SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential for Use of the
Commission Only (as permitted
by Rule 14a-6(e) (2)
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under 240.14a-12
CENTRAL COAST BANCORP
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X] No fee required.
[ ] $125 per Exchange Act Rules 0-11 (c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22 (a) (2) of Schedule 14A.
[ ] Fee computed on table below per exchange Act Rules 14a-6 (i) 4 and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously by written preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a) (2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid :
(2) Form, Schedule or Registration Statement No. :
(3) Filing Party :
(4) Date Filed :
CENTRAL COAST BANCORP
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MONDAY, JUNE 11, 2001
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of Central Coast Bancorp will be held
at 301 Main Street, Salinas, California, on Monday, June 11, 2001 at 5:30 p.m.
for the following purposes:
1. To amend the articles of incorporation and bylaws to provide for the
classification of the board of directors.
2. To amend the articles of incorporation and bylaws to eliminate
cumulative voting in the election of directors.
3. To elect directors.
4. To approve the appointment of Deloitte & Touche LLP as independent public
accountants for the 2001 fiscal year.
5. To transact such other business as may properly come before the Meeting.
The names of the Board of Directors' nominees to be directors of Central
Coast Bancorp are set forth in the accompanying Proxy Statement and incorporated
here by reference.
Article III, Section 16 of the Bylaws of Central Coast Bancorp provides
for the nomination of directors in the following manner:
"Nomination for election of members of the Board of Directors may be made
by the Board of Directors or by any shareholder of any outstanding class of
capital stock of the corporation entitled to vote for the election of directors.
Notice of intention to make any nominations shall be made in writing and shall
be delivered or mailed to the President of the corporation not less than 21 days
nor more than 60 days prior to any meeting of shareholders called for the
election of directors; provided however, that if less than 21 days notice of the
meeting is given to shareholders, such notice of intention to nominate shall be
mailed or delivered to the President of the corporation not later than the close
of business on the tenth day following the day on which the notice of meeting
was mailed; provided further that if notice of such meeting is sent by
third-class mail as permitted by Section 6 of these by-laws, no notice of
intention to make nominations shall be required. Such notification shall contain
the following information to the extent known to the notifying shareholder:
(a) the name and address of each proposed nominee;
(b) the principal occupation of each proposed nominee;
(c) the number of shares of capital stock of the corporation owned by each
proposed nominee;
(d) the name and residence address of the notifying shareholder; and
(e) the number of shares of capital stock of the corporation owned by the
notifying shareholder.
Nominations not made in accordance herewith may, in the discretion of the
Chairman of the meeting, be disregarded and upon the Chairman's instructions,
the inspectors of election can disregard all votes cast for each such nominee. A
copy of this paragraph shall be set forth in a notice to shareholders of any
meeting at which Directors are to be elected."
Only shareholders of record at the close of business on April 16, 2001 are
entitled to notice of and to vote at this Meeting and at any postponements or
adjournments thereof.
By Order of the Board of Directors
/s/ JOHN F. MCCARTHY
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John F. McCarthy, Secretary
Salinas, California
April 26, 2001
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
Mailed to Shareholders
on or about April 26, 2001
CENTRAL COAST BANCORP
PROXY STATEMENT
INFORMATION CONCERNING THE SOLICITATION
This Proxy Statement is being furnished to the shareholders of Central
Coast Bancorp, a California corporation (the "Corporation"), in connection with
the solicitation of proxies by the Board of Directors for use at the Annual
Meeting of Shareholders to be held at 301 Main Street, Salinas, California on
June 11, 2001 at 5:30 p.m. (the "Meeting"). Only shareholders of record on April
16, 2001 (the "Record Date") will be entitled to notice of the Meeting and to
vote at the Meeting. At the close of business on the Record Date, the
Corporation had outstanding and entitled to be voted 7,277,568 shares of its no
par value Common Stock (the "Common Stock").
Shareholders are entitled to one vote for each share held, except that for
the election of directors each shareholder has cumulative voting rights and is
entitled to as many votes as shall equal the number of shares held by such
shareholder multiplied by the number of directors to be elected. Each
shareholder may cast all his or her votes for a single candidate or distribute
such votes among any or all of the candidates as he or she chooses. However, no
shareholder shall be entitled to cumulate votes (in other words, cast for any
candidate a number of votes greater than the number of shares of stock held by
such shareholder) unless such candidate's name has been placed in nomination
prior to the voting and the shareholder has given notice at the Meeting prior to
the voting of the shareholder's intention to cumulate his or her votes. If any
shareholder has given such notice, all shareholders may cumulate their votes for
candidates in nomination. Prior to voting, an opportunity will be given for
shareholders or their proxies at the Meeting to announce their intention to
cumulate their votes. The proxy holders are given, under the terms of the proxy,
discretionary authority to cumulate votes on shares for which they hold a proxy.
Any person giving a proxy in the form accompanying this Proxy Statement
has the power to revoke that proxy prior to its exercise. The proxy may be
revoked prior to the Meeting by delivering to the Secretary of the Corporation
either a written instrument revoking the proxy or a duly executed proxy bearing
a later date. The proxy may also be revoked by the shareholder by attending and
voting at the Meeting.
Votes cast by proxy or in person at the Meeting will be counted by the
Inspectors of Election for the Meeting. The Inspectors will treat abstentions
and "broker non-votes" (shares held by brokers or nominees as to which
instructions have not been received from the beneficial owners or persons
entitled to vote and the broker or nominee does not have discretionary voting
power under applicable rules of the stock exchange or other self-regulatory
organization of which the broker or nominee is a member) as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum. Abstentions and "broker non-votes" will not be counted as shares voted
for purposes of determining the outcome of any matter as may properly come
before the Meeting.
Unless otherwise instructed, each valid proxy returned which is not
revoked will be voted "FOR" proposals 1, 2, 3 and 4 as described in this Proxy
Statement, and, at the proxyholders' discretion, on such other matters, if any,
which may come before the Meeting (including any proposal to postpone or adjourn
the Meeting).
1
The Corporation will bear the entire cost of preparing, assembling,
printing and mailing proxy materials furnished by the Board of Directors to
shareholders. Copies of proxy materials will be furnished to brokerage houses,
fiduciaries and custodians to be forwarded to the beneficial owners of the
Common Stock. In addition to the solicitation of proxies by use of the mail,
some of the officers, directors and regular employees of the Corporation and its
subsidiary, Community Bank of Central California (the "Bank"), may (without
additional compensation) solicit proxies by telephone or personal interview, the
costs of which will be borne by the Corporation.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
As of the Record Date, April 16, 2001, no individual known to the
Corporation owned more than five percent (5%) of the outstanding shares of its
Common Stock except as described below.
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Name and Amount and Percentage
Address of Nature of of Class
Title of Beneficial Beneficial Beneficially
Class Owner Ownership Owned
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Common Stock, Robert L.Meyer (1) 543,851 7.47%
No Par Value
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(1) The address for the person listed is P.O. Box 606, King City,
California, 93930-0606. 516,820 shares are held by Mr. Meyer and his
spouse as trustees of the Robert L. Meyer and Patricia J. Meyer Trust
dated July 28, 1977 and 27,031 shares are held as trustee of the Craig
Meyer Trust.
Security Ownership of Management
The following table sets forth information as of April 16, 2001,
concerning the equity ownership of the Corporation's directors and the executive
officers named in the Summary Compensation Table, and directors and executive
officers as a group. Unless otherwise indicated in the notes to the table, each
director and executive officer listed below possesses sole voting power and sole
investment power for the shares of the Corporation's Common Stock listed below.
All of the shares shown in the following table are owned both of record and
beneficially except as indicated in the notes to the table. The Corporation has
only one class of shares outstanding, Common Stock.
Name and Address (1) Amount and Nature of Percent of
Title of Class Beneficial Owner Beneficial Ownership Class (2)
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Common Stock, No Par Value Robert C. Blatter 25,771 (3) 0.35%
Common Stock, No Par Value C. Edward Boutonnet 276,891 (4) 3.77%
Common Stock, No Par Value Bradford G. Crandall 247,035 (5) 3.36%
Common Stock, No Par Value Alfred P. Glover 73,347 (6) 1.00%
Common Stock, No Par Value Michael T. Lapsys 119,888 (7) 1.64%
Common Stock, No Par Value Duncan L. McCarter, R.Ph. 168,735 (8) 2.30%
Common Stock, No Par Value John F. McCarthy 101,945 (9) 1.40%
2
Name and Address (1) Amount and Nature of Percent of
Title of Class Beneficial Owner Beneficial Ownership Class (2)
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Common Stock, No Par Value Robert M. Mraule, D.D.S.,MD 185,321 (10) 2.52%
Common Stock, No Par Value Louis A. Souza 66,005 (11) 0.90%
Common Stock, No Par Value Robert M. Stanberry 18,012 (12) 0.25%
Common Stock, No Par Value Mose E. Thomas, Jr. 77,016 (13) 1.05%
Common Stock, No Par Value Nick Ventimiglia 113,101 (14) 1.54%
All directors and executive officers
of the Corporation as a group (12 persons) 1,473,067 (15) 18.31%
(1) The address for all persons listed is c/o Central Coast Bancorp, 301
Main Street, Salinas, California, 93901.
(2) Includes shares of Common Stock subject to stock options exercisable
immediately.
(3) Includes 4,489 shares held jointly with his spouse and 23,229 shares
of Common Stock subject to stock options exercisable immediately.
(4) Includes 79,669 shares of Common Stock held in a partnership, 4,211
shares as custodian for his grandchildren, 27,230 shares of Common Stock
held by Mr. Boutonnet as trustee of the Charles E. Boutonnet Trust,
33,377 shares held by Mr. Boutonnet as trustee of Boutonnet Farms, Inc.
Profit Sharing Plan, 63,889 shares held in the Central Coast Bancorp
Nonqualified Deferred Compensation Plan Trust as to which Mr. Boutonnet
has shared investment power and 68,515 shares of Common Stock subject to
stock options exercisable immediately.
(5) Includes 85,070 shares of Common Stock held jointly with his spouse as
trustees of the Bradford G. Crandall and Lynne O. Crandall Trust, 29,950
shares held by Mr. Crandall and his sister as trustees of the Irella F.
Crandall Trust, 63,500 shares held in the Central Coast Bancorp
Nonqualified Deferred Compensation Plan Trust as to which Mr. Crandall
has shared investment power and 68,515 shares of Common Stock subject to
stock options exercisable immediately.
(6) Includes 10,305 shares of Common Stock held jointly with his spouse,
707 shares held by his spouse and 43,558 shares of Common Stock subject
to stock options exercisable immediately.
(7) Includes 18 shares of Common Stock held jointly with his spouse, and
498 shares held as custodian, 93,055 shares held in the Kathy O. Lapsys
and Michael T. Lapsys Trust and 26,317 shares of Common Stock subject to
stock options exercisable immediately.
(8) Includes 36,916 shares of Common Stock held jointly with his spouse as
trustees of the Duncan L. McCarter and Leslie P. McCarter Trust, 63,081
shares held in the Central Coast Bancorp Nonqualified Deferred
Compensation Plan Trust as to which Mr. McCarter has shared investment
power and 68,515 shares of Common Stock subject to stock options
exercisable immediately.
(9) Includes 74,267 shares of Common Stock held jointly with his spouse as
trustees of the John F. McCarthy and Mary Ann McCarthy Trust and 27,678
shares of Common Stock subject to stock options exercisable immediately.
(10) Includes 73,085 shares of Common Stock held by Dr. Mraule as trustee
of Robert M. Mraule D.D.S., M.D., Inc. Money Purchase Pension Plan,
43,721 shares held in the Central Coast Bancorp Nonqualified Deferred
Compensation Plan Trust as to which Mr. Mraule has shared investment
power and 68,515 shares subject to stock options exercisable
immediately.
(11) Includes 14,752 shares of Common Stock held jointly with his spouse,
15,125 shares held in the Central Coast Bancorp Nonqualified Deferred
Compensation Plan Trust as to which Mr. Souza has shared investment power
and 28,433 shares of Common Stock subject to stock options exercisable
immediately.
(12) Includes 16,652 shares of Common Stock subject to stock options
exercisable immediately.
(13) Includes 11,237 shares of Common Stock owned jointly with his spouse, and
35,564 shares of Common Stock subject to stock options exercisable
immediately.
(14) Includes 71,260 shares of Common Stock subject to stock options
exercisable immediately.
(15) Includes 552,251 shares of Common Stock subject to stock options
exercisable immediately and 249,316 shares held by the Central Coast
Bancorp Board of Directors Deferred Stock Option Plan Trust.
3
PROPOSAL NO. 1
APPROVAL OF AMENDMENTS TO THE CENTRAL COAST BANCORP
ARTICLES OF INCORPORATION AND BYLAWS TO PROVIDE FOR
THE CLASSIFICATION OF THE BOARD OF DIRECTORS
Introduction
On March 26, 2001, the board of directors adopted amendments to the
Central Coast Bancorp articles of incorporation and bylaws which provide that
the board of directors be divided into three classes of directors, each
consisting of a number of directors equal as nearly as practicable to one-third
the total number of directors, for so long as the board consists of at least
nine authorized directors and, in the event that the total number of authorized
directors on the board is at least six but less than nine, for classification of
the board of directors into two classes, each consisting of a number of
directors equal as nearly as practicable to one-half the total number of
directors. After initial implementation at the 2001 annual meeting of
shareholders, each class of directors would be subject to election every third
year and would serve for a three-year term for so long as the board remained
classified into three classes, or would be subject to election every second year
and would serve for a two-year term in the event the board were classified into
two classes. Currently, all of Central Coast Bancorp's directors are elected
each year to serve a one-year term.
If the proposal is approved by the shareholders, the board of
directors will, for purposes of initial implementation, designate three classes
of directors for election at the 2001 annual meeting. Class I will be elected
initially for a one-year term expiring at the 2002 annual meeting of
shareholders; Class II will be elected initially for a two-year term expiring at
the 2003 annual meeting of shareholders; and Class III will be elected for a
three-year term expiring at the annual meeting of shareholders to be held in the
year 2004; and, in each case, until their successors are duly elected and
qualified. At each annual meeting after the 2001 annual meeting, only directors
of the class whose term is expiring would be voted upon, and upon election each
director would serve a three-year term. Commencing with the annual meeting of
shareholders scheduled to occur in 2002, directors elected to Class I would
serve for a three-year term and until their successors are duly elected and
qualified, subject to any decrease in the total number of authorized directors.
Subsequently, in the years 2003 and 2004, directors elected to Class II and
Class III, respectively, would also be elected for a three-year term and until
their successors are duly elected and qualified.
Classification of the board of directors is permitted by Section
301.5 of the California Corporations Code. Under Section 301.5, a qualifying
California corporation, may divide its board of directors into two or three
classes, with one-half or one-third of the directors, respectively, elected at
each annual meeting (or as near to one-half or one-third as practicable). The
authorized number of directors must be not less than six in the case of a
two-class board and not less than nine in the case of a three-class board.
Classified boards of directors are permitted under the corporate law of a
majority of states, and Central Coast Bancorp believes that well over one-half
of Fortune 500 companies provide for classified boards.
The text of the proposed amendment to the articles of incorporation
is set forth in Appendix B attached to this proxy statement. If this proposal is
adopted by the Central Coast Bancorp shareholders, in order to make the bylaws
consistent with the amendment to the articles of incorporation described in this
proposal, upon effectiveness of the filing of the amendment to the articles of
incorporation with the California Secretary of State, Section 17 of Article III
of the bylaws will be amended to read as set forth in Appendix B, which is
incorporated here by this reference. The proposed amendments to the articles of
incorporation and bylaws are subject to such modification as may be required
upon filing by the California Secretary of State.
Effect of Classification of Board
If adopted, the classification of the board will apply to every
subsequent election of directors for so long as at least six directors are
authorized under the Central Coast Bancorp bylaws and the classification
provision is not amended. The Central Coast Bancorp bylaws provide that the
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board of directors will consist of not less than seven (7) and not more than
thirteen (13) directors, with the exact number of directors currently set at
nine (9). So long as the board continues to consist of at least nine (9)
authorized directors, after initial implementation of the classified board,
directors will serve for a term of three years rather than one year, and
one-third of the directors (or as near to one-third as practicable) will be
elected each year.
In the event that the number of directors increases, the increase
will be apportioned by the board among the classes of directors to make each
class as nearly equal in number as possible. If the number of authorized
directors is decreased to at least six but less than nine, the directors will be
apportioned by the board among two classes, each consisting of one-half of the
directors or as close an approximation as possible, directors will serve for a
term of two years, and one-half the directors (or as near to one-half as
practicable) will be elected each year. In any event, a decrease in the number
of directors cannot shorten the term of any incumbent director. Vacancies on the
board created by any resignation, removal or other reason, or by an increase in
the size of the board, may be filled for the remainder of the term by the vote
of the majority of the directors remaining in office or by the vote of holders
of a majority of the outstanding shares of the Central Coast Bancorp common
stock.
Under California law, members of the board of directors may be
removed by the board of directors for cause (defined to be a felony conviction
or court declaration of unsound mind), by the shareholders without cause or by
court order for fraudulent or dishonest acts or gross abuse of authority or
discretion. In the case of a board of directors that is not classified, no
director may be removed by the shareholders if the votes cast against the
removal (or, if done by written consent, the votes eligible to be cast by the
non-consenting shareholders) would have been sufficient to elect the director if
voted cumulatively at an election at which the same total number of votes were
cast (or, if the action is taken by written consent, all shares entitled to vote
were voted) and the entire number of directors authorized at the time of the
director's most recent election were then being elected (the "relevant number of
directors"). In the case of classified boards, the relevant number of directors
is (i) the number of directors elected at the most recent annual meeting of
shareholders or, if greater, (ii) the number of directors sought to be removed.
It should be noted that this removal provision applies equally to corporations
that permit cumulative voting and to those that do not.
Reasons for the Amendment
By eliminating the possibility of rapid removal of the board, the
directors of Central Coast Bancorp will have the necessary time to most
effectively satisfy their responsibility to the Central Coast Bancorp
shareholders to evaluate any proposal and to assess and develop alternatives
without the pressure created by the threat of imminent removal. In addition,
this proposal, by providing that directors will serve three-year terms rather
than one-year terms, will enhance continuity and stability in the composition of
Central Coast Bancorp's board of directors and in the policies formulated by the
board. The board believes that this, in turn, will permit it more effectively to
represent the interests of all shareholders, including responding to demands or
actions by any shareholder or group. Following adoption of the classified board
structure, at any given time at least one-third of the members of the board of
directors will generally have had prior experience as directors of Central Coast
Bancorp. The board believes that this will facilitate long-range planning,
strategy and policy and will have a positive impact on customer and employee
loyalty. Central Coast Bancorp has not historically had problems with either the
continuity or stability of its board of directors.
Anti-Takeover and Other Effects
Public companies are potentially subject to attempts by various
individuals and entities to acquire significant minority positions in the
company with the intent either of obtaining actual control of the company by
electing their own slate of directors, or of achieving some other goal, such as
the repurchase of their shares by the company at a premium. Public companies
also are potentially subject to inadequately priced or coercive bids for control
through majority share ownership. These prospective acquirors may be in a
position to elect the company's entire board of directors through a proxy
contest or otherwise, even though they do not own a majority of the company's
outstanding shares at the time.
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If this proposal is approved, a majority of a Central Coast Bancorp's
directors could not be removed by those persons or by a shareholder or group of
shareholders seeking to replace a majority of the directors until two
consecutive annual meetings of shareholders have occurred, unless the removal
was for cause and the requisite vote was obtained. The classification of the
board of directors will have the effect of making it more difficult to replace
incumbent directors. So long as the board is classified into three classes, a
minimum of three annual meetings of shareholders would generally be required to
replace the entire board, absent intervening vacancies.
This proposal is not in response to any attempt to acquire control of
Central Coast Bancorp. However, the board believes that adopting this proposal
is prudent, advantageous and in the best interests of shareholders because it
will give the board more time to fulfill its responsibilities to shareholders,
and it will provide greater assurance of continuity and stability in the
composition and policies of the board of directors. The board also believes the
advantages outweigh any disadvantage relating to discouraging potential
acquirors from attempting to obtain control of Central Coast Bancorp.
While the proposal is not intended as a takeover-resistive measure in
response to a specific threat, it may discourage the acquisition of large blocks
of Central Coast Bancorp's shares by causing it to take longer for a person or
group of persons who acquire a block of shares to effect a change in management.
Existing Anti-Takeover Attributes
Central Coast Bancorp has other corporate attributes that may also
have the effect of helping Central Coast Bancorp to resist an acquisition. These
include existing provisions in the Central Coast Bancorp articles of
incorporation and bylaws eliminating, subject to specified exceptions, the
liability of directors for monetary damages; provisions in the articles of
incorporation and bylaws providing for indemnification of directors and
officers; provisions in the articles of incorporation authorizing the board of
directors to issue up to one million shares of preferred stock and to fix the
rights and preferences related to such preferred stock; provisions in the bylaws
requiring advance notice of nomination of a candidate for election to the board
of directors of Central Coast Bancorp when the nomination is made by a person
other than the nominating committee of the board; and, if approved by the
Central Coast Bancorp shareholders, the elimination of cumulative voting in the
election of directors as described in Proposal No. 2 and Appendix C of this
proxy statement. This proposal is not part of a plan by management to adopt a
series of anti-takeover measures and management does not presently intend to
propose that shareholders consider other measures in addition to those described
above, which could have an anti-takeover effect.
Vote Required for Approval
Approval of the proposed amendments to the articles of incorporation
and the bylaws requires that holders of a majority of the outstanding shares of
common stock of Central Coast Bancorp vote "FOR" the proposal. If this proposal
is not approved, it is the intention of Central Coast Bancorp that the directors
elected at the 2001 annual meeting will serve without classification as
contemplated by this proposal.
Recommendation of Management
The board of directors believes that the amendment of the articles of
incorporation and bylaws is in the best interests of Central Coast Bancorp and
its shareholders. The board of directors believes that the advantages of the
proposed amendments to the articles of incorporation and bylaws classifying the
board of directors for purposes of the election of directors greatly outweigh
the possible disadvantages of the amendments. Accordingly, the board of
directors has unanimously approved the proposed amendments and unanimously
recommends that the Central Coast Bancorp shareholders vote "FOR" their
approval.
6
PROPOSAL NO. 2
APPROVAL OF AMENDMENTS TO THE CENTRAL COAST BANCORP ARTICLES OF INCORPORATION
AND BYLAWS TO ELIMINATE CUMULATIVE VOTING IN THE ELECTION OF DIRECTORS
Introduction
Effective on January 1, 1990, the California General Corporation Law
was amended to permit California corporations with widely traded securities to
provide, with the approval of their shareholders, for majority rule voting in
electing directors in lieu of cumulative voting. California law specifically
allows a corporation with its common stock quoted on the New York Stock
Exchange, the American Stock Exchange or the Nasdaq National Market to eliminate
cumulative voting by an amendment to its bylaws or articles of incorporation.
Central Coast Bancorp's common stock is listed for trading and quoted under the
symbol "CCBN" on the Nasdaq National Market. Prior to such legislation,
cumulative voting in electing directors was mandatory for California
corporations upon proper notice by any shareholder of the corporation. By
permitting shareholders of California corporations to provide for majority rule
voting in electing directors, the new law substantially conforms California
corporate law with the corporate laws of a majority of other states (including
Delaware, Illinois, Michigan, New Jersey, New York, Ohio, Pennsylvania and
Texas) which either provide that cumulative voting is optional or make no
provision for cumulative voting at all. Only a small majority of states still
require that shareholders be permitted to invoke cumulative voting.
Cumulative Voting
Cumulative voting in the election of directors may currently be
invoked by any shareholder of Central Coast Bancorp who complies with statutory
notice requirements. Cumulative voting entitles shareholders to a number of
votes per share of common stock equal to the number of directors to be elected,
and all nominees are voted upon simultaneously. Holders of shares may cast all
of their votes for a single nominee or distribute them among two to more
nominees.
As a consequence of cumulative voting, a shareholder with a
relatively small number of voting shares may be able to elect one or more
directors. For example, if a shareholder were to give the appropriate notice and
properly nominate a nominee, and nine directors were to be elected at an annual
meeting, a shareholder holding 10% of the voting shares could elect one director
by cumulating and casting his or her votes for one candidate. This is true even
if shareholders holding 90% of the voting shares are opposed to the election of
that candidate and cast their votes to elect nine other nominees.
Absent cumulative voting, a nominee cannot be elected without
relatively wide support, as shareholders are entitled to only one vote per share
with the nominee receiving the greatest number of votes being elected.
Consequently, the holder or holders of a majority of the shares entitled to vote
in an election of directors will be able to elect all directors of Central Coast
Bancorp, and holders of less than a majority of the shares may not be able to
elect any directors.
For reasons set forth below, the board believes that the articles of
incorporation should be amended to eliminate cumulative voting. The text of the
proposed amendment to the articles of incorporation is set forth in Appendix C
attached to this proxy statement and is incorporated here by this reference. The
proposed amendment to the articles of incorporation is subject to such
modification as may be required upon filing by the California Secretary of
State.
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Reasons for the Amendment
The board believes that the elimination of cumulative voting is
advantageous to Central Coast Bancorp and its shareholders because each director
of a publicly held corporation has a duty to represent the interests of all
shareholders rather than any specific shareholder or group of shareholders. The
presence on the board of directors of one or more directors representing the
interests of a minority shareholder or group of shareholders could disrupt the
management of Central Coast Bancorp and prevent it from operating in the most
effective manner. Furthermore, the election of directors who view themselves as
representing a particular minority constituency could introduce an element of
discord on the board of directors, impair the ability of the directors to work
effectively and discourage qualified independent individuals from serving as
directors. Providing for majority rule voting in the election of directors by
eliminating cumulative voting will help ensure that each director acts in the
best interests of all shareholders.
This proposal to eliminate cumulative voting is not being made in
response to any effort by a minority shareholder or group of shareholders to
attain representation on the board of directors or acquire greater influence in
the management of the Corporation's business, nor is Central Coast Bancorp aware
of any such effort. Furthermore, this proposal is not being made in response to
any attempt to acquire control of Central Coast Bancorp, nor is Central Coast
Bancorp aware of any such attempt.
Other Effects
Approval of the proposed amendment may render more difficult any
attempt by a holder or group of holders of a significant number of voting
shares, but less than a majority, to change or influence the management or
policies of Central Coast Bancorp. In addition, under certain circumstances, the
proposed amendment, along with other measures that may be viewed as having
anti-takeover effects (such as Proposal No. 1 to classify the Central Coast
Bancorp board of directors), may discourage an unfriendly acquisition or
business combination involving Central Coast Bancorp that a shareholder might
consider to be in such shareholder's best interest, including an unfriendly
acquisition or business combination that might result in payment of a premium
over the market price for the shares held by the shareholder. For example, the
proposed amendment may discourage the accumulation of large minority
shareholdings (as a prelude to an unfriendly acquisition or business combination
proposal or otherwise) by persons who would not make that acquisition without
being assured of representation on the board of directors.
Conforming Bylaw Amendment
If this Proposal No. 2 is adopted by the Central Coast Bancorp
shareholders, in order to make the bylaws consistent with the amendment to the
articles of incorporation set forth in this Proposal No. 2, upon effectiveness
of the filing of the amended articles of incorporation with the California
Secretary of State, Section 11 of Article II of the bylaws shall be amended to
read as set forth in Appendix C which is incorporated here by this reference.
The proposed amendment of the bylaws is subject to such modification as may be
required upon filing by the California Secretary of State.
Vote Required for Approval
Approval of the proposed amendments to the articles of incorporation
and the bylaws requires that holders of a majority of the outstanding shares of
common stock of Central Coast Bancorp vote "FOR" the proposal.
Recommendation of Management
The board of directors believes that this proposal is in the best
interests of Central Coast Bancorp and its shareholders, and unanimously
recommends a vote "FOR" its approval.
8
PROPOSAL NO. 3
ELECTION OF CENTRAL COAST BANCORP DIRECTORS
The number of directors authorized for election at this meeting is nine
(9). Management has nominated the nine (9) incumbent directors to serve as the
Central Coast Bancorp directors. Each director will hold office until his or her
successor is elected and qualified.
All proxies will be voted for the election of the nine (9) nominees listed
below (all of whom are incumbent directors) recommended by the board of
directors unless authority to vote for the election of any directors is
withheld. The nominees receiving the highest number of affirmative votes of the
shares entitled to be voted for them shall be elected as directors, and will be
elected (a) to the class designated opposite their names, provided that Proposal
No. 1 is approved, and (b) in the event Proposal No. 1 is not approved, then as
directors without classification. Abstentions and votes cast against nominees
have no effect on the election of directors. If any of the nominees should
unexpectedly decline or be unable to act as a director, their proxies may be
voted for a substitute nominee to be designated by the board of directors. The
board of directors has no reason to believe that any nominee will be become
unavailable and has no present intention to nominate persons in addition to or
in lieu of those named below.
Mose E. (Class 1) Louis A. (Class 1) Alfred P. (Class 1)
Thomas Souza Glover
Michael T. (Class 2) Duncan L. (Class 2) Nick (Class 2)
Lapsys McCarter Ventimiglia
C. Edward (Class 3) Bradford C. (Class 3) Robert M. (Class 3)
Boutonnet Crandall Mraule
See "Proposal No. 1, Approval of Amendments to the Central Coast Bancorp
Articles of Incorporation and Bylaws to Provide for the Classification of the
Board of Directors" on page 4, for information regarding the classification
of the board of directors.
The following table sets forth names and certain information as of April
16, 2001, concerning the persons named for election as directors of the
Corporation.
Director of Director of
Corporation Bank (1) Principal Occupation
Name Age Since Since During Last Five Years
- ---- --- ----- ----- ----------------------
C. Edward 61 1994 1982 Organizer, Bank of
Boutonnet Salinas; Owner and
General Manager, Sea Mist
Farms, Ocean Mist Farms
and Boutonnet Farms, Inc.
Bradford G. 66 1994 1982 President, E.B. Stone &
Crandall Son, Inc., wholesale
nursery supply firm.
Alfred P. 69 1996 1988 Organizer of Cypress
Glover Bank; Owner, Glover
Enterprises, a real estate
development firm.
Michael T. 52 1998 1998 Chairman, Device Dynamics
Lapsys Incorporated, a
semiconductor marking
company.
Duncan L. 54 1994 1982 President and Chief
McCarter,R.Ph. Executive Officer,
Healthcare Pathway
Management, Inc., d.b.a.
AdvantaCare Medical, and
d.b.a. AdvantaCare
InfusionCare, and Care
Pharmacies, Inc.
9
Director of Director of
Corporation Bank (1) Principal Occupation
Name Age Since Since During Last Five Years
- ---- --- ----- ----- ----------------------
Robert M. 51 1994 1982 Physician, Dentist, Oral
Mraule, and Maxillofacial Surgeon.
D.D.S.,
M.D.
Louis A. Souza 72 1996 1988 Organizer of Cypress
Bank; Owner, Louis A.
Souza Construction, a
general contractor,
semi-retired.
Mose E. 60 1996 1989 Organizer of Cypress
Thomas, Bank; Owner and General
Jr. Manager, Chapel of
Seaside, Inc., and
Mission Mortuary, Inc.,
funeral chapels.
Nick 59 1994 1982 Organizer, Director,
Ventimiglia President and Chief
Executive Officer, Bank of
Salinas from 1982 to 1994.
(1) Represents year of first service as a director of either of the
predecessors, Bank of Salinas or Cypress Bank, prior to their merger
resulting in Community Bank of Central California.
None of the directors/nominees for director listed above or executive
officers listed on page 11, were selected pursuant to any arrangement or
understanding other than with the directors and executive officers of the
Corporation acting within their capacities as such. There are no family
relationships between any two or more of the directors/nominees for director or
executive officers. No director/nominee for director or executive officer serves
as a director of (i) any company which has a class of securities registered
under Section 12, or which is subject to the periodic reporting requirements of
Section 15(d), of the Securities Exchange Act of 1934, or (ii) any company
registered as an investment company under the Investment Company Act of 1940.
Committees of the Board of Directors
The Audit Committee, chaired by Alfred P. Glover, and the Finance
Committee, chaired by C. Edward Boutonnet, whose common members include
Michael T. Lapsys, Duncan L. McCarter, Robert M. Mraule (Vice Chairman) and
Mose E. Thomas, Jr., oversee the Corporation's and Subsidiary's independent
public accountants, analyze the results of internal and regulatory
examinations and monitor the financial and accounting organization and
reporting. The Audit Committee met thirteen (13) times and the Finance
Committee met twelve (12) times in 2000. See the Audit Committee Reprot on
page 16 for additional information regarding the functions of the Audit
Committee.
The Board of Directors has not established a nominating committee. The
full Board of Directors performs the functions of a nominating committee with
responsibility for considering appropriate candidates for election as directors.
The Premises, Compensation and Performance Committee, whose members
include C. Edward Boutonnet (Vice Chairman), Duncan L. McCarter, Robert M.
Mraule (Chairman), Louis A. Souza and Mose E. Thomas, Jr., oversees physical
premises used in daily operations and reviews and establishes employee
benefits and the compensation paid to executive officers and other
employees. The Premises, Compensation and Performance Committee met twelve
(12) times in 2000.
The Investment/CRA/ALCO Committee, whose members include Bradford G.
Crandall, Alfred P. Glover, Michael T. Lapsys (Chairman) and Louis A. Souza
(Vice Chairman), has responsibility for asset/liability management, review of
the Corporation's investment portfolio, maintenance of shareholder relations
and community reinvestment. The Investment Committee met nine (9) times in
2000.
The Loan Committee, whose members include C. Edward Boutonnet (Vice
Chairman), Bradford G. Crandall (Chairman), Alfred P. Glover, Michael T.
Lapsys and Louis A. Souza has responsibility for establishing loan policy and
approving loans which exceed certain dollar limits. The Loan Committee met
twenty-four (24) times in 2000.
10
The Marketing and Shareholder Relations Committee, whose members include
Duncan L. McCarter (Chairman), Louis A. Souza and Mose E. Thomas (Vice
Chairman), has responsibility for administering the Corporation's marketing
policies and marketing programs. The Marketing Committee met eleven (11) times
in 2000.
During 2000, the Corporation's Board of Directors held twelve (12)
meetings. All Directors attended at least seventy-five percent (75%) of the
aggregate of the total number of meetings of the Board of Directors and the
number of meetings of the committees on which they served, except Directors
Crandall, McCarter and Thomas, who attended 67%, 67% and 53%, respectively.
Compensation of Directors
The fees paid to directors during 2000 included a base fee of $2,050 per
month for attendance at Board meetings of the Corporation and the Subsidiary. In
addition to the base fee, the Loan Committee Chairman received $200 per month,
the Chairmen of then Audit, Finance, Investment/CRA/ALCO, Marketing and
Shareholder Relations and the Premises, Compensation and Performance Committees
each received $100 per month. The total amount of fees paid to all Directors as
a group for attendance at Board and committee meetings was $205,000 in 2000.
EXECUTIVE OFFICERS
The following table sets forth names and certain information as of April
16, 2001, concerning the executive officers of the Corporation.
Corporation Bank
Executive Executive Principal Occupation
Name Age Since Since During Last Five Years
---- --- ----- ----- ----------------------
Nick 59 1994 1982 Chairman, President and
Ventimiglia Chief Executive Officer of
the Corporation since
December 1994. President and
Chief Executive Officer of
Community Bank of Central
California or its
predecessors, since 1982.
Organizer, Director,
President and Chief Executive
Officer, Bank of Salinas from
1982 to 1994.
John F. McCarthy 58 1994 1988 Executive Vice President
and Chief Operating Officer
of the Corporation, and of
Community Bank of Central
California or its
predecessors, since 1988
and 1994, respectively.
Secretary of the
Corporation, and of
Community Bank of Central
California or its
predecessors, since 1997.
Vice President and Regional
Manager, Hibernia Bank,
Salinas from 1986 to 1988;
Vice President and Regional
Manager, Crocker National
Bank from 1980 to 1986.
Robert M. 61 1998 1998 Senior Vice President and
Stanberry Chief Financial Officer of
the Corporation, and of
Community Bank of Central
California or its
predecessors, since 1998.
Vice President and Chief
Financial Officer, TriCo
Bancshares from 1993 to 1998.
11
Corporation Bank
Executive Executive Principal Occupation
Name Age Since Since During Last Five Years
---- --- ----- ----- ----------------------
Robert C. Blatter 40 1996 1996 Senior Vice President and
Loan Administrator of the
Corporation, and of
Community Bank of Central
California or its
predecessors, since
1996. Commercial Banking
Officer, Bank of America
from 1986 to 1989.
EXECUTIVE COMPENSATION
Set forth below is the summary compensation paid or accrued during the
three years ended December 31, 2000 to Nick Ventimiglia, John McCarthy, Robert
M. Stanberry and Robert C. Blatter, the only executive officers of the
Corporation and/or the Subsidiary.
SUMMARY COMPENSATION TABLE
- ---------------------------------------------------------------------------------------------------------------------------------
Long-Term Compensation
----------------------
Annual Compensation Awards Payouts
-------------------------- ------------ -------
(f) (g)
(e) Restricted Securities (h) (i)
(a) (c) (d) Other Annual Stock Underlying LTIP All Other
Name and (b) Salary Bonus Compensation Award(s) (Options/SARs Payouts Compensation
Principal Position Year ($)1/ ($)2/ ($)3/ ($) (#)4/ ($) ($) 5/
------------------ ---- ------ ----- ------------ -------- ------------ ------- ------------
Nick Ventimiglia, 2000 $255,000 $173,250 -- -- 11,000 -- $2,625
Chief Executive Officer; 1999 $240,000 $165,000 -- -- -- -- $2,111
President, Central Coast 1998 $240,000 $154,030 -- -- -- -- $2,000
Bancorp and Community
Bank
- ------------------------
John F. McCarthy, 2000 $165,500 $112,875 -- -- 8,250 -- $2,625
Executive Vice President, 1999 $157,500 $107,500 -- -- -- -- $2,111
Chief Operating Officer 1999 $150,000 $100,119 -- -- -- -- $2,000
and Corporate Secretary
- ------------------------
Robert M. Stanberry, 2000 $124,000 $ 63,000 -- -- 4,400 -- $2,453
Senior Vice President 1999 $117,875 $ 60,000 -- -- -- -- $2,457
and Chief Financial 1998 $ 14,626 -- -- -- 22,687 -- --
Officer
- ------------------------
Robert C. Blatter, 2000 $105,000 $ 63,000 -- -- 4,400 -- $2,625
Senior Vice President 1999 $ 90,000 $ 60,000 -- -- -- -- $2,111
and Loan Administrator 1998 $ 85,000 $ 60,000 -- -- -- -- $1,981
- ---------------------------------------------------------------------------------------------------------------------------------
1/ Amounts shown include cash and non-cash compensation earned and received by
executive officers as well as amounts earned but deferred at the election of
those officers under the 401(k) and Deferred Compensation Plans. The salary
paid to Mr. Stanberry in 1998 was the amount earned in the period from the
date of initial employment, November 16, 1998.
2/ Amounts indicated as bonus payments were earned for performance during 2000,
1999 and 1998.
3/ No executive officer received perquisites or other personal benefits in
excess of the lesser of $50,000 or 10% of each such officer's total annual
salary and bonus during 2000, 1999, and 1998.
4/ Amounts shown represent the number of shares granted, adjusted for all stock
dividends and stock splits. The Corporation had a 1982 Stock Option Plan (the
"1982 Plan") pursuant to which options could be granted to directors and key,
full-time salaried, officers and employees of the Corporation and the
Subsidiary. The 1982 Plan expired by its terms in 1993. Options granted under
the 1982 Plan were either incentive options or non- statutory options.
Options granted under the 1982 Plan became exercisable in accordance with a
vesting schedule established at the time of grant. Vesting could not extend
beyond ten years from the date of grant. Upon a change in control of the
Corporation, all outstanding options under the 1982 Plan will become fully
vested and exercisable. Options granted under the 1982 Plan were adjusted to
protect against dilution in the event of certain changes in the Corporation's
capitalization, including stock splits and stock dividends. The Corporation's
1994 Stock Option Plan, as amended, (the "1994 Plan") is substantially
similar to the 1982 Plan regarding provisions related to option grants,
vesting and dilution. Upon a change in control, options do not become fully
vested and exercisable, but may be assumed or equivalent options may be
substituted by a successor corporation. All options granted to the named
executive officers are incentive stock options and have an exercise price
equal to the fair market value of the Corporation's Common Stock on the date
of grant.
5/ Amounts shown for each named executive officer are 401(k) matching
contributions for the year indicated.
12
The following table sets forth information concerning options granted
during 2000 to the executive officers named in the Summary Compensation Table.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
- ----------------------------------------------------------------------------------------------------------
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term
----------------------------------------------------- -------------------------
(a) (b) (c) (d) (e) (f) (g)
- ----------------------------------------------------------------------------------------------------------
Number of Percentage
Securities of Total
Underlying Options/SARs
Option/SARs Granted to Exercise of
Granted Employees in Base Price Expiration
(#) Fiscal Year ($/Sh) Date 5% ($) 10% ($)
- ----------------------------------------------------------------------------------------------------------
Nick Ventimiglia 11,000 10% $14.55 3/26/10 $100,655 $255,078
- ----------------------------------------------------------------------------------------------------------
John F. McCarthy 8,250 8% $14.55 3/26/10 $ 75,491 $191,309
- ----------------------------------------------------------------------------------------------------------
Robert M. Stanberry 4,400 4% $14.55 3/26/10 $ 40,262 $102,031
- ----------------------------------------------------------------------------------------------------------
Robert C. Blatter 4,400 4% $14.55 3/26/10 $ 40,262 $102,031
- ----------------------------------------------------------------------------------------------------------
The following table sets forth the number of shares of Common Stock
acquired by each of the named executive officers upon the exercise of stock
options during fiscal 2000, the net value realized upon exercise, the number of
shares of Common Stock represented by outstanding stock options held by each of
the named executive officers as of December 31, 2000 and the value of such
options based on the closing price of the Corporation's Common Stock and certain
information concerning unexercised options under the 1994 Stock Option Plan.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
- -----------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised in-the-Money
Options/SARs at Options/SARs at
Fiscal Year-End Fiscal Year-End
Shares Value (#) ($)
Acquired on Realized Exercisable/ Exercisable/
Name Exercise (#) ($) Unexercisable Unexercisable (1)
- -----------------------------------------------------------------------------------------------------
Nick Ventimiglia - - 67,631 / 11,000 $641,717 / $178,800
- -----------------------------------------------------------------------------------------------------
John F. McCarthy - - 24,956 / 8,250 $203,255 / $134,100
- -----------------------------------------------------------------------------------------------------
Robert M. Stanberry - - 15,125 / 11,963 $ 53,309 / $ 98,176
- -----------------------------------------------------------------------------------------------------
Robert C. Blatter - - 21,779 / 4,400 $216,537 / $ 71,520
- -----------------------------------------------------------------------------------------------------
(1) The aggregate value has been determined based upon the closing price for the
Corporation's Common Stock at year-end, minus the exercise price.
13
Employment Contracts and Termination of Employment and Change in Control
Arrangements
The Corporation has entered into employment agreements with Messrs.
Ventimiglia, President and Chief Executive Officer; McCarthy, Executive Vice
President and Chief Operating Officer; Stanberry, Senior Vice President and
Chief Financial Officer; and Blatter, Senior Vice President and Loan
Administrator. The agreements provide for an original term of three years with
automatic one-year extensions until the agreements are terminated as described
below. The agreements provide for a base salary, which is disclosed for 2000 in
the Summary Compensation Table. The base salaries under each agreement are
reviewed annually and are subject to adjustment at the discretion of the Board
of Directors. Additionally, the agreements provide for, among other things: (a)
a discretionary annual bonus based upon the Corporation's achievement of certain
profitability, growth and asset quality standards as established by the Board of
Directors; (b) payment of base salary, reduced by the amounts received from
state disability insurance or workers' compensation or other similar insurance
benefits through policies provided by the Bank; (c) stock option grants under
the Corporation's stock option plan, at the sole discretion of the Board of
Directors; (d) four weeks annual vacation leave; (e) use of an automobile; and
(f) reimbursement for ordinary and necessary expenses incurred in connection
with employment.
The agreements may be terminated with or without cause, but if the
agreements are terminated without cause due to the occurrence of circumstances
that make it impossible or impractical for the Employer to conduct or continue
its business, the loss by the Employer of its legal capacity to contract or the
Employer's breach of the terms of the agreement, the employee is entitled to
receive severance compensation equal to six months of the existing base salary
(twelve months in the case of Mr. Ventimiglia). The agreements further provide
that in the event of a "change in control" as defined therein and within a
period of one and a half years (two years in the case of Mr. Ventimiglia)
following consummation of such change in control: (a) the employee's employment
is terminated; or (b) any adverse change occurs in the nature and scope of the
employee's position, responsibilities, duties, salary, benefits or location of
employment; or (c) any event occurs which reasonably constitutes a demotion,
significant diminution or constructive termination of employment, then the
employee will be entitled to receive severance compensation in an amount equal
to a multiple of the employee's average annual compensation for the five years
immediately preceding the change in control as follows: (a) two times for Mr.
Ventimiglia; (b) one and one-half times for Messrs. McCarthy and Stanberry; and
(c) one times for Mr. Blatter.
Recognizing the importance of building and retaining a competent
management team, additional agreements were entered into to provide post-
retirement benefits to Messers Ventimiglia, McCarthy and Blatter. The terms of
the agreements include the amounts each employee will receive upon the
occurrence of certain specified events, including formal retirement on or after
a specified age. The agreements generally provide for annual retirement benefit
payments of Ninety Thousand Dollars ($90,000) to Mr. Ventimiglia, Seventy
Thousand Dollars ($70,000) to Mr. McCarthy and Forty-five Thousand Dollars
($45,000) to Mr. Blatter. The annual retirement benefit amount is payable in
equal monthly installments over a fifteen (15) year period. In the event of an
employee's death, all remaining amounts due are anticipated to be paid to the
employee's designated beneficiary over the remaining payout period. Other events
which may alter when payment of the annual retirement benefit is to begin, or
the amount which is to be paid, include: (a) disability prior to retirement in
which case the employee shall be entitled to a lesser benefit payment amount
based upon the length of employment; and (b) either termination of employment
without cause or constructive termination following a "change of control," in
which case the employee is entitled to receive the full annual benefit payment
in equal monthly installments for fifteen (15) years beginning in the month
following the termination or "change of control." Generally, in those situations
where the employee is terminated for cause, or where the employee voluntarily
terminates his employment prior to retirement or other event triggering a right
to payments under the agreement, the employee is not entitled to the payment of
any benefits.
14
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The compensation of the executive officers of the Corporation and the Bank
is reviewed and approved annually by the Board of Directors on recommendation by
the Premises, Compensation and Performance Committee (the "Committee"). During
2000, Messrs. Boutonnet, McCarter, Mraule, Souza and Thomas were members of the
Committee. Messrs. Ventimiglia, McCarthy, Stanberry and Blatter, served as
executive officers of the Corporation and/or the Bank during 2000.
The Committee's philosophy is that compensation should be designed to
reflect the value created for shareholders while supporting the Corporation's
strategic goals. The Committee reviews annually the compensation of the
executive officers to insure that the Corporation's compensation programs are
related to financial performance and consistent generally with employers of
comparable size in the industry. Annual compensation for the Corporation's
executive officers includes the following components:
1) Base salary is related to the individual officer's level of
responsibility and comparison with comparable employers in the industry.
2) Annual cash bonuses are based on individual and Corporation
performance. Factors evaluated include the achievement of certain profitability,
growth and asset quality standards as established by the Board of Directors. The
bonus compensation is funded from the Corporation's pre-tax income. While many
of the factors considered in determining whether to award a bonus are objective,
the Committee recommendation may also include certain subjective factors as part
of the bonus analysis. During 2000, bonuses were recommended by the Committee
and approved by the Board of Directors for the named executive officers as
reflected in the Summary Compensation Table.
3) Stock option grants are intended to increase the executive officers'
interest in the Corporation's long-term success and to link the interests of the
executive officers with those of the shareholders as measured by the
Corporation's share price. Stock options are granted at the prevailing market
value of the Corporation's Common Stock and will only have value if the
Corporation's stock price increases. See the Summary Compensation Table, Option
Grant Table and Option/SAR Exercise Table, and notes thereto for further
description of stock options.
4) The Corporation matches salary deferred by employees participating in
its 401(k) Plan at a rate determined annually by the Board of Directors (25% of
salary deferred for 2000). Executive officers are eligible to participate in the
401(k) plan. See the Summary Compensation Table for further 401(k) plan
information.
Submitted by:
/s/ ROBERT M. MRAULE /s/ C. EDWARD BOUTONNET /s/ DUNCAN L. MCCARTER
- ------------------------- ----------------------- ----------------------
Robert M. Mraule, DDS, MD C. Edward Boutonnet Duncan L. McCarter, R.Ph.
/s/ LOUIS A. SOUZA /s/ MOSE E. THOMAS
- ------------------------- -----------------------
Louis A. Souza Mose E. Thomas, Jr.
15
AUDIT COMMITTEE REPORT
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE
CORPORATION'S PREVIOUS OR FUTURE FILINGS UNDER THE SECURITIES ACT OF 1933 OR THE
SECURITIES EXCHANGE ACT OF 1934 THAT MIGHT INCORPORATE THIS PROXY STATEMENT OR
FUTURE FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, IN WHOLE OR IN PART,
THE FOLLOWING REPORT SHALL NOT BE DEEMED TO BE INCORPORATED BY REFERENCE INTO
ANY SUCH FILING.
The Audit Committee consists of the following members of the Corporation's
Board of Directors: Alfred P. Glover, Michael T. Lapsys, Duncan L. McCarter,
Robert M. Mraule, and Mose E. Thomas, Jr. . Each of the members of the
Committee is independent as defined under the National Association of
Securities Dealers' listing standards. The Committee operates under a
written charter adopted by the Board of Directors which is included in this
proxy statement as Appendix A.
The Committee's responsibilities include providing advice with respect to
the Corporation's financial matters and assisting the Board of Directors in
discharging its responsibilities regarding accounting, tax and legal compliance.
The Committee's primary responsibilities are to: (1) serve as an independent and
objective party to monitor the Corporation's financial reporting process and
internal control system; (2) review and evaluate the audit efforts of the
Corporation's independent accountants and internal auditors (BancAudit
Associates LLC); (3) evaluate the Corporation's quarterly financial performance
as well as its compliance with laws and regulations; (4) oversee management's
establishment and enforcement of financial policies and business practices; and
(5) facilitate communication among the independent accountants, financial and
senior management, the internal auditors and the Board of Directors.
The Committee has reviewed and discussed the audited financial statements
of the Corporation for the fiscal year ended December 31, 2000 with the
Corporation's management. The Committee has discussed with Deloitte & Touche
LLP, the Corporation's independent public accountants, the matters required to
be discussed by Statement on Auditing Standards No. 61 (Communication with Audit
Committees). The Committee has also received the written disclosures and the
letter from Deloitte & Touche LLP required by Independence Standards Board
Standard No. 1 (Independence Discussion with Audit Committees) and the Committee
has discussed the independence of Deloitte & Touche LLP with that firm.
Based on the Committee's review and discussions noted above, the Committee
recommended to the Board of Directors that the Corporation's audited financial
statements be included in the Corporation's Annual Report on Form 10-K for the
fiscal year ended December 31, 2000 for filing with the Securities and Exchange
Commission.
Submitted by:
/s/ ALFRED P. GLOVER /s/ ROBERT M. MRAULE /s/ MICHAEL T. LAPSYS
- ---------------------- ------------------------ ---------------------
Alfred P. Glover Robert M. Mraule, DDS, MD Michael T. Lapsys
/s/ DUNCAN L. MCCARTER /s/ MOSE E. THOMAS
- ---------------------- -----------------------
Duncan L. McCarter, R.Ph Mose E. Thomas, Jr.
16
COMPARISON OF CENTRAL COAST BANCORP SHAREHOLDER RETURN
Set forth below is a line graph comparing the annual percentage change in
the cumulative total return on the Corporation's Common Stock with the
cumulative total return of the S&P 500 and the Nasdaq Bank Index as of the end
of each of the Corporation's last five fiscal years.
The following table assumes that $100.00 was invested on December 31, 1995
in Central Coast Bancorp Common Stock and each index, and that all dividends
were reinvested. Returns have been adjusted for stock dividends and stock splits
declared by Central Coast Bancorp. Shareholder returns over the indicated period
should not be considered indicative of future shareholder returns.
[GRAPHIC OMITTED]
Index 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
- ----- -------- -------- -------- -------- -------- --------
Central Coast Bancorp 100.00 138.96 210.97 226.44 232.07 276.55
S&P 500 100.00 123.18 164.36 212.07 256.84 233.95
Nasdaq Bank Stocks 100.00 132.04 221.06 219.64 211.14 241.08
Changes in Control
The Corporation knows of no arrangements, including any pledge by any
person of securities of the Corporation, the operation of which may, at a
subsequent date, result in a change of control of the Corporation.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors, executive officers and ten percent or more shareholders
of the Corporation's equity securities, to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes of ownership of
the Corporation's equity securities. Officers, directors and ten percent or more
shareholders are required by SEC regulation to furnish the Corporation with
copies of all Section 16(a) forms they file. To the Corporation's knowledge,
based solely on review of the copies of such reports furnished to the
Corporation and written representations that no other reports were required,
during the fiscal year ended December 31, 2000,
17
except for Messrs. Blatter, Crandall and Mraule, who filed one late report on a
Form 4, all Section 16(a) filing requirements applicable to its executive
officers, directors and beneficial owners of ten percent or more of the
Corporation's equity securities appear to have been met.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Others
There have been no transactions, or series of similar transactions, during
2000, or any currently proposed transaction, or series of similar transactions,
to which the Corporation or the Bank was or is to be a party, in which the
amount involved exceeded or will exceed $60,000 and in which any director of the
Corporation or the Bank, executive officer of the Corporation or the Bank, any
shareholder owning of record or beneficially 5% or more of the Corporation's
Common Stock, or any member of the immediate family of any of the foregoing
persons, had, or will have, a direct or indirect material interest.
Certain Business Relationships
There were no business relationships during 2000 of the type requiring
disclosure under Item 404(b) of Regulation S-K.
Indebtedness of Management
The Corporation, through the Bank, has had, and expects in the future to
have banking transactions in the ordinary course of its business with many of
the Corporation's directors and officers and their associates, including
transactions with corporations of which such persons are directors, officers or
controlling shareholders, on substantially the same terms (including interest
rates and collateral) as those prevailing for comparable transactions with
others. Management believes that in 2000 such transactions comprising loans did
not involve more than the normal risk of collectibility or present other
unfavorable features. Loans to executive officers of the Corporation and the
Bank are subject to limitations as to amount and purposes prescribed in part by
the Federal Reserve Act, as amended, and the regulations of the Federal Deposit
Insurance Corporation.
18
PROPOSAL NO. 4
RATIFICATION AND APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Deloitte & Touche LLP, certified public
accountants, served the Corporation as its independent public accountants and
auditors for the 2000 fiscal year at the direction of the Board of Directors of
the Corporation. Deloitte & Touche LLP has no interests, financial or otherwise,
in the Corporation. The services rendered by Deloitte & Touche LLP during the
2000 fiscal year were audit services, consultation in connection with various
accounting matters, and preparation of the Corporation's income tax returns. The
fees paid to Deloitte & Touche LLP for professional services during the 2000
fiscal year were as follows:
Audit Fees
The Corporation paid Deloitte & Touche LLP $200,000 during the 2000 fiscal
year for the audit of the Corporation's annual financial statements for the most
recent fiscal year and for reviews of the Corporation's financial statements
included in the Corporation's Form 10-Q filings for the 2000 fiscal year.
Financial Information Systems Design and Implementation Fees
No services were provided and no payments made for financial information systems
design and implementation.
All Other Fees
The Corporation paid Deloitte & Touche LLP $27,000 during the 2000 fiscal
year for all other services rendered by Deloitte & Touche LLP to the
Corporation.
The Board of Directors of the Corporation approved each professional
service rendered by Deloitte & Touche LLP during the 2000 fiscal year and
considered whether the provision of such services is compatible with Deloitte &
Touche LLP maintaining its independence. It is anticipated that one of the
representatives of that firm will be present at the Meeting and will be able to
make a statement if they so desire and answer appropriate questions.
The Board of Directors has selected Deloitte & Touche LLP to serve as the
Corporation's independent public accountants for the year 2001 and recommends
that shareholders vote "FOR" the ratification of the appointment of Deloitte &
Touche LLP.
19
ANNUAL REPORT
The Annual Report of the Corporation containing audited financial
statements for the fiscal year ended December 31, 2000 is included in this
mailing to shareholders.
FORM 10-K
A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED, IS AVAILABLE TO SHAREHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO
JOHN F. McCARTHY, SECRETARY, CENTRAL COAST BANCORP, 301 MAIN STREET, SALINAS,
CALIFORNIA, 93901.
SHAREHOLDERS' PROPOSALS
Next year's Annual Meeting of Shareholders will be held on May 16, 2002.
The deadline for shareholders to submit proposals for inclusion in the Proxy
Statement and form of Proxy for the 2002 Annual Meeting of Shareholders is
December 21, 2001. Management of the Corporation will have discretionary
authority to vote proxies obtained by it in connection with any shareholder
proposal not submitted on or before the December 21, 2001 deadline. All
proposals should be submitted by Certified Mail - Return Receipt Requested, to
John F. McCarthy, Secretary, Central Coast Bancorp, 301 Main Street, Salinas,
California, 93901.
OTHER MATTERS
The Board of Directors knows of no other matters which will be brought
before the Meeting, but if such matters are properly presented to the Meeting,
proxies solicited hereby will be voted in accordance with the judgment of the
persons holding such proxies. All shares represented by duly executed proxies
will be voted at the Meeting in accordance with the terms of such proxies.
CENTRAL COAST BANCORP
Salinas, California
April 26, 2001 By: /s/ JOHN F. MCCARTHY
---------------------
John F. McCarthy
20
APPENDIX A
Audit Charter
ARTICLE 1
PURPOSE
- -------
The Audit Committee shall oversee the integrity of the financial reporting
process and internal controls of the Company/Bank (the Terms Company and Bank
refer to each entity jointly). The Audit Committee is responsible for the
selection, evaluation and replacement of independent and internal auditors. The
Committee shall confirm and assure the independence of the independent auditor
and the objectivity of the internal auditor. The Audit Committee shall monitor
the control environment of the Company/Bank and shall review the adequacy of
internal control systems, including internal audit activities, to ensure the
accuracy of financial reporting. The Audit Committee, working with management,
shall help ensure that the involvement of the Company's/Bank's internal auditor
in the audit of the Company's/Bank's entire financial reporting process is
appropriate and properly coordinated with the independent Auditor. Finally, the
Audit Committee shall foster a strong ethical climate within the Company/Bank
and maintain open channels of communication.
The Audit Committee shall report regularly to the Board of Directors of
the Company/Bank ("Board"). The Board and management shall ensure that the Audit
Committee has adequate resources and authority to discharge its responsibilities
and to act as informed, vigilant and effective overseers of the Company's/Bank's
financial reporting process and internal controls.
ARTICLE 2
DEFINITIONS
- -----------
2.1 Affiliate: An "Affiliate" of the Company/Bank or of any other entity,
herein after acquired, shall mean entity that directly or indirectly
controls, or is controlled by, or is under common control with, the
Company/Bank or the other entity, as the case maybe.
2.2 Audit Services: "Audit Services" is any work required to be performed
by an Independent Auditor or Internal Auditor.
2.3 Call Report: A "Call Report" for any period is the consolidated Report
of Condition and Income for the Company/Bank.
2.4 Financial Reporting: The "Financial Reporting" of the Company/Bank is the
recording, processing, summarizing and presenting of financial data in
annual Financial Statements, interim Financial Statements and regulatory
reports.
2.5 Financial Statements: The "Financial Statements" of the Company/Bank are
the statements and accompanying footnotes that are intended to show the
financial position of the Company/Bank at a point in time, the results of
operation and the cash flows of the Company/Bank, over a period of time.
2.6 Governmental Entity: A "Governmental Entity" shall mean (1) any national
government, or political subdivision thereof or local jurisdiction
therein; or (2) any board, commission, department, division, organ,
instrumentality, court or agency of any entity described in (1) above,
however constituted.
21
2.7 Independent Auditor: An "Independent Auditor" is any individual, including
an auditor, who performs or participates in providing Audit Services and
any accounting firm, including a corporation, proprietorship, partnership
or other business comprised of Independent Auditors providing Audit
Services.
2.8 Independent Director: An " Independent Director" of the Company/Bank is a
director of the Company/Bank who (1) is not and has not been an officer or
employee of the Company/Bank or any of its Affiliates within the preceding
3 years, (2) the Board has determined is independent of management of the
Company/Bank after considering whether (a) the director serves or has
served as a consultant, advisor, promoter, underwriter, legal counsel, or
trustee to the Company/Bank or any of its Affiliates; (b) the director is
a relative of an officer or other employee of the Company/Bank or any of
its Affiliates currently or in the past three years; (c) the director has
received compensation in excess of $60,000, except for board services,
retirement benefits or non-discretionary compensation; (d) a company
affiliated with the director has received or has made payments to / from
the Company/Bank in excess of 5% of gross revenues or $200k, whichever is
more in the past 3 years, and (e) the director is employed as executive of
another entity where any executive of the Company / Bank serves on that
entity's compensation committee.
ARTICLE 3
ORGANIZATION
- ------------
3.1 Membership: The Audit Committee shall consist of not less than three (3)
independent directors who must be able to read and understand financial
statements. In addition, at least one member must have financial
sophistication. The Audit Committee may have one non independent director
on the committee with Board approval and proxy disclosure if the board,
under exceptional and limited circumstances, determines that membership on
the committee by the individual is required by the best interests of the
corporation and its shareholders; however, current employee, officer or
immediate family is not permitted for any reason.
3.2 Appointment and Term: The Board of Directors shall appoint the members of
the Audit Committee at its annual meeting for a term of one year.
3.3 Chairperson: The Chairperson of the Audit Committee shall be appointed by
the Board of Directors of the Company/Bank from among the members of the
Audit Committee. The Chairperson of the Audit Committee shall preside at
all meetings of the Audit Committee and shall perform such other duties as
may be assigned by the Board of Directors from time to time.
3.4 Removal: Except as provided in this paragraph, a member of the Audit
Committee may be removed from the Audit Committee upon the vote of a
majority of the Board. Any member of the Audit Committee, effective as of
the date such member ceases to be a member of the Board, shall also cease
to be a member of the Audit Committee. The Board shall remove from the
Audit Committee:
(a) Any member who the Board determines has breached such member's
obligations under the Company's/Bank's Code of Ethics and
Statement of Responsibilities;
(b) Any member who fails to attend a minimum of seventy-five percent
(75%) of all general and special meetings of the Audit Committee,
such determination to be made on an annual basis at the
Organizational meetings of the Company/Bank;
22
(c) Any member who has been convicted of a felony or who has engaged
in any dishonest or fraudulent activity, as determined by a Court
of competent jurisdiction;
(d) Any member who has grossly abused such member's authority as an
Audit Committee member and/or Board member of the Company/Bank, as
determined by the Board; or
(e) Any member who has been declared of unsound mind.
3.5 Resignation: Any member of the Audit Committee may resign effective upon
giving written notice to the Chairperson of the Board of Directors unless
the notice specifies a later time for the effectiveness of such
resignation. If the resignation is effective at a later time, a successor
may be appointed to fill the vacancy on the Audit Committee when the
resignation becomes effective.
3.6 Vacancies: All vacancies on the Audit Committee, however created, may be
filled by a majority vote of the Board of Directors, and each member of
the Audit Committee so appointed shall hold office until the expiration of
the term for which appointed and until a successor is appointed and
qualified.
3.7 Regular Meetings: Regular meetings of the Audit Committee shall be held at
least quarterly during each fiscal year of the Company/Bank at such time
and place as the Audit Committee by resolution shall determine. The Audit
Committee shall meet prior to the commencement of the annual audit by the
Company's/Bank's Independent Auditor to review the scope and approach of
the annual audit and at the conclusion thereof review such audit,
including any comments or recommendations of the independent auditors. The
Audit Committee may provide for other regular meetings of the Audit
Committee by resolution. Regular meetings of the Audit Committee may be
held without notice.
3.8 Special Meetings: Special meetings of the Audit Committee may be called at
any time by the Chairperson of the Audit Committee, any two members
thereof, the Chairperson of the Board of Directors or a majority of the
Board of Directors. Special meetings may be held upon four (4) days'
notice by mail or twenty-four (24) hours' notice delivered personally or
by telephone, facsimile or telegraph.
3.9 Voting: A majority of the Audit Committee members shall constitute a
quorum for the transaction of business. Every action consented by a
majority of the Audit Committee members present at a meeting (at which a
quorum is present) shall be regarded as an act of the Audit Committee.
3.10 Minutes: The Audit Committee shall maintain minutes and other relevant
records of its meetings and activities. Such minutes shall be made
available for review by the Board of Directors, and by bank regulatory
agencies.
3.11 Telephone Conference Meetings: Members of the Audit Committee may
participate in a meeting through the use of conference telephone or
similar communication equipment, so long as all members participating in
such meetings can hear one another. Participation in a meeting pursuant to
this Section will be recorded in the minutes and will constitute present
in person at such meeting.
3.12 Access to Counsel: The Audit Committee may retain its own outside counsel,
to be paid at the expense of the Company/Bank, at its discretion and
without the prior permission or approval of the Board of Directors or the
management of the Company/Bank.
23
3.13 Authority to meet with Auditors: The Audit Committee shall have the
authority without obtaining the permission of the Board of Directors of
the Company/Bank to meet at any time with the Company's/Bank's Independent
Auditor or any of the Company's/Bank's internal audit personnel without
including any of the other members or representatives of the management of
the Company/Bank in such meeting.
3.14 Internal Auditor:
(a) Audit Committee Appointment of an Internal Auditor. The Audit
Committee shall appoint the Company's/Bank's Internal Auditor, who
shall serve at the pleasure of the Audit Committee, and who shall
report on all matters directly to the Chairperson of the Audit
Committee. The Audit Committee shall be responsible for overseeing
and maintaining the independence of the Internal Auditor. The
Company's/Bank's Internal Auditor shall meet with the Audit Committee
on a regular basis, attend meetings of the Audit Committee and report
regularly on the activities of the Company's/Bank's internal auditing
personnel. The internal auditor shall be accountable to the Audit
Committee and the Board of Directors.
(b) Internal Auditor Relationship with Company/Bank Management. The
Internal Auditor shall be available to the Chief Executive Officer
and other officers of the Company/Bank for opinions and advice
concerning the Company's/Bank's internal controls. In particular, the
Internal Auditor shall advise the Chief Executive Officer and other
officers of the Company/Bank as to whether the Company's/Bank's
accounting systems, internal controls, and policies and procedures
are adequate, efficient, effective, and followed by Company/Bank
personnel. The Internal Auditor's performance under this paragraph
with respect to the Company's/Bank's management periodically shall be
reviewed by the Chief Executive Officer and shall be part of the
Internal Auditor's annual performance review.
3.15 Amendments:
(a) General. This charter of the Audit Committee may be amended only by a
resolution adopted by a majority of the Outside Directors (whether or
not constituting a quorum of the entire Board of Directors).
(b) Compliance with Rules issued by Regulatory Agencies. It is the intent
of the Board of Directors that this Audit Committee Charter complies
with applicable legal rules, including rules and guidelines of the
Federal Deposit Insurance Corporation, The Federal Reserve Bank, The
Securities & Exchange Commission and the NASDAQ Stock Exchange. It is
also the intent of the Board of Directors to amend this Charter, from
time to time, to comply with changes in applicable law including
changes in the final rules and guidelines of the organizations listed
above.
ARTICLE 4
DUTIES AND RESPONSIBILITIES
4.1 Duties and Responsibilities: The duties and responsibilities of the
Audit Committee shall include the following:
a) Review of Reports. The Audit Committee shall review with management
and the Independent Auditor, quarterly interim financial information.
The Committee shall review and discuss the audited annual financial
statements with management and the independent auditors and recommend
to the board of directors inclusion of such statements in the annual
report on Form10-K. The Audit Committee shall inquire as to the
independent auditors qualitative judgments about the appropriateness,
not just the acceptability of the accounting principles and the
clarity of the financial disclosure practices used or proposed to be
adopted by the Company / Bank.
24
b) Approval Selection and Termination of Independent Auditor. The Audit
Committee shall approve the selection and termination of the
Company's/Bank's Independent Auditor. The Audit Committee shall
arrange for pre-filing independent accountant's review of quarterly
interim financial statements and for an audit of the annual financial
statements. Prior to the commencement of any proposed audit of the
Company's/Bank's financial records or Financial Reporting by the
Independent Auditor, the Audit Committee shall review and approve the
scope and approach of the proposed audit. The Audit Committee shall
confirm and assure the independence of the independent auditor.
c) Review of Adjustments, Suggestions, and Disagreements. The Audit
Committee shall review all significant adjustments to the
Company's/Bank's Financial Statements suggested by the
Company's/Bank's Independent Auditor and address all significant
disagreements between the Independent Auditor and the management of
the Company/Bank. The management of the Company/Bank shall advise the
Audit Committee of any significant accounting issue on which it seeks
to obtain an opinion from any auditor other than the Company's/Bank's
Independent Auditor or by any Governmental Entity for improvements to
the Company's/Bank's internal financial controls or Financial
Reporting practices and procedures.
d) Oversight of Internal Accounting Controls. The Audit Committee shall
review the adequacy of the Company's/Bank's systems and procedures of
internal accounting controls over Financial Reporting. The Audit
Committee shall review the handling by the Company's/Bank's
management of any material inadequacies or reportable conditions
identified by the Company's/Bank's internal auditing personnel or
Independent Auditor in the systems and procedures of internal
accounting records.
e) Evaluation of Internal Audit Function. The Audit Committee shall from
time to time, and at least quarterly, evaluate the activities,
organizational structure, qualifications, utilization and
effectiveness of the Company's/Bank's internal auditing personnel.
The Audit Committee shall review with management and the Internal
Auditor their assessments of the adequacy of internal controls,
including identified material weakness in internal controls. The
Audit Committee shall review with management and with the Internal
Auditor measures for detection and prevention of management override
or compromise of the internal control system. Finally, the Audit
Committee shall work with management and the Internal Auditor to
assure comprehensive coverage of the Company's/Bank's operations by
audits.
f) Oversight of Internal Credit Review Process. The Audit Committee
shall review the adequacy of the Company's/Bank's internal credit
review process. The Audit Committee may at it discretion obtain
assistance in conducting such review from one or more outside
consultants selected by the Audit Committee whose fees, if any, shall
be paid by the Company/Bank with, however, the prior permission of
the Board.
g) Duties Provided for Under Applicable Law. The Audit Committee shall
have all such other duties and responsibilities specifically provided
for as audit committee responsibilities under applicable law.
h) Compliance with Banking Regulations and Accounting Standards. The
Audit Committee shall ensure the Company's/Bank's compliance with all
applicable banking regulations and accounting rules, as such
regulations and rules relate to any of the duties and
responsibilities.
i) Annual Reporting to Shareholders. The Audit committee shall report
annually in the proxy statement the following:
25
- the Audit committee's review and discussion of the financial
statements with management
- the Audit committee's discussion with the independent
auditors of the written independence disclosures required
by Independence Standards Board Statement No. 1
- the audit Committee's recommendation to the Board of
Directors that the audited financial statements be included
in the Company's annual report on Form 10K
4.2 Access to Corporate Resources: The Audit Committee shall at all times have
access to resources of the Company/Bank, including personnel and
electronic computing or data processing support (subject to the
constraints of the annual operating budget approved by the Board), which
the Audit Committee may deem necessary to enable the Audit Committee to
perform its duties and responsibilities as set forth in this Article 4.
26
APPENDIX B
Text of Proposed Amendments to the Central Coast Bancorp Articles of
Incorporation and Bylaws to Provide for the Classification of the Board of
Directors
The articles of incorporation of Central Coast Bancorp shall be amended by
adding thereto a new Article VII which shall read as set forth below:
VII
(a) The number of directors which shall constitute the whole board of
directors of this corporation shall be specified in the bylaws of the
corporation.
(b) In the event that the authorized number of directors shall be fixed
at nine (9) or more, the board of directors shall be divided into
three classes: Class I, Class II and Class III, each consisting of a
number of directors equal as nearly as practicable to one-third the
total number of directors. Directors in Class I shall initially serve
for a term expiring at the 2002 annual meeting of shareholders,
directors in Class II shall initially serve for a term expiring at
the 2003 annual meeting of shareholders, and directors in Class III
shall initially serve for a term expiring at the 2004 annual meeting
of shareholders. Thereafter, each director shall serve for a term
ending at the third annual shareholders meeting following the annual
meeting at which such director was elected. In the event that the
authorized number of directors shall be fixed with at least six (6)
but less than nine (9), the board of directors shall be divided into
two classes, designated Class I and Class II, each consisting of
one-half of the directors or as close an approximation as possible.
At each annual meeting, each of the successors to the directors of
the class whose term shall have expired at such annual meeting shall
be elected for a term running until the second annual meeting next
succeeding his or her election and until his or her successor shall
have been duly elected and qualified. The foregoing notwithstanding,
each director shall serve until his or her successor shall have been
duly elected and qualified, unless he or she shall resign, die,
become disqualified or disabled, or shall otherwise be removed.
(c) At each annual election, the directors chosen to succeed those whose
terms then expire shall be identified as being of the same class as
the directors they succeed, unless, by reason of any intervening
changes in the authorized number of directors, the board of directors
shall designate one or more directorships whose term then expires as
directorships of another class in order more nearly to achieve
equality in the number of directors among the classes. When the board
of directors fills a vacancy resulting from the resignation, death,
disqualification or removal of a director, the director chosen to
fill that vacancy shall be of the same class as the director he or
she succeeds, unless, by reason of any previous changes in the
authorized number of directors, the board of directors shall
designate the vacant directorship as a directorship of another class
in order more nearly to achieve equality in the number of directors
among the classes.
(d) Notwithstanding the rule that the classes shall be as nearly equal in
number of directors as possible, in the event of any change in the
authorized number of directors, each director then continuing to
serve as such will nevertheless continue as a director of the class
of which he or she is a member, until the expiration of his current
term or his or her earlier resignation, death, disqualification or
removal. If any newly
27
created directorship or vacancy on the board of directors, consistent
with the rule that the three classes shall be as nearly equal in
number of directors as possible, may be allocated to one or two or
more classes, the board of directors shall allocate it to that of the
available class whose term of office is due to expire at the earliest
date following such allocation.
Section 17 of Article III of the Central Coast Bancorp bylaws shall
be amended in its entirety to read as follows:
Section 17. Election and Term of Office. The directors shall be
elected annually by the shareholders at the annual meeting of the
shareholders; provided, that if for any reason, the annual meeting or an
adjournment thereof is not held or the directors are not elected thereat,
then the directors may be elected at any special meeting of the
shareholders called and held for that purpose. The term of office of the
directors shall, except as provided in Section 18, begin immediately after
their election and shall continue until their respective successors are
elected and qualified. In the event that the authorized number of
directors shall be fixed at nine (9) or more, the board of directors shall
be divided into three classes, designated Class I, Class II and Class III.
Each class shall consist of one-third of the directors or as close an
approximation as possible. The initial term of office of the directors of
Class I shall expire at the annual meeting to be held during fiscal year
2002, the initial term of office of the directors of Class II shall expire
at the annual meeting to be held during fiscal year 2003 and the initial
term of office of the directors of Class III shall expire at the annual
meeting to be held during fiscal year 2004. At each annual meeting,
commencing with the annual meeting to be held during fiscal year 2002,
each of the successors to the directors of the class whose term shall have
expired at such annual meeting shall be elected for a term running until
the third annual meeting next succeeding his or her election and until his
or her successor shall have been duly elected and qualified. In the event
that the authorized number of directors shall be fixed with at least six
(6) but less than nine (9), the board of directors shall be divided into
two classes, designated Class I and Class II. Each class shall consist of
one-half of the directors or as close an approximation as possible. At
each annual meeting, each of the successors to the directors of the class
whose term shall have expired at such annual meeting shall be elected for
a term running until the second annual meeting next succeeding his or her
election and until his or her successor shall have been duly elected and
qualified. Notwithstanding the rule that the classes shall be as nearly
equal in number of directors as possible, in the event of any change in
the authorized number of directors, each director then continuing to serve
as such shall nevertheless continue as a director of the class of which he
or she is a member until the expiration of his or her current term, or his
or her prior death, resignation or removal. At such annual election, the
directors chosen to succeed those whose terms then expire shall be of the
same class as the directors they succeed, unless, by reason of any
intervening changes in the authorized number of directors, the board of
directors shall designate one or more directorships whose term then
expires as directorships of another class in order more nearly to achieve
equality of number of directors among the classes.
This Section 17 may be amended or repealed only by approval of the
board of directors and the outstanding shares (as defined in Section 152
of the California General Corporation Law) voting as a single class,
notwithstanding Section 903 of the California General Corporation Law.
28
APPENDIX C
Text of Proposed Amendments to Central Coast Bancorp Articles of
Incorporation and Bylaws to Eliminate Cumulative Voting in the Election of
Directors
The articles of incorporation of Central Coast Bancorp shall be amended by
adding thereto a new Article VIII which shall read as set forth below:
VIII
No holder of any class of stock of the corporation shall be entitled to
cumulative voting in connection with any election of directors of the
corporation.
Section 11 of Article II of the Central Coast Bancorp bylaws shall be
amended in its entirety to read as follows:
Section 11. Voting Rights; No Cumulative Voting. Only persons in
whose names shares entitled to vote stand on the stock records of the
corporation at the close of business on the record date fixed by the Board
of Directors as provided in Section 41 of these Bylaws for the
determination of shareholders of record shall be entitled to notice of and
to vote at a meeting of shareholders. If no record date is fixed, the
record date for determining shareholders entitled to notice of or to vote
at a meeting of shareholders shall be at the close of business or the
business day next preceding the day on which notice is given or, if notice
is waived, at the close of business on the business day next preceding the
day on which the meeting is held; the record date for determining
corporate action in writing without a meeting, when no prior action by the
Board of Directors has been taken, shall be the day on which the first
written consent is given; and the record date for determining shareholders
for any other purpose shall be at the close of business on the day on
which the Board of Directors adopts the resolution relating thereto, or
the 60th day prior to the date of such other action, whichever is later.
No holder of any class of stock of the corporation shall be entitled
to cumulate votes in connection with any election of directors of the
corporation.
In any election of directors, the candidates receiving the highest
number of votes of the shares entitled to be voted for them are elected.
Voting may be by voice or ballot, provided that any election of
directors must be by ballot upon the demand of any shareholder made at the
meeting and before the voting begins.
29
CENTRAL COAST BANCORP
Solicited by the Board of Directors
for the Annual Meeting of Shareholders
on June 11, 2001
THIS PROXY IS SOLICITED BY, AND ON BEHALF OF, THE BOARD OF DIRECTORS
AND MAY BE REVOKED PRIOR TO ITS EXERCISE.
The undersigned holder of common stock acknowledges receipt of a copy of the
notice of annual meeting of shareholders of Central Coast Bancorp and the
accompanying proxy statement dated April 26, 2001, and revoking any proxy
heretofore given, hereby constitutes and appoints C. Edward Boutonnet, and
Nick Ventimiglia and each of them, with full power of substitution, as
attorneys and proxies to appear and vote all of the shares of common stock of
Central Coast Bancorp, a California corporation, outstanding in the name of
the undersigned which the undersigned could vote if personally present and
acting at the Annual Meeting of Shareholders of Central Coast Bancorp, to be
held at 301 Main Street, Salinas, California, on Monday, June 11, 2001, at
5:30 p.m. or at any postponements or adjournments thereof, upon the following
items as set forth in the notice of meeting and proxy statement and to vote
according to their discretion on all matters which may be properly presented
for action at the meeting or any postponements or adjournments thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2, 3, AND 4 SET
FORTH ON THE REVERSE SIDE. THE PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS
DIRECTED, IF NO DIRECTION IS MADE, IT WILL BE VOTED "FOR" PROPOSALS 1, 2, 3,
AND 4 SET FORTH ABOVE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
FOR all WITHHOLD
nominees AUTHORITY
listed at right to vote UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED
(except as for all "FOR" THE FOLLOWING ITEMS:
marked to nominees FOR AGAINST ABSTAIN
the contrary listed
at right) at right
3. To elect as Nominees: C. Edward Boutonnet 1. To approve amendments
director of Bradford G. Crandall to the Central Coast
Central Coast Alfred P. Glover Bancorp articles of
Bancorp Michael T. Lapsys incorporation and bylaws
management's Duncan L. McCarter, R. Ph. to provide for the
nominees set Robert M. Mraule, D.D.S., M.D. classification of the
forth below who [__] [__] Louis M. Souza board of directors. [_] [_] [_]
will be elected Mose E. Thomas, Jr. 2. To approve amendments
(a) to the class designated in the Nick Ventimilia to the Central Coast
accompanying proxy statement dated Bancorp articles of
April 26, 2001 provided that Proposal incorporation and bylaws
No. 1 at right is approved and (b) to eliminate cumulative
in the event Proposal No. 1 is not voting in the election
approved, as directors without of directors. [_] [_] [_]
classification. 4. To ratify the appointment
of Deloitte & Touche, LLP
as independent
accountants for the year
INSTRUCTION: To withhold authority to vote for 2001. [_] [_] [_]
any individual nominee, strike a line through the 5. In their discretion to
nominee's name in the list at right. transact such other
business as may properly
come before the annual
meeting or any post-
ponements or adjournments
of the annual meeting.
I/we do [_] do not [_]
expect to attend this meeting
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING,
PLEASE DATE, SIGN AND RETURN THIS PROXY AS
PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE
PAID ENVELOPE.
SHAREHOLDER(S) SIGNATURE Dated 2001
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Please date and sign exactly as your name(s) appears. When signing as attorney, executor, administrator, trustee, or guardian
please give full title. If more than one trustee, all should sign. All joint ownership should sign.