MONTEREY BAY BANCORP, INC.
36 BRENNAN STREET
WATSONVILLE, CALIFORNIA 95076
408-722-3885
April 7, 1997
Fellow Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders
(the "Annual Meeting") of Monterey Bay Bancorp, Inc. (the "Company"), the
holding company for Monterey Bay Bank (formerly known as Watsonville Federal
Savings and Loan Association) (the "Bank"), which will be held on Friday, May 2,
1997, at 11:00 a.m., Pacific Time, at 15 Brennan Street, Watsonville, California
95076.
The attached Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted at the Annual Meeting. Directors and officers
of Monterey Bay Bancorp, Inc., as well as a representative of Deloitte & Touche
LLP, the Company's independent auditors, will be present at the Annual Meeting
to respond to any questions that stockholders may have regarding the business to
be transacted.
The Board of Directors of Monterey Bay Bancorp, Inc. has determined
that the matters to be considered at the Annual Meeting are in the best
interests of the Company and its stockholders. For the reasons set forth in the
Proxy Statement, the Board unanimously recommends that you vote "FOR" each
matter to be considered.
YOUR COOPERATION IS APPRECIATED SINCE A MAJORITY OF THE COMMON STOCK
MUST BE REPRESENTED, EITHER IN PERSON OR BY PROXY, TO CONSTITUTE A QUORUM FOR
THE CONDUCT OF BUSINESS. WHETHER OR NOT YOU EXPECT TO ATTEND, PLEASE SIGN, DATE
AND RETURN THE ENCLOSED PROXY CARD PROMPTLY IN THE POSTAGE-PAID ENVELOPE
PROVIDED SO THAT YOUR SHARES WILL BE REPRESENTED.
On behalf of the Board of Directors and all of the employees of the
Company and the Bank, I thank you for your continued interest and support.
Sincerely yours,
Eugene R. Friend
Chairman of the Board and
Chief Executive Officer
MONTEREY BAY BANCORP, INC.
36 BRENNAN STREET
WATSONVILLE, CALIFORNIA 95076
408-722-3885
__________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 2, 1997
__________________________________
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Annual Meeting") of Monterey Bay Bancorp, Inc. (the "Company") will be held on
May 2, 1997 at 11:00 a.m., Pacific Time, at 15 Brennan Street, Watsonville,
California, 95076.
The purpose of the Annual Meeting is to consider and vote upon the
following matters:
1. The election of three directors to three-year terms of office,
each;
2. The ratification of the appointment of Deloitte & Touche LLP as
independent auditors of the Company for the fiscal year ending
December 31, 1997; and
3. Such other matters as may properly come before the Annual Meeting
and at any adjournments thereof, including whether or not to
adjourn the meeting.
The Board of Directors has established March 31, 1997, as the record
date for the determination of stockholders entitled to receive notice of and to
vote at the Annual Meeting and at any adjournments thereof. Only record holders
of the common stock of the Company as of the close of business on that date will
be entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof. In the event there are not sufficient votes for a quorum or to approve
or ratify any of the foregoing proposals at the time of the Annual Meeting, the
Annual Meeting may be adjourned in order to permit further solicitation of
proxies by the Company. A list of stockholders entitled to vote at the Annual
Meeting will be available at Monterey Bay Bancorp, Inc., 36 Brennan Street,
Watsonville, California 95076, for a period of ten days prior to the Annual
Meeting and will also be available at the meeting itself.
By Order of the Board of Directors
Carlene F. Anderson
Corporate Secretary
Watsonville, California
April 7, 1997
MONTEREY BAY BANCORP, INC.
_______________________
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 2, 1997
_______________________
SOLICITATION AND VOTING OF PROXIES
This Proxy Statement is being furnished to stockholders of Monterey Bay
Bancorp, Inc. (the "Company") in connection with the solicitation by the Board
of Directors ("Board of Directors" or "Board") of proxies to be used at the
annual meeting of stockholders (the "Annual Meeting"), to be held on May 2,
1997, at 11:00 a.m., Pacific Time, at 15 Brennan Street, Watsonville,
California, 95076 and at any adjournments thereof. The 1996 Annual Report to
Stockholders, including consolidated financial statements for the fiscal year
ended December 31, 1996, and a proxy card, accompanies this Proxy Statement,
which is first being mailed to record holders on or about April 7, 1997.
Regardless of the number of shares of common stock owned, it is important
that record holders of a majority of the outstanding shares of common stock be
represented by proxy or in person at the Annual Meeting. Stockholders are
requested to vote by completing the enclosed proxy card and returning it signed
and dated in the enclosed postage-paid envelope. Stockholders are urged to
indicate their vote in the spaces provided on the proxy card. PROXIES SOLICITED
BY THE BOARD OF DIRECTORS OF THE COMPANY WILL BE VOTED IN ACCORDANCE WITH THE
DIRECTIONS GIVEN THEREIN. WHERE NO INSTRUCTIONS ARE INDICATED, SIGNED PROXY
CARDS WILL BE VOTED FOR THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR NAMED
IN THIS PROXY STATEMENT AND FOR THE RATIFICATION OF EACH OF THE SPECIFIC
PROPOSALS PRESENTED IN THIS PROXY STATEMENT.
Other than the matters set forth on the attached Notice of Annual Meeting
of Stockholders, the Board of Directors knows of no additional matters that will
be presented for consideration at the Annual Meeting. Execution of a proxy,
however, confers on the designated proxy holders discretionary authority to vote
the shares in accordance with their best judgment on such other business, if
any, that may properly come before the Annual Meeting and at any adjournments
thereof, including whether or not to adjourn the Annual Meeting.
A proxy may be revoked at any time prior to its exercise by filing a
written notice of revocation with the Corporate Secretary of the Company, by
delivering to the Company a duly executed proxy bearing a later date, or by
attending the Annual Meeting and voting in person. However, if you are a
stockholder whose shares are not registered in your own name, you will need
appropriate documentation from your record holder to vote personally at the
Annual Meeting.
The cost of solicitation of proxies on behalf of the Board of Directors
will be borne by the Company. In addition to the solicitation of proxies by
mail, Chemical Mellon Shareholder Services will assist the Company in soliciting
proxies for the Annual Meeting and will be paid a fee of $3,750. Proxies may
also be solicited personally or by mail or telephone by directors,
officers and other employees of the Company and its subsidiary, the Bank,
without additional compensation therefor. The Company will also request
persons, firms and corporations holding shares in their names, or in the name of
their nominees, which are beneficially owned by others, to send proxy material
to and obtain proxies from such beneficial owners, and will reimburse such
holders for their reasonable expenses in doing so.
VOTING SECURITIES
The securities which may be voted at the Annual Meeting consist of shares
of common stock of the Company ("Common Stock"), with each share entitling its
owner to one vote on all matters to be voted on at the Annual Meeting, except as
described below. There is no cumulative voting for the election of directors.
The close of business on March 31, 1997, has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
stockholders of record entitled to notice of and to vote at the Annual Meeting
and at any adjournments thereof. The total number of shares of Common Stock
outstanding on the Record Date was 3,244,908 shares.
In accordance with the provisions of the Company's Certificate of
Incorporation, record holders of Common Stock who beneficially own in excess of
10% of the outstanding shares of Common Stock (the "Limit") are not entitled to
any vote with respect to the shares held in excess of the Limit. A person or
entity is deemed to beneficially own shares owned by an affiliate of, as well as
by persons acting in concert with, such person or entity. The Company's
Certificate of Incorporation authorizes the Board of Directors (i) to make all
determinations necessary to implement and apply the Limit, including determining
whether persons or entities are acting in concert, and (ii) to demand that any
person who is reasonably believed to beneficially own stock in excess of the
Limit supply information to the Company to enable the Board of Directors to
implement and apply the Limit.
The presence, in person or by proxy, of the holders of at least a majority
of the total number of shares of Common Stock entitled to vote (after giving
effect to the Limit described above, if applicable) is necessary to constitute a
quorum at the Annual Meeting. In the event that there are not sufficient votes
for a quorum, or to approve or ratify any matter being presented at the time of
the Annual Meeting, the Annual Meeting may be adjourned in order to permit the
further solicitation of proxies.
As to the election of directors, the proxy card being provided by the Board
of Directors enables a stockholder to vote "FOR" the election of the nominees
proposed by the Board of Directors, or to "WITHHOLD AUTHORITY" to vote for one
or more of the nominees being proposed. Under Delaware law and the Company's
Bylaws, directors are elected by a plurality of votes cast, without regard to
either broker non-votes, or proxies as to which authority to vote for one or
more of the nominees being proposed is withheld.
As to the ratification of Deloitte & Touche LLP as independent auditors of
the Company and all other matters that may properly come before the Annual
Meeting, by checking the
2
appropriate box, a stockholder may: (i) vote "FOR" the item; (ii) vote
"AGAINST" the item; or (iii) "ABSTAIN" from voting on the item. Pursuant to
Delaware law, the favorable vote of a majority of the outstanding stock entitled
to vote thereon is required in order to approve the Amendment; proxies marked
"ABSTAIN" and broker non-votes shall be counted as a vote against the Amendment.
Under the Company's Bylaws, unless otherwise required by the Certificate of
Incorporation or by law, the ratification of auditors and other matters shall be
determined by a majority of the votes cast, without regard to either broker non-
votes, or proxies marked "ABSTAIN" as to that matter.
Proxies solicited hereby will be returned to the Company's transfer agent,
and will be tabulated by inspectors of election designated by the Board of
Directors, who will not be employed by, or a director of, the Company or any of
its affiliates.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as to those persons believed by
the Company to be beneficial owners of more than 5% of the Company's outstanding
shares of Common Stock on the Record Date or as disclosed in certain reports
regarding such ownership filed by such persons with the Company and with the
Securities and Exchange Commission ("SEC"), in accordance with Sections 13(d)
and 13(g) of the Securities Exchange Act of 1934, as amended ("Exchange Act").
Other than those persons listed below, the Company is not aware of any person,
as such term is defined in the Exchange Act, that owns more than 5% of the
Company's Common Stock as of the Record Date.
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP CLASS
- -----------------------------------------------------------------------------------------
Common Stock Monterey Bay Bank Employee 286,415/(1)/ 8.83%
Stock Ownership Plan ("ESOP")
36 Brennan Street
Watsonville, California 95076
Common Stock Josiah T. Austin 323,264/(2)/ 9.96%
Valer C. Austin
HC Box 395
Pearce, AZ 85625
Common Stock Kahn Brothers & Co., Inc. 259,200/(3)/ 7.99%
555 Madison Avenue
New York, NY 10022
Common Stock Findim Inv., SA 323,500/(4)/ 9.97%
Gradinata Forghee 2
Massagno, Switzerland
011-41-91-568916
(footnotes on following page)
3
- ------------------------
(1) Shares of Common Stock were acquired by the ESOP in the conversion of the
Bank from mutual to stock form and the formation of the Company. The
Company's Compensation/Benefits Committee serves as the ESOP Committee and
administers the ESOP. See "Proposal 1. Election of Directors - Meetings of
the Board of Directors and Committees of the Board of Directors -
Compensation/Benefits Committee." California Central Trust Bank, Costa
Mesa, California has been appointed as the corporate trustee for the ESOP
("ESOP Trustee"). The ESOP Trustee, subject to its fiduciary duty, must
vote all allocated shares held in the ESOP in accordance with the
instructions of the participants. At December 31, 1996, 56,415 shares had
been allocated under the ESOP. Unallocated shares and allocated shares for
which no voting instructions are received will be voted by the ESOP Trustee
in a manner calculated to most accurately reflect the instructions received
from participants regarding the allocated stock so long as such vote is in
accordance with the provisions of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA").
(2) Based upon information supplied to the Company by Mr. and Mrs. Austin on
March 31, 1997.
(3) Based upon information in a Schedule 13F filed on November 14, 1996.
(4) Based upon information in a Schedule 13D Amendment filed on January 14,
1997.
PROPOSALS TO BE VOTED ON AT THE MEETING
PROPOSAL 1. ELECTION OF DIRECTORS
The Board of Directors of the Company consisted of nine directors at fiscal
year end and is divided into three classes. On March 20, 1997, the Board of
Directors of the Company increased the number of directors to ten and on March
31, 1997, elected Nicholas C. Biase as a director to a term expiring in 1998.
Each of the ten members of the Board of Directors of the Company also presently
serve as directors of the Bank. Directors are elected for staggered terms of
three years each, with the term of office of only one of the three classes of
Directors expiring each year. Directors serve until their successors are
elected and qualified.
The three nominees proposed for election at this Annual Meeting are Eugene R.
Friend, Donald K. Henrichsen and McKenzie Moss.
In the event that any such nominee is unable to serve or declines to serve
for any reason, it is intended that the proxies will be voted for the election
of such other person as may be designated by the present Board of Directors.
The Board of Directors has no reason to believe that any of the persons named
will be unable or unwilling to serve. UNLESS AUTHORITY TO VOTE FOR THE ELECTION
OF ANY NOMINEE IS WITHHELD, IT IS INTENDED THAT THE SHARES REPRESENTED BY THE
ENCLOSED PROXY CARD, IF EXECUTED AND RETURNED, WILL BE VOTED FOR THE ELECTION OF
THE NOMINEES PROPOSED BY THE BOARD OF DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE
NOMINEES NAMED IN THIS PROXY STATEMENT.
INFORMATION WITH RESPECT TO THE NOMINEES, CONTINUING DIRECTORS AND EXECUTIVE
OFFICERS
The following table sets forth, as of the Record Date, the names of the
nominees, continuing directors and executive officers of the Company; their
ages; a brief description of their recent business experience, including present
occupations and employment; certain directorships held by each; the year in
which each became a director of the Bank; and the year in which their terms (or
in the case of the nominees, their proposed terms) as director of the Company
expire. The table also sets forth the amount of Common Stock and the percent
thereof beneficially owned by each and by all directors and executive officers
as a group as of the Record Date.
4
SHARES OF
NAME AND PRINCIPAL EXPIRATION COMMON STOCK
OCCUPATION AT PRESENT DIRECTOR OF TERM AS BENEFICIALLY PERCENT OF
AND FOR PAST FIVE YEARS AGE SINCE(1) DIRECTOR OWNED(2) CLASS
- --------------------------------------------------------------------------------------------------
NOMINEES
Eugene R. Friend 73 1969 2000 21,957(3)(4)(5) *
Chairman of the Board and Chief
Executive Officer of the Company
and the Bank
Donald K. Henrichsen 65 1970 2000 27,606(6)(7) *
President of John's Shoe Store,
Inc., a retail business in
Watsonville, California,
McKenzie Moss 66 1996 2000 -- --
Financial & Strategic Planning
Consultant; Lecturer; Writer
CONTINUING DIRECTORS
William J. Meidl 66 1961 1999 7,497(6)(7) *
Retired; Served as President and
Chief Executive Officer of the
Bank from 1967 until
retirement in August 1994
Steven Franich 50 1989 1999 28,364(6)(7) *
President of Marty Franich Ford
Lincoln Mercury
Gary L. Manfre 43 1993 1999 22,050(6)(7) *
President of Watsonville Coast
Produce, Inc.
P. W. Bachan 70 1954 1998 12,693(6)(7) *
Partner in the law firm of Bachan,
Skillicorn, Marinovich, Balian and
Barsi
Edward K. Banks (8) 48 1993 1998 8,151(6)(7) *
Chief Executive Officer of Pajaro
Valley Insurance Agencies, Inc.
Louis Resetar, Jr. 70 1961 1998 19,996(6)(7) *
Retired; Mr. Resetar was an apple
grower in Watsonville, California
prior to retirement
Nicholas C. Biase 29 1997 1998 --(10) --(10)
Representative of Findim
Investments, S.A.
5
SHARES OF
NAME AND PRINCIPAL EXPIRATION COMMON STOCK
OCCUPATION AT PRESENT DIRECTOR OF TERM AS BENEFICIALLY PERCENT OF
AND FOR PAST FIVE YEARS AGE SINCE(1) DIRECTOR OWNED(2) CLASS
- --------------------------------------------------------------------------------------------------
EXECUTIVE OFFICERS
Marshall G. Delk 42 -- -- 50,886(3)(4)(5) 1.57%
President and Chief Operating
Officer of the Company and the
Bank;
Stock Ownership of all
Directors and Executive Officers
as a Group (14 persons) 276,370(9) 8.52%
- --------------------------
* Represents less than 1.0% of the Company's voting securities.
(1) Includes years of service as a director of the Bank.
(2) Each person effectively exercises sole (or shares with spouse or other
immediate family member) voting or dispositive power as to shares reported
herein (except as noted).
(3) Includes 4,423 and 23,000 shares awarded to Messrs. Friend and Delk,
respectively, pursuant to the Monterey Bay Bank Performance Equity Program
for Officers and Employees ("Performance Equity Program"). Base awards
under the Performance Equity Program began vesting in five equal annual
installments, on August 24, 1996, the first anniversary of the effective
date of the grant. Performance and high performance awards under the
Performance Equity Program began vesting in five equal annual installments
on August 24, 1996, the first anniversary of the effective date of the
grant; however, such vesting is subject to the attainment of certain
performance goals, and if such goals are not met, the shares which would
have vested will lapse and be returned to the Plan Share Reserve. See
Footnote 3 to the "Summary Compensation Table."
(4) Does not include 9,200 and 46,000 shares subject to options awarded to
Messrs. Friend and Delk, respectively, pursuant to the Monterey Bay Bancorp,
Inc. 1995 Incentive Stock Option Plan ("Incentive Option Plan"), which began
vesting in five equal annual installments on August 24, 1996, the first
anniversary of the effective date of the grant.
(5) Includes 1,802 and 3,286 shares allocated to Messrs. Friend and Delk,
respectively, pursuant to the Bank's ESOP as of December 31, 1996.
(6) Includes 4,422, 2,211, 2,211, 4,423, 2,211, 4,423 and 4,423 shares awarded
to Messrs. Meidl, Franich, Manfre, Bachan, Banks, Resetar and Henrichsen,
respectively, pursuant to the Bank's Recognition and Retention Plan for
Outside Directors ("RRP"). Awards under the RRP began vesting in five equal
annual installments on August 24, 1996, the first anniversary of the
effective date of the grant.
(7) Does not include 7,867, 10,401, 10,401, 7,868, 10,401, 7,868 and 7,868
shares subject to options awarded to Messrs. Meidl, Franich, Manfre, Bachan,
Banks, Resetar and Henrichsen, respectively, pursuant to the Monterey Bay
Bancorp, Inc. 1995 Stock Option Plan for Outside Directors ("Directors'
Option Plan"). Such options began vesting in five equal annual installments
on August 24, 1996, the first anniversary of the effective date of the
grant.
(8) Mr. Banks is the son-in-law of Mr. Friend.
(9) Includes 24,324 shares awarded to directors under the RRP and 58,089 shares
awarded to executive officers under the Performance Equity Program. Does
not include 62,674 shares subject to options awarded to directors under the
Directors Option Plan or 130,571 shares subject to options awarded to
executive officers under the Incentive Option Plan. Also includes 15,096
shares awarded to executive officers pursuant to the ESOP.
(10)Findim Investments, S.A. is the beneficial owner of 323,500 shares of
Company Common Stock of which Mr. Biase disclaims beneficial ownership.
6
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors conducts its business through meetings of the Board
of Directors and through activities of its committees. The Board of Directors
meets monthly and may have additional meetings as needed. During fiscal 1996,
the Company's Board of Directors held 16 meetings. All of the directors of the
Company attended at least 75% of the total number of the Company's Board
meetings held and committee meetings on which such directors served during
fiscal 1996. The Boards of Directors of the Company and the Bank maintain
committees, the nature and composition of which are described below:
AUDIT COMMITTEE. The Audit Committee of the Company consists of Messrs.
Franich (Chairman), Resetar, Bachan and Banks, all of whom are outside
directors. This committee meets as called by the Committee Chairman and met
once in fiscal year 1996. The purpose of this committee is to provide assurance
that financial disclosures made by management portray the financial condition
and results of operations. The committee also maintains a liaison with the
outside auditors and reviews the adequacy of internal controls. The Audit
Committee of the Bank met 11 times in fiscal 1996.
NOMINATING COMMITTEE. The Company's Nominating Committee for the 1997
Annual Meeting consists of Messrs. Bachan (Chairman), Meidl and Franich. The
committee considers and recommends the nominees for director to stand for
election at the Company's annual meeting of stockholders. The Company's
Certificate of Incorporation and Bylaws also provide for stockholder nominations
of directors. These provisions require such nominations to be made pursuant to
timely notice in writing to the Secretary of the Company. The stockholder's
notice of nomination must contain all information relating to the nominee which
is required to be disclosed by the Company's Bylaws and by the Securities
Exchange Act of 1934. The Nominating Committee met on January 23, 1997.
COMPENSATION/BENEFITS COMMITTEE. The Compensation/Benefits Committee of
the Bank consists of Messrs. Henrichsen (Chairman), Banks, Manfre and Resetar.
The Compensation/Benefits Committee also serves as the ESOP Committee. This
committee meets to establish compensation for the Chief Executive Officer,
approves the compensation of senior officers and various compensation and
benefits to be paid to employees and to review the incentive compensation
programs when necessary. See "Executive Compensation - Compensation Committee
Report on Executive Compensation." The Compensation/Benefits Committee met 7
times in fiscal 1996.
DIRECTORS' COMPENSATION
DIRECTORS' FEES. Directors of the Company who are not also employees of
the Company receive a retainer of $200 per month for serving on the Company's
Board of Directors. In 1996, the monthly retainer for service on the Board of
Directors of the Bank by directors who are not also employees of the Bank was
$1,500. All members of the Board of Directors of the Bank are also members of
the Board of Directors of Portola Investment Corporation, a wholly-owned
7
subsidiary of the Bank ("Portola"), and directors of Portola who are not also
employees of the Bank receive a monthly retainer fee of $200. No committee
meeting fees are paid.
DIRECTORS' OPTION PLAN. The Company maintains the Directors' Option Plan
for all directors who are not also employees of the Company or the Bank. Under
the Directors' Option Plan, each outside director was granted options to
purchase shares of Common Stock based upon his years of service. Each outside
director who had less than twenty years of service on the date of grant received
13,001 options and each outside director who had twenty years or more of service
on the date of the grant received 9,835 options. The options had an exercise
price of $11.37 per share, which was the fair market value of the shares on the
date of grant, August 24, 1995. To the extent options for shares are available
for grant under the Directors' Option Plan, each subsequently elected and
qualified outside director will be granted non-statutory stock options to
purchase a number of shares of Common Stock equal to 9,835 shares or options to
purchase such lesser number of shares as remain in the Directors' Option Plan.
If options for sufficient shares are not available to fulfill the grant of
options to outside directors, and thereafter options become available, such
persons shall receive options to purchase an amount of shares of Common Stock,
determined by dividing pro rata among such persons the number of options
available. The exercise price of each option granted to subsequent directors
will be equal to the fair market value of the Common Stock on the date of the
grant. All options initially granted under the Directors' Option Plan began
vesting in five equal annual installments on August 24, 1996, the first
anniversary of the effective date of the grant, provided, however, that in the
event of death or disability of the participant or, to the extent not prohibited
by the OTS, upon a change in control of the Company or the Bank, all options
previously granted would automatically become exercisable.
RECOGNITION AND RETENTION PLAN FOR OUTSIDE DIRECTORS. The Company
maintains the Recogniation and Retention Plan ("RRP") which grants awards to all
directors who are not also employees of the Company or the Bank. Under the RRP,
each outside director who had less than 20 years of service on the date of grant
was awarded 2,764 shares of Common Stock and each outside Director who had 20
years or more of service on the date of grant was awarded 5,529 shares of Common
Stock. To the extent shares in the Plan Share Reserve are available for grants
under the RRP, each subsequently elected and qualified outside director will be
granted an award equal to 2,764 shares of Common Stock. If sufficient shares
are not available to fulfill the grant of awards to outside directors and
thereafter shares become available, such persons shall receive an amount of
shares of Common Stock, determined by dividing pro rata among such persons the
number of shares available. Awards to directors began vesting in five equal
annual installments on August 24, 1996, the first anniversary of the effective
date of the award. Awards will be 100% vested upon termination of service as a
director due to death or disability of the director or, to the extent not
prohibited by the OTS, upon a change in control of the Company or the Bank. In
the event that a director terminates service with the Company or the Bank before
his or her Awards have been fully vested, the director's non-vested awards will
be forfeited.
DIRECTORS' RETIREMENT PLAN. The Bank maintains the Directors' Retirement
Plan for certain qualified directors. Pursuant to the Directors' Retirement
Plan, each director who has
8
served on the Bank's Board of Directors for a minimum of three consecutive terms
of three years each, and has served continuously as a director until his or her
normal retirement age or disability, is entitled to receive a quarterly payment
equal to the amount of the quarterly retainer fee in effect at his or her date
of retirement or disability for a period of 10 years. The Directors' Retirement
Plan provides that payments will be accelerated upon the death of the
Participant.
EXECUTIVE COMPENSATION
THE REPORT OF THE COMPENSATION COMMITTEE AND THE STOCK PERFORMANCE GRAPH
SHALL NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT
INCORPORATING BY REFERENCE THIS PROXY STATEMENT INTO ANY FILING UNDER THE
SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR THE SECURITIES EXCHANGE ACT OF
1934, EXCEPT TO THE EXTENT THAT THE COMPANY SPECIFICALLY INCORPORATES THIS
INFORMATION BY REFERENCE, AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH
ACTS.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION. Under rules
established by the Securities and Exchange Commission ("SEC"), the Company is
required to provide certain data and information in regard to the compensation
and benefits provided to the Company's Chief Executive Officer and other
executive officers of the Company. The disclosure requirements for the Chief
Executive Officer and other executive officers include the use of tables and a
report explaining the rationale and considerations that led to fundamental
executive compensation decisions affecting those individuals. In fulfillment of
this requirement, the Compensation/Benefits Committee, at the direction of the
Board of Directors, has prepared the following report for inclusion in this
proxy statement.
GENERAL. The Compensation/Benefits Committee of the Board of Directors is
responsible for establishing the compensation levels and benefits for executive
officers of the Bank who also serve as executive officers of the Company and for
reviewing recommendations of management for compensation and benefits for other
officers and employees of the Bank. The Company does not pay any cash
compensation to the executive officers of the Company for serving as such. The
Compensation/Benefits Committee consists of Messrs. Henrichsen, Banks, Manfre
and Resetar, who are outside directors.
COMPENSATION POLICIES. The Compensation/Benefits Committee has the
following goals for compensation programs impacting the executive officers of
the Company and the Bank.
. to provide motivation for the executive officers to enhance
shareholder value by linking their compensation to the value of the
Company's stock;
. to retain the executive officers who have led the Company to high
performance levels and allow the Bank to attract high quality
executive officers in the future by providing total compensation
opportunities which are consistent with competitive norms of the
industry and the Company's level of performance; and
9
. to maintain reasonable "fixed" compensation costs by targeting base
salaries at a competitive average.
In addition, in order to align the interests and performance of its executive
officers with the long term interests of its stockholders, the Company and the
Bank have adopted plans which reward the executives for delivering long term
value to the Company and the Bank.
The executive compensation package available to executive officers is
composed of the following components:
. Base Salary; and
. Long Term Incentive Compensation, Including Stock Options and Stock
Awards.
Mr. Delk has employment agreements with the Company and the Bank which specify a
minimum base salary and require periodic review of such salary. In addition,
executive officers participate in other benefit plans available to all employees
including the Employee Stock Ownership Plan and the 401(k) Plan.
BASE SALARY. In determining salary levels, the Compensation/Benefits
Committee considers the entire compensation package, including the equity
compensation to be provided under the Company's stock plans, of the executive
officers. The Compensation/Benefits Committee meets in the first quarter of
each year to determine the level of any salary increase to take effect
immediately after such determination is made. The Compensation/Benefits
Committee determines the level of salary increase after reviewing the
qualifications and experience of the executive officers of the Bank, the
compensation paid to persons having similar duties and responsibilities at other
institutions, and the size of the Bank and the complexity of its operations.
Although the Compensation/Benefits Committee's policy in regard to base
salary is subjective and no specific formula is used for decision making, the
Compensation/Benefits Committee considered the overall performance of the
Company, including the fact that the Company posted earnings, and the
performance of the individual executive officer.
BONUS AWARDS. Although the Bank has paid bonuses to executive officers in
prior years, it is the current policy of the Compensation/Benefits Committee
that bonuses will not constitute part of the compensation package of the
executive officers.
INCENTIVE COMPENSATION. The Company and the Bank have adopted the
Incentive Option Plan and the Performance Equity Program, respectively, under
which executive officers may receive grants and awards. The
Compensation/Benefits Committee believes that stock ownership is a significant
incentive in building stockholders' wealth and aligning the interests of
employees and stockholders. Stock options and stock awards under such plans
were allocated based upon regulatory practices and policies, the practices of
other recently converted institutions as verified by external surveys and based
upon the executive officers' level of responsibility and
10
contributions to the Company and the Bank. Certain performance awards under the
Performance Equity Program were made during the year which lapsed because
certain performance goals were not met. All of the executive officers have
received grants and awards which have vesting periods of 20% per year beginning
one year after shareholder approval of the plans. See "Summary Compensation
Table."
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER AND CHIEF OPERATING OFFICER.
After taking into consideration the factors discussed above including the entire
compensation package, qualifications and experience, size of the Bank and
complexity of its operations, the Compensation Committee determined to increase
Mr. Friend's base salary to $63,000, and determined to increase Mr. Delk's base
salary to $99,330 for fiscal 1996. As discussed above, no bonuses were paid in
1996. Messrs. Friend and Delk received stock options and stock awards under the
same policies discussed in "Long Term Incentive Compensation" above. Such
grants are listed in the "Summary Compensation Table." In making its
determinations, the Compensation Committee also considered the outstanding
grants and awards to Messrs. Friend and Delk as well as the appreciation of such
awards.
COMPENSATION/BENEFITS COMMITTEE
Donald K. Henrichsen
Edward K. Banks
Gary L. Manfre
Louis Resetar, Jr.
11
STOCK PERFORMANCE GRAPH. The following graph shows a comparison of
cumulative total shareholder return on the Company's Common Stock, based on the
market price of the Common Stock with the cumulative total return of companies
in the Nasdaq National Market and Nasdaq Bank Stocks for the period beginning on
February 15, 1995, the day the Company's Common Stock began trading, through
December 31, 1996. The graph was derived from a limited period of time and
reflects the market's reaction to the initial public offering of the Common
Stock, and, as a result, may not be indicative of possible future performance of
the Company's Common Stock. The data was supplied by the Center for Research in
Security Prices ("CRSP") of the University of Chicago Graduate School of
Business.
COMPARISON OF CUMULATIVE TOTAL RETURNS
Monterey Bay Bancorp, Inc.
February 15, 1995 - December 31, 1996
[GRAPH APPEARS HERE]
Summary
2/15/95 6/30/95 12/29/95 6/28/96 12/31/96
------- ------- -------- ------- --------
Monterery Bay Bancorp, Inc. 100.000 116.901 130.986 133.803 166.869
CRSP Nasdaq Market Index 100.000 117.568 133.330 150.951 163.990
CRSP Nasdaq Bank Stocks 100.000 112.873 139.072 147.005 183.860
Notes:
A. The lines represent semi-annual index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the semi-annual interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.00 on 2/15/95.
12
SUMMARY COMPENSATION TABLE. The following table shows, for the years ended
December 31, 1996, 1995 and 1994, the cash compensation paid by the Bank, as
well as certain other compensation paid or accrued for those years, to the chief
executive officer and the most highly compensated executive officer of the
Company and the Bank in fiscal year 1996 ("Named Executive Officer"). No
executive officer of the Company and the Bank received salary and other annual
compensation in excess of $100,000 in fiscal year 1996. The Company does not
pay any cash compensation.
LONG-TERM COMPENSATION
--------------------------------------------
ANNUAL COMPENSATION(1) AWARDS PAYOUTS
------------------------------------------------------------------------------------
OTHER
ANNUAL RESTRICTED SECURITIES LTIP ALL OTHER
NAME AND PRINCIPAL COMPENSATION STOCK UNDERLYING PAYOUTS COMPENSATION
POSITIONS YEAR SALARY($) BONUS($) ($)(2) AWARDS OPTIONS ($)(5) ($)(6)
($)(3) (#)(4)
- ------------------------------------------------------------------------------------------------------------------------------------
Eugene R. Friend (7) 1996 $63,000 $ - $ - $ - - - $16,489
Chief Executive 1995 61,960 - - 62,865 11,500 - 10,091
Officer 1994 20,000 2,000 - - - - -
Marshall G. Delk (8) 1996 99,330 - - - - - 28,143
President and 1995 94,823 - - 326,888 57,500 - 20,555(9)
Chief Operating 1994 87,460 4,000 - - - - -
Officer
- -------------------
(1) Under Annual Compensation, the column titled "Salary" includes amounts
deferred by the named executive officer pursuant to the Bank's 401(k) Plan
pursuant to which employees may defer up to 15% of their compensation, up
to the maximum limits under the Internal Revenue Code of 1986 as amended.
(2) For fiscal years ending in 1996, 1995 and 1994, there were no (a)
perquisites over the lesser of $50,000 or 10% of the individual's total
salary and bonus for the year; (b) payments of above-market preferential
earnings on deferred compensation; (c) payments of earnings with respect to
long-term incentive plans prior to settlement or maturation; (d) tax
payment reimbursements; or (e) preferential discounts on stock.
(3) Pursuant to the Performance Equity Program, Messrs. Friend and Delk were
awarded an aggregate of 5,529 and 28,750 shares of common stock,
respectively, which had a market value of $11.37 per share on the date of
grant, August 24, 1995. Base awards to Messrs. Friend and Delk began
vesting in five equal annual installments on August 24, 1996, the first
anniversary date of the effective date of the award. Similarly, the vesting
of performance and high performance awards to Mr. Delk began to vest in
five equal annual installments on August 24, 1996; however, such vesting is
subject to the attainment of certain performance goals, some of which were
not met during fiscal year 1995, resulting in the lapse of 2,012 shares.
When shares become vested and are distributed, the recipient will also
receive an amount equal to accumulated dividends (if any). All awards vest
immediately upon termination of employment due to death or disability or,
to the extent not prohibited by the OTS, upon the occurrence of a change in
control. As of December 31, 1996, the market value of the remaining shares
held by Messrs. Friend and Delk was $65,239 and $339,250, respectively.
(4) Includes options awarded under the Incentive Option Plan. Options granted
to Messrs. Friend and Delk began vesting in five equal annual installments
on August 24, 1996, the first anniversary date of the effective date of the
award. To the extent not already exercisable, the options become
exercisable upon death or disability or, to the extent not prohibited by
the OTS, upon the occurrence of a change in control.
(5) For 1996, 1995 and 1994, the Bank had no long-term incentive plans, for the
named executive officers accordingly, there were no payouts or awards under
any long-term incentive plan.
(6) Pursuant to the ESOP, Messrs. Friend and Delk were allocated 868 and 1,378
shares of Common Stock, respectively, as of December 31, 1995, and further
allocated 934 and 1,908 shares of Common Stock respectively, as of December
31, 1996. Dollar amounts reflect market values of $11.625 and $14.75
respectivlely as of December 31, 1995 and December 31, 1996, the dates of
allocation.
(7) Mr. Friend became the Chief Executive Officer effective September 1, 1994.
(8) Mr. Delk became President and Chief Operating Officer effective September
1, 1994.
(9) Also includes $4,536 contributed by the Bank pursuant to the Monterey Bay
Bank 401(k) Plan.
13
EMPLOYMENT AGREEMENTS. The Bank and the Company have entered into
employment agreements with Mr. Delk (the "Executive"). These employment
agreements are intended to ensure that the Bank and the Company will be able to
maintain a stable and competent management base. The continued success of the
Bank and the Company depends, to a significant degree, on Mr. Delk's skills and
competence.
The Bank's and the Company's employment agreements (collectively, the
"Employment Agreements") are substantially similar. The Employment Agreements
provide for two year terms. The Company's employment agreement provides for
automatic daily extensions such that the remaining term of the agreement shall
be two years after notice of non-renewal is provided by either the Board of
Directors or the Executive. The Bank's employment agreement provides that,
commencing on the first anniversary date and continuing each anniversary date
thereafter, the Board of Directors may extend the agreement for an additional
year so that the remaining term shall be two years, unless notice of non-renewal
is given by the Board of Directors after conducting a performance evaluation of
the Executive. The Employment Agreements provide that the Executive's base
salary will be reviewed annually. In this regard, for fiscal 1997, the base
salary of Mr. Delk is $101,200. In addition to base salary, the employment
agreements provide for, among other things, participation in stock benefit plans
and other fringe benefits applicable to executive personnel.
The Employment Agreements provide for termination of the Executive by the
Bank or the Company for cause as defined in the Employment Agreements at any
time. In the event the Bank or the Company chooses to terminate the Executive's
employment for reasons other than for cause, or in the event of the Executive's
resignation from the Bank and the Company upon (i) failure to re-elect the
Executive to his current offices, (ii) a material change in the Executive's
functions, duties or responsibilities, (iii) a relocation of the Executive's
principal place of employment by more than fifty miles, (iv) liquidation or
dissolution of the Bank or the Company, or (v) a breach of the Employment
Agreement by the Bank or the Company, the Executive or, in the event of death,
his beneficiary would be entitled to severance pay in an amount equal to the
remaining salary payments under the Employment Agreement, including base salary,
bonuses, other payments and health benefits due under the remaining term of the
Employment Agreement to the Executive.
Under the Company's agreement, if termination, voluntary or involuntary,
follows a change in control of the Bank or the Company, as defined in the
Employment Agreement, the Executive or, in the event of death, his beneficiary,
would be entitled to a severance payment equal to the greater of (i) the
payments due for the remaining terms of the agreement or (ii) three times the
average of the three preceding years' annual compensation, including bonuses and
any other cash compensation paid or to be paid to the Executive during such
years, and the amount of any contributions made or to be made to any employee
benefit plan. In addition, the Bank and the Company would continue the
Executive's life, health, and disability coverage for thirty-six months. The
Bank's agreement has a similar change in control provision, however, the
Executive would only be entitled to receive a severance payment under one
agreement. Payments to the
14
Executive under the Bank's employment agreement are guaranteed by the Company in
the event that payments or benefits are not paid by the Bank.
In the event of a change in control based upon the past fiscal year's
salary and bonus, Mr. Delk would receive approximately $290,149 in severance
payments in addition to other cash and non-cash benefits provided for under the
Employment Agreements.
INCENTIVE STOCK OPTION PLAN
The Company maintains the Incentive Stock Option Plan, which provides
discretionary awards to officers and key employees as determined by a committee
of disinterested directors who administer the plan. No options or stock
appreciation rights were granted to the Named Executive Officers during fiscal
year 1996.
The following table provides certain information with respect to the number
of shares of Common Stock represented by outstanding options held by the Named
Executive Officers as of December 31, 1996. Also reported are the value for
"in-the-money" options which represent the positive spread between the exercise
price of any such existing stock options and the year-end price of the Common
Stock. 13,800 options were exercisable by the Named Executive Officers in
fiscal 1996.
FISCAL YEAR END OPTION/SAR VALUES
SECURITIES UNDERLYING VALUE OF UNEXERCISED
NUMBER IN-THE-
OF UNEXERCISED MONEY OPTIONS/SARS AT
OPTIONS/SARS FISCAL YEAR END ($)(1)
AT FISCAL YEAR END (#)
---------------------------- ------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
Eugene R. Friend............ 2,300 9,200 7,774 31,096
Marshall G. Delk............ 11,500 46,000 38,870 155,480
- ----------------------
(1) Market value of underlying securities at fiscal year end ($14.75) minus the
exercise or base price ($11.37) per share. Options vest at an annual rate
of 20% of the original amount granted and began vesting on August 24, 1996.
SALARY CONTINUATION PLAN. The Bank maintains a salary continuation plan for
the benefit of certain officers of the Bank (the "Salary Continuation Plan").
Officers participating in the Salary Continuation Plan are entitled to receive a
monthly payment (determined by the Board of Directors) for a period of 10 years
upon retirement. Participating officers must be employed by the Bank through
the age specified in individual plans to receive plan benefits. The Salary
Continuation Plan provides that payments will be accelerated upon the death of a
Participant.
15
TRANSACTIONS WITH CERTAIN RELATED PERSONS
The Bank's current policy provides that all loans made by the Bank to its
directors and officers are made in the ordinary course of business, are made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons and do not
involve more than the normal risk of collectibility or present other unfavorable
features.
PROPOSAL 2. RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended December 31,
1996 were Deloitte & Touche LLP. The Company's Board of Directors has
reappointed Deloitte & Touche LLP to continue as independent auditors for the
Bank and the Company for the fiscal year ending December 31, 1997, subject to
ratification of such appointment by the stockholders.
Representatives of Deloitte & Touche LLP will be present at the Annual
Meeting. They will be given an opportunity to make a statement if they desire
to do so and will be available to respond to appropriate questions from
stockholders present at the Annual Meeting.
UNLESS MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY THE ENCLOSED PROXY
CARD WILL BE VOTED FOR RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP
AS THE INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER
31, 1997.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY.
ADDITIONAL INFORMATION
STOCKHOLDER PROPOSALS
To be considered for inclusion in the Company's proxy statement and form of
proxy relating to the 1998 Annual Meeting of Stockholders, a stockholder
proposal must be received by the Secretary of the Company at the address set
forth on the Notice to the Proxy Statement not later than December 3, 1997. Any
such proposal will be subject to 17 C.F.R. Section 240.14a-8 of the Rules and
Regulations under the Securities Exchange Act of 1934, as amended.
NOTICE OF BUSINESS TO BE CONDUCTED AT AN ANNUAL MEETING
The Bylaws of the Company provide an advance notice procedure for a
stockholder to properly bring business before an Annual Meeting. The
stockholder must give written advance notice to the Secretary of the Company not
less than ninety (90) days before the date originally fixed for such meeting,
provided, however, that in the event that less than one hundred (100) days
16
notice or prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be received not later
than the close of business on the tenth day following the date on which the
Company's notice to stockholders of the annual meeting date was mailed or such
public disclosure was made. The advance notice by stockholder must include the
stockholder's name and address, as they appear on the Company's record of
stockholders, a brief description of the proposed business, the reason for
conducting such business at the Annual Meeting, the class and number of shares
of the Company's capital stock that are beneficially owned by such stockholder
and any material interest of such stockholder in the proposed business. In the
case of nominations to the Board of Directors, certain information regarding the
nominee must be provided. Nothing in this paragraph shall be deemed to require
the Company to include in its proxy statement or the proxy relating to an annual
meeting any stockholder proposal which does not meet all of the requirements for
inclusion established by the SEC in effect at the time such proposal is
received.
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING
The Board of Directors knows of no business which will be presented for
consideration at the Meeting other than as stated in the Notice of Annual
Meeting of Stockholders. If, however, other matters are properly brought before
the Annual Meeting, it is the intention of the persons named in the accompanying
proxy to vote the shares represented thereby on such matters in accordance with
their best judgment.
Whether or not you intend to be present at the Annual Meeting, you are
urged to return your proxy card promptly. If you are then present at the Annual
Meeting and wish to vote your shares in person, your original proxy may be
revoked by voting at the Annual Meeting.
By Order of the Board of Directors
Carlene F. Anderson
Corporate Secretary
April 7, 1997
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE
REQUESTED TO SIGN, DATE AND PROMPTLY RETURN THE
ACCOMPANYING PROXY CARD IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
17
REVOCABLE PROXY
MONTEREY BAY BANCORP, INC.
ANNUAL MEETING OF SHAREHOLDERS
MAY 2, 1997
11:00 A.M. PACIFIC TIME
The undersigned hereby appoints the Board of Directors of Monterey Bay
Bancorp, Inc. (the "Company") to act as proxy for the undersigned, and to vote
all shares of Common Stock of the Company which the undersigned is entitled to
vote only at the Annual Meeting of Shareholders, to be held on May 2, 1997, at
11:00 a.m. Pacific Time, at 15 Brennan Street, Watsonville, California, and at
any and all adjournments thereof, as set forth on the reverse side.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF MONTEREY BAY BANCORP,
INC.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE PROPOSALS
PRESENTED.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
Pleasemark
yourvotesas
indicatedin
thisexample
X
Signature(s) __________________________ Dated: ____
NOTE: Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your
full title. If shares are held jointly, each holder may sign but only one
signature is required.
- ---
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF MONTEREY BAY BANCORP,
INC.
FOR
VOTE
WITHHELD FOR
AGAINST
ABSTAIN
1. The election as directors of all nominees listed (except as marked to the
contrary below).
Eugene R. Friend,
Donald R.
Henrichsen and
McKenzie Moss
INSTRUCTION: To
withhold your
vote for any
individual
nominee, write
that nominee's
name on the line
provided below:
- ----------------------
2. The ratification of the appointment of Deloitte & Touche LLP as independent
auditors of Monterey Bay Bancorp, Inc. for the fiscal year ending December
31, 1997.
THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSALS
LISTED. IF ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL MEETING, INCLUDING
WHETHER OR NOT TO ADJOURN THE MEETING, THIS PROXY WILL BE VOTED BY THE BOARD
OF DIRECTORS IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF
DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING.
The undersigned acknowledges receipt from the Company prior to the execution
of this proxy of a Notice of Annual Meeting of Shareholders and of a Proxy
Statement dated April 7, 1997 and of the Annual Report to Shareholders.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.