SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
PrivateBancorp, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[logo of PrivateBancorp]
March 26, 2001
Dear Stockholders:
You are cordially invited to attend the 2001 Annual Meeting of Stockholders
of PrivateBancorp, Inc. which will be held at The Standard Club, 320 South
Plymouth Court, Chicago, Illinois 60604, on Thursday, April 26, 2001, at 4:00
p.m. local time.
The attached Notice of the Annual Meeting and Proxy Statement describe the
formal business to be transacted at the meeting. Directors and officers of
PrivateBancorp, Inc. as well as representatives of Arthur Andersen LLP will be
present at the meeting to respond to any questions that our stockholders may
have regarding the business to be transacted.
The Board of Directors of PrivateBancorp, Inc. has determined that the
specific proposals to be considered at the 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 a vote "FOR" each of these matters.
YOUR VOTE IS IMPORTANT. Please sign and return the enclosed proxy card
promptly in the postage-paid envelope. 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.
On behalf of the Board of Directors and all the employees of the Company,
The PrivateBank and Trust Company and The PrivateBank (St. Louis), I wish to
thank you for your continued support.
Sincerely,
/s/ Ralph B. Mandell
Ralph B. Mandell
Chairman of the Board,
President and Chief Executive Officer
PRIVATEBANCORP, INC.
Ten North Dearborn Street
Chicago, Illinois 60602
PRIVATEBANCORP, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on April 26, 2001
NOTICE IS HEREBY GIVEN that the 2001 Annual Meeting of Stockholders of
PrivateBancorp, Inc. will be held at The Standard Club, 320 South Plymouth
Court, Chicago, Illinois 60604, on Thursday, April 26, 2001, at 4:00 p.m. local
time.
The meeting is for the purpose of considering and voting upon the following
matters:
1. Election of five Class III directors to hold office for a three-year
term;
2. Ratification of the appointment of Arthur Andersen LLP as the
Company's independent public accountants for the fiscal year ending
December 31, 2001; and
3. Such other business as may properly come before the meeting, including
whether or not to adjourn the meeting, and any adjournment of the
meeting.
The Board of Directors has fixed March 8, 2001 as the record date for
determining stockholders entitled to notice of, and to vote at, the meeting and
at any adjournments thereof. Only record holders of the common stock of the
Company as of the close of business on the record date will be entitled to vote
at the meeting. In the event there are not sufficient shares represented for a
quorum or to approve any one or more of the foregoing proposals at the time of
the meeting, the meeting may be adjourned in order to permit further
solicitation of proxies by the Company. A list of stockholders entitled to vote
at the meeting will be available at the Company's offices located at The
PrivateBank and Trust Company, Ten North Dearborn Street, Chicago, Illinois
60602, for a period of ten days prior to the meeting and will also be available
at the meeting.
By order of the Board of Directors,
/s/ Gary L. Svec
Gary L. Svec
Secretary and Chief Financial Officer
March 26, 2001
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED FORM OF PROXY
IN THE ENVELOPE PROVIDED.
PRIVATEBANCORP, INC.
Ten North Dearborn Street
Chicago, Illinois 60602
PROXY STATEMENT
FOR THE 2001 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD THURSDAY, APRIL 26, 2001
Solicitation and Voting of Proxies
These proxy materials are furnished in connection with the solicitation by
the Board of Directors of PrivateBancorp, Inc. ("the Company"), a Delaware
corporation, of proxies to be used at the 2001 Annual Meeting of Stockholders of
the Company and at any adjournment of such meeting. The meeting is scheduled to
be held on April 26, 2001, at 4:00 p.m. local time, at The Standard Club, 320
South Plymouth Court, Chicago, Illinois 60604. The Company's 2000 Annual Report
on Form 10-K, including audited consolidated financial statements for the fiscal
year ended December 31, 2000, this proxy statement and a proxy card are first
being mailed to record holders of common stock of the Company on or about March
26, 2001.
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 will be voted in
accordance with the directions given therein. When no instructions are
indicated, signed proxy cards will be voted FOR each of the proposals.
Other than the matters listed in 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 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 meeting and at any adjournments thereof,
including whether or not to adjourn the meeting.
A proxy may be revoked at any time prior to its exercise by filing a
written notice of revocation with the Secretary of the Company, by delivering to
the Company a duly executed proxy bearing a later date, or by attending the
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 meeting.
Cost of Proxy Solicitation
The cost of solicitation of proxies on behalf of management will be borne
by the Company. In addition to the solicitation of proxies by mail, proxies may
be solicited personally or by telephone by directors, officers and other
employees of the Company, The PrivateBank (Chicago) and The PrivateBank (St.
Louis). No additional compensation will be paid for such solicitation. 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 materials to and obtain proxies from such beneficial
owners, and will reimburse such holders for their reasonable expenses in doing
so.
Voting Securities and Stockholders Entitled to Vote
The Board of Directors has fixed the close of business on March 8, 2001 as
the record date for determining stockholders entitled to notice of, and to vote
at, the meeting. On the record date, the Company had outstanding 4,664,432
shares of common stock. Each outstanding share of common stock entitles the
holder to one vote. The Company's Amended and Restated By-laws state that a
majority of the outstanding shares of the Company entitled to vote on a matter,
present in person or represented by proxy, shall constitute a quorum for the
consideration of such matters at any meeting of stockholders. If a quorum is
present, the affirmative vote of the majority of the shares present in person or
represented by proxy at the meeting and entitled to vote is required for the
taking of any action by the stockholders, with the exception of the election of
the director nominees, in which case an affirmative vote of the holders of a
plurality of the shares present at the meeting, represented in person or by
proxy, and entitled to vote, is required.
Proxies received from stockholders in proper form will be voted at the
meeting and, if specified, as directed by the stockholder. Unless contrary
instructions are given, the proxy will be voted at the meeting for the election
of each of the nominees for Class III Director, as set forth below, for
ratification of the appointment of Arthur Andersen LLP as the Company's
independent public accountants for the fiscal year ending December 31, 2001,
and, in accordance with the best judgment of the holders of the proxies, on any
other business which may properly come before the meeting and be submitted to a
vote of the stockholders. Shares represented by proxies which are marked
"withhold for all" with respect to the election of one or more nominees for
election as directors will not be counted as votes cast in determining whether a
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plurality vote was obtained on such matter. Proxies which are marked "abstain"
on other proposals will be counted as present and entitled to vote and have the
effect of voting against the proposal. With respect to brokers who have returned
proxies but are prohibited from exercising discretionary voting authority for
shares owned by beneficial owners who have not returned voting instructions to
the brokers, those shares also will not be counted as votes cast. Abstentions
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and broker non-votes are counted as shares present for the purpose of
determining whether the shares represented at the meeting constitute a quorum.
In the event that there are not sufficient votes for a quorum at the time of the
meeting, the meeting may be adjourned in order to permit the further
solicitation of proxies.
Your vote is important. Because many stockholders may not be able to
personally attend the meeting, it is necessary that a large number be
represented by proxy. Prompt return of your proxy card in the postage-paid
envelope provided will be appreciated.
PROPOSAL 1. ELECTION OF DIRECTORS
The Company's Board of Directors consists of 15 members divided into three
classes who are elected to hold office for staggered three-year terms as
provided in the Company's By-laws. The five persons currently serving as Class
III Directors have been nominated for election at this Annual Meeting of
Stockholders to serve for a three-year term to end at the annual meeting of
stockholders to be held in 2004. The term of those persons currently serving as
Class I Directors expires at the annual stockholder meeting to be held in 2002;
the term of Class II Directors expires at the annual stockholder meeting to be
held in 2003.
The five persons named below, all currently serving as Class III Directors,
have been nominated for re-election as Class III Directors to serve for a term
to end at the annual meeting of stockholders in the year 2004 or until their
successors are elected and qualified. All of the nominees have indicated a
willingness to serve and the Board of Directors has no reason to believe that
any of the nominees will not be available for election. However, if any of the
nominees is not available for election, proxies may be
2
voted for the election of other persons selected by the Board of Directors.
Proxies cannot, however, be voted for a greater number of persons than five. To
be elected as a director, each nominee must receive the affirmative vote of a
plurality of the shares present in person or represented by proxy and entitled
to vote at the meeting. Stockholders of the Company have no cumulative voting
rights with respect to the election of directors.
The names, ages and certain background information of the persons serving
on the Board of Directors of the Company, including the Director Nominees, are
set forth below.
Class III Director Nominees to Serve Until 2004
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Robert F. Coleman (56), a director since 1990, is a principal of Robert F.
Coleman & Associates, a law firm located in Chicago, Illinois. He concentrates
his practice on business and professional litigation.
James M. Guyette (55), has been a director since 1990. Since 1997, he has been
President and Chief Executive Officer of Rolls Royce North America, Inc. Mr.
Guyette served as Executive Vice President of UAL Corporation from 1985 to 1995
when he retired after more than 25 years of employment with that company. He is
currently a director of Rolls-Royce plc (London) and Pembroke Capital (Dublin),
and formerly a director of First United Financial Services and United Airlines
Employees Credit Union.
Philip M. Kayman (58), a director since 1990, has been a senior partner with the
law firm of Neal, Gerber & Eisenberg in Chicago, Illinois since the firm's
founding in 1986.
Thomas F. Meagher (70), has been a director since 1996. Mr. Meagher has been the
Chairman of Howell Tractor and Equipment Co., a distributor of heavy equipment
located in Elk Grove Village, Illinois, since 1980. He has had an extensive
career in the transportation industry and currently serves on the Board of
Directors of Trans World Airlines, Inc., a New York Stock Exchange company.
William J. Podl, (56), has been a director since August 1999. Mr. Podl was an
organizer of Towne Square Financial Corporation, which was purchased by the
Company in August 1999. Mr. Podl founded Doran Scales, Inc. in 1976, and is
currently Chairman and Chief Executive Officer of that company.
Class I Directors Serving Until 2002
- ------------------------------------
Ralph B. Mandell (60), a director since 1989, is a co-founder of the Company and
The PrivateBank (Chicago). A director of The PrivateBank (Chicago) and The
PrivateBank (St. Louis), he has served as Chairman and Chief Executive Officer
of the Company and The PrivateBank (Chicago) since 1994 and assumed the
additional title of President of both entities in March 1999. From inception
until 1994, Mr. Mandell had the title of Co-Chairman. Prior to starting The
PrivateBank (Chicago) and the Company, Mr. Mandell was the Chief Operating
Officer of First United Financial Services, Inc., from 1985 to 1989, and served
as its President from 1988 to 1989. First United, a company that was traded on
the Nasdaq National Market, was sold to First Chicago Corporation in 1987. He
also served as President of Oak Park Trust & Savings Bank from 1985 until 1988.
Prior thereto, Mr. Mandell had served as Executive Vice President of Oak Park
Trust & Savings Bank since 1979.
Naomi T. Borwell (73), has been a director since 1990. She is a private
investor. Mrs. Borwell is a former director of First Chicago Bank of Oak Park
and First United Trust Company.
William A. Castellano (59), has been a director since 1991. From 1996 to present
he has been Chairman and founder of both Workspace, Inc. and Worknet, Inc.,
located in Oakbrook Terrace, Illinois. Workspace provides office furniture to
businesses, and Worknet provides computer networking services to businesses. He
was the founder of and served as the Chief Executive Officer to Chrysler Systems
Leasing from 1977 to 1991.
3
Alvin J. Gottlieb (73), a director since 1990, is a private investor. Since
1961, Mr. Gottlieb has served in various capacities on the board of directors of
Gottlieb Memorial Hospital, located in Melrose Park, Illinois, and he currently
holds the position of Vice Chairman.
William R. Langley (60), a director since 1989, is a co-founder of the Company
and The PrivateBank (Chicago). Mr. Langley held the title of Co-Chairman of the
Company, and was active in day-to-day management of the Company until 1995 when
he retired. Prior to the formation of the Company, Mr. Langley had served as
Chief Executive Officer of First United Financial Services, Inc. from 1985 to
1987 and as Chairman from 1987 to 1989. First United, a company that was traded
on the Nasdaq National Market, was sold to First Chicago Corporation in 1987.
Prior to that, he served as Chairman and President of Oak Park Trust & Savings
Bank, where he had been employed since 1973.
Class II Directors Serving Until 2003
- -------------------------------------
Donald L. Beal (54), a director since 1991, has been the owner of Kar-Don, Inc.
d/b/a Arrow Lumber Company, located in Chicago, Illinois, since 1980. Prior to
that, Mr. Beal served as Vice President of Hyde Park Bank & Trust with
responsibilities including commercial lending and personal banking. Mr. Beal is
also the sole owner of Ashland Investment, Inc.
John E. Gorman (55), has been a director since 1994. Since 1982, Mr. Gorman has
been a General Partner of the Jorman Group, a privately-owned organization with
diversified business holdings.
Richard C. Jensen (55), has been a director since January 2000. Mr. Jensen has
been a Managing Director of The PrivateBank (Chicago) since November 1999. He
became Chairman, Chief Executive Officer and a Managing Director of The
PrivateBank (St. Louis) upon its receipt of its banking charter in June, 2000.
From May 1998 until joining us, Mr. Jensen served as Chairman and Chief
Executive Officer of Missouri Holdings, Inc. From March to May 1998, he served
as President and Chief Executive Officer of Royal Banks of Missouri. For the
previous 18 years, Mr. Jensen served in various executive positions with Nations
Bank and its predecessor, Boatmen's Bank, in St. Louis.
Caren L. Reed (66), a director since 1990, was a founding director of The
PrivateBank (Chicago). Mr. Reed is currently employed as Vice Chairman of the
Company and The PrivateBank (Chicago). From 1990 to March 1999, Mr. Reed also
held the title of President of the Company and The PrivateBank (Chicago). Prior
to joining the bank, Mr. Reed was an Executive Vice President of Continental
Bank, Chicago with a career spanning 34 years.
Michael B. Susman (62), has been a director since 1990. He has been a partner in
the law firm of Spitzer, Addis, Susman & Krull, located in Chicago, Illinois,
since 1974.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES FOR CLASS III DIRECTOR NAMED ABOVE.
4
Security Ownership of Certain Beneficial Owners, Directors and Executive
Officers
The following table sets forth the beneficial ownership of the common stock
as of March 8, 2001, with respect to (1) each Director and executive officer of
the Company; and (2) all Directors and executive officers of the Company as a
group. Other than Mr. Mandell, the Company does not know of any stockholder who
holds in excess of 5% of any class of the Company's voting securities.
Amount of
Common Total
Shares Currently Amount of Total
Beneficially Restricted Exercisable Beneficial Percentage
Owned/(1)/ Stock/(1)/ Options/(1)/ Ownership/(1)/ Ownership/(1)/
----------------- ---------------- ------------ -------------- ---------------
Directors
- ---------
Ralph B. Mandell**.................... 241,395(2) 32,600(3) 75,840 349,835 7.35%
Donald L. Beal........................ 16,244(4) -- 18,720 34,964 *
Naomi T. Borwell...................... 164,800 -- 18,720 183,520 3.90
William A. Castellano................. 152,400(5) -- 18,720 171,120 3.64
Robert F. Coleman..................... 26,400(6) -- 18,720 45,120 *
John E. Gorman........................ 49,000 -- 14,400 63,400 1.35
Alvin J. Gottlieb..................... 105,600 -- 9,240 114,840 2.45
James M. Guyette...................... 12,000 -- 18,720 30,720 *
Richard C. Jensen..................... 5,723(7) 5,200(8) -- 10,923 *
Philip M. Kayman...................... 14,800 -- 18,720 33,520 *
William R. Langley.................... 89,600 -- 74,240 163,840 3.44
Thomas F. Meagher..................... 17,000 -- 12,480 29,480 *
William J. Podl....................... 25,556 -- 3,000 28,556 *
Caren L. Reed......................... -- 9,600(9) 10,040 19,640 *
Michael B. Susman..................... 25,400 -- 18,720 44,120 *
--------- --------- ------- --------- -----
Total Directors (15 persons).......... 945,918 47,400 330,280 1,323,598 26.39%
Non-director Named Executive Officers
- -------------------------------------
Gary L. Svec.......................... 2,443 5,500(8) -- 7,943 *
Gary S. Collins....................... 23,452(10) 14,400(3) 31,616 69,468 1.47
Thomas S. Palmer...................... 6,187 3,000(8) -- 9,187 *
Hugh H. McLean........................ 52,728 11,800(11) 16,000 80,528 1.71
--------- --------- ------- --------- -----
Total Directors and Executive......... 1,030,728 82,100 377,896 1,490,724 29.44%
Officers (19 persons)................ ========= ========= ======= ========= =====
________________
* Less than 1%
** Denotes person who serves as a director who is also a named executive
officer.
(1) Beneficial ownership is determined in accordance with SEC Rule 13d-3
promulgated under the Securities Exchange Act of 1934.
(2) Includes 72,720 shares which have been pledged as collateral to secure a
loan from the Company to Mr. Mandell. See "Transactions with Related
Person." Also, includes 23,600 shares held by Mr. Mandell's spouse. Mr.
Mandell's business address is c/o The PrivateBank and Trust Company, Ten
North Dearborn, Chicago, Illinois 60602.
(3) Shares vest at various dates between 2001 and 2006, and are subject to
forfeiture until such time as they vest.
(4) Includes 9,144 shares held by Mr. Beal's spouse and children.
(5) Includes 14,000 shares held by Mr. Castellano's children and 10,000 shares
held by WMC Investment Ltd. Partnership.
(6) Includes 800 shares held by Mr. Coleman's spouse and 3,200 shares held by
the Robert F. Coleman & Associates Retirement Savings Plan of which Mr.
Coleman is a participant.
(7) Represents shares held by Mr. Jensen's spouse.
(8) Shares vest at various dates between 2005 and 2006 and are subject to
forfeiture until such time as they vest.
(9) Shares vest at various dates between 2001 and 2002, and are subject to
forfeiture until such time as they vest.
(10) Includes 4,420 shares held by Mr. Collins' spouse.
(11) Shares vest at various dates between 2002 and 2006, and are subject to
forfeiture until such time as they vest.
5
Board Committees
Members of the Company's Board of Directors have been appointed to serve on
various committees of the Board. The Board of Directors currently has three
standing committees: (1) the Compensation Committee; (2) the Audit Committee;
and (3) the Planning Committee. The Company has not designated a nominating
committee. The entire Board of Directors acts to nominate persons for election
as directors.
Compensation Committee. The Compensation Committee is responsible for
reviewing the performance of the Chief Executive Officer; reviewing and
recommending the compensation of the Company's officers, including the Chief
Executive Officer; recommending and approving stock option grants and restricted
stock awards to management; reviewing and recommending non-cash compensation
programs including stock option grants, 401(k) contributions and annual bonuses;
reviewing and recommending director compensation; and advising the Chief
Executive Officer on miscellaneous compensation issues. The Compensation
Committee also advises and assists management in formulating policies regarding
compensation. The members of the Compensation Committee are Messrs. Guyette
(Chairman), Castellano, Meagher and Susman and Mrs. Borwell.
Audit Committee. The Audit Committee reports to the Board of Directors in
discharging its responsibilities relating to the Company's accounting, reporting
and financial control practices. The Board of Directors has adopted a written
charter for the Audit Committee that outlines the responsibilities and processes
of the Audit Committee. A copy of the charter is attached as Appendix A to this
Proxy Statement. Generally, the Audit Committee assists the Board, through
review and recommendation, in its oversight responsibility related to the
quality and integrity of the Company's financial information and reporting
functions, the adequacy and effectiveness of the Company's system of internal
accounting and financial controls, and the independent audit process, and
annually reviews the qualifications of the independent public accountants. The
independent public accountants are responsible for auditing the Company's
financial statements and expressing an opinion as to their conformity with
generally accepted accounting principles. The Audit Committee is composed
entirely of outside directors who are not officers of the Company. The members
of the Audit Committee are "independent" directors as such term is defined in
Rule 4200(a)(15) of the National Association of Securities Dealers' listing
standards. The members of the Audit Committee are Messrs. Coleman (Chairman),
Beal, Gorman, Guyette, Langley and Podl.
Planning Committee. The Planning Committee is responsible for studying
strategic issues prior to submission to the entire Board of Directors for
approval. The Planning Committee consists of Messrs. Mandell (Chairman),
Castellano, Coleman, Gorman, Guyette, Kayman and Langley.
The entire Board of Directors identifies candidates for director
nomination. The Board of Directors will consider nominees recommended by
stockholders if the procedures set forth under "Notice of Business to be
Conducted at an Annual Meeting of Stockholders" are met.
During 2000, the Board of Directors met monthly. In addition, the
Compensation Committee met five times and the Audit Committee met ten times. The
Planning Committee did not hold any meetings in 2000. Each of the directors of
the Company attended at least 75% of the total number of meetings held of the
Board and Board committees on which such director served during fiscal year
2000, with the exception of Messrs. Gorman, Guyette and Gottlieb.
6
Board of Directors' Compensation
In 1992, the Company commenced a program of compensating the outside
directors of the Company who are also outside directors of The PrivateBank
(Chicago) with stock option awards in lieu of cash retainers. The Company's
philosophy has been to increase the directors' equity stake in the Company to
enhance the alignment of their interests with those of the stockholders. The
director options have been granted each year in amounts determined at the
discretion of the Board. The options are fully vested at the end of the year of
grant, subject to a full year of service. In each case, the options have been
granted at an exercise price equal to or greater than the estimated fair market
value of our common stock at the date of grant. Partial awards have been made
for partial year service. During 2000, options to purchase a total of 42,000
shares were granted to non-employee directors. As of December 31, 2000, there
were outstanding options granted to non-employee directors pursuant to this
program to purchase an aggregate of 234,880 shares of common stock at an average
weighted per share exercise price of $11.00.
In addition to stock options, non-employee members of the Company's Board
of Directors receive fees of $200 for each Board meeting attended. The directors
also receive $100 per meeting for attendance at meetings of any committees of
the Board on which they serve. Those directors who serve on the board of The
PrivateBank (Chicago) or The PrivateBank (St. Louis) are also entitled to the
same meeting fees. During 2000, the Board of Directors met monthly. Total Board
and Board committee meeting fees paid in 2000 were $37,700.
7
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes the compensation paid by the Company and its
subsidiaries to the Chairman, President and Chief Executive Officer and the four
other most highly paid executive officers (the "Named Executive Officers") who
served as such during 2000, 1999 and 1998.
Summary Compensation Table
--------------------------------------------------------------------------------------------------
Long-term
Compensation
Annual Compensation Awards
---------------------------------------- ---------------------------------
Other Annual Securities All Other
Name and Compensation Restricted Underlying Comp-
Principal Position Year Salary ($) Bonus ($) (1) ($) (2) Stock ($) (3) Options (#) (4) ensation ($)
------------------ ---- ----------- ------------- ----------- ------------- --------------- ------------
Ralph B. Mandell.......... 2000 265,000 150,000 19,103 37,125(5) 6,000 57,440(6)
Chairman, President and 1999 230,000 200,000 19,871 90,000(7) 6,000 59,034(6)
CEO 1998 210,000 125,000 18,845 77,000(8) 6,400 34,723(6)
Donald A. Roubitchek*..... 2000 114,000(15) -- 1,880 -- -- 41,400(15)
Former Secretary/Treasurer 1999 145,000 75,000 2,155 43,200(10) 4,000 3,200(9)
and CFO 1998 138,000 40,000 1,776 22,000(11) 6,400 3,200(9)
Hugh H. McLean............ 2000 138,000 50,000 11,275 24,750(12) 3,600 3,400(9)
Managing Director 1999 130,000 60,000 12,725 54,000(13) 4,000 3,200(9)
1998 115,000 46,000 11,756 22,000(11) 5,600 3,005(9)
Gary S. Collins........... 2000 128,000 62,000 10,375 24,750(12) 3,600 3,400(9)
Managing Director 1999 120,000 57,000 10,210 43,200(14) 4,000 3,200(9)
1998 112,000 45,000 9,429 22,000(11) 5,600 2,749(9)
M. Gail Fitzgerald*....... 2000 144,000 47,000 1,842 -- 3,600 3,400(9)
Senior Trust Officer; 1999 118,000 50,000 3,504 36,000(16) 4,000 3,200(9)
Manager Director 1998 112,000 41,000 3,206 22,000(11) 5,600 3,067(9)
________________
* Indicates individual that was no longer serving in the capacity of an
executive officer at December 31, 2000.
(1) Bonuses for 2000, 1999 and 1998 were determined in December of the
respective years and paid in the following January.
(2) Represents automobile allowances, life insurance premiums and club
membership dues and fees paid by the Company.
(3) Reflects restricted stock awards under the Company's Stock Incentive Plan.
The Company has paid regular dividends on all shares of restricted stock
outstanding. These shares of restricted stock are subject to forfeiture
until the fifth anniversary of the grant date. The number and value of the
aggregate restricted stock holdings of each of the above named persons as
of December 31, 2000, based on the closing price of $9.125 for the
Company's common stock on that date, were as follows: Mr. Mandell -- 29,600
shares, $270,100; Mr. Roubitchek -- 4,400 shares, $40,150; Mr. McLean --
9,800 shares, $89,425; Mr. Collins -- 12,400 shares, $113,150; and Ms.
Fitzgerald -- 6,800 shares, $62,050.
(4) Options to purchase shares of common stock granted in 2000 have an exercise
price of $12.375 and vest over a four year period; options granted in 1999
have an exercise price of $18.00 and vest over a four year period; options
granted in 1998 have an exercise price of $17.1875 (representing 125% of
fair market value at the date of grant) and vest at the end of five years;
however, these options may vest before the fifth anniversary subject to
performance-based acceleration terms providing for complete vesting upon
the third or fourth anniversary of their grant date if the cumulative
annualized growth rate of the fair market value of the common stock
(including dividends paid) equals at least 15% as of such anniversary date.
(5) Represents an award of 3,000 shares of restricted stock at a value of
$12.375 per share.
(6) Represents (a) matching contributions to the Company's 401(k) Plan, and (b)
dollar value-benefit of accrued imputed interest (assuming full forgiveness
of cumulative accrued interest) relating to a loan from the Company in
connection with Mr. Mandell's 1998 stock purchase transaction. See
"Transactions with Related Persons."
(7) Represents an award of 5,000 shares of restricted stock at a value of
$18.00 per share.
(8) Represents an award of 5,600 shares of restricted stock at a value of
$13.75 per share.
(9) Represents matching contributions to the Company's 401(k) plan made by the
Company for the benefit of the executive officer.
(10) Represents an award of 2,400 shares of restricted stock at a value of
$18.00 per share.
(11) Represents an award of 1,600 shares of restricted stock at a value of
$13.75 per share.
(12) Represents an award of 2,000 shares of restricted stock at a value of
$12.375 per share.
(13) Represents an award of 3,000 shares of restricted stock at a value of
$18.00 per share.
(14) Represents an award of 2,400 shares of restricted stock at a value of
$18.00 per share.
(15) Mr. Roubitchek was employed as Chief Financial Officer through August 24,
2000. "All Other Compensation" includes (a) matching contributions to the
Company's 401(k) Plan in the amount of $3,400, and (b) payments totaling
$38,000 pursuant to Mr. Roubitchek's severance agreement with the Company.
(16) Represents an award of 2,000 shares of restricted stock at a value of
$18.00 per share.
8
Option Grants in Last Fiscal Year
The table below summarizes certain information about the options to
purchase the Company's common stock which were granted in 2000 by the Company
for each Named Executive Officer. All options were granted with a per share
exercise price equal to the fair market value of the Company's common stock on
the grant date.
Option Grants in Last Fiscal Year
Potential Realizable
Value at Assumed
% of Total Annual Rates of
Number of Options Stock Price
Shares Granted to Appreciation
Underlying Employees Exercise or For Option Term
Options in Fiscal Base Price Expiration --------------------
Name Granted (#) Year ($/Sh) Date 5%($) 10%($)
- -------------------- ----------- ---------- ----------- ---------- ------- --------
Ralph B. Mandell....... 6,000 6.74% $12.375 05/24/10 $46,695 $118,335
Donald A. Roubitchek... -- -- -- -- -- --
Gary S. Collins........ 3,600 4.04 12.375 05/24/10 28,017 71,001
Hugh H. McLean......... 3,600 4.04 12.375 05/24/10 28,017 71,001
M. Gail Fitzgerald..... 3,600 4.04 12.375 05/24/10 28,017 71,001
Aggregated Option Exercises and Year-End Values
The following table summarizes for each Named Executive Officer the number
of shares of common stock subject to outstanding options and the value of such
options that were unexercised at December 31, 2000.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
Number of
Securities Underlying Value of Unexercised
Shares Unexercised In-the-money
Acquired on Value Options at Options at
Name Exercise (#) Realized ($) December 31, 2000 (#) December 31, 2000 ($)/(2)/
- ---------------------- ------------ ------------ --------------------- --------------------------
Exercisable/ Exercisable/
Unexercisable/(1)/ Unexercisable/(1)/
--------------------- --------------------------
Ralph B. Mandell....... -- -- 75,840/18,400 167,540/--
Donald A. Roubitchek... -- -- 38,736/ -- 83,726/--
Gary S. Collins........ -- -- 31,616/13,200 68,696/--
Hugh H. McLean......... -- -- 16,000/13,200 --/--
M. Gail Fitzgerald..... -- -- 16,000/13,200 --/--
________________
(1) The numbers and amounts in the above table represent shares of common stock
subject to options granted by the Company that were unexercised as of
December 31, 2000.
(2) The estimated fair market value of the Company's common stock at December
31, 2000 was $9.125 per share.
9
Employment Agreements
The Company has entered into an employment agreement with Ralph B. Mandell,
the Company's Chairman, President and Chief Executive Officer. The agreement,
which has a term of two years, expires on June 30, 2001, and is subject to
renewal for a successive two-year term. Under the provisions of the agreement,
Mr. Mandell is entitled to an initial annual base salary of $230,000. Mr.
Mandell may receive a discretionary bonus to the extent determined by the Board
of Directors and is entitled to participate in benefit plans and other fringe
benefits available to the Company's managing directors.
Under the agreement, Mr. Mandell's employment may be terminated by the
Company at any time for "cause," as defined in the agreement, in which case, or
if he resigns from the Company without "good reason," the agreement immediately
terminates, and he would be entitled only to unpaid benefits accrued during the
term of his employment. If Mr. Mandell chooses to resign with good reason, or
the Company chooses to terminate his employment without cause, he is also
entitled to receive severance in the amount equal to 18 months of his then
current base annual salary, plus a pro rata bonus for the year of termination
based on the prior year's bonus amount, if any. The agreement also provides for
death benefits equal to six months of his then current annual base salary.
In the event that Mr. Mandell is terminated after a change in control of
the Company, he will be entitled to a lump sum payment equal to three times the
sum of (1) his annual base salary; (2) the greater of (a) his bonus amount, if
any, for the prior year or (b) his average bonus, if any, for the three
preceding years; and (3) the sum of the contributions that would have been made
by the Company to him during the year under benefit plans and the annual value
of any other executive perquisites. Based on Mr. Mandell's compensation through
2000, in the event of a change of control and his subsequent termination, he
would be entitled to a lump-sum payment of approximately $1.7 million under the
agreement. The agreement also entitles Mr. Mandell to receive gross up payments
to cover any federal excise taxes payable by him in the event the change in
control benefits are deemed to constitute "excess parachute payments" under
Section 280G of the Internal Revenue Code. A change in control is defined under
the agreement as an occurrence of any one of the following events as determined
by the Board:
. if any person, as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act, becomes the beneficial owner of 10% or more
of the total voting power of the Company's then outstanding voting
capital stock; provided, however, that if that person becomes a
beneficial owner of 10% or more of the Company's voting capital stock
as a result of an acquisition of stock directly from the Company, or a
decrease in the number of outstanding shares due to a repurchase of
shares by the Company, it shall not be considered a change in control;
. if during any period of two consecutive years, those individuals who
at the beginning of the period constitute the Board of Directors cease
to make up a majority of the Board;
. the consummation of a reorganization, merger or consolidation of the
Company, or the sale of all or substantially all of its assets;
provided, that so long as more than 50% of the voting stock of the
successor entity is held by stockholders who had been beneficial
owners of the Company's stock immediately before the transaction, and
at least a majority of the board of the successor entity is made up of
members of the Company's Board, the merger or sale shall not be
considered a change in control; and
. the approval by the Company's stockholders of a plan of complete
liquidation or dissolution.
10
The agreement also contains non-compete provisions, which prohibit Mr.
Mandell from soliciting, either for his own account or for the benefit of any
entity located within a 25 mile radius of the Company or any of its
subsidiaries, any of its clients or employees. These non-compete provisions
remain in effect for a period of one year after the termination of his
employment. The non-compete provisions do not apply in the event of a change in
control.
The Company has also entered into an employment agreement with Richard C.
Jensen, one of our directors, and the chairman, chief executive officer and a
managing director of The PrivateBank (St. Louis). The agreement, which has a
term of three years, expires on June 30, 2003, subject to renewal for a
successive term. The terms and provisions of Mr. Jensen's agreement are
substantially similar to those of the employment agreement with Mr. Mandell
summarized above, with the following exceptions:
. Mr. Jensen's annual base salary is $150,000;
. In the event of Mr. Jensen's discharge without cause or his
resignation with good reason, as defined in the agreement, Mr. Jensen
is entitled to (a) continue to receive his then current base salary
for a period of 12 months, plus a pro rata bonus for the year of
termination based on the prior year's bonus amount, if any; and (b)
outplacement counseling services for a period of up to one year, or
until Mr. Jensen is employed elsewhere or self-employed; and
. In the event Mr. Jensen is terminated after a change of control of the
Company, he will be entitled to a lump-sum payment equal to two times
the sum of: (a) his annual base salary; (b) the greater of (i) his
bonus amount, if any, for the prior year or (ii) his average bonus, if
any, for the three preceding years; and (c) the sum of contributions
that would have been made by the Company to him during the year under
benefit plans and the annual value of any other executive perquisites.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Introduction
The Compensation Committee ("Committee") is comprised entirely of non-
management directors. Among the Committee's duties are the responsibility for
review and approval of the compensation and benefit programs for the chief
executive officer and other senior executives. The Committee also advises and
assists management in formulating policies regarding compensation.
Objectives
Under the direction of the Committee, the Company's compensation policies
are designed to align the interests of the executives with those of the
stockholders. The goal of the policies is to improve profitability and long term
stockholder value by rewarding the executives based on criteria set for personal
and corporate performance. The compensation program and policies are also
designed to aid in the attraction, development and retention of key personnel.
The Committee uses third-party consultants and compensation surveys to help
construct and maintain a competitive compensation program. Consultants are
chosen based on their experience in compensation matters and their experience in
the financial services industry. The consultants use information from various
sources, such as proxy statements from publicly held companies and their own
compensation surveys, to construct a peer group of companies to which the
Company's compensation
11
programs are compared. The peer group is comprised of financial services
companies of similar size and selected other companies which have experienced
rapid growth similar to that of the Company.
Performance Criteria
The Committee uses a combination of base salary, cash incentive
compensation and equity-based compensation as its total compensation package.
Corporate and individual performance goals are set when the annual profit plan
is approved. The annual profit plan establishes the performance benchmark for
both earnings and asset growth.
The chief executive officer's performance goals are set by the Committee
and are based upon a combination of objective and subjective performance
criteria. Objective criteria include the achievement of net income and earnings
per share targets and growth in assets, loans and trust assets under
administration. Subjective criteria include leadership, planning and execution
of strategic initiatives.
The performance goals of the other senior executives are set by the chief
executive officer. These goals are based upon both corporate and personal
performance. Corporate goals are based upon achievement of the same earnings and
growth targets as for the chief executive officer. Individual performance goals
are based upon a combination of personal objective and subjective performance
criteria.
Base Salary
In considering annual base salary increases, the Committee in conjunction
with the chief executive officer reviews the performance of each of its senior
executives individually. The Committee compares base salary data with
information obtained from third party consultants and compensation surveys. Base
salary levels are targeted to be at or slightly below mid-points of comparable
executive compensation at companies in the Company's peer group as determined by
the Committee. This peer group consists of a smaller number of companies than
comprise the peer group index included in the stock performance graph below. The
Committee feels that a significant portion of total compensation should be at
risk. The Committee recognizes that it is difficult to make exact comparisons as
specific talents and responsibilities of each senior executive make his position
unique. In general, competitive trends of the industry and in the Company's peer
group are followed. In December of each year, the Committee approves annual base
salaries for the executive officers for the following year.
Cash Incentive Compensation
Cash incentive compensation is based on individual performance versus
personal and corporate goals. When performance goals are set, the Committee
assigns a percentage of the salary of the chief executive officer as his target
annual cash incentive compensation award. The chief executive officer recommends
target percentages for each of the other senior executives which are reviewed
and approved by the Committee. These target percentages may be slightly above
those set by peer companies as identified by third party consultants and
compensation surveys. This is consistent with the Committee's "at risk"
compensation philosophy.
In December of each year, the Committee approves annual cash incentive
compensation awards, assuming projected corporate and individual performance
levels are met, which are payable in January of the following year. Also in
December of each year, target cash incentive compensation percentages are set
for the following year.
12
Equity-Based Compensation
All senior executives are participants in the Company's Stock Incentive
Plan. At its discretion, the Committee grants awards consisting of stock
options, restricted stock, or a combination of both, to the chief executive
officer. The chief executive officer recommends awards for the other senior
executives to the Committee for approval. These awards are based on past
performance and the expectation that each executive officer's future performance
will positively impact stockholder value. The Committee believes that by using
equity-based compensation for its executive officers in addition to base salary
and cash incentive compensation awards, the interests of management are best
aligned with the interests of the Company's stockholders.
Under the terms of the Stock Incentive Plan, awards may be given in the
form of stock options, restricted stock, or a combination of both. In the past,
the Committee has granted both types of awards. In 1992, certain executive
officers were granted non-qualified stock options as replacement for a portion
of compensation forfeited in that year. Since then, all stock options granted to
executive officers have been in the form of incentive stock options, and except
in 1998, have been granted at the then current market price of the Company's
common stock with a ten year life and four year vesting schedule. In 1998, the
Committee granted incentive stock options as "premium priced options" at 125% of
market value with five year cliff vesting. Vesting on these options may be
accelerated if total return exceeds certain hurdles over a certain period of
time. Restricted stock awards have been granted with five year cliff vesting.
Compensation of Chief Executive Officer
The Committee reviews the performance of Mr. Ralph B. Mandell, the
Company's chief executive officer, by evaluating the achievement of corporate
and personal objectives. The Committee considered the effect of significant
corporate developments and initiatives in evaluating overall corporate
performance in 2000. Factors which influenced the Committee's evaluation of
performance for 2000 included: growth in earnings per share in 2000 after
certain acquisition-related charges and start-up costs; growth in assets, loans
and trust assets under administration; successful negotiation of the transaction
to acquire Johnson Bank Illinois, with banking offices in Lake Forest and
Winnetka, Illinois (transaction closed in February, 2000); and establishment of
The PrivateBank (St. Louis), a federal savings bank, in St. Louis, Missouri.
For 2000, Mr. Mandell received base salary of $265,000, a cash bonus of
$150,000 (paid in January 2001), 6,000 incentive stock options, and 3,000 shares
of restricted stock.
Under the terms of a 1998 stock purchase agreement, Mr. Mandell borrowed
$949,740 from the Company to purchase Company stock. Interest on his note is
forgiven in stages over a five year period dependent upon Mr. Mandell's
continued employment until May 28, 2003. Imputed income on the note for 2000 was
$54,040.
Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code limits the deductibility of
executive compensation for officers of public companies. Section 162(m)
generally disallows the ordinary business expense deduction for compensation in
excess of $1,000,000 paid to a company's chief executive officer and each of the
next four most highly compensated executive officers. In 2000, neither the chief
executive officer nor any of the next four most highly compensated executive
officers were compensated in excess of $1,000,000, and the Committee does not
currently anticipate that the Company will be affected by the limits of Section
162(m).
13
This report is submitted by the Compensation Committee.
James M. Guyette (Chairman)
Naomi T. Borwell
William A. Castellano
Thomas F. Meagher
Michael B. Susman
Compensation Committee Interlocks and Insider Participation
Messrs. Guyette, Castellano, Meagher and Susman and Mrs. Borwell each serve
on the Compensation Committee of the Board of Directors of the Company. Each of
these individuals has engaged in certain transactions as clients of the banks,
in the ordinary course of the banks' business, including borrowings, during the
last year, all of which transactions are or were on substantially the same terms
(including interest rates and collateral on loans) as those prevailing at the
time for comparable transactions with unaffiliated persons. In the opinion of
management, none of these transactions involved more than the normal risk of
collectability or presented any other unfavorable features. In addition, Mr.
Ralph B. Mandell, our Chairman, President and Chief Executive Officer, serves on
the Compensation Committee of The PrivateBank (St. Louis), which is responsible
for determining the compensation of the senior officers of that bank. Mr.
Richard C. Jensen, Chairman, Chief Executive Officer and a Managing Director of
The PrivateBank (St. Louis), is a director of the Company.
14
PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return on the
common stock of the Company for the period beginning June 30, 1999 and ending
December 29, 2000, with the cumulative total return on the Russell 2000 Index
and a peer group index, the CRSP Index for Nasdaq Bank Stocks, over the same
period, assuming the investment of $100 in the Company's common stock, the
Russell 2000 Index and the CRSP Index for Nasdaq Bank Stocks on June 30, 1999,
and the reinvestment of all dividends.
[Graph appears here]
06/30/99 09/30/99 12/31/99 03/31/00 06/30/00 09/29/00 12/29/00
--------- --------- --------- --------- --------- --------- ---------
PrivateBancorp, Inc..... $ 100.00 $ 84.52 $ 63.81 $ 50.19 $ 70.63 $ 66.26 $ 43.89
Russell 2000 Index...... 100.00 91.10 93.44 84.48 82.22 97.86 106.80
CRSP Index for Nasdaq
Bank Stocks............ 100.00 93.36 110.18 117.66 112.84 113.68 105.42
15
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934 requires the Company's
directors and certain executive officers and certain other beneficial owners of
the Company's common stock to periodically file notices of changes in beneficial
ownership of common stock with the Securities and Exchange Commission and the
Nasdaq National Market. To the best of the Company's knowledge, based solely on
copies of such reports received by it, the Company believes that for 2000 all
required filings were timely filed by each of its directors and executive
officers with the exception of Mr. Svec, who filed his report on Form 3 late.
TRANSACTIONS WITH RELATED PERSONS
Some of the Company's executive officers and directors are, and have been
during the preceding year, clients of the banks, and some of the Company's
executive officers and directors are direct or indirect owners of 10% or more of
the stock of corporations which are, or have been in the past, clients of the
banks. As such clients, they have had transactions in the ordinary course of
business of the banks, including borrowings, all of which transactions are or
were on substantially the same terms (including interest rates and collateral on
loans) as those prevailing at the time for comparable transactions with
nonaffiliated persons. In the opinion of management, none of the transactions
involved more than the normal risk of collectibility or presented any other
unfavorable features. At December 31, 2000, the Company had $10.4 million in
loans outstanding to certain directors and executive officers and their business
interests of the Company and to certain executive officers of the banks.
In May 1998, Ralph B. Mandell, the Company's Chairman, President and Chief
Executive Officer, purchased 72,720 shares of newly issued common stock at
$13.75 per share from the Company. The purpose of the transaction was to enhance
Mr. Mandell's interest in the long-term performance of the Company and further
align his interests with those of the Company's stockholders. As part of the
transaction, the Company loaned Mr. Mandell approximately 95% of the purchase
price on a full recourse basis. The loan matures in five years but becomes
payable prior to the fifth year in the event Mr. Mandell sells any of the 72,720
shares or Mr. Mandell's employment is terminated. Interest accrues at 5.69% per
annum, compounded annually (the applicable Federal rate), on the principal
amount of the loan; however, provided Mr. Mandell does not sell any of the
shares purchased and remains in the Company's employ, 25% of the accumulated
interest on the loan will be forgiven on the loan's second anniversary, 50% of
the accumulated interest on the loan will be forgiven on its third anniversary,
75% of the accumulated interest on the loan will be forgiven on its fourth
anniversary, and 100% of the accumulated interest on the loan will be forgiven
on the loan's fifth anniversary. Mr. Mandell pledged all of the shares of common
stock purchased in the transaction as collateral for the loan he received from
the Company, but he is entitled to vote, and receive dividends on, the shares.
During 2000, The PrivateBank (Chicago) acquired selected furniture with a
total cost of $61,733 through certain related parties of William A. Castellano,
one of our directors.
In connection with Company's acquisition of Towne Square Financial
Corporation, William J. Podl, who subsequently became a director of the Company,
received 15,278 shares of common stock of the Company as consideration for his
16.667% ownership interest of Towne Square Financial Corporation. Mr. Podl is
currently a 16.667% owner of Towne Square Realty, LLC, from which The
PrivateBank (Chicago) leases approximately 6,700 square feet in a building
located in St. Charles, IL. This lease became effective August 1, 1999. In 2000,
the Company paid rent in the amount of $107,245 to Towne Square Realty, LLC.
16
During 2000, the Company incurred professional fees for services provided
by the law firm of Spitzer, Addis, Susman & Krull in the amount of approximately
$186,000. Michael B. Susman, who is one of the Company's directors, is a partner
of that firm.
PROPOSAL 2. RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Arthur Andersen LLP as independent
public accountants for the Company for the fiscal year ending December 31, 2001.
At the meeting, stockholders will vote on ratification of this selection of
Arthur Andersen LLP.
One or more representatives of Arthur Andersen LLP will be present at the
meeting and will have the opportunity to make a statement if they desire to do
so, and will be available to respond to appropriate questions from stockholders
at the meeting.
Unless marked to the contrary, the shares represented by the enclosed proxy
card will be voted FOR ratification of the appointment of Arthur Andersen LLP as
the independent public accountants of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE
INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY.
AUDIT COMMITTEE REPORT
The Audit Committee of the Company's Board of Directors is composed of six
independent directors and operates under a written charter adopted by the Board
of Directors and the Committee. A copy of this charter is attached as Appendix A
to this Proxy Statement. The Board appoints the Audit Committee and its
chairman, with the Committee consisting of no fewer than three directors. The
Committee assists the Board, through review and recommendation, in its oversight
responsibility related to the quality and integrity of the Company's financial
information and reporting functions, the adequacy and effectiveness of the
Company's system of internal accounting and financial controls, and the
independent audit process.
The responsibility for the quality and integrity of the Company's financial
statements and the completeness and accuracy of its internal controls and
financial reporting process rests with the Company's management. The Company's
independent public accountants, Arthur Andersen LLP, are responsible for
performing an audit and expressing an opinion as to whether the Company's
financial statements are fairly presented, in all material respects, in
conformity with generally accepted accounting principles.
The Audit Committee reviewed and discussed with management and Arthur
Andersen LLP the audited financial statements of the Company for the year ended
December 31, 2000. The Audit Committee also reviewed and discussed with Arthur
Andersen LLP the matters required to be discussed by Statement on Auditing
Standards No. 61, as amended ("Communication with Audit Committees"), as
currently in effect.
Arthur Andersen LLP also provided to the Committee the written disclosures
and the letter required by Independence Standards Board Standard No. 1
("Independence Discussions with Audit
17
Committees"), as currently in effect. The disclosures described the
relationships and fee arrangements between the firm and the Company. Consistent
with Independence Standards Board Standard No. 1 and the SEC's "Revision of the
Commission's Auditor Independence Requirements," which became effective February
5, 2001, the Audit Committee considered at a meeting held on February 22, 2001,
whether the provision of non-audit services by Arthur Andersen LLP to the
Company for the fiscal year ended December 31, 2000 is compatible with
maintaining Arthur Andersen LLP's independence, and has discussed with
representatives of Arthur Andersen LLP that firm's independence from the
Company.
The members of the Audit Committee are not professionally engaged in the
practice of auditing or accounting and are not experts in the fields of
accounting or auditing, including in respect of auditor independence. Members of
the Committee rely without independent verification on the information provided
to them and on the representations made by management and Arthur Andersen LLP.
Accordingly, the Committee's oversight does not provide an independent basis to
determine that management has maintained appropriate accounting and financial
reporting principles or appropriate internal controls and procedures designed to
assure compliance with accounting standards and applicable laws and regulations.
Furthermore, the Audit Committee's considerations and discussions referred to
above do not assure that the audit of the Company's financial statements has
been carried out in accordance with generally accepted auditing standards, that
the financial statements are presented in accordance with generally accepted
accounting principles or that Arthur Andersen LLP is in fact "independent."
Based on the above-mentioned reviews and discussions with management and
Arthur Andersen LLP, and subject to the limitations on the role and
responsibilities of the Audit Committee referred to above, and as described in
its charter, the Audit Committee, exercising its business judgment, recommended
to the Board of Directors that the Company's audited financial statements be
included in its Annual Report on Form 10-K for the year ended December 31, 2000,
for filing with the SEC.
This report is submitted on behalf of the members of the Audit Committee:
Robert F. Coleman (Chair)
Donald L. Beal
John E. Gorman
James M. Guyette
William R. Langley
William J. Podl
The foregoing Audit Committee Report 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, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
Audit Fees
Arthur Andersen LLP has billed the Company $140,000, in the aggregate, for
professional services rendered by them for the audit of the Company's annual
financial statements for the fiscal year ended December 31, 2000, and the
reviews of the interim financial statements included in the Company's Quarterly
Reports on Form 10-Q filed with the SEC during the fiscal year ended December
31, 2000.
18
Financial Information Systems Design and Implementation Fees
Arthur Andersen LLP has billed the Company $0, in the aggregate, for
professional services to the Company of the nature described in Regulation S-X
Rule 2-01(c)(4)(ii) during the fiscal year ended December 31, 2000.
All Other Fees
Arthur Andersen LLP has billed the Company $55,000, in the aggregate, for
all other services rendered by them exclusive of those described above under
"Audit Fees" and "Financial Information Systems Design and Implementation Fees,"
during the fiscal year ended December 31, 2000. This amount includes audit-
related services of $10,000 and non-audit services of $45,000. Audit-related
services generally include fees for internal audit services and services
performed in connection with the filing of registration statements as required
by the SEC. Non-audit services generally include tax return review and tax
consultation services.
The Audit Committee has considered whether the services described under the
caption "Financial Information Systems Design and Implementation Fees" and "All
Other Fees" performed by Arthur Andersen LLP are compatible with maintaining
that firm's independence.
STOCKHOLDER PROPOSALS
To be considered for inclusion in the Company's proxy and form of proxy
relating to the 2002 Annual Meeting of Stockholders, a stockholder's proposal
must be received prior to November 26, 2001, by the Secretary of the Company at
the Company's executive offices at Ten North Dearborn, Chicago, Illinois 60602.
Any such proposal will be subject to Rule 14a-8 under the Securities Exchange
Act of 1934.
NOTICE OF BUSINESS TO BE CONDUCTED AT AN
ANNUAL MEETING OF STOCKHOLDERS
Pursuant to the Company's By-laws, the only business that may be conducted
at an annual meeting of stockholders is business brought by or at the direction
of the Board of Directors and proper matters submitted in advance by a
stockholder. The By-laws of the Company set forth the advance notice procedures
for a stockholder to properly bring business before an annual meeting. To be
timely, a stockholder must give the required information to the Secretary of the
Company not less than 120 days prior to the annual meeting date. If the 2002
annual meeting is held on April 25, 2002, the date contemplated under the
existing By-laws, the deadline for advance notice by a stockholder would be
December 26, 2001. In the event the Company publicly announces or discloses that
the date of the 2002 Annual Meeting of Stockholders is to be held on any other
date, notice by the stockholder will be timely if received not later than 120
days prior to the meeting date or, if later, the close of business on the tenth
(10th) 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 a stockholder must include the name and address of
the stockholder proposing the business, a brief description of the proposed
business, the number of shares of stock of the Corporation which the stockholder
beneficially owns and any material interest of the stockholder in such business.
In the case of nomination to the Board of Directors, certain information
regarding the nominee must be provided. These requirements apply to any matter
that a stockholder wishes to raise at an annual
19
meeting, including any matters raised outside of the procedures of Rule 14a-8
under the Securities Exchange Act. 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 Securities and Exchange Commission
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 other matter 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 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 meeting, you are urged to
return your proxy card promptly. If you are a record holder and are present as
the meeting and wish to vote your shares in person, your proxy may be revoked by
voting at the meeting. However, if you are a stockholder whose shares are not
registered in your own name, you will need additional documentation from your
record holder to vote personally at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Gary L. Svec
Gary L. Svec
Secretary and Chief Financial Officer
20
Appendix A
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PRIVATEBANCORP, INC.
Audit Committee of the
Board of Directors
COMMITTEE CHARTER
as amended, approved by the Board effective February 22, 2001
Composition: The Audit Committee shall be comprised of not less than
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three members of the Board as may be appointed to the
Committee from time to time by a majority of the Board, all
of whom shall be independent of management of the Company
and free of any relationship that, in the opinion of the
Board, would interfere with the exercise of independent
judgment as a Committee member. The Committee composition
shall comply with the requirements of the Nasdaq National
Market for listed companies. All members of the Committee
should be "financially literate" in that they shall have a
working familiarity with basic finance and accounting
practices and be able to read and understand fundamental
financial statements, including the Company's balance sheet,
income statement and cash flow statement. At least one
member of the Committee shall have experience in the area of
financial accounting and reporting. The Chairman of the
Audit Committee shall be elected by the Board out of those
members appointed to the Committee. The Chairman shall
preside at meetings of the Audit Committee.
Committee Role and
Scope of Authority: The role of the Audit Committee is to ensure to the Board
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and the Company's stockholders, potential stockholders and
the investment community that the corporate accounting and
financial reporting practices of the Company are in
accordance with all applicable requirements. The Audit
Committee shall assist the Board, through review and
recommendation, in its oversight responsibility related to
the quality and integrity of the Company's consolidated
financial information and reporting (including the
establishment and adequacy of appropriate reserves), the
adequacy and effectiveness of the Company's system of
internal accounting and financial controls, and the
independent audit process. The duties of the Audit Committee
shall include (in addition to any other specific
responsibilities expressly assigned to the Committee by
resolution of the Board) the following:
1. review and reassess the adequacy of this Charter at
least annually;
A-1
2. select, evaluate, and, where appropriate, replace the
independent auditor (or nominate the independent
auditor to be proposed for stockholder approval in the
proxy statement), who has ultimate accountability to
the Board and the Committee, as representatives of the
Company's stockholders, to audit the financial
statements of the Company and its subsidiaries;
3. review and concur in the continued employment,
appointment or replacement of the Company's internal
auditor (if appointed);
4. ensure that it receives from the independent auditors a
formal written statement delineating all relationships
between the auditor and the Company, consistent with
Independence Standards Board Standard 1, and actively
engage in a dialogue with the auditor with respect to
any disclosed relationships or services that may impact
the objectivity and independence of the auditor;
5. take appropriate action to oversee the independence of
the independent auditors and confirm and assure the
independence of the Company's internal auditor (if
appointed);
6. meet with the independent auditors and financial
management of the Company to review the scope of the
proposed audit for the current year and the audit
procedures to be utilized, and at the conclusion
thereof review such audit, including any comments or
recommendations of the independent auditors;
7. review with the independent auditors, the Company's
internal auditor (if appointed), and financial and
accounting personnel, the adequacy and effectiveness of
the accounting and financial controls of the Company,
and elicit any recommendations for the improvement of
such internal control procedures or particular areas
where new or more detailed controls or procedures are
desirable. Particular emphasis should be given to the
adequacy of such internal controls to expose any
payments, transactions, or procedures that might be
deemed illegal or otherwise improper;
8. periodically review Company policy statements to
determine adherence to an appropriate corporate code of
conduct;
9. review the internal audit function of the Company
including the independence, authority and nature of its
reporting obligations, the proposed audit plans for the
coming year, and the coordination of such plans with
the independent auditors;
10. receive prior to each meeting, a summary of findings
from completed internal audits and a progress report on
the proposed internal audit plan, with explanations for
any deviations from the original plan;
A-2
11. review and discuss the financial statements contained
in the annual report to stockholders with management
and the independent auditors to determine that the
independent auditors are satisfied with the disclosure
and content of the financial statements to be presented
to the stockholders, and in connection therewith,
review any changes in accounting principles;
12. review with management the Company's Form 10-Q Report
prior to its filing with the SEC. The Chairman of the
Committee may represent the entire Committee for
purposes of this review;
13. provide sufficient opportunity for the internal and
independent auditors to meet with the members of the
Audit Committee without members of management present
(among the items to be discussed in these meetings are
the independent auditors' evaluation of the Company's
financial, accounting, and auditing personnel, and the
cooperation that the independent auditors received
during the course of the audit);
14. review accounting and financial human resources and
succession planning within the Company;
15. investigate any matter brought to the Committee's
attention within the scope of its duties (the Audit
Committee is expressly authorized to retain outside
counsel for this purpose if, in its judgment, that is
appropriate); and
16. perform any other activities consistent with this
Charter, the Company's By-laws and Delaware General
Corporation Law, as the Committee or the Board may deem
necessary or appropriate.
In addition, the Committee shall be responsible for
preparing and signing the Audit Committee Report required to
be included in the Company's proxy statement relating to the
annual meeting of stockholders. In carrying out its duties
and responsibilities, the Audit Committee shall have direct
access to independent counsel when deemed necessary and
shall maintain free and open means of communication between
the directors, the independent auditors, the internal
auditors, and the financial management of the Company.
Manner of Acting: A majority of the members of the Committee present (in
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person or by telephone) at any meeting of the Committee
shall constitute a quorum, and approval by a majority of the
quorum is necessary for Committee action. Minutes shall be
recorded of each meeting held. The Committee may adopt its
own rules of procedure, and, unless otherwise determined by
a majority vote of the members of the Committee, when
appropriate, action may be taken by written consent in lieu
of a meeting of the Committee.
Reports: The Chairman of the Audit Committee (or in his absence such
- -------
other Committee member as the Committee may select) shall
report on behalf
A-3
of the Committee to the full Board at each regularly
scheduled meeting thereof with respect to any action taken
by the Committee if any meetings of the Committee have been
held (or action otherwise taken) since the date of the
previous Board meeting. In lieu of any such report, the
minutes of meetings held or other record of action taken may
be submitted to the Board of Directors for review.
A-4
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PrivateBancorp
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I N C.
Ten North Dearborn Street
Chicago, Illinois 60602
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Please complete, date, sign and mail the
detached proxy card in the enclosed postage-prepaid envelope.
DETACH PROXY CARD HERE
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This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder(s). If no direction is made, this proxy
will be voted "FOR ALL" of the five (5) Class III nominees for director, and
"FOR" ratification of the appointment of Arthur Andersen LLP as independent
auditors of the Company for the fiscal year ending December 31, 2001.
If any other business is presented at the Annual Meeting, including whether
or not to adjourn the meeting, this proxy will be voted, to the extent legally
permissible, by those named in this proxy in their best judgment. At the present
time, the Board of Directors knows of no other business to be presented at the
Annual Meeting.
Signature ______________________
Signature ______________________
Date _____________________, 2001
Please sign exactly as name (or names) appears above. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by authorized officer. If a
partnership, please sign in partnership name by authorized person.
[LOGO]
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PrivateBancorp
--------------
I N C.
If you personally plan to attend the Annual Meeting of Stockholders please check
the box below and list the names of attendees on the reverse side.
Return this stub in the enclosed envelope with your completed proxy card.
I/We do plan to attend the 2001 Annual Meeting. [_]
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REVOCABLE PROXY - PrivateBancorp, Inc.
Annual Meeting of Stockholders, April 26, 2001
- --------------------------------------------------------------------------------
The undersigned stockholder(s) of PrivateBancorp, Inc., a Delaware
corporation (the "Company"), does (do) hereby constitute and appoint Gary
S. Collins and/or Hugh H. McLean, and each of them, the true and lawful
attorney of the undersigned with full power of substitution, to appear and
act as the proxy or proxies of the undersigned at the Annual Meeting of
Stockholders of the Company to be held at The Standard Club, 320 S.
Plymouth Court, Chicago, Illinois on April 26, 2001, at 4:00 p.m. and at
any adjournment thereof, and to vote all the shares of PrivateBancorp, Inc.
standing in the name of the undersigned, or which the undersigned may be
entitled to vote, as fully as the undersigned might or could do if
personally present, as set forth below. PLEASE MARK VOTE IN THE APPROPRIATE
BOX IN THE FOLLOWING MANNER USING DARK INK ONLY.
1. The election of five (5) Class III directors of the Company's Board of
Directors to serve until the annual meeting of stockholders in 2004.
FOR WITHHOLD FOR ALL
ALL FOR ALL EXCEPT
Robert F. Coleman William J. Podi [_] [_] [_]
James M. Guyette Philip M. Kayman
Thomas F. Meagher
INSTRUCTION: To withhold your vote for any individual nominee, insert
that nominee's name on the line provided below.
___________________________________________________________________
2. The ratification of the appointment of Arthur Andersen LLP as
independent auditors of the Company for the fiscal year ending
December 31, 2001.
[_] FOR [_] AGAINST [_] ABSTAIN
The Board of Directors of the Company 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 of its nominees for
director and FOR the ratification of the appointment of Arthur Andersen LLP
as independent auditors of the Company for the fiscal year ending December
31, 2001.
PLEASE LIST
NAMES OF PERSONS ATTENDING
__________________________
__________________________
__________________________
__________________________