EXHIBIT 99.8
[LOGO OF COMMERCE BANK
APPEARS HERE]
April 11, 1994
Dear Fellow Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders to
be held at the Radisson Hotel in Hampton, Virginia on Thursday, May 12, 1994, at
12:00 noon. The formal notice of the Annual Meeting and Proxy Statement
describing the matters to be presented are enclosed. Please give them your
prompt and careful attention.
The matters scheduled for consideration at the meeting are the election of
directors, the ratification of the appointment of directors to the six Regional
Boards serving the Virginia Beach, Portsmouth, Peninsula, Chesapeake, Norfolk
and Suffolk communities, the approval of an amendment to the Bank's Articles of
Incorporation to increase the number of authorized shares of Common Stock to
10,000,000, and the ratification of the appointment of independent auditors. We
will also report to you on the Bank's condition and performance.
The meeting will be followed by a reception at the Hampton Air & Space
Museum that we hope you will be able to attend.
Your continuing interest in the business of Commerce Bank is appreciated,
and we hope you will attend the Annual Meeting. Whether or not you are
personally present, it is important that your shares be represented at the
meeting. Accordingly, please sign, date, and mail the enclosed Proxy promptly.
If you wish to vote in accordance with the Board of Directors' recommendations,
it is not necessary to specify your choices. You may merely sign, date, and
return the enclosed Proxy.
We hope you will be with us.
Cordially,
/s/ Thomas C. Broyles /s/ G. Robert Aston, Jr.
Thomas C. Broyles G. Robert Aston, Jr.
Chairman of the Board President and Chief
Executive Officer
COMMERCE BANK
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 12, 1994
TO OUR SHAREHOLDERS:
The Annual Meeting of Shareholders of Commerce Bank will be held at the
Radisson Hotel located at 700 Settlers Road, Hampton, Virginia, on Thursday, May
12, 1994 at 12:00 noon for the following purposes:
1. To elect directors for the ensuing year, or until their successors have
been elected and qualified (page 1);
2. To ratify the appointment of the members elected to serve on the six
Regional Boards of Directors for the Virginia Beach, Portsmouth,
Peninsula, Chesapeake, Norfolk and Suffolk communities (page 6);
3. To approve an amendment to the Bank's Articles of Incorporation to
increase the number of authorized shares of Common Stock from 5,000,000
to 10,000,000 shares (page 14);
4. To ratify the appointment of Ernst & Young as independent accountants
and auditors for 1994 (page 15); and
5. To transact such other business as may properly come before the meeting
or any adjournments thereof.
The Board of Directors has fixed the close of business on March 31, 1994 as
the record date for determination of shareholders entitled to notice of and to
vote at the meeting and any adjournments thereof.
By Order of the Board of Directors,
David W. Edmondson, C.P.A.
Senior Vice President
and Corporate Secretary
April 11, 1994
COMMERCE BANK
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 12, 1994
GENERAL
The enclosed proxy is solicited by the Board of Directors of Commerce Bank
(the "Bank") for the Annual Meeting of Shareholders (the "Annual Meeting") of
the Bank to be held Thursday, May 12, 1994, at the time and place and for the
purposes set forth in the accompanying Notice of the Annual Meeting.
Shareholders may revoke their proxies at any time prior to their exercise by
written notice to the Bank, by submitting a proxy bearing a later date, or by
attending the Annual Meeting and requesting to vote in person. The approximate
mailing date of this Proxy Statement and accompanying proxy is April 11, 1994.
OUTSTANDING SHARES, RECORD DATE AND SOLICITATION
Only those shareholders of record at the close of business on March 31,
1994, are entitled to notice of and to vote at the Annual Meeting or any
adjournments thereof. The number of shares of Common Stock, par value $2.50 per
share ("Common Stock"), of the Bank outstanding and entitled to vote as of the
record date was 2,702,538. Shareholders are entitled to one vote for each share
held on such date.
The cost of solicitation of proxies will be borne by the Bank.
Solicitation is being made by mail, and if necessary may be made in person, or
by telephone or special letter by officers and regular employees of the Bank,
none of whom will receive additional compensation for performing such services.
Proxies properly executed will be voted at the Annual Meeting or any
adjournments thereof in the manner specified therein.
OWNERSHIP OF 5% OR MORE
No person owns 5% or more of the outstanding shares of Common Stock,
except for FMR Corp. ("Fidelity Investments"), Boston, Massachusetts, which
owned 248,850 shares of Common Stock, representing 9.3% of the outstanding
shares, according to the most recent Schedule 13G filing of Fidelity Investments
received by the Bank.
ELECTION OF DIRECTORS - PROPOSAL ONE
Nominees for Election
The twenty-one persons named below,all of whom currently serve on the
Board of Directors, will be nominated to serve as directors until the 1995
Annual Meeting of Shareholders or until their successors have been duly elected
and qualified. The persons named in the proxy will vote for the election of the
nominees named below unless authority is withheld. If for any reason any of the
persons named below should become unavailable to serve, an event which
management does not anticipate, proxies will be voted for the remaining
nominees and such other person or persons as the Board of Directors may
designate.
Number
(Percent) of
Served as Principal Shares Owned
Director Occupation During as of
Name and Age Since Past Five Years March 1, 1994 (1)
- ------------ ----- --------------- -----------------
Sally James Andrews, 46 1990 Deputy City Attorney, 6,265* (2)(3)
City of Hampton
G. Robert Aston, Jr., 48 1985 President and Chief 82,121 (2)(4)
Executive Officer of the Bank (3.0%)
Ramon W. Breeden, Jr., 60 1978 Chief Executive Officer, 87,317 (2)(3)
The Breeden Companies, Inc., (3.2%)
Virginia Beach, Va.
(real estate development)
John W. Brown, 44 1990 Attorney-at-Law, 1,502* (5)
John W. Brown, P.C.,
Chesapeake, Va.
Thomas C. Broyles, 63 1978 Chairman of the Board of the 29,778 (5)
Bank; Attorney-at-Law, (1.1%)
Member of the law firm of
Kaufman & Canoles, Norfolk, Va.
Bradford L. Cherry, 52 1985 President and Treasurer, 3,952* (3)
Cherry Carpet, Inc.,
Portsmouth, Va.
J. W. Whiting Chisman, Jr., 52 1986 Vice-Chairman of the Board 91,886 (2)(3)
of the Bank; Private Investor (3.3%)
since December 1988; formerly
served as President and Manager,
Chisman Company, Hampton, Va.
(producers of ready mix concrete)
Elwood L. Edwards, C.P.A., 55 1986 Certified Public Accountant, 2,528*
President of the accounting
firm of Eggleston, Smith,
Hall, Cotman & Company, P.C.,
Newport News, Va.
Andrew S. Fine, 57 1978 Attorney-at-Law, Member 114,491 (2)(3)(5)
of the law firm of Fine, (4.2%)
Fine, Legum & Fine, P.C.
Virginia Beach, Va.
Ernest F. Hardee, 53 1985 Vice-Chairman of the Board 79,319 (2)(6)
of the Bank, Hardee Realty Corp (2.9%)
Portsmouth, Va.
(real estate management)
-2-
Number
(Percent) of
Served as Principal Shares Owned
Director Occupation During as of
Name and Age Since Past Five Years March 1, 1994 (1)
------------ --------- ----------------- -----------------
John C. Harry, III, 57 1990 President, John C. Harry, 1,217*
Inc., Norfolk, Va. (real
estate appraiser)
E. L. Hudson, 64 1982 Owner, Hudson Enterprises 45,217 (2)(3)
Norfolk, Va. (1.7%)
(construction contracting
and real estate leasing)
William J. Jones, 57 1979 President, Atlantic X-Ray 12,452* (2)
Service, Inc., Virginia
Beach, Va. (medical equipment
sales)
Arthur J. Lancaster, Jr., 75 1987 President, Bennett's Creek 11,148* (2)
Wholesale Nursery, Suffolk, Va.
W. Ashton Lewis, 48 1985 President, Bill Lewis 31,310 (2)(3)
Chevrolet Corporation, (1.2%)
Chesapeake, Va. (retail)
automobile sales)
J. Alan Lindauer, C.M.C., 54 1985 President, Waterside 103,813 (2)(3)(6)(7)
Management, Inc., (3.8%)
Virginia Beach, Va.
(business and financial
consulting)
R. Scott Morgan, 48 1986 Executive Vice President 26,410* (2)(4)
and Senior Lending Officer
of the Bank
Donald N. Pattern, 51 1986 Attorney-at-Law, Member 24,316* (2)(3)(5)
of the law firm of Patten,
Wornom & Watkins, L.C.,
Newport News, Va.
Edward B. Snyder, 66 1982 President, Checkered Flag 24,323* (2)(3)
Motor Car Company,
Virginia Beach, Va.
(retail automobile sales)
George W. Vakos, 62 1984 Judge (retired); President 27,930 (2)(3)
Atlantic Enterprises, Inc. (1.0%)
t/a Oceanfront Inn,
Virginia Beach, Va.
-3-
Number
(Percent) of
Served as Principal Shares Owned
Director Occupation During as of
Name and Age Since Past Five Years March 1, 1994 (1)
------------ --------- ----------------- -----------------
F. Lewis Wood, 55 1986 Chairman of the Board, 20,238* (2)(3)
Hampton Motor Corporation
t/a Hampton Chevrolet-Jeep
Eagle, Hampton, Va.
(retail automobile sales)
All Directors and Executive 884,896 (2)(3)(4)
Officers as a Group (32 persons) (29.8%)
- -----------------------
* Represents less than 1% of the outstanding shares of Common Stock.
(1) For purposes of this table, beneficial ownership has been determined in
accordance with the provisions of Rule 13d-3 under the Securities Exchange
Act of 1934 (the "1934 Act"), as adopted by the Federal Deposit Insurance
Corporation with which the Bank files reports, proxy statements and other
information pursuant to the informational requirements of the 1934 Act.
Under this rule, in general, a person is deemed to be the beneficial owner
of a security if he has or shares the power to vote or to direct the voting
of the security or the power to dispose or to direct the disposition of the
security, or if he has the right to acquire beneficial ownership of the
security within 60 days.
(2) Includes the indicated number of shares, or shares that may be acquired
upon the conversion of the Bank's 10% Convertible Subordinated Capital
Notes (the "Convertible Notes"), held by their close relatives or held
jointly with their spouses or as custodians or trustees for the benefit of
their children or others -- Mrs. Andrews, 4,646 shares; Mr. Aston, 1,855
shares; Mr. Breeden, 22,178 shares; Mr. Chisman, 11,757 shares; Mr. Fine,
4,641 shares; Mr. Hardee, 59,421 shares; Mr. Hudson, 1,211 shares; Mr.
Lancaster, 7,883 shares; Mr. Lewis, 7,679 shares; Mr. Lindauer, 1,410
shares; Mr. Morgan, 74 shares; Mr. Patten, 3,384 shares; Mr. Snyder, 11,591
shares; Mr. Vakos, 7,783 shares; and Mr. Wood, 5,892 shares; and all
executive officers as a group, 1,194 shares. The amounts shown in the table
also include the indicated number of shares, and shares that may be
acquired upon the conversion of the Bank's Convertible Notes, held by
certain corporations and partnerships under the control of -- Mr. Chisman,
4,211 shares; Mr. Fine, 93,523 shares; Mr. Hardee, 1,869 shares; Mr.
Hudson, 34,091 shares; Mr. Jones, 10,688 shares; Mr. Lewis, 54 shares; and
Mr. Patten, 4,710 shares.
(3) Includes the indicated number of shares that may be acquired upon the
conversion of the Bank's Convertible Notes held in their own names or for
their benefit -- Mrs. Andrews, 789 shares; Mr. Breeden, 13,158 shares; Mr.
Cherry, 1,316 shares; Mr. Chisman, 42,684 shares; Mr. Fine, 2,632 shares;
Mr. Hudson, 1,421 shares; Mr. Lewis, 1,737 shares; Mr. Lindauer, 8,369
shares; Mr. Patten, 2,894 shares; Mr. Snyder, 1,053 shares; Mr. Vakos,
6,421 shares, and Mr. Wood, 2,737 shares.
(4) Includes the indicated number of shares that may be acquired within 60 days
pursuant to the exercise of stock options granted under the Bank's stock
option plans - Mr. Aston, 79,732 shares; Mr. Morgan, 13,040 shares; and all
executive officers as a group, 149,011 shares. See "Executive Compensation-
Stock Option Plans."
(5) See "Executive Compensation - Transactions with Management."
(6) Does not include 12,154 shares that each of Messrs. Hardee and Lindauer may
acquire pursuant to a currently exercisable stock option agreement they
have entered into with another director of the Bank.
-4-
(7) Includes 21,923 shares held by the Bank's Trust Department as trustee for
Mr. Lindauer, and as to which shares Mr. Lindauer has the power to direct
the voting.
There are no family relationships among any of the directors or between any
of the directors and executive officers of the Bank.
During 1993, the Board of Directors of the Bank held a total of twelve
meetings. The Executive Committee of the Board of Directors met ten times, the
Audit Committee five times, and Compensation/Stock Option Committee one time.
All nominees who served as directors of the Bank, except for Messrs. Bresden and
Jones, attended at least 75% of all the meetings of the Board and committees on
which they served.
Committees of the Board of Directors
The Board of Directors of the Bank has a total of five committees,
including standing Executive, Audit, Compensation/Stock Option, Trust and
Marketing Committees.
The Executive Committee consists of Messrs. Aston (Chairman), Bresden,
Broyles, Chisman, Fine, Hardee, Jones, Lewis, Lindauer and Wood. The primary
duties of the Executive Committee are to act in the Board's stead when the Board
is not in session, during which time the Committee possesses all the powers of
the Board in the management of the business and affairs of the Bank, except as
otherwise limited by law.
The Audit Committee consists of Messrs. Edwards (Chairman), Cherry, Hardee,
Lancaster and Mr. Dennis R. Deans from the Norfolk Community Board of Directors.
The committee is responsible for reviewing the financial condition of the Bank,
its internal controls and audit program, the performance and findings of the
internal audit staff, and any action taken thereon by management. The Committee
reviews audit and examination reports of regulatory agencies and of the
independent auditors. The Audit Committee also selects the Bank's independent
auditors for appointment by the Board, subject to appropriate ratification.
The Compensation/Stock Option Committee consists of Messrs. Fine
(Chairman), Broyles, Chisman, Hardee, Jones, Lindauer and Wood. This Committee
approves the compensation of senior management and administers the Bank's stock
option plans.
The Board does not have a nominating committee. The entire Board of
Directors selects and recommends a slate of nominees to be voted on for election
as directors at each Annual Meeting and selects persons to fill vacancies on the
Board.
Directors' Compensation
Directors of the Bank in 1993 received $350 for attendance at each meeting
of the Board. Directors serving on the Executive Committee received $200 for
each meeting attended. Directors serving on the Audit and Compensation/Stock
Option Committees received $50 for each meeting attended. No director who is an
employee of the Bank is compensated for services as a member of any committee of
the Board. Members of each of the Virginia Beach, Portsmouth, Peninsula,
Norfolk, Chesapeake and Suffolk Regional Boards of Directors received $200 in
1993 for each meeting attended.
-5-
RATIFICATION OF REGIONAL BOARDS - PROPOSAL TWO
In addition to the Corporate Board of Directors described above, the Bank
has six Regional Boards of Directors to guide its development of each of the
six distinct market areas the Bank serves: Virginia Beach, Portsmouth, the
Peninsula, Chesapeake, Norfolk and Suffolk. The Corporate Board is made up of
representatives from each of the six Regional Boards. It is the responsibility
of each Regional Board, acting under delegated authority of the Corporate Board,
to direct the overall development of its respective community and to make local
loan decisions below specified dollar amounts.
The members of the respective Regional Boards of Directors are as follows:
Virginia Beach Board of Directors
---------------------------------
Andrew S. Fine, Chairman William L. Hendricks
Attorney-at-Law President, Weather Makers, Inc.
Fine, Fine, Legum & Fine, P.C.
Ernest L. Hudson
Robert W. Berry, Jr., Vice Chairman Owner, Hudson Enterprises
Manager, C & P Telephone Company (Retired)
William J. Jones
G. Robert Aston, Jr. President, Atlantic X-Ray Service,
President and Chief Executive Officer, Inc.
Commerce Bank
John Jay, M.D.
Frederick W. Twyman, III General Hospital Pathologists
President/Virginia Beach, Commerce Bank
Gary D. McMahan, General Agent
Ramon W. Breeden, Jr. Massachusetts Mutual Life Insurance
Chief Executive Officer Company
The Breeden Companies
J. Harry Mote, President
Thomas C. Broyles J. Harry Mote & Son General
Attorney-at-Law Contractors, Inc.
Kaufman & Canoles:
Chairman of the Board, Commerce Bank Edward B. Snyder
President, Checkered Flag Motor
Van H. Cunningham Car Company
Chairman, Charter Investment Group
Louisa Strayhorn
Robert E. Fentress Reengineering Facilitator,
Senior Vice President, Commerce Bank Internal Management Consultant,
(Retired) Sentara Health System
James N. Fletcher George W. Vakos
Vice President, Commerce Bank Retired Judge; President, Atlantic
(Retired) Enterprises, Inc. t/a
Oceanfront Inn
Bertram L. Warren, Jr., M.D.
Obstatrics and Gynecology, Inc.
-6-
Portsmouth Board of Directors
-----------------------------
Arthur L. Cherry, Chairman Ernest F. Hardee
Chairman and Chief Executive President, Hardee Realty Corporation;
Officer, Cherry Carpet, Inc. Vice Chairman of the Board,
Commerce Bank
G. Robert Aston, Jr.
President and Chief Executive Officer, James W. Holley, III, D.D.S.
Commerce Bank
Arthur J. Lancaster, Jr.
R. Scott Morgan President, Bennett's Creek Wholesale
Executive Vice President and Nursery; President, Lancaster Old Toy
Senior Landing Officer, Commerce Bank and Train Museum
P. Ward Robinett, Jr. Jerrold L. Miller
President/Portsmouth, Commerce Bank President, Earl Industries, Inc.
Bradford L. Cherry William S. Moore, Jr.
President and Treasurer, Attorney-at-Law
Cherry Carpet, Inc. Member, Virginia House of Delegates
W. Carroll Crescy C. Dick Park, M.D.
President, Sales Systems, Ltd. Cardiovascular and Thoracic
of Virginia, The Aloha Motel Surgical Associates, Inc.
Garland R. Culpeper, President, Charles H. Parkerson
Culpepper Radiator Service, Inc. President, Lancaster Farms, Inc.
Neal P. Davis, D.D.S. Robert B. Seal, M.D.
(Retired) Dr. R. B. Seal, Ltd.
W. Durbin Donahue, D.V.M. Robert L. Sondej
Churchland Animal Hospital, Inc. Attorney-at-Law
Sondej & Whitlow, P.C.
John W. Frankos, C.P.A.
Falles & Associates Ned D. Taylor, D.D.S.
Drs. Dodson, Taylor and Jett, Inc.
Nancy G. Wren
-7-
Peninsula Board of Directors
----------------------------
J. W. Whiting Chisman, Jr,. Chairman S. Frear Hawkins, II
Private Investor and Developer; Attorney-at-Law,
Vice Chairman of the Board, Commerce Bank Hawkins, Burcher & Boester
G. Robert Aston, Jr. Daniel B. Nice
President and Chief Executive Officer, Vice President
Commerce Bank Nice Brother, Inc.
Dennis A. Holbrook Donald N. Patten
President/Peninsula, Commerce Bank Attorney-at-Law
Patten, Wornom & Watkins, L.C.
Sally James Andrews Robert F. Ripley, Jr.
Deputy City Attorney Attorney-at-Law
for Hampton, Virginia
Secretary/Treasurer, G.C.R., Inc.
Douglas H. Chessen, M.D.
Douglas H. Chessen, M.D., P.C.
Barry E. DuVal F. Lewis Wood
President, DuVal Associates, Inc. Chairman of the Board
Mayor of Newport News Hampton Motor Corporation
t/a Hampton Chevrolet-Jeep-Eagle
Elwood L. Edwards, C.P.A. Dorothy F. Wright
President, President, DFW Corporation
Eggleston, Smith, Hall, Cotman & Company
Chesapeake Board of Directors
-----------------------------
W. Ashton Lewis, Chairman Mark L. Earley, Sr.
President, Attorney-at-Law
Bill Lewis Chevrolet Corporation Tavss, Fetcher, Earley & King, P.C.
Virginia State Senator
G. Robert Aston, Jr. Paul J. Farrell
President and Chief Executive Officer, President, Rosewell Corporation
Commerce Bank
William A. Copeland, Jr. Stephanie J. Marioneaux, M.D.
President/Chesapeake, Commerce Bank Stephanie J. Marioneaux, M.D., P.C.
Dr. C. Fred Bateman Juan M. Montero, II, M.D.
Superintendent, Chesapeake Public Schools Juan M. Montero, II, M.D., Inc.
E. Lee Baynor Carl C. Rumsey, Sr.
President, Baynor Furniture President and Chief Executive
Officer,
Oil Transport, Inc.
John W. Brown Lee W. Smith, Sr.
Attorney-at-Law President and Chief Executive
John W. Brown, P.C. Officer,
Lee's Contracting Services, Inc.
Lloyd H. Burton Pat J. Viola, C.P.A.
Executive Vice President, Goodman & Company
Burton Lumber Corporation
-8-
Norfolk Board of Directors
--------------------------
Dorothy M. Doumar, Chairman J. Alan Lindauer, C.M.C.
President, Waterside Management, Inc.
G. Robert Aston, Jr. Thomas E. Robinson
President and Chief Executive Officer, President, Robinson & Wetmore
Commerce Bank
W. Thomas Pearson, Jr. William P. Robinson, Jr.
President/Norfolk, Commerce Bank Attorney-at-Law, Robinson, Madison,
Fulton and Anderson; Member, Virginia
House of Delegates
Gloria J. Abel Robert M. Rubin, D.M.D.
Senior Vice President and Senior Banking Drs. Rubin, Karesh and Shivar, Ltd.
Director, Commerce Bank
Gary M. Bowers Jack B. Taylor, M.D.
President, The Jonathan Corporation (Retired)
Bettie Minette Cooper John J. Vavals
Attorney-at-Law, Kaufman & Canoles
Dennis R. Deans, C.P.A.
Partner, McPhillips, Lieland and Deans
David W. Edmondson, C.P.A.
Senior Vice President and
Corporate Secretary, Commerce Bank
Suffolk Board of Directors
--------------------------
McLemore Birdsong, Jr., Chairman William C. Glermak
Vice President, Birdsong Corporation Administrator, Obioi Hospital
G. Robert Aston, Jr. John C. Harry, III
President and Chief Executive Officer, President, John C. Harry, Inc.
Commerce Bank
William C. Branche Robert M. Hayes
President/Suffolk, Commerce Bank District Manager, Virginia Power
Company
Carroll H. Brinkley David L. Holland
President, President, Southern Oil
C. W. Brinkley, Inc.
Ray E. Duke Robert V. House
President, Treasurer, Suffolk Insurance
Duke Oldsmobile-Cadillac Corporation Corporation
E. Grier Ferguson Wayne K. Sawyer
Attorney-at-Law, Ferguson & Rawls, P.C. Vice President, Bennett's Creek
Wholesale Nursery
Russell R. Smith, Jr.
Vice President, O'Connor
and Company, Inc.
-9-
EXECUTIVE COMPENSATION
The table below sets forth information concerning the annual and long-term
compensation for services in all capacities to the Bank for the years ended
December 31, 1993, 1992 and 1991 of those persons who were, at December 31, 1993
(i) the chief executive officer and (ii) the other four most highly compensated
executive officers of the Bank (the "Named Officers"):
SUMMARY COMPENSATION TABLE
Annual Compensation
---------------------------------------
Other All Other
Name and Compen- Compen-
Principal Position Year Salary Bonus (1) sation (2) sation (3)
- ------------------ ---- ------ --------- ---------- ----------
G. Robert Aston, Jr. 1993 $193,600 $196,500 - $187,826
President/Chief 1992 133,225 150,000 - 249,902
Executive Officer 1991 132,600 85,000 - 57,427
R. Scott Morgan 1993 $118,600 $ 55,000 - $ 12,375
Executive Vice 1992 92,925 50,000 - 12,006
President and Senior 1991 82,600 30,000 - 11,032
Lending Officer
Gerald T. McDonald 1993 $ 90,000 $ 35,000 - $ 11,946
Executive Vice 1992 75,000 45,000 - 9,942
President and Chief 1991 68,800 27,000 - 6,831
Financial Officer
Dennis A. Holbrook 1993 $ 83,025 $ 34,243 - $ 9,499
President/Peninsula 1992 76,875 20,000 - 7,811
1991 75,000 15,000 - 4,635
P. Ward Robinett, Jr.(4) 1993 $ 95,000 $ 20,900 - $ 4,750
President/Portsmouth 1992 0 15,000 - 0
1991 0 0 - 0
- ---------------------
(1) Amounts awarded by the Compensation/Stock Option Committee.
(2) The amount of compensation in the form of perquisites or other personal
benefits properly categorized in this column did not exceed the lesser of
$50,000 or 10% of the total annual salary and bonus reported in each year
for the Named Officers and, therefore, is not required to be reported
(3) The amounts shown in this column consists of the following: (i) Bank
matching contributions or accruals to the Bank's 401(k) Thrift and Profit
Sharing Plan - such amounts for 1993 are $7,930, $6,625, $7,446, and
$5,347, respectively for Messrs. Aston, Morgan, McDonald and Holbrook.
(ii) an officers deferred compensation plan - such amounts for 1993 are
$34,000, $5,750, $4,500, $4,152, and $4,750, respectively for Messrs.
Aston, Morgan, McDonald, Holbrook and Robinett. (iii) Life Insurance
Premiums - such amount for 1993 was $20,986 for Mr. Aston. (iv)
Supplemental Compensation Agreement - such amount for 1993 was $125,000 for
Mr. Aston.
(4) Mr. Robinett commenced his employment with the Bank on December 15, 1992.
-10-
The total cash compensation for all executive officers as a group (13
persons) for 1993 was $1,893,376.
The Bank does not have a pension or retirement plan in effect for
employees. The Bank does, however, have a 401(k) Thrift and Profit Sharing Plan
for employees and a Deferred Compensation Plan for directors, both as described
below. The Bank provides group life, health and long-term disability insurance
coverage for all officers of the Bank and covers 51% of the premium costs for
this coverage for all employees and officers. No compensation was paid or
accrued during 1993 the distribution of which is subject to some future event.
Employment Arrangements
In 1985, the Bank entered into an employment agreement with Mr. Aston for
a period of five years at a base salary, together with incentive or bonus
compensation, in amounts determined by the Board of Directors in accordance with
the salary administration program then in effect. That agreement expired on
March 31, 1990. In accordance with the terms of a new employment agreement dated
as of April 30, 1992, Mr. Aston will be employed for a five-year term beginning
on May 1, 1992 and ending on April 30, 1997, unless renewed by the Bank for one
additional year. Under the agreement, Mr. Aston's base salary may not be less
than $130,000 per year, and the amount of his bonus compensation may not be less
than 3% of the Bank's "net operating revenues" for that year. If, however, the
annual net operating revenues of the Bank do not exceed $1.5 million, the Bank
is not obligated to pay a cash bonus to Mr. Aston for that year. Net operating
revenues are defined as the consolidated net income of the Bank, but do not
include any proceeds from a transaction that is of a non-recurring or
extraordinary nature. To help provide for his retirement, the agreement provides
that the Bank will set aside each year, whether in the form of an annuity
contract or a deferred compensation account or a combination thereof, an amount
equal to 10% of Mr. Aston's total base salary and bonus compensation for that
year. The compensation arrangements set forth in the agreement are based on the
cash compensation and other benefits paid to Mr. Aston since 1990. Similar to
his original employment agreement, the agreement further provides for certain
benefits in the event of a "change of control" of the Bank. A "change of
control" is defined in the agreement to include (i) the acquisition by any
person of 25% or more of either the then outstanding shares of Common Stock or
the combined voting power of the Bank's then outstanding voting securities,
subject to certain exceptions as described therein, (ii) the approval by
shareholders of a merger, share exchange or consolidation of the Bank with any
other corporation, subject to certain exceptions as described therein or (iii) a
change in the composition of the Board of Directors that results in the members
of the incumbent Board (as defined in the agreement) no longer constituting at
least a majority of the Board. If a change of control occurs, Mr. Aston will be
entitled to receive a severance allowance in an amount equal to the product of
his average annual compensation based on the most recent five taxable years
multiplied by two.
On December 30, 1992, the Bank entered into a Supplemental Compensation
Agreement with Mr. Aston that provides for the payment to Mr. Aston of a total
of $315,000 over a three year period beginning in 1993. This agreement provides
that payments are to be made in eight equal quarterly installments of $31,250
each beginning on January 15, 1993 and continuing on the 15th day of each April,
July, October and January through October 15, 1994, followed by 4 equal
quarterly installments of $16,250 each beginning on January 15, 1995 and
continuing on April 15, July 15 and ending on October 15, 1995. If Mr. Aston
ceases to be employed by the Bank for any reason other than his death or
disability or a change in control of the Bank (as defined in the agreement), no
payment of any then unpaid installments shall be made under the agreement and
all rights of Mr. Aston to receive payments will be forfeited. The agreement
further provides that in the event of Mr. Aston's death or a change in control
of the Bank, any then unpaid installments under the agreement will be
accelerated and paid in one lump sum. In the event of his permanent and total
disability, payments under the agreement will continue as
originally scheduled. The obligation of the Bank to make payments under the
agreement is an unfunded obligation payable solely from the general assets of
the Bank subject to the claims of the Bank's general creditors.
On November 6, 1991, the Bank entered into a letter agreement with Mr.
Dennis A. Holbrook providing for the Bank to employ Mr. Holbrook as President of
the Peninsula Region. On November 17, 1992, the Bank entered into a letter
agreement with Mr. P. Ward Robinett, Jr., providing for the Bank to employ Mr.
Robinett as President of the Portsmouth Region. On April 5, 1993, the Bank
entered into a letter agreement with Mr. Frederick W. Twyman, III, providing for
the Bank to employ Mr. Twyman as President of the Virginia Beach Region. The
agreements have a three-year term and provide for the Bank to pay Messrs.
Holbrook, Robinett and Twyman, respectively, a base salary of $75,000, $95,000
and $80,000 per year which is subject to the Board of Directors discretion for
adjustment, as well as to awards of bonuses and commissions. In addition, if any
of these individuals should resign as a result of a material adverse change in
their duties or a material reduction in their base salary, or if the Bank
terminates their employment "without cause" (as defined below), then the Bank
generally must pay a post-termination salary for two years to Messrs. Holbrook,
Robinett and Twyman in the amount of $75,000, $95,000 and $80,000, respectively.
Any such post-termination payments would be reduced, however, by any
compensation they receive from other employers. In addition, they would not be
entitled to any such payments if they did not use reasonable efforts to obtain
comparable employment after the resignation or termination. Pursuant to the
agreement, a termination of employment is "without cause" unless it results from
(i) negligent action that damages the Bank or its relations with its customers
or employees, (ii) retirement or death, (iii) conviction of a crime of moral
turpitude or (iv) use of drugs or alcohol in a manner that interferes with the
performance of their duties.
Stock Option Plans
The Bank has two separate stock option plans. Under The Commerce Bank 1985
Stock Option Plan (the "1985 Plan"), the Board of Directors may grant to
management employees of the Bank incentive stock options (which are eligible for
more favorable tax treatment for optionees than non-qualified options) and
non-qualified options covering an aggregate of 209,637 shares of the Bank's
Common Stock, as adjusted to reflect the five 5% stock dividends paid since the
adoption of the 1985 Plan. The Bank's 1993 Incentive Stock Plan (the "1993
Plan") provides for the granting of both incentive and non-qualified stock
options covering an aggregate of 157,500 shares. Tandem stock appreciation
rights may be attached to stock options granted under each plan, and the 1993
Plan provides for the granting of restricted stock awards. No stock appreciation
rights or restricted stock awards have been granted.
Employees are selected to receive awards under the Plans based upon their
responsibilities and their present and potential contributions to the success of
the Bank. The exercise price of all options, stock appreciation rights and
restricted stock awards granted under the Plans may not be less than the fair
market value of the Common Stock on the date of grant, and no option or stock
appreciation right may be exercised more than ten years after the date of grant.
The awards are not transferable other than by will or the laws of descent and
distribution.
As of March 31, 1994, a total of 22 persons held options under the Plans
covering an aggregate of 270,042 shares. These options have a weighted average
exercise price of $14.75 per share and expire at various dates between 1996 and
2003. As of that same date, an aggregate of 97,095 shares remained available
under the Plans for additional grants.
During 1993, stock options covering an aggregate of 62,918 shares were
granted, including options for 5,250, 10,418 and 15,750 shares to Messrs.
McDonald, Holbrook and Robinett,
respectively, all of whom are named in the Cash Compensation Table. All of the
options granted during 1993 had an exercise price of $22.86.
During 1993, two executive officers exercised options covering an
aggregate of 6,000 shares. Mr. R. Scott Morgan, Executive Vice President and
Senior Lending Officer of the Bank, exercised an option for 1,500 shares with an
option price of $9.41 per share. The aggregate net value of the securities
(i.e., market value of the Common Stock less the option exercise price) received
by Mr. Morgan in connection with the exercise of the option was approximately
$21,885. Mr. William T. Hodsden also exercised a non-qualified option during
1993 for 4,500 shares with an option price of $9.88, which corresponds to an
aggregate net value of securities received of approximately $52,290.
Thrift and Profit Sharing Plan
Under the Commerce Bank Thrift and Profit Sharing Plan ("Thrift Plan"), in
which substantially all employees with at least one year of service are
eligible, each participant may make pre-tax savings contributions by payroll
deduction up to 15% of covered compensation, but not over $8,994 in 1993. The
Bank makes a matching contribution on the first 6% of each participant's covered
compensation to the Thrift Plan from current or accumulated profits in a
percentage determined by the Bank. The Bank may make additional contributions at
its discretion, but the Bank also may amend or terminate the Thrift Plan at any
time without shareholder approval. The matching Bank contribution to the Thrift
Plan may be used to invest in Common Stock of the Bank at its then current
market value.
Deferred Compensation Plan
The Commerce Bank Directors' Deferred Compensation Plan (the "Deferred
Compensation Plan") allows a director to elect to defer payment of directors
fees until a later date. All of the directors that serve on the Board of
Directors of the Bank, the six Regional Boards of Directors, and such other
boards as the Board of Directors may in the future establish may elect to
participate in the Deferred Compensation Plan, which included 50 participants at
March 1, 1994.
The Deferred Compensation Plan provides that any amounts deferred
thereunder will be applied toward the purchase of shares of the Bank's Common
Stock at its then current market value. It provides that the Bank may purchase
either newly-issued shares or shares in the open market. During 1993, 3,991
shares of the Bank's Common Stock were purchased under the Deferred Compensation
Plan.
The shares purchased with a participating director's fees will be held in
a separate trust until the date of distribution designated by such director. In
order to ensure the proper tax treatment, the shares held in the trust will be
subject to the claims of the Bank's creditors. Accordingly, the participants
will have no preference or guarantee of distribution while the shares continue
to be held in the trust.
The Bank may amend or terminate the Deferred Compensation Plan at any time
and from time to time without shareholder approval.
Loans to Officers and Directors
Certain directors and executive officers of the Bank, members of their
immediate families and corporations, partnerships and other entities with which
such person are associated are customers of the Bank. As such, they had
transactions in the ordinary course of business with the Bank during 1993, and
will have additional transactions with the Bank in the future. All loans and
commitments to lend included in such transactions were made in the ordinary
course of
business, upon substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons and have not involved more than the normal risk of collectibility
or presented other unfavorable features. As of December 31, 1993, loans from the
Bank to all executive officers and directors and/or corporations and other
entities in which they are significantly interested amounted to approximately
$20.3 million, which equaled the yearly high. This amount represented
approximately 47% of the total equity capital of the Bank as of December 31,
1993. During 1993, no lending relationship between the Bank and any of its
executive officers of directors and/or corporations or other entities in which
they are significantly interested exceeded 10% of the Bank's equity capital at
December 31, 1993.
Transactions with Management
In the ordinary course of its business, the Bank has engaged in certain
transactions with certain of its officers and directors and/or corporations and
other entities in which they are significantly interested. All such transactions
have been made on substantially the same terms as those prevailing at the time
for comparable transactions with unaffiliated parties. The Bank has engaged
Kaufman & Canoles, the firm of which Mr. Broyles is a partner, Fine, Fine, Logum
& Fine, P.C. the firm of which Mr. Fine is a partner, Patten, Wornom & Watkins,
L.C., the firm of which Mr. Patten is a partner, and Mr. Brown for certain
legal services during the year.
The Bank leases office space at its banking office at 5101 Cleveland
Street in Virginia Beach from the Runnymede Corporation, a Virginia corporation
in which Andrew S. Fine, a director of the Bank, holds approximately a 33%
interest. The lease agreement with Runnymede Corporation contains substantially
the same terms and conditions as those prevailing at the time it was entered
into for the rental of comparable office space form unaffiliated parties. The
Bank's other lease agreements are with unrelated parties. Except for the
foregoing lease agreement with Mr. Fine, no transactions with management during
1993, 1992 or 1991, involved more than $60,00 in the aggregate for any one
interested officer or director during that year.
AMENDMENT TO THE ARTICLES OF INCORPORATION - PROPOSAL THREE
The Board of Directors on March 31, 1994 adopted resolutions declaring it
advisable to increase the authorized number of shares of Common Stock from
5,000,000 to 10,000,000 shares and, for the purpose of effecting such increase,
to amend the first sentence of Article III of the Articles of Incorporation to
read as follows:
The Corporation shall have the authority to issue ten
million (10,000,000) shares of Common Stock, par
value $2.50 per share, and one million (1,000,000)
shares of Serial Preferred Stock, par value $5.00 per
share.
As of March 31, 1994, the Bank had issued and outstanding an aggregate of
2,702,538 shares of Common Stock. No shares of serial preferred stock have been
issued. In addition, a total of 364,637 shares of Common Stock are currently
reserved for the issuance of shares upon the exercise of options, 262,895 shares
are reserved for issuance upon conversion of the Bank's 10% Convertible
Subordinated Capital Notes and an additional 234,321 shares are reserved for
issuance under the dividend reinvestment and stock purchase plan. The Bank
therefore has 1,435,607 shares of Common Stock unissued and unreserved. The
Board of Directors believes that the increase in number of authorized shares of
Common Stock is advisable because of the limited number of unissued and
unreserved shares of Common Stock presently available, and because such increase
will give the Bank greater flexibility in considering and planning future
operations. The Common Stock would be available for issuance by the Board of
Directors for proper corporate purposes including, but not limited to, stock
dividends, stock splits, acquisitions
and the raising of capital through the sale of stock. Although the Board of
Directors has no present plans for the additional shares, the authorization of
such shares will enable the Bank to act promptly if appropriate circumstances
arise which will require issuance of such shares.
The authorization of additional shares of Common Stock will not, standing
alone, affect the rights of holders of issued shares of Common Stock. Depending
on the circumstances, an issuance of additional shares of Common Stock could
affect the existing holders of shares of Common Stock by diluting the per share
earnings and voting power of Common Stock. Shareholders do not have preemptive
rights to subscribe for, purchase or receive any shares of authorized capital
stock of the Bank.
The proposed amendment may be considered to have certain "anti-takeover"
implications. This is so because it is possible that shares of the additionally
authorized Common Stock could be issued in order to dilute the stock ownership
and voting power of a shareholder attempting to acquire control of the Bank, for
example, through a merger, tender offer, proxy contest or otherwise. The Board
of Directors could issue the additionally authorized shares of Common Stock to
discourage or make more difficult such a takeover attempt which could have the
effect of protecting current management.
The Board of Directors already has the power to authorize the issuance of
shares of Common Stock for any purpose which it deems to be in the Bank's best
interest. Although adoption of this amendment would increase the number of
shares of Common Stock available for issuance, it would not confer any
additional powers upon the Board of Directors.
In order for the proposed amendment to the first sentence of Article III to
be adopted, it must be approved by the affirmative vote of the holders of at
lease a majority of the outstanding shares.
The Board recommends a vote "FOR" the proposed amendment.
RATIFICATION OF SELECTION OF ACCOUNTANTS - PROPOSAL FOUR
On the recommendation of the Audit Committee, the Board of Directors has
appointed Ernst & Young, Certified Public Accountants, as the Bank's independent
auditors for the year ending December 31, 1994, and considers it desirable that
the appointment be ratified by the shareholders. A partner of Ernst & Young is
expected to attend the Annual Meeting, with the opportunity to make a statement
and/or respond to appropriate questions from shareholders.
OTHER MATTERS
Management knows of no other business to be brought before the Annual
Meeting. Should any other business properly be presented for action at the
meeting, the shares represented by the enclosed proxy will be voted by the
persons named therein in accordance with their best judgment and in the best
interests of the Bank.
THE BANK'S ANNUAL REPORT ON FORM F-2 FOR THE YEAR ENDED DECEMBER 31,
1993, FILED WITH THE FEDERAL DEPOSIT INSURANCE CORPORATION IS AVAILABLE TO
SHAREHOLDERS FREE OF CHARGE UPON WRITTEN REQUEST TO:
Gerald T. McDonald
Executive Vice President and Chief Financial Officer
Commerce Bank
5101 Cleveland Street
Virginia Beach, Virginia 23462
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