UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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
PRIVATE BANCORP 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)(4) 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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(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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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
[LOGO] PRIVATEBANCORP I N C.
March 14, 2002
Dear Stockholders:
You are cordially invited to attend the 2002 Annual Meeting of Stockholders
of PrivateBancorp, Inc. which will be held at The Union League Club, 65 West
Jackson Boulevard, Chicago, Illinois 60604, on Thursday, April 25, 2002, 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 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 25, 2002
NOTICE IS HEREBY GIVEN that the 2002 Annual Meeting of Stockholders of
PrivateBancorp, Inc. will be held at The Union League Club, 65 West Jackson
Blvd., Chicago, Illinois 60604, on Thursday, April 25, 2002, 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 I directors to hold office for a three-year
term; and
2. 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 1, 2002 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 14, 2002
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 2002 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD THURSDAY, APRIL 25, 2002
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 2002 Annual Meeting of Stockholders of
the Company and at any adjournment of such meeting. The meeting is scheduled to
be held on April 25, 2002, at 4:00 p.m. local time, at The Union League Club, 65
West Jackson Blvd., Chicago, Illinois 60604. The Company's 2001 Annual Report on
Form 10-K, including audited consolidated financial statements for the fiscal
year ended December 31, 2001, this proxy statement and a proxy card are first
being mailed to record holders of common stock of the Company on or about March
14, 2002.
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 1, 2002 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 4,907,940
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
1
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 I Director, as set forth below, 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 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 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 I
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 2005. The term of those persons currently serving as
Class II Directors expires at the annual stockholder meeting to be held in 2003.
The term of Class III Directors expires at the annual stockholder meeting to be
held in 2004.
The five persons named below, all currently serving as Class I Directors,
have been nominated for re-election as Class I Directors to serve for a term to
end at the annual meeting of stockholders in the year 2005 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 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.
2
Class I Directors Serving Until 2005
- ------------------------------------
Ralph B. Mandell (61), a director since 1989, is a co-founder of
PrivateBancorp Inc. 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 PrivateBancorp 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 PrivateBancorp, 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 (74), 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 (60), has been a director since 1991. He has been
Chairman and founder of both Workspace, Inc. and Worknet, Inc., located in
Oakbrook Terrace, Illinois since 1996. Workspace provides office furniture to
businesses, and Worknet provides computer networking services to businesses. In
May 2001, Workspace, Inc. was sold to Boise Cascade. He was the founder of and
served as the Chief Executive Officer to Chrysler Systems Leasing from 1977 to
1991.
Alvin J. Gottlieb (74), 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 (61), 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 (55), 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 (56), 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 (56), 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.
3
Caren L. Reed (67), a director since 1990, was a founding director of 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 (63), 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 and president of Henry R. Ferris & Company Genealogical
Researcher since 1987.
Class III Director Nominees to Serve Until 2004
- -----------------------------------------------
Robert F. Coleman (57), 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 (56), 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 (59), 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 (71), 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 (57), 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.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH OF
THE NOMINEES FOR CLASS I 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 1, 2002, with respect to (1) each Director and named 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 Stock Options Ownership/(1)/ Ownership/(1)/
------------ ---------- ----------- -------------- ---------------
Directors
- ---------
Ralph B. Mandell**............ 287,900/(2)/ 24,600/(3)/ 40,600 353,100 7.14%
Donald L. Beal................ 15,964/(4)/ -- 17,400 33,364 *
Naomi T. Borwell.............. 186,520 -- -- 186,520 3.80
William A. Castellano......... 166,460/(5)/ -- 8,160 174,620 3.55
Robert F. Coleman............. 26,400/(6)/ -- 21,720 48,120 *
John E. Gorman................ 58,240 -- 8,160 66,400 1.35
Alvin J. Gottlieb............. 111,840 -- -- 111,840 2.28
James M. Guyette.............. 25,560 -- 8,160 33,720 *
Richard C. Jensen**........... 15,723/(7)/ 5,200/(8)/ -- 20,923 *
Philip M. Kayman.............. 22,040 -- 15,840 37,520 *
William R. Langley............ 127,840 -- 39,000 166,840 3.37
Thomas F. Meagher............. 22,320 -- 11,160 33,480 *
William J. Podl............... 33,556 -- -- 33,556 *
Caren L. Reed................. 8,640 4,800/(9)/ 9,200 22,640 *
Michael B. Susman............. 26,440 -- 20,680 47,120 *
--------- ------ ------- --------- -----
Total Directors (15) persons 1,135,443 34,600 199,720 1,369,763 26.82%
Non-director Named Executive Officers
Gary L. Svec.................. 2,560 8,000/(8)/ -- 10,560 *
Gary S. Collins............... 44,464/(10)/ 11,200/(3)/ 18,050 73,714 1.50%
Hugh H. McLean................ 57,184 11,800/(11)/ 18,000 86,984 1.77
--------- ------ ------- --------- -----
Total Non-director Named Executive 104,208 31,200 36,050 171,258 3.46%
Officers (3) persons
Total Directors and Executive
Officers (20) persons 1,259,454 75,800 237,770 1,573,024 30.57%
========= ====== ======= ========= =====
____________
* Less than 1%
** Denotes person who serves as a director and 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 2002 and 2006, and are subject to
forfeiture until such time as they vest.
(4) Includes 8,864 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) Includes 5,723 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 four
standing committees: (1) the Compensation Committee; (2) the Audit Committee;
(3) the Planning Committee; and (4) the Information Technology 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. 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, Podl and Reed.
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.
Information Technology Committee. The Information Technology Committee
reports to the Audit Committee in discharging its responsibilities related to
the Company's information technology infrastructure. The Information Technology
Committee conducted its first meeting in January 2002 and has oversight
responsibility related to the quality and integrity of the Company's information
technology functions. This Committee is composed entirely of outside directors
who are not officers of the Company. The members of the Information Technology
Committee are Messrs. Podl (Chairman), Castellano, Coleman, Kayman, Langley, and
Susman.
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 2001, the Board of Directors met monthly. In addition, the
Compensation Committee met three times and the Audit Committee met 14 times. The
Planning Committee did not hold any meetings in 2001. 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
2001, 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) and The PrivateBank (St. Louis) 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 2001, options to
purchase a total of 37,000 shares were granted to non-employee directors. As of
December 31, 2001, there were outstanding options granted to non-employee
directors pursuant to this program to purchase an aggregate of 192,120 shares of
common stock at an average weighted per share exercise price of $12.47.
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. Effective May 2001, Board of Director fees
increased to $300 per meeting and $200 per each committee meeting of the Board
of Directors. 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 2001, the Board of Directors met monthly. Total Board and Board
committee meeting fees paid in 2001 were $104,000.
7
s
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes the compensation paid by the Company and its
subsidiaries to the Chairman, President and Chief Executive Officer and the four
other most highly paid executive officers (the "Named Executive Officers") who
served as such at December 31, 2001.
Summary Compensation Table
---------------------------------------------------------------------------------------
Long-Term
Annual Compensation Compensation Awards
-------------------------------- ------------------------------
Other Annual Securities All Other
Name and Salary Bonus Compensation Restricted Underlying Compensation
Principal Position Year ($) ($)(1) ($)(2) Stock($)(3) Options(#)(4) ($)
- --------------------------- ---- ------- ------- ------------ ----------- ------------- ------------
Ralph B. Mandell/(5)/ ..... 2001 290,000 300,000 19,122 42,375/(6)/ 6,500 57,440/(7)/
Chairman, President and CEO 2000 265,000 150,000 19,103 37,125/(8)/ 6,000 57,440/(7)/
1999 230,000 200,000 19,871 90,000/(9)/ 6,000 59,034/(7)/
Gary L. Svec .............. 2001 180,000 150,000 6,018 70,950/(10)/ 4,000 1,200/(11)/
Secretary/Treasurer and CFO 2000 150,000 108,000 2,330 48,563/(12)/ 6,500 --
Richard C. Jensen ......... 2001 160,000 60,000 9,636 24,013/(13)/ 4,000 3,400/(11)/
Managing Director 2000 150,000 50,000 9,402 43,313/(14)/ 6,000 250/(11)/
1999 150,000 50,000 826 -- -- --
Hugh H. McLean ............ 2001 155,000 105,000 11,778 28,250/(15)/ 4,000 3,400/(11)/
Managing Director 2000 138,000 50,000 11,275 24,750/(16)/ 3,600 3,400/(11)/
1999 130,000 60,000 12,725 54,000/(17)/ 4,000 3,200/(11)/
Gary S. Collins/(5)/ ...... 2001 155,000 105,000 16,253 28,250/(15)/ 4,000 3,400/(11)/
Managing Director 2000 128,000 62,000 10,375 24,750/(16)/ 3,600 3,400/(11)/
1999 120,000 57,000 10,210 43,200/(18)/ 4,000 3,200/(11)/
______________
(1) Bonuses for 2001, 2000 and 1999 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, 2001, based on the closing price of $19.625 for the
Company's common stock on that date, were as follows: Mr. Mandell -- 24,600
shares, $482,775; Mr. Svec -- 8,000 shares, $157,000; Mr. McLean -- 11,800
shares, $231,575; Mr. Collins -- 11,200 shares, $219,800; and Mr. Jensen --
5,200 shares, $102,050.
(4) Options to purchase shares of common stock granted in 2001 have an exercise
price of $14.125 and vest over a four year period; options 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.
(5) On April 25, 2001, restricted shares that were granted in 1996 vested and
created taxable compensation in the amount of $112,000 and $44,800 to Ralph
Mandell and Gary Collins, respectively.
(6) Represents an award of 3,000 shares of restricted stock at a value of
$14.125 per share.
(7) 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."
(8) Represents an award of 3,000 shares of restricted stock at a value of
$12.375 per share.
(9) Represents an award of 5,000 shares of restricted stock at a value of
$18.00 per share.
(10) Represents awards of 2,000 restricted shares on February 22, 2001 and 2,500
restricted shares on December 13, 2001, respectively. The February and
December 2001 restricted stock grants were made at $14.125 and $17.08 per
share, respectively.
(11) Represents matching contributions to the Company's 401(k) plan made by the
Company for the benefit of the executive officer.
(12) Represents an award of 3,500 shares of restricted stock at a value of
$13.875 per share.
(13) Represents an award of 1,700 shares of restricted stock at an value of
$14.125 per share.
(14) Represents an award of 3,500 shares of restricted stock at a value of
$12.375 per share.
(15) Represents an award of 2,000 shares of restricted stock at a value of
$14.125 per share.
(16) Represents an award of 2,000 shares of restricted stock at a value of
$12.375 per share.
(17) Represents an award of 3,000 shares of restricted stock at a value of
$18.00 per share.
(18) Represents an award of 2,400 shares of restricted stock at a value of
$18.00 per share.
8
Option Grants in Last Fiscal Year
The table below summarizes certain information about the options to
purchase the Company's common stock which were granted in 2001 by the Company
for each Named Executive Officer. All options were granted with a per share
exercise price equal to the fair market value of the Company's common stock on
the grant date.
Option Grants in Last Fiscal Year
Potential Realizable
Value at Assumed
% of Total Annual Rates of
Number of Options Stock Price
Shares Granted to Appreciation
Underlying Employees Exercise or for Option Term
Options in Fiscal Base Price Expiration --------------------
Name Granted(#) Year ($/Sh) Date 5%($) 10%($)
- ------------------------ ---------- ---------- ----------- ---------- -------- ---------
Ralph B. Mandell ....... 6,500 7.66% $14.125 02/21/11 57,740 146,326
Gary L. Svec ........... 4,000 4.71 14.125 02/21/11 35,533 90,046
Richard C. Jensen ...... 4,000 4.71 14.125 02/21/11 35,533 90,046
Gary S. Collins ........ 4,000 4.71 14.125 02/21/11 35,533 90,046
Hugh H. McLean ......... 4,000 4.71 14.125 02/21/11 35,533 90,046
Aggregated Option Exercises and Year-End Values
The following table summarizes for each Named Executive Officer the number
of shares of common stock subject to outstanding options and the value of such
options that were unexercised at December 31, 2001.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End
Option Values
Value of
Number of Unexercised
Securities Underlying in-the-Money
Shares Unexercised Options at
Acquired on Value Options at December 31,
Name Exercise (#) Realized($) December 31, 2001 (#) 2001($)/(2)/
- ---------------------------- ------------ ----------- --------------------- -----------------
Exercisable/ Exercisable/
Unexercisable(1) Unexercisable/(1)/
--------------------- -----------------
Ralph B. Mandell ........... -- -- 78,840/21,900 968,735/99,725
Gary L. Svec ............... -- -- -- /10,500 -- /61,000
Richard C. Jensen .......... -- -- -- /10,000 -- /65,500
Gary S. Collins ............ 15,296 168,632 18,050/15,200 195,888/65,000
Hugh H. McLean ............. -- -- 18,000/15,200 167,250/65,000
_____________
(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, 2001.
(2) The estimated fair market value of the Company's common stock at December
31, 2001 was $19.625 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, 2003, 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 $290,000. 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 150% of his then current
base annual salary, plus the average of the sum of the bonuses he earned during
the previous three years, in addition to 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
2001, in the event of a change of control and his subsequent termination, he
would be entitled to a lump-sum payment of approximately $3.4 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-solicitation 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-solicitation provisions
remain in effect for a period of two years after the termination of his
employment.
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.
11
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 has used 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 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
12
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.
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. In
2001, the chief financial officer received a special restricted stock award with
a two 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 2001. Factors which influenced the Committee's evaluation of
performance for 2001 included: growth in earnings per share in 2001, growth in
assets, loans and trust assets under administration as well as annual
appreciation in the market price of the Company's common stock.
For 2001, Mr. Mandell received base salary of $290,000, a cash bonus of
$300,000 (paid in January, 2002), 6,500 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 2001 was
$54,040.
13
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 2001, 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).
The 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 31, 2001, 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.
06/30/99 12/31/99 06/30/00 12/29/00 06/30/01 12/31/01
-------- -------- -------- -------- -------- --------
PrivateBancorp, Inc.. $100.00 $ 63.81 $ 70.63 $ 43.89 $ 78.30 $ 95.07
Russell 2000 Index .. 100.00 93.44 82.22 106.80 114.29 116.43
CRSP Index for Nasdaq
Bank Stocks ...... 100.00 110.18 112.84 105.42 111.84 106.50
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 2001 all
required filings were timely filed by each of its directors and executive
officers with the exception of Messrs. Palmer, Meagher, Kayman, McLean and Mrs.
Borwell, who each filed one late Form 4 report, Messrs. Beal and Collins, who
each filed two late Form 4 reports and Mr. Ruckstaetter who filed a late Form 3.
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, 2001, the Company had $11.5 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 2001, The PrivateBank (Chicago) acquired selected furniture with a
total cost of $75,608.51 through certain related parties of William A.
Castellano, one of our directors.
In connection with the 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. During 2001,
Mr. Podl was a 16.667% owner of Towne Square Realty, LLC, from which The
PrivateBank (Chicago) leases approximately 6,000 square feet in a building
located in St. Charles, IL. This lease became effective August 1, 1999. In 2001,
the Company paid rent in the amount of $117,857 to Towne Square Realty, LLC.
During 2001, the Company incurred professional fees for services provided
by the law firm of Spitzer, Addis, Susman & Krull in the amount of approximately
$263,264. Michael B. Susman, who is one of the Company's directors, is a partner
of that firm.
16
INDEPENDENT PUBLIC ACCOUNTANTS
The Company's independent public accountants for its fiscal year ended
December 31, 2001 are Arthur Andersen LLP. The Board of Directors has not yet
appointed the Company's independent public accountants for the fiscal year ended
December 31, 2002. Under its charter, the Audit Committee is responsible for
reviewing the qualifications of the Company's independent public accountants for
the preceding year, and recommending to the Board of Directors the selection of
the independent public accountants for the current fiscal year. It is expected
that this process and the Board of Director approval will be finalized during
the second quarter of 2002. Arthur Andersen LLP has been the Company's
independent public accountants since 1991.
Management has invited representatives of Arthur Andersen LLP to be present
at the meeting, and expects that they will attend. If present, these
representatives 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.
Audit Fees
Arthur Andersen LLP has billed the Company $132,500, 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, 2001, 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, 2001.
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, 2001.
All Other Fees
Arthur Andersen LLP has billed the Company $54,600, 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, 2001. This amount includes
audit-related services of $16,250 and non-audit services of $38,350.
Audit-related services generally include fees for specific procedures requested
by management. 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.
AUDIT COMMITTEE REPORT
The Audit Committee of the Company's Board of Directors is composed of
seven independent directors and operates under a written charter adopted by the
Board of Directors and the Committee. 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 for 2001, Arthur Andersen LLP, are responsible
17
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, 2001. 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 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 28, 2002, whether the provision of non-audit services
by Arthur Andersen LLP to the Company for the fiscal year ended December 31,
2001 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, 2001,
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
Caren L. Reed
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.
18
STOCKHOLDER PROPOSALS
To be considered for inclusion in the Company's proxy and form of proxy
relating to the 2003 Annual Meeting of Stockholders, a stockholder's proposal
must be received prior to November 14, 2002, 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.
HOUSEHOLDING
The SEC has adopted amendments to the proxy rules permitting companies and
intermediaries to satisfy delivery requirements for proxy statements with
respect to two or more stockholders sharing the same address by delivering a
single proxy statement to those stockholders. This method of delivery, often
referred to as "householding," should reduce the amount of duplicate information
that stockholders receive and lower printing and mailing costs for companies. We
are not householding materials for our stockholders in connection with the
Annual Meeting, however, we have been informed that certain intermediaries will
household proxy materials.
If a broker or other nominee holds your shares, this means that:
. Only one annual report and proxy statement will be delivered to
multiple stockholders sharing an address unless you notify ADP at
(888) 603-5847 or Householding Department, 51 Mercedes Way, Edgewood,
NY 11717, to inform them of your request. Be sure to include your
name, the name of your brokerage firm and your account number.
. You can contact us by calling (312) 683-7100 or by writing to
PrivateBancorp, Inc., Ten North Dearborn, Chicago, IL 60602,
Attention: Corporate Secretary, to request a separate copy of the
annual report and proxy statement for the Annual Meeting and for
future meetings or you can contact your broker to make the same
request.
. You can request delivery of a single copy of annual reports or proxy
statements from your broker if you share the same address as another
stockholder.
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 2003
annual meeting is held on April 24, 2003, the date contemplated under the
existing By-laws, the deadline for advance notice by a stockholder would be
December 25, 2002. In the event the Company publicly announces or discloses that
the date of the 2003 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; provided however, that in the event that less
than 130 days notice or prior public disclosure of the meeting date is given or
made, notice by the stockholder will be timely if received by 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 meeting, including any matters
raised outside of the procedures of Rule 14a-8 under the Securities Exchange
Act. Nothing in this paragraph shall
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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
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