
1990, and during this period, has been engaged by the Company to provide certain
tax and consultant services. KPMG Peat Marwick LLP, plans to have a
representative present at the Annual Meeting who will have the opportunity to
make a statement if he or she desires to do so and is expected to respond to
shareholders' questions regarding the Company's financial statements. If the
appointment is not approved, the Board of Directors will select other
independent accountants.
The Board of Directors recommends that you vote "FOR"
ratification of the selection of KPMG Peat Marwick LLP
as the Company's independent auditors for the
year ending December 31, 2000.
PROPOSAL III
ADJOURNMENT OF ANNUAL MEETING
We are seeking your approval to adjourn the Annual Meeting in the event
that the number of proxies sufficient to approve Proposals I or II are not
received by May 26, 2000. In order to permit proxies that have been received at
the time of the Annual Meeting to be voted, if necessary, for the adjournment,
the question of adjournment to permit further solicitation of proxies to approve
Proposals I or II is being submitted to shareholders as a separate proposal. If
it becomes necessary to adjourn the Annual Meeting, and the adjournment is for a
period of less than 30 days, no notice of the time and place of the adjourned
meeting will be given to the shareholders, other than an announcement made at
the Annual Meeting.
The Board of Directors recommends
that you vote "FOR" the approval of the adjournment of the Annual Meeting.
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION
The 1999 financial statements, selected consolidated financial data,
and management's discussion and analysis of financial condition and results of
operations appear in the Form 10-KSB and the 1999 Annual Report for the fiscal
year ended December 31, 1999, which are being mailed to all shareholders along
with this Proxy Statement. The financial statements are incorporated herein by
reference.
-14-
SHAREHOLDERS' PROPOSALS
Proposals of shareholders intended to be presented at the 2001 Annual
Meeting should be submitted by certified mail, return receipt requested, and
must be received by Federal Trust at its corporate office located at 1211 Orange
Avenue, Winter Park, Florida 32787, on or before December 22, 2000, to be
eligible for inclusion in next year's Proxy Statement. However, if next year's
annual meeting of shareholders is held on a date more than 30 days before or
after the corresponding date of the 2000 Annual Meeting, any shareholder who
wishes to have a proposal included in the Proxy Statement for that meeting must
deliver a copy of the proposal to Federal Trust a reasonable time before the
Proxy solicitation is made. Federal Trust reserves the right to decline to
include in the Proxy Statement any shareholder's proposal which does not comply
with the Proxy rules (Regulation 14A) adopted under the Securities Exchange Act
of 1934, as amended.
FEDERAL TRUST CORPORATION
WINTER PARK, FLORIDA
April 21, 2000
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FEDERAL TRUST CORPORATION - REVOCABLE PROXY
2000 ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints James V. Suskiewich and Aubrey H. Wright, Jr.,
and each of them, with full powers of substitution, to act as proxy for, and
attorney-in-fact, to vote all shares of the common stock of Federal Trust
Corporation. which the undersigned may be entitled to vote at the Annual Meeting
of Shareholders to be held at The Farmers Market, 200 West New England Street,
Winter Park, Florida on Friday, May 26, 2000, at 10:00 a.m., and at any and all
adjournments thereof.
The undersigned shareholder of Federal Trust Corporation may revoke this Proxy
at any time before it is voted by either filing with the Secretary of Federal
Trust Corporation a written notice of revocation, delivering to Federal Trust
Corporation a duly executed Proxy bearing a later date, or by attending the
Annual Meeting and voting in person.
THE FOLLOWING PROPOSALS ARE BEING ACTED UPON:
FOR WITHHOLD
PROPOSAL I: The election of Kenneth W. Hill AUTHORITY
as a Class I director, to serve a three-year term,
ending at the 2003 Annual Meeting. o o
Annual Meeting.
FOR AGAINST ABSTAIN
PROPOSAL II: The ratification of KPMG Peat Marwick
LLP, as the independent auditors for Federal Trust o o o
Corporation for the fiscal year ending
December 31, 2000.
FOR AGAINST ABSTAIN
PROPOSAL III: The adjournment of the Annual Meeting
to solicit additional proxies in the event there are o o o
not sufficient votes to approve Proposals I or II.
IN THEIR DISCRETION THE PROXY HOLDER(S) ARE AUTHORIZED TO TRANSACT AND TO VOTE
UPON SUCH OTHER BUSINESS as may properly come before this Annual Meeting or any
adjournments thereof, unless indicated otherwise by marking this box o.
NOTE: When properly executed, this Proxy will be voted in the manner directed by
the undersigned shareholder. UNLESS CONTRARY DIRECTION IS GIVEN, THIS PROXY WILL
BE VOTED FOR THE PROPOSALS LISTED.
[Label]
X_________________________________________________
Signature
X_________________________________________________
Signature if held jointly
When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, agent, trustee or guardian, please give full
title. If shareholder is a corporation, please sign in full corporate name by
president or other authorized officer. If shareholder is a partnership, please
sign in partnership name by authorized person. The undersigned acknowledges
receipt from Federal Trust Corporation, prior to the execution of the Proxy, a
Notice of the Annual Meeting, and a Proxy Statement dated April 21, 2000, and
the 1999 Annual Report.