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
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under ss. 240.14a-12
COMMERCE BANCORP, INC.
(Name of Registrant as Specified In Its Charter)
N/A
(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:
N/A
(2) Aggregate number of securities to which transaction applies:
N/A
(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):
N/A
(4) Proposed maximum aggregate value of transaction:
N/A
(5) Total fee paid:
N/A
[ ] 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:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
COMMERCE BANCORP, INC. [LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the 2002 Annual Meeting of Shareholders (the
"Annual Meeting") of Commerce Bancorp, Inc. ("Bancorp") will be held at Commerce
University, 17000 Horizon Way, Mt. Laurel, New Jersey, on Tuesday, May 21, 2002,
at 5:30 P.M., local time to consider and act upon the following matters as more
fully described in the annexed proxy statement:
1. To elect directors; and
2. To act upon such other matters as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
The board of directors has fixed April 1, 2002 as the record date for
determination of shareholders entitled to vote at the Annual Meeting. Only
shareholders of record at the close of business on that date will be entitled to
receive notice of, and to vote at, the Annual Meeting.
You are cordially invited to attend the Annual Meeting in person. Whether
or not you expect to attend the Annual Meeting in person, you are urged to sign
and date the enclosed proxy and promptly return it in the envelope provided for
that purpose.
By Order of the Board of Directors
ROBERT C. BECK,
Secretary
April 19, 2002
COMMERCE BANCORP, INC.
COMMERCE ATRIUM
1701 ROUTE 70 EAST
CHERRY HILL, NEW JERSEY 08034-5400
PROXY STATEMENT
This Notice of Annual Meeting, proxy statement and enclosed proxy are being
furnished to shareholders of Commerce Bancorp, Inc. ("Bancorp") in conjunction
with the solicitation of proxies by the board of directors of Bancorp for use at
Bancorp's 2002 Annual Meeting of Shareholders to be held on Tuesday, May 21,
2002, at 5:30 P.M., local time, at Commerce University, 17000 Horizon Way, Mt.
Laurel, New Jersey, (the "Annual Meeting"), and at any adjournment or
postponement thereof. The approximate date upon which this proxy statement and
the accompanying form of proxy will be first sent, given or otherwise made
available to Bancorp's shareholders is April 19, 2002.
The expense of the proxy solicitation will be borne by Bancorp. In addition
to solicitation by mail, proxies may be solicited in person or by telephone by
directors, officers or employees of Bancorp and its subsidiaries without
additional compensation. Bancorp is required to pay the reasonable expenses
incurred by recordholders of Bancorp common stock who are brokers, dealers,
banks or voting trustees, or their nominees, for mailing proxy material and
annual shareholder reports to the beneficial owners of Bancorp common stock they
hold of record, upon request of such recordholders.
The board of directors of Bancorp has fixed the close of business on April
1, 2002, as the date for determining holders of record of Bancorp common stock
entitled to receive notice of, and to vote at, the Annual Meeting. On that date,
there were 66,297,791 shares of Bancorp common stock outstanding. Each holder of
Bancorp common stock is entitled to cast one vote for each share held of record
on that date.
The holders of a majority of the aggregate outstanding shares of Bancorp
common stock, present either in person or by proxy, will constitute a quorum for
the transaction of business at the Annual Meeting. Pursuant to the New Jersey
Business Corporation Act ("NJBCA"), abstentions and broker non-votes (which may
occur if a beneficial owner of stock where shares are held in a brokerage or
bank account fails to provide the broker or bank voting instructions as to such
shares) will be counted solely for the purpose of determining whether a quorum
is present.
If the enclosed form of proxy is properly marked, signed, and returned in
time to be voted at the Annual Meeting and not revoked, the shares represented
by the proxy will be voted in accordance with the instructions marked thereon.
Signed proxies not marked to the contrary will be voted "FOR" the election of
all nominees for director.
Any Bancorp shareholder giving a proxy may revoke it at any time before it
is voted by (i) giving written notice of such revocation, signed in the same
manner as the proxy, to Bancorp's Secretary, (ii) executing a new proxy and
returning it to the Secretary of Bancorp prior to the voting of the first proxy
at the Annual Meeting, or (iii) attending the Annual Meeting and voting in
person (although attendance at the Annual Meeting will not in and of itself
constitute revocation of a proxy).
1
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
Common Stock
The following table sets forth, as of April 1, 2002, the beneficial
ownership of Bancorp's common stock by (i) each director and nominee for
director of Bancorp, (ii) each of the executive officers of Bancorp named in the
Summary Compensation Table and (iii) all the directors, nominees for director,
and executive officers of Bancorp as a group. Except as set forth below, no
person is known by Bancorp to own beneficially more than 5% of Bancorp's common
stock. Unless otherwise specified, all persons listed below have sole voting and
investment power with respect to their shares. The address of Mr. Hill is c/o
Commerce Bancorp, Inc., Commerce Atrium, 1701 Route 70 East, Cherry Hill, New
Jersey, 08034.
Name of Number of Shares Percent of
Beneficial Owner or Beneficially Class
Identity of Group Owned(1) (2) Beneficially Owned(1)(2)
- -------------------------------------------------- -------------------- ------------------------
Robert C. Beck................................... 393,558(3) *
Jack R Bershad................................... 134,444(4) *
Joseph E. Buckelew............................... 603,775(5) *
Donald T. DiFrancesco............................ 2,376(6) *
Vernon W. Hill, II............................... 3,456,452(7) 5.07%
C. Edward Jordan, Jr............................. 424,798(8) *
Morton N. Kerr................................... 45,710(9) *
Steven M. Lewis.................................. 490,047(10) *
George E. Norcross, III.......................... 910,867(11) 1.37%
Daniel J. Ragone................................. 200,642(12) *
William A. Schwartz, Jr.......................... 80,440(13) *
Joseph T. Tarquini, Jr........................... 546,150(14) *
Frank C. Videon, Sr.............................. 200,714(15) *
Peter M. Musumeci, Jr........................... 445,449(16) *
Robert D. Falese, Jr............................. 471,727(17) *
Dennis M. DiFlorio............................... 716,595(18) 1.07%
All Directors, Nominees for Director
and Executive Officers of Bancorp
as a Group (18 Persons).......................... 9,267,283(19) 13.03%
FMR Corp.
82 Devonshire Street
Boston, MA 02109................................. 6,512,060(20) 9.82%
_____________________________
* less than 1%
<FN>
(1) The securities "beneficially owned" are determined in accordance with the
definitions of "beneficial ownership" as set forth in the regulations of
the Securities and Exchange Commission ("SEC") and, accordingly, may
include securities owned by or for, among others, the wife and/or minor
children of the individual and any other relative who has the same
residence as such individual as well as other securities as to which the
individual has or shares voting or investment power or has the right to
acquire under outstanding stock options within 60 days after April 1, 2002.
Shares subject to outstanding stock options which an individual has the
right to acquire within 60 days after April 1, 2002 are deemed to be
outstanding for the purpose of computing the percentage of outstanding
securities of the class owned by such individual or any group including
such individual only. Beneficial ownership may be disclaimed as to certain
of the securities.
(2) The figures in these columns do not reflect the shares of Bancorp common
stock issuable upon the conversion of the 5.95% Convertible Trust Preferred
Securities (the "trust preferred securities") issued by Commerce Capital
Trust II on March 11, 2002. Messrs. Bershad, Buckelew, DiFlorio, Hill,
Ragone and Videon beneficially own 3,000, 10,000, 2,000, 8,000, 2,000 and
8,000 trust preferred securities, respectively, and the directors, nominees
for directors and executive
2
officers of Bancorp, as a group (18 persons), beneficially own 35,000 trust
preferred securities. Each trust preferred security is convertible at any
time on or after the occurrence of the events described below and prior to
5:00 p.m., New York City time, on the business day immediately preceding
the date of repayment of such trust preferred security, whether at stated
maturity (i.e. March 11, 2032) or upon redemption, at the option of the
holder thereof, into shares of Bancorp common stock at an initial
conversion ratio of 0.9478 shares of Bancorp common stock for each trust
preferred security, subject to adjustment under certain circumstances. The
trust preferred securities are convertible into shares of Bancorp common
stock if: (a) the closing sale price of Bancorp common stock for at least
20 trading days in a period of 30 consecutive trading days ending on the
last trading day of any calendar quarter beginning with the quarter ending
June 30, 2002 is more than 110% of the trust preferred securities
conversion price then in effect on the last day of such calendar quarter,
(b) the assigned credit rating by Moody's of the trust preferred securities
is at or below Bal, (c) the trust preferred securities are called for
redemption (which may occur on or prior to March 11, 2032), or (d)
specified corporate transactions have occurred as set forth in the
Indenture dated March 11, 2002 between Bancorp and The Bank of New York, as
Debenture Trustee. The trust preferred securities are not currently
convertible.
(3) Includes 1,108 shares of Bancorp common stock held by Mr. Beck's wife and
97,172 shares of Bancorp common stock issuable upon the exercise of stock
options granted under Bancorp's 1989 and 1998 Stock Option Plans for
Non-Employee Directors.
(4) Includes 29,356 shares of Bancorp common stock held by Mr. Bershad's wife
and 66,406 shares of Bancorp common stock issuable upon the exercise of
stock options granted under Bancorp's 1989 and 1998 Stock Option Plans for
Non-Employee Directors.
(5) Includes 149,378 shares of Bancorp common stock held by Mr. Buckelew's
wife, 4,778 shares of Bancorp common stock held by Buckelew & Lane
Investments, 3,168 shares of Bancorp common stock allocated to Mr.
Buckelew's account under Bancorp's 401(k) Plan and 100,000 shares of
Bancorp common stock issuable upon the exercise of stock options granted
under Bancorp's Employee Plans. Mr. Buckelew is a partner of Buckelew &
Lane Investments.
(6) Includes 550 shares of Bancorp common stock held by Mr. DiFrancesco's wife.
(7) Includes 103,680 shares of Bancorp common stock held by Site Development
Inc., 43,936 shares of Bancorp common stock held by Mr. Hill's wife,
145,542 shares of Bancorp common stock held by S. J. Dining, Inc., 148,666
shares of Bancorp common stock held by U.S. Restaurants, Inc., 113,860
shares of Bancorp common stock held by J.V. Properties, 35,748 shares of
Bancorp common stock held by InterArch, Inc., 154,904 shares held by
InterArch, Inc. Profit Sharing Plan, 127,196 shares of Bancorp common stock
held by the Hill Family Trust, 86,336 shares held by the Hill Family
Foundation and 36,062 shares of Bancorp common stock allocated to Mr.
Hill's account under Bancorp's 401(k) Plan. Mr. Hill is the Chairman of the
Board of Site Development, Inc., a shareholder of S. J. Dining, Inc., a
shareholder of U.S. Restaurants, Inc., a partner in J.V. Properties, a
co-trustee and beneficiary of the Hill Family Trust, and a trustee of the
Hill Family Foundation. InterArch, Inc., is a company owned by Mr. Hill's
wife. This amount also includes 1,871,454 shares of Bancorp common stock
issuable upon the exercise of stock options granted to Mr. Hill under
Bancorp's Employee Plans.
(8) Includes 320,122 shares of Bancorp common stock issuable upon the exercise
of stock options granted to Mr. Jordan under Bancorp's Employee Plans,
30,856 shares of Bancorp common stock allocated to Mr. Jordan's account
under Bancorp's 401(k) Plan, and 4,000 shares of Bancorp common stock held
in trust for Mr. Jordan's minor children.
(9) Includes 45,710 shares of Bancorp common stock held by the
Markeim-Chalmers, Inc. Pension Plan. Markeim-Chalmers, Inc. is a company
owned by Mr. Kerr.
(10) Includes 145,542 shares of Bancorp common stock held by S. J. Dining, Inc.,
148,666 shares of Bancorp common stock held by U.S. Restaurants, Inc. and
65,026 shares of Bancorp common stock issuable upon the exercise of stock
options granted to Mr. Lewis under Bancorp's 1989 and 1998 Stock Option
Plans for Non-Employee Directors. Mr. Lewis is President of S. J. Dining,
Inc. and President of U.S. Restaurants, Inc. This amount also includes
11,648 shares of Bancorp common stock held in trust for Mr. Lewis' minor
children.
(11) Includes 328,683 shares of Bancorp common stock held jointly with Mr.
Norcross' wife, 1,200 shares of Bancorp common stock held by Mr. Norcross'
wife, 524 shares of Bancorp common stock held as custodian for Mr.
Norcross' minor children, 137,427 shares of Bancorp common stock held under
a grantor trust for Mr. Norcross' minor children, 14,725 shares of Bancorp
common stock allocated to Mr. Norcross's account under Bancorp's 401(k)
Plan and 416,808 shares of Bancorp common stock issuable upon the exercise
of stock options granted to Mr. Norcross under Bancorp's Employee Plans.
3
(12) Includes 49,752 shares of Bancorp common stock held by Mr. Ragone's wife,
22,025 shares of Bancorp common stock held jointly with Mr. Ragone's wife
and 67,428 shares of Bancorp common stock issuable upon the exercise of
stock options granted to Mr. Ragone under Bancorp's 1989 and 1998 Stock
Option Plans for Non-Employee Directors.
(13) Includes 6,514 shares of Bancorp common stock held by Mr. Schwartz's wife,
25,156 shares of Bancorp common stock held jointly with Mr. Schwartz's wife
and 44,226 shares of Bancorp common stock issuable upon the exercise of
stock options granted to Mr. Schwartz under Bancorp's 1989 and 1998 Stock
Option Plans for Non-Employee Directors.
(14) Includes 40,718 shares of Bancorp common stock held by Mr. Tarquini's wife,
4,696 shares of Bancorp common stock held by The Tarquini Foundation and
87,126 shares of Bancorp common stock issuable upon the exercise of stock
options granted to Mr. Tarquini under Bancorp's 1989 and 1998 Stock Option
Plans for Non-Employee Directors.
(15) Includes 49,412 shares of Bancorp common stock held jointly with Mr.
Videon's wife, 17,873 shares of Bancorp common stock held by Mr. Videon's
wife, 15,496 shares held by the Frank C. Videon, Inc., Profit Sharing
Trust, 8,957 shares of Bancorp common stock held by the Videon Chevrolet
Profit Sharing Plan, 32,437 shares of Bancorp common stock held by the
Videon Dodge, Inc. Employee Profit Sharing Trust, 17,248 shares of Bancorp
common stock held by the Frank C. Videon Funeral Home Profit Sharing Plan,
26,553 shares of Bancorp common stock held in Trust for Mr. Videon's minor
grandchildren and 32,738 shares of Bancorp common stock issuable upon the
exercise of stock options granted to Mr. Videon under Bancorp's 1989 and
1998 Stock Option Plans for Non-Employee Directors. Mr. Videon is president
of Frank C. Videon, Inc., Vice President of Videon Chevrolet, President of
Videon Dodge, Inc., and Owner of Videon Funeral Home.
(16) Includes 191,342 shares of Bancorp common stock held jointly with Mr.
Musumeci's wife, 5,120 shares held by the Peter/Linda Musumeci Foundation,
219,044 shares of Bancorp common stock issuable upon the exercise of stock
options granted to Mr. Musumeci under Bancorp's Employee Plans and 29,289
shares of Bancorp common stock allocated to Mr. Musumeci's account under
Bancorp's 401(k) Plan.
(17) Includes 427,248 shares of Bancorp common stock issuable upon the exercise
of stock options granted to Mr. Falese under Bancorp's Employee Plans,
9,801 shares of Bancorp common stock allocated to Mr. Falese's account
under Bancorp's 401(k) Plan, 1,900 shares of Bancorp common stock held by
Mr. Falese's wife and 875 shares of Bancorp common stock held jointly with
Mr. Falese's wife.
(18) Includes 25,638 shares held by Mr. DiFlorio's wife, 569,056 shares of
Bancorp common stock issuable upon the exercise of stock options granted to
Mr. DiFlorio under Bancorp's Employee Plans and 16,928 shares of Bancorp
common stock allocated to Mr. DiFlorio's account under Bancorp's 401(k)
Plan.
(19) Includes an aggregate of 4,838,340 shares of Bancorp common stock issuable
upon the exercise of stock options granted to directors and certain
executive officers of Bancorp under Bancorp's 1989 and 1998 Stock Option
Plans for Non- Employee Directors and Bancorp's Employee Plans.
(20) According to FMR Corp.'s Schedule 13G, dated February 14, 2002, as filed
under the Securities Exchange Act of 1934, as amended, the shares of
Bancorp common stock shown in the table are beneficially owned as follows:
Fidelity Management & Research Company, 5,387,740 shares (includes
3,306,606 shares of Bancorp's common stock owned by Fidelity Contrafund)
and Fidelity Management Trust Company, 1,124,320 shares. According to the
Schedule 13G, FMR Corp. and related entities have sole voting power over
1,123,320 shares and sole dispositive power over 6,512,060 shares of the
shares reported as beneficially owned. The Schedule 13G indicates that
Edward C. Johnson 3d, Chairman of FMR Corp. and Abigail Johnson, a director
and significant shareholder of FMR Corp., may also be considered beneficial
owners of these shares.
</FN>
4
ELECTION OF DIRECTORS
The bylaws of Bancorp provide that Bancorp's business shall be managed by a
board of not less than five nor more than twenty-five directors and that within
these limits the number of directors shall be as established by resolution of a
majority of the full board of directors. The board of directors by resolution
has set at thirteen the number of persons to be elected to the board of
directors at the Annual Meeting.
Pursuant to the NJBCA, the election of directors will be determined by a
plurality vote and the thirteen nominees receiving the most "FOR" votes will be
elected. Shares may be voted "FOR" or withheld from each nominee. Abstentions
and broker non-votes (which may occur if a beneficial owner of stock where
shares are held in a brokerage or bank account fails to provide the broker or
bank voting instructions as to such shares) will have no effect on the outcome
of the election because directors will be elected by a plurality of the shares
voted for directors.
The board of directors unanimously recommends a vote "FOR" the election as
directors of the nominees named herein.
The board of directors has designated the thirteen persons listed below to
be nominees for election as directors. All of the nominees are currently members
of the board, and each of them has consented to serve if elected. Bancorp has no
reason to believe that any of the nominees will be unavailable for election;
however, if any nominee becomes unavailable for any reason, the board of
directors may designate a substitute nominee, or the number of directors to be
elected at the Annual Meeting will be reduced accordingly. Directors of Bancorp
hold office for one year and until their respective successors have been duly
elected and qualified.
David Baird, IV resigned as director of Bancorp, Commerce NJ and Commerce
PA in January 2002. On March 19, 2002, Bancorp's board of directors, by
resolution, increased the number of persons to comprise Bancorp's board of
directors from twelve to thirteen and appointed Donald T. DiFrancesco and George
E. Norcross, III, as directors.
The following information regarding Bancorp's nominees is based, in part,
on information furnished by the nominees.
Name Age Positions with Bancorp and Subsidiaries
---------- ------ ------------------------------------------------
Vernon W. Hill, II............... 56 Chairman and President of Bancorp; Chairman and President of Commerce NJ;
Chairman and President of Commerce PA; Chairman of Commerce Shore, Commerce
North and Commerce Delaware
C. Edward Jordan, Jr............. 58 Executive Vice President and Director of Bancorp; Executive Vice President
and Director of Commerce NJ; Director of Commerce PA
Robert C. Beck................... 66 Secretary and Director of Bancorp; Secretary and Director of Commerce NJ;
Director of Commerce PA
Jack R Bershad................... 71 Director of Bancorp, Commerce NJ and Commerce PA
Joseph E. Buckelew............... 73 Director of Bancorp, Commerce NJ, Commerce Shore and Commerce PA; President
of Commerce Shore; Vice Chairman of Commerce National Insurance Services, Inc.
Donald T. DiFrancesco............ 57 Director of Bancorp and Commerce NJ
Morton N. Kerr................... 71 Director of Bancorp, Commerce NJ and Commerce PA
Steven M. Lewis.................. 52 Director of Bancorp, Commerce NJ and Commerce PA
George E. Norcross, III.......... 45 Director of Bancorp and Commerce NJ; Chairman and Chief Executive Officer of
Commerce National Insurance Services, Inc.
Daniel J. Ragone................. 74 Director of Bancorp, Commerce NJ and Commerce PA
William A. Schwartz, Jr.......... 61 Director of Bancorp, Commerce NJ and Commerce PA
Joseph T. Tarquini, Jr........... 66 Director of Bancorp, Commerce NJ and Commerce PA
Frank C. Videon, Sr.............. 79 Director of Bancorp, Commerce NJ and Commerce PA
5
Mr. Hill, a director of Commerce NJ since 1973 and Bancorp since 1982, has
been Chairman and/or President of Commerce NJ since 1973 and Chairman and
President of Bancorp since 1982. Mr. Hill has been Chairman and/or President of
Site Development, Inc., Cherry Hill, New Jersey, a developer of real estate,
since 1968. Mr. Hill has been Chairman of Commerce PA from June 1984 to June
1986 and from January 1987 to the present, President of Commerce PA since June
1994, a director of Commerce Bank/Harrisburg, Camp Hill, Pennsylvania since 1985
(and its holding company, Pennsylvania Commerce Bancorp, Inc., a Nasdaq traded
company, since its formation in 1999), Chairman of Commerce Shore since January
1989, Chairman of Commerce North since January 1997, Chairman of Commerce
Delaware since October 1999, and Chairman of Commerce Central from January 1999
to March 2001 when Commerce Central was merged with and into Commerce NJ.
Mr. Jordan, a director of Commerce NJ since 1974, Bancorp since 1982 and
Commerce PA since June 1997, has been Executive Vice President of Commerce NJ
since 1974 and Executive Vice President of Bancorp since 1982.
Mr. Beck, a director of Commerce NJ since 1973, Bancorp since 1982 and
Commerce PA since June 1997, has been Secretary of Commerce NJ since 1973 and
Secretary of Bancorp since 1982. Mr. Beck has been a partner of the law firm of
Parker, McCay & Criscuolo, Marlton, New Jersey since 1987.
Mr. Bershad, a director of Commerce PA since 1984 and Bancorp and Commerce
NJ since 1987, is the Chairman Emeritus of the law firm of Blank Rome Comisky &
McCauley LLP, Philadelphia, Pennsylvania and Cherry Hill, New Jersey, and has
been a partner in such firm since 1964.
Mr. Buckelew, a director of Bancorp since November 1996, Commerce Shore
since 1993, Commerce NJ and Commerce PA since June 1997, has been Vice Chairman
of Commerce National Insurance Services, Inc. since November 2000 and President
of Commerce Shore since 1998. Mr. Buckelew was Chairman of Commerce National
Insurance Services, Inc. from November 1996 through November 2000.
Mr. DiFrancesco, a director of Bancorp and Commerce NJ since March 2002,
was the Acting Governor of New Jersey from January 31, 2001 through January 8,
2002, served as the President of the New Jersey Senate from 1992 through January
31, 2001 and has been a partner in the law firm of DiFrancesco, Bateman, Coley,
Yospin, Kunzman, Davis & Lehrer, P.C., Warren, New Jersey from 1992 through
January 31, 2001 and from January 8, 2002 to present.
Mr. Kerr, a director of Commerce NJ since 1973, Bancorp since 1982 and
Commerce PA since June 1997, has been Chairman and/or President of
Markeim-Chalmers, Inc., Realtors, Cherry Hill, New Jersey, since 1965.
Mr. Lewis, a director of Commerce PA since 1984 and a director of Bancorp
and Commerce NJ since 1988, has been President of U.S. Restaurants, Inc., Blue
Bell, Pennsylvania since 1985 and President of S. J. Dining, Inc., Blue Bell,
Pennsylvania since 1986.
Mr. Norcross, a director of Bancorp and Commerce NJ since March 2002, has
been the Chairman and Chief Executive Officer of Commerce National Insurance
Services, Inc. since November 2000. Mr. Norcross was the President and Chief
Executive Officer of Commerce National Insurance Services, Inc. from November
1996 through November 2000. Mr. Norcross is a director of U.S. Vision, Inc.,
Glendora, New Jersey, a Nasdaq traded company.
Mr. Ragone, a director of Commerce NJ since 1981, Bancorp since 1982 and
Commerce PA since June 1997, is the former Chairman and/or President of Ragone,
Raible, Lacatena & Beppel, C.P.A., Haddonfield, New Jersey, and its predecessor
firms.
Mr. Schwartz, a director of Commerce PA since 1984 and a director of
Bancorp and Commerce NJ since June 1997, has been Chairman, President and Chief
Executive Officer of U.S. Vision, Inc., Glendora, New Jersey, a Nasdaq traded
company, or its predecessor firms, since 1967.
Mr. Tarquini, a director of Commerce NJ since 1973, Bancorp since 1982 and
Commerce PA since June 1997, is the Chairman and former President of The
Tarquini Organization, A.I.A., Camden, New Jersey, since 1980. Prior thereto, he
was a partner in its predecessor firms.
6
Mr. Videon, a director of Commerce PA since 1991 and a director of Bancorp
and Commerce NJ since June 1997, has been the owner of Frank C. Videon Funeral
Home, Broomall, Pennsylvania, since 1982.
Director Compensation
Directors of Bancorp, Commerce NJ and Commerce PA were paid an annual fee
of $14,000 plus $1,000 for each meeting of the board of directors and committee
meeting attended in 2001 and will be paid an annual fee of $14,000 and a meeting
fee of $1,000 for each meeting of the board of directors and committee meeting
attended in 2002. When meetings of the board of directors of Bancorp, Commerce
NJ and Commerce PA occur on the same day, only one fee is paid. Directors of
Commerce Shore, Commerce North and Commerce Delaware were paid a fee of $500 for
each meeting of the board of directors and committee meeting attended in 2001
and will be paid the same meeting fee for each meeting of the board of directors
and committee meeting attended in 2002. Directors of Commerce Central were paid
a fee of $500 for each meeting of the board of directors and committee meeting
attended in 2001. No fees are paid to directors who are also operating officers
of Bancorp or its banking subsidiaries. Each director of Bancorp is provided
with $100,000 of permanent life insurance.
A retirement plan for Bancorp's directors who are not officers or employees
of Bancorp on the date their service as a Bancorp director ends ("outside
director"), provides that outside directors with five or more years of service
as a Bancorp director are entitled to receive annually, for ten years or the
number of years served as a director, whichever is less, commencing upon such
director's attainment of age 65 and retirement from the Bancorp board or upon
such director's disability, payments equal to the highest 1099 Compensation (as
such term is defined in the plan) in effect at any time during the five year
period immediately preceding such director's retirement or, if earlier, death or
disability. This plan further provides that, in the event a director dies before
receiving all benefits to which he or she is entitled, such director's surviving
spouse is entitled to receive all benefits not received by the deceased director
commencing upon such director's death. Upon a change in control of Bancorp, the
plan provides that each director then sitting on the Bancorp board,
notwithstanding the length of time served as a director, becomes entitled to
receive annually, for ten years, or twice the number of years served as a
director, whichever is less, payments equal to the higher of the director's 1099
Compensation at the time of the director's termination of board service and the
highest 1099 Compensation in effect at any time during the five year period
immediately preceding the change in control commencing on the latest to occur of
the termination of the director's board service, attainment of age 65 or any
date designated by the director at any time and from time to time. The
definition of "change in control" for purposes of this plan parallels the
definition of that term contained in the Employment Agreements discussed on page
12 of this proxy statement. This plan became effective January 1, 1993, as
amended.
1989 and 1998 Stock Option Plans For Non-Employee Directors
Effective April 24, 1989 (and as amended in 1994), Bancorp adopted the 1989
Stock Option Plan for Non-Employee Directors (the "1989 Plan") which provides
for the purchase of a total of not more than 641,379 shares (as adjusted for all
stock splits and dividends through April 1, 2002) of Bancorp common stock by
members of the boards of directors of Bancorp and its subsidiary corporations.
Options granted pursuant to the 1989 Plan may be exercised beginning on the
earlier to occur of (i) one year after the date of their grant or (ii) a "change
in control" of Bancorp, as such term is defined in the 1989 Plan. No further
options may be granted under the 1989 Plan. As of April 1, 2002, 110,762 options
(as adjusted for all stock splits and stock dividends through April 1, 2002)
were outstanding under the 1989 Plan.
Effective June 29, 1998, Bancorp adopted the 1998 Stock Option Plan for
Non-Employee Directors (the "1998 Plan") which provides for the purchase of a
total of not more than 1,102,500 shares (as adjusted for all stock splits and
dividends through April 1, 2002) of Bancorp common stock by members of the board
of directors of Bancorp and its subsidiary corporations. Under the 1998 Plan,
members of the boards of directors of Bancorp and its current and future
subsidiary corporations (i.e., any corporation in which Bancorp owns, directly
or indirectly, fifty percent or more of the outstanding voting power of all
classes of stock of such corporation at the time of election or reelection of
such director) who are not also employees of Bancorp or its subsidiary
corporations are entitled to receive options to purchase Bancorp common stock.
Options granted pursuant to the 1998 Plan may be exercised in whole, or from
time to time in
7
part, beginning on the earlier to occur of (i) one year after the date of their
grant or (ii) a "change in control" of Bancorp, as such term is defined in the
1998 Plan. As of April 1, 2002, 979,124 options (as adjusted for all stock
splits and stock dividends through April 1, 2002) had been granted under the
1998 Plan and 123,376 options (as adjusted for all stock splits and stock
dividends through April 1, 2002) were available for grant. Options may continue
to be granted under the 1998 Plan through December 31, 2007.
Both the 1989 Plan and 1998 Plan are administered by the board of directors
of Bancorp, including non-employee directors. Options granted under the 1989
Plan and/or 1998 Plan are not "incentive stock options" as defined in Section
422 of the Internal Revenue Code of 1986, as amended. Option prices are intended
to equal 100% of the fair market value of Bancorp's common stock on the date of
option grant. The board of directors of Bancorp, in their sole discretion, may
grant options under the 1998 Plan to non-employee directors and determine the
number of shares subject to each option, the rate of option exercisability, and
subject to certain limitations, the option price and the duration of the
options. Unless terminated earlier by the option's terms, options granted under
the 1989 Plan and/or 1998 Plan expire ten years after the date they are granted.
For the year ended December 31, 2001, options to purchase the following
shares of Bancorp common stock were granted to the following directors under the
1998 Plan: Messrs. Baird, 6,000; Beck, 6,000; Bershad, 6,000; Kerr, 6,000;
Lewis, 6,000; Ragone, 6,000; Schwartz, 6,000; Tarquini, 6,000; and Videon,
6,000. Such options were not exercisable in 2001.
Meetings and Committees of the Board of Directors
During 2001, there were 12 meetings of the board of directors of Bancorp.
The board of directors of Bancorp has established an Audit Committee, an
Oversight Committee and a Personnel Committee but does not have a standing
Nominating Committee. In addition, each of Bancorp's five subsidiary banks,
Commerce Bank, N.A., Cherry Hill, New Jersey ("Commerce NJ"), Commerce
Bank/Pennsylvania, N.A., Devon, Pennsylvania ("Commerce PA"), Commerce
Bank/Shore, N.A., Toms River, New Jersey ("Commerce Shore"), Commerce
Bank/Delaware, N.A., Wilmington, Delaware ("Commerce Delaware") and Commerce
Bank/North, Ramsey, New Jersey ("Commerce North") has various committees of
their respective boards. Similarly, Commerce Bank/Central, N.A., Flemington, New
Jersey ("Commerce Central"), a bank subsidiary of Bancorp until merged with and
into Commerce NJ in March 2001, had various committees of its board.
Information with respect to the committees of the board of directors of
Bancorp is set forth below.
Audit Committee
The Audit Committee reviews the financial statements, accounting procedures
and methods employed in connection with audit programs of Bancorp and its
wholly-owned subsidiary banks. It serves as the principal liaison between the
board of directors and Bancorp's independent auditors. In addition, this
committee makes recommendations to the board of directors concerning the
selection of Bancorp's independent auditors. Daniel J. Ragone, Chairman, Frank
C. Videon, Sr. and Joseph T. Tarquini, Jr. are the current members of the Audit
Committee. During 2001, there were four meetings of the Audit Committee. The
Board of Directors adopted an Audit Committee Charter on May 16, 2000. The board
of directors of Bancorp, in its business judgement, has determined that each
member of the Audit Committee is independent, financially literate and possessed
of appropriate financial management expertise, as required by applicable listing
standards of the New York Stock Exchange.
Oversight Committee
The Oversight Committee reviews compliance matters at Bancorp and its
banking subsidiaries, and reports to Bancorp's Audit Committee. Daniel J.
Ragone, Joseph T. Tarquini, Jr., Joseph A. Haynes (Director of Commerce North)
and Daniel M. Monroe (Director of Commerce Shore) are the current members of the
Oversight Committee. During 2001, there were four meetings of the Oversight
Committee.
8
Personnel Committee
The Personnel Committee reviews and recommends the levels of compensation
of Bancorp's and its subsidiary banks' executive officers and administers
Bancorp's Employee Plans. Morton N. Kerr, Daniel J. Ragone and Jack R Bershad
are the current members of the Personnel Committee. During 2001, there was one
meeting of the Personnel Committee. The report of the Personnel Committee with
respect to 2001 compensation is set forth on page 17 of this proxy statement.
Attendance
In 2001, each of Bancorp's directors and nominees for director attended
more than 75% of the total number of meetings of the board of directors and all
committees of which they were members of Bancorp and its subsidiary banks, as
the case may be.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee has met with management to review and discuss the
audited financial statements. The Audit Committee also conducted discussions
with its independent auditors, Ernst & Young LLP, regarding the matters required
by the Statement on Auditing Standards No. 61. As required by Independence
Standards Board Standard No. 1, "Independence Discussion with Audit Committees,"
the Audit Committee has discussed with and received the required written
disclosures and a confirming letter from Ernst & Young LLP regarding its
independence and has discussed with Ernst & Young LLP its independence. The
Audit Committee has also considered whether the provision of non-audit services
by the independent auditors to Bancorp is compatible with maintaining the
auditors' independence. Based upon the review and discussions referred to above,
the Audit Committee recommended to the Board of Directors that the audited
financial statements be included in the Company's Annual Report on Form 10-K for
the year ended December 31, 2001.
This Audit Committee Report and information regarding the Audit Committee
contained in the paragraph preceding the Report shall not be deemed incorporated
by reference in any document previously or subsequently filed with the
Securities and Exchange Commission that incorporates by reference all or any
portion of this proxy statement, except to the extent that Bancorp specifically
requests that the Report or information be specifically incorporated by
reference. The Audit Committee's considerations and discussions referred to
above do not assure that the audit of Bancorp's financial statements for the
year ended December 31, 2001 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 Bancorp's
auditors are in fact "independent."
AUDIT COMMITTEE
Daniel J. Ragone
Frank C. Videon, Sr.
Joseph T. Tarquini, Jr.
9
EXECUTIVE OFFICERS
The executive officers of Bancorp and its banking subsidiaries, as of
April 1, 2002, are set forth below.
Position with Bancorp, Commerce NJ,
Commerce PA, Commerce Shore,
Commerce Delaware and Commerce North
Name Age Principal Occupation
- -------------------------- ----- -----------------------------------------------------------------------
Vernon W. Hill, II 56 Chairman and President of Bancorp since 1982; Chairman and/or
President of Commerce NJ since 1973; Chairman of Commerce PA from June
1984 to June 1986 and from January 1987 to present; President of
Commerce PA from June 1994 to present; Chairman of Commerce Shore since
1989, Commerce North since 1997, and Commerce Delaware since 1999.
C. Edward Jordan, Jr. 58 Executive Vice President and Director of Bancorp since 1982; Executive
Vice President and Director of Commerce NJ since 1974; Director of
Commerce PA since 1997.
Peter M. Musumeci, Jr. 51 Executive Vice President and Senior Credit Officer of Bancorp since
1986; Treasurer and Assistant Secretary of Bancorp since 1984;
Executive Vice President and Senior Credit Officer of Commerce NJ
since 1986; Director of Commerce Shore since 1989.
Robert D. Falese, Jr. 55 Executive Vice President and Senior Loan Officer of Bancorp and
Commerce NJ since 1992.
Dennis M. DiFlorio 48 Executive Vice President of Bancorp and Commerce NJ since January
1996; Director of Commerce North since 1997. Prior thereto Mr.
DiFlorio was Senior Vice President of Commerce NJ since 1988.
David Wojcik 49 Senior Vice President of Bancorp since 1988.
Douglas J. Pauls 43 Chief Financial Officer of Bancorp since March 2002; Senior Vice
President of Bancorp since January 1999. Prior thereto Mr. Pauls was
the Chief Accounting Officer of Bancorp from October 1995 to March
2002.
10
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table is a summary of certain information concerning the
compensation during the last three fiscal years awarded or paid to, or earned
by, Bancorp's chief executive officer and each of Bancorp's other four most
highly compensated executive officers during Bancorp's last fiscal year.
Long Term
Annual Compensation Compensation
---------------------------------------------- --------------
Other Securities
Annual Underlying All Other
Compen Stock Option Compen-
Name/Title Year Salary Bonus -sation(1) Grants (2) sation
---------- ---- ------ ----- ---------- ---------- ------
Vernon W. Hill, II........................... 2001 $1,250,000 $500,000 $123,614 200,000 $33,116 (3)
Chairman and President of Bancorp; Chairman and 2000 800,000 250,000 93,020 30,072
President of Commerce NJ and Commerce PA; 1999 700,000 200,000 69,091 105,000 33,086
Chairman of Commerce Shore, Commerce North, and
Commerce Delaware
C. Edward Jordan, Jr......................... 2001 $275,000 $25,000 20,000 $26,833 (3)
Executive Vice President of Bancorp; Executive 2000 262,500 25,000 24,097
Vice President of Commerce NJ 1999 262,500 25,000 10,500 24,312
Peter M. Musumeci............................ 2001 $360,000 $100,000 50,000 $22,167 (3)
Executive Vice President and Senior Credit 2000 330,000 75,000 19,001
Officer, Treasurer and Assistant Secretary of 1999 300,000 60,000 26,250 22,077
Bancorp; Executive Vice President of Commerce NJ
Robert D. Falese, Jr. ....................... 2001 $500,000 $150,000 100,000 $17,901 (3)
Executive Vice President and Senior Loan 2000 375,000 100,000 14,414
Officer of Commerce NJ 1999 325,000 100,000 52,500 17,299
Dennis M. DiFlorio........................... 2001 $500,000 $150,000 100,000 $8,174 (3)
Executive Vice President of Commerce NJ 2000 375,000 100,000 4,783
1999 325,000 100,000 52,500 7,645
<FN>
____________________________
(1) The total in this column reflects personal use of a company car (2001,
$4,518; 2000, $4,518; 1999, $4,517), expense allowances (2001, $117,086;
2000, $86,632; 1999, $62,004) and country club dues (2001, $2,010; 2000,
$1,870; 1999, $2,570). The value of such other annual compensation did not
exceed the lesser of $50,000 or 10% of salary and bonus for any individual
in any year except for Mr. Hill.
(2) The stock option grants reflected in this column have been adjusted for the
2 for 1 stock split declared on November 21, 2001, and the 5% stock
dividend declared on December 21, 1999. The original grant was adjusted
based on the unexercised option shares outstanding on the dates of the
stock split and the stock dividend.
(3) The totals in this column reflect (i) premiums on life insurance (for 2001,
Mr. Hill, $21,446; Mr. Jordan, $15,328; and Mr. Musumeci, $12,540; for
2000, Mr. Hill, $22,129; Mr. Jordan, $15,818; and Mr. Musumeci, $12,851;
and for 1999, Mr. Hill, $22,746; Mr. Jordan, $16,320; and Mr. Musumeci,
$13,147); (ii) long-term disability policies (for 2001, Mr. Hill, $7,796;
Mr. Jordan, $7,631; Mr. Musumeci, $5,800; Mr. Falese, $14,027; and Mr.
DiFlorio, $4,300; for 2000, Mr. Hill, $7,724; Mr. Jordan, $8,060; Mr.
Musumeci, $5,931; Mr. Falese, $14,195; and Mr. DiFlorio, $4,564; and for
1999, Mr. Hill, $7,329; Mr. Jordan, $4,981; Mr. Musumeci, $5,919; Mr.
Falese, $14,288; and Mr. DiFlorio, $4,634); (iii) contributions to
Bancorp's ESOP (in 2001, $165 each for all five individuals; in 2000, $219
each for all five individuals; and in 1999, $3,011 each for all five
individuals); and (iv) contributions to Bancorp's 401K (for 2001, Mr. Hill,
$3,709; Mr. Jordan, $3,709; Mr. Musumeci, $3,662; Mr. Falese, $3,709; and
Mr. DiFlorio, $3,709).
</FN>
11
Employment Agreements
Mr. Hill's employment agreement provides that he will be employed by
Bancorp and Commerce NJ as Chairman of the Board, President and Chief Executive
Officer for a term of five years effective January 1, 1992, provided that on
each January 1 thereafter Mr. Hill's employment agreement shall be automatically
renewed and extended for a new five year term unless either Bancorp or Mr. Hill
gives the other at least 90 days prior written notice of their desire to
terminate Mr. Hill's employment agreement, in which event the term will have
four years remaining.
Under the terms of Mr. Hill's employment agreement, Mr. Hill's "base
salary" shall not be less than $1,500,000. Mr. Hill's employment agreement
provides that Mr. Hill will participate in any benefit or compensation programs
in effect which are generally made available from time to time to executive
officers of Bancorp and provides for all other fringe benefits as in effect from
time to time which are generally available to Bancorp's salaried officers
including, without limitation, medical and hospitalization coverage, life
insurance coverage and disability coverage.
Mr. Hill's employment agreement requires Bancorp to compensate Mr. Hill for
the balance of the term of his employment agreement at a rate equal to seventy
percent of his annual base salary if he becomes permanently disabled (as defined
in Mr. Hill's employment agreement) during the term and to pay Mr. Hill's
designated beneficiary a lump sum death benefit if he dies during the term in an
amount equal to three times his average annual base salary in effect during the
24 months immediately preceding his death.
Mr. Hill's employment agreement allows Mr. Hill to terminate his employment
with Bancorp upon a change in control of Bancorp (as defined in Mr. Hill's
employment agreement) and if within three years of such change in control,
without Mr. Hill's consent, among other things, the nature and scope of his
authority with Bancorp or a surviving or acquiring person are materially reduced
to a level below that which he enjoyed on January 1, 1992. If Mr. Hill
terminates his employment because of a change in control, he will be entitled to
a lump sum severance payment equal to four times his average annual base salary
in effect during the 24 month period immediately preceding such termination
(provided that such payment does not constitute a "parachute payment" under
Section 280G of the Internal Revenue Code of 1986, as amended, and in the event
such payment would constitute a "parachute payment," such lump sum severance
payment shall be reduced so as to not constitute a "parachute payment"), and the
continuation of certain benefits including medical, hospitalization and life
insurance. Mr. Hill's employment agreement contains a non-competition covenant
for Mr. Hill should his employment with Bancorp be terminated under certain
circumstances.
The employment agreements for Messrs. Jordan, Musumeci, Falese and DiFlorio
are substantially similar to that of Mr. Hill's except that: Mr. Jordan will
serve as Executive Vice President of Bancorp and Commerce NJ, Mr. Musumeci will
serve as Executive Vice President and Senior Credit Officer of Bancorp and
Commerce NJ, Mr. Falese will serve as Executive Vice President and Senior Loan
Officer of Bancorp and Commerce NJ, and Mr. DiFlorio will serve as Executive
Vice President of Bancorp and Commerce NJ. The term of each employment agreement
is three years and the lump sum death benefit is in each case equal to two times
the respective average annual base salary in effect during the 24 month period
preceding death. Mr. Jordan's "base salary" under his employment agreement is
$300,000, Mr. Musumeci's "base salary" under his employment agreement is
$400,000, Mr. Falese's "base salary" under his employment agreement is $550,000
and Mr. DiFlorio's "base salary" under his employment agreement is $550,000.
Employee Stock Option Plans
Effective April 1984, Bancorp adopted the Commerce Bancorp, Inc. Incentive
Stock Option Plan (the "1984 Plan") which provided for the purchase of a total
of not more than 3,901,811 shares of Bancorp common stock (as adjusted for all
stock splits and stock dividends through April 1, 2002) by officers and key
employees. Options granted under the 1984 Plan were intended to constitute
"incentive stock options" as defined in Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"). No further options may be granted under the
1984 Plan. As of April 1, 2002, 444,636 options (as adjusted for all stock
splits and stock dividends through April 1, 2002) were outstanding under the
1984 Plan.
12
Effective May 1994, Bancorp adopted the Commerce Bancorp, Inc. 1994
Employee Stock Option Plan (the "1994 Plan") which provided for the purchase of
a total of not more than 3,348,579 shares of Bancorp common stock (as adjusted
for all stock splits and stock dividends through April 1, 2002) by officers and
key employees. Pursuant to the 1994 Plan, stock options may be granted which
qualify under the Code as incentive stock options as well as stock options that
do not qualify as incentive stock options. No further options may be granted
under the 1994 Plan. As of April 1, 2002, 1,454,842 options (as adjusted for all
stock splits and stock dividends through April 1, 2002) were outstanding under
the 1994 Plan.
Effective May 1997, Bancorp adopted the Commerce Bancorp, Inc. 1997
Employee Stock Option Plan (the "1997 Plan") which provides for the purchase of
a total of not more than 17,235,156 shares of Bancorp common stock (as adjusted
for all stock splits and stock dividends through April 1, 2002) by officers and
key employees. Pursuant to the 1997 Plan, stock options may be granted which
qualify under the Code as incentive stock options as well as stock options that
do not qualify as incentive stock options. All officers and key employees of
Bancorp or any current or future subsidiary corporation are eligible to receive
options under the 1997 Plan. As of April 1, 2002, 11,743,645 options (as
adjusted for all stock splits and stock dividends through April 1, 2002) had
been granted under the 1997 Plan and 5,491,511 options (as adjusted for all
stock splits and stock dividends through April 1, 2002) were available for
grant. Options may continue to be granted under the 1997 Plan through December
31, 2006.
The 1984 Plan, 1994 Plan and 1997 Plan are collectively referred to as the
"Employee Plans."
The purpose of the Employee Plans is to provide additional incentive to
employees of Bancorp by encouraging them to invest in Bancorp's common stock and
thereby acquire a proprietary interest in Bancorp and an increased personal
interest in Bancorp's continued success and progress.
The Employee Plans are administered by the Personnel Committee
("Committee") which is appointed by the board of directors and consists only of
directors who are not eligible to receive options under the Employee Plans. The
Committee determines, among other things, which officers and key employees
receive an option or options under the Employee Plans, the type of option
(incentive stock options or non-qualified stock options, or both) to be granted,
the number of shares subject to each option, the rate of option exercisability,
and, subject to certain other provisions to be discussed below, the option price
and duration of the option. Under the 1997 Plan, no individual may be granted a
number of options that is more than 50% of the total number of shares of Bancorp
common stock authorized for issuance under the 1997 Plan. In addition, incentive
stock options first exercisable by an employee in any one year under the 1997
Plan (and all other Employee Plans of Bancorp) may not exceed $100,000 in value
(determined at the time of grant). The Committee may, in its discretion, modify
or amend any of the option terms herein described, provided that if an incentive
option is granted, the option as modified or amended continues to be an
incentive stock option.
In the event of any change in the capitalization of Bancorp, such as by
stock dividend, stock split or what the board of directors deems in its sole
discretion to be similar circumstances, the aggregate number and kind of shares
which may be issued under the Employee Plans will be appropriately adjusted in a
manner determined in the sole discretion of the board of directors. Reacquired
shares of Bancorp's common stock, as well as unissued shares, may be used for
the purpose of the 1997 Plan. Common stock of Bancorp subject to options which
have terminated unexercised, either in whole or in part, will be available for
future options granted under the 1997 Plan. The option price for options issued
under the 1997 Plan must be at least equal to 100% of the fair market value of
the Bancorp common stock as of the date the option is granted.
Options granted pursuant to the Employee Plans are not exercisable until
one year after the date of grant and then are exercisable pursuant to a schedule
based on years of service or option holding period. Under the 1994 Plan and 1997
Plan, but not the 1984 Plan, in the event of a "change in control" of Bancorp,
as defined in the 1994 Plan and 1997 Plan, each optionee may exercise the total
number of shares then subject to the option. The Committee has the authority to
provide for a different rate of option exercisability for any optionee.
13
Options granted under the 1984 Plan and 1994 Plan are not transferable
other than by will or by the laws of descent and distribution. Except as
otherwise authorized by the Committee with respect to non-qualified stock
options only, options granted pursuant to the 1997 Plan are not transferable,
except by will or the laws of descent and distribution in the event of death.
Options granted under the 1984 Plan had a term of ten years subject to
earlier termination in the event of termination of employment, death, or
disability. The 1984 Plan provided that during the lifetime of an optionee, his
option is exercisable only by him and only while employed by Bancorp or a
subsidiary or within (i) three months after his retirement, or (ii) three months
after he otherwise ceases to be so employed, to the extent the option was
exercisable on the last day of employment. For these purposes, retirement means
termination of employment by an optionee who has attained age 65. If an optionee
retires due to disability, his options may be exercised within twelve months of
his retirement date. If an optionee dies within a period during which his option
could have been exercised by him, his option may be exercised within one year of
his death (unless the option earlier terminates) by those entitled to do so
under his will or the laws of descent and distribution, but only to the extent
the option was exercisable by him immediately prior to his death.
Under the 1994 Plan and 1997 Plan, unless terminated earlier by the
option's terms, both incentive stock options and non-qualified stock options
expire ten years after the date they are granted. Options terminate three months
after the date on which employment is terminated (whether such termination be
voluntary or involuntary), other than by reason of death or disability. The
option terminates one year from the date of termination due to death or
disability (but not later than the scheduled termination date). During an
optionee's lifetime, the option is exercisable only by the optionee including,
for this purpose, the optionee's legal guardian or custodian in the event of
disability, except that under the 1997 Plan, if specifically permitted by the
Committee or the board of directors, non-qualified stock options are
transferable.
During 2001, Bancorp granted stock options to purchase an aggregate of
2,583,050 shares (as adjusted for all stock splits and stock dividends through
April 1, 2002) of Bancorp's common stock at an average price of $30.71 per share
(as adjusted for all stock splits and stock dividends through April 1, 2002)
under the 1997 Plan. During 2001, a total of 1,014,391 options were exercised
under the Employee Plans.
Stock Option Tables
The following table sets forth certain information regarding options
granted during 2001 to each of the executive officers named in the Summary
Compensation Table.
Individual Option Grants in Fiscal 2001 Grant Date Value
--------------------------------------------------------- -------------------------
Number of % of Total Black-
Securities Options Scholes
Underlying Granted to Grant Date Black-
Options Employees in Exercise Present Scholes
Name Granted(1) Fiscal Year Price(1) Expiration Date Value(2) Value
---- ---------- ----------- -------- --------------- -------- -----
Vernon W. Hill, II.......... 200,000 7.7% $ 30.60 January 31, 2011 $1,646,000 $8.23
C. Edward Jordan, Jr........ 20,000 0.8% 30.60 January 31, 2011 164,600 8.23
Peter M. Musumeci, Jr....... 50,000 1.9% 30.60 January 31, 2011 411,500 8.23
Robert D. Falese, Jr........ 100,000 3.9% 30.60 January 31, 2011 823,000 8.23
Dennis M. DiFlorio.......... 100,000 3.9% 30.60 January 31, 2011 823,000 8.23
<FN>
____________________________
(1) The stock option grants and exercise price reflected in these columns have
been adjusted for the 2 for 1 stock split declared on November 21, 2001.
(2) In accordance with Securities and Exchange Commission rules, the
Black-Scholes option pricing model was chosen to estimate the grant date
present value of the options set forth in this table. Bancorp's use of this
model should not be construed
14
as an endorsement of its accuracy at valuing options. All stock option
valuation models, including the Black-Scholes model, require a prediction
about future movement of the stock price. The assumptions used in the model
were expected volatility of .309, risk-free rate of return of 4.86%,
dividend yield of 2.50%, and weighted average expected life of 4.75 years.
The real value of the options in this table depends upon the actual
performance of Bancorp's common stock during the applicable period.
</FN>
The following table sets forth certain information regarding individual
exercises of stock options during 2001 by each of the executive officers named
in the Summary Compensation Table.
AGGREGATED STOCK OPTION EXERCISES IN 2001 AND
YEAR-END STOCK OPTION VALUES
Shares Number of Securities Underlying Value of Unexercised in the Money
Acquired on Value Unexercised Stock Options at Stock Options at
Name Exercise Realized Year-End 2001 (1) Year-end 2001
- -------------------------- ------------ --------- ------------------------------- ----------------------------------
Exercisable (2) Unexercisable Exercisable (2) Unexercisable
--------------- ------------- --------------- -------------
Vernon W. Hill, II......... 0 $0 1,871,454 0 $43,469,306 $0
C. Edward Jordan, Jr....... 11,825 497,639 320,122 0 9,353,342 0
Peter M. Musumeci, Jr...... 47,887 2,431,011 219,044 0 4,075,676 0
Robert D. Falese, Jr....... 12,050 578,451 462,028 0 9,656,884 0
Dennis M. DiFlorio......... 0 0 569,056 0 13,244,383 0
<FN>
____________________________
(1) The stock options in this column have been adjusted for the 2 for 1 stock
split declared November 21, 2001.
(2) Includes stock options held as of December 31, 2001 and which were
exercisable on or within 60 days of December 31, 2001.
</FN>
Employee Stock Ownership Plan
Effective January 1, 2002, the Commerce Bancorp, Inc. Employee Stock
Ownership Plan ("ESOP") was merged into the Commerce Bancorp, Inc. 401(k)
Retirement Plan ("401(k) Plan").
As of the date of the merger, the ESOP Trust held of record 1,674,730
shares of Bancorp common stock (as adjusted for all stock splits and stock
dividends through April 1, 2002). In connection with the merger, shares of
Bancorp common stock were allocated to each of the individual participant
accounts in the 401(k) Plan.
For the Plan Year ended December 31, 2001, Bancorp contributed $100,000 to
the ESOP.
Supplemental Executive Retirement Plan
Effective January 1, 1992, Bancorp established a Supplemental Executive
Retirement Plan ("SERP") for certain designated executives in order to provide
supplemental retirement income equal to sixty percent of average annual
compensation at the time of retirement. Average annual compensation is defined
as the average of the actual annual compensation paid to the executive by
Bancorp during the period of three consecutive years which produces the highest
such average during the ten year period ending with termination of employment.
The SERP is unfunded, is not a qualified plan under the Code and benefits are
paid directly by Bancorp. Messrs. Hill, Jordan, Musumeci, Falese and DiFlorio
have been designated to participate in the SERP.
Certain Transactions
Certain directors and executive officers of Bancorp and its subsidiaries
and certain of their immediate family members and certain corporations or
organizations with which they are affiliated have had and expect to continue to
have loan and other banking transactions with Bancorp's subsidiary banks. All
such loans and other banking transactions were made in the ordinary course of
business, were made on substantially the same terms, including
15
interest rates and collateral, as those prevailing at the time for comparable
transactions for unrelated parties, and did not involve more than the normal
risk of uncollectibility or present other unfavorable features.
The board of directors of Bancorp approves all transactions in which an
officer or director of Bancorp or any of its subsidiaries has an interest. In
the case of a transaction involving a director of Bancorp, such director does
not vote on the transaction.
Mr. Kerr is the Chairman of Markeim-Chalmers, Inc. which in 2001 received
approximately $253,000 in fees for real estate related services, primarily real
estate appraisals.
Messrs. Beck, Bershad and DiFrancesco are members of law firms which
Bancorp and its subsidiaries have retained during Bancorp's last fiscal year and
which Bancorp and its subsidiaries intend to retain during its current fiscal
year.
Bancorp leases the land on which it has constructed twenty branch offices
from limited partnerships in which Mr. Hill is a partner or in which a
corporation owned by Mr. Hill is a partner under separate operating lease
agreements. The aggregate annual rental under these leases for 2001 was
approximately $1.3 million. These leases expire periodically beginning 2004 but
are renewable through 2040. Aggregate annual rentals escalate to $1.4 million in
2006.
During 2001, Bancorp leased land to a limited partnership partially
comprised of the directors of Bancorp including Messrs. Bershad, Hill and Lewis
and a corporation owned by Mr. Hill. In accordance with the provision of the
land lease, the limited partnership constructed and owned an office building
located on the land. Commerce PA leased the building as a branch facility.
During the first quarter of 2002, Bancorp purchased all of the partnership
interests of the limited partnership.
Management believes that the rental paid or received for each of the
foregoing leases is comparable to the rental which they would have to pay to or
would have received from, as the case may be, and that the option prices are
comparable to or more favorable than those that could have been obtained or
received from, non-affiliated parties in similar commercial transactions for
similar locations, assuming that such locations were available.
During 2001, Bancorp subsidiaries obtained interior design, facilities
management and general contractor services in the amount of approximately $2.3
million from a business corporation of which Shirley Hill, wife of Mr. Hill, is
a principal shareholder and the president. Additionally, during 2001 this
business received commissions of approximately $1.9 million on furniture and
facility purchases made directly by Bancorp subsidiary banks. These expenditures
related primarily to the furnishing and related design services of the opening
and/or refurbishing of certain offices during the period. Management believes
such expenses were substantially equivalent to those that would have been paid
to unaffiliated companies for similar furniture and services.
During 2001, Bancorp and its subsidiaries utilized the facilities of
Galloway National Golf Club in the amount of approximately $309,000. Mr. Hill,
is a principal equity holder of Galloway National Golf Club. Management believes
such expenses were substantially equivalent to those that would have been paid
to unaffiliated companies for utilization of their facilities.
16
REPORT OF THE PERSONNEL COMMITTEE
The Personnel Committee of the board of directors of Bancorp is composed of
outside non-employee directors. Bancorp's compensation package for its executive
officers consists of base salary, annual performance bonus, annual stock option
grants and various broad based employee benefits. Management recommendations of
base salary levels, annual performance bonuses and stock option grants are
reviewed by the Personnel Committee and submitted to the full board of directors
for approval.
The objective of Bancorp's executive compensation is to enhance Bancorp's
long-term profitability by providing compensation that will attract and retain
superior talent, reward performance and align the interests of the executive
officers with the long term interests of the shareholders of Bancorp.
Bancorp has employment agreements with Messrs. Hill, Jordan, Musumeci,
Falese and DiFlorio which were effective January 1, 1992 for Messrs. Hill,
Jordan and Musumeci, and January 1, 1998 for Messrs. Falese and DiFlorio. See
"EXECUTIVE COMPENSATION - Employment Agreements."
Base salary levels for Bancorp's executive officers are competitively set
relative to companies in peer businesses. In reviewing base salaries, the
Personnel Committee also takes into account individual experience and
performance.
Bancorp's annual performance bonuses are intended to provide a direct cash
incentive to executive officers and other key employees to maximize Bancorp's
profitability. Financial performance is compared against budgets as well as peer
businesses.
Stock options are intended to encourage officers and other key employees to
remain employed by Bancorp by providing them with a long term interest in
Bancorp's overall performance as reflected by the performance of Bancorp's
common stock. In granting stock options, the Personnel Committee takes into
account prior stock option grants and considers the executive's level of
compensation and past contributions to Bancorp.
Vernon W. Hill, II was Bancorp's Chairman and President (chief executive
officer) for 2001. Mr. Hill's base salary is set competitively relative to other
chief executive officers in financial service companies in Bancorp's market
area. In determining Mr. Hill's base salary as well as annual performance bonus,
the Personnel Committee reviewed independent compensation data and Bancorp's
performance as compared against budgets and peer businesses. As with Bancorp's
other executive officers, Mr. Hill's total compensation involves certain
subjective judgments and is not based solely upon any specific objective
criteria or weighting.
The Personnel Committee and Bancorp are considering the future impact on
executive compensation, and whether certain changes should be made as a result
of Section 162(m) of the Code which became effective January 1, 1994. This
provision generally denies a deduction for federal income tax purposes for
annual compensation in excess of $1.0 million for executive officers named in
the "Summary Compensation Table" contained in this proxy statement, except for
certain compensation that is performance-based and for compensation that is paid
pursuant to certain contracts entered into prior to February 1993. Bancorp
believes that the limitation will have no material effect on it in 2002.
PERSONNEL COMMITTEE
Morton N. Kerr
Daniel J. Ragone
Jack R Bershad
17
Personnel Committee Interlocks and Insider Participation
The Personnel Committee members are Morton N. Kerr, Daniel J. Ragone and
Jack R Bershad.
Mr. Kerr is the Chairman of Markeim-Chalmers, Inc. which in 2001 received
approximately $ 253,000 in fees for real estate related services, primarily real
estate appraisals.
Mr. Bershad is a member of a law firm which Bancorp and its subsidiaries
have retained during Bancorp's last fiscal year and which Bancorp and its
subsidiaries intend to retain during its current fiscal year. See "EXECUTIVE
COMPENSATION - Certain Transactions."
Financial Performance
The graph below shows a comparison of the cumulative return experienced by
Bancorp's shareholders over the years 1997 through 2001, the S&P Regional Small
Bank Index and the S&P 500 Index assuming an investment of $100 in each at
December 31, 1996 and the reinvestment of dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
Commerce Bancorp, S&P Regional Small Bank Index, S&P 500 Index
Year-end 1997 to Year-end 2001
[GRAPH OMITTED - DATA POINTS AS FOLLOWS]
S&P Regional
Year CBH Small Bank Index S&P 500
- -------------- ------------------------------------------------------
1996 100.0 100.0 100.0
1997 166.1 167.9 133.4
1998 229.5 160.7 171.5
1999 189.3 141.6 207.5
2000 343.4 190.3 188.7
2001 401.4 217.5 166.2
18
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended ("Exchange
Act") requires Bancorp's directors and executive officers, and persons who own
more than 10% of a registered class of Bancorp's equity securities, to file with
the SEC reports about their beneficial ownership of common stock and other
equity securities of Bancorp. All such persons are required by SEC regulation to
furnish Bancorp with copies of all Section 16(a) reports they file.
Based solely on review of the copies of such reports furnished to Bancorp
and written representations that no other reports were required during the
fiscal year ended December 31, 2001, Bancorp believes all Section 16(a) filing
requirements applicable to its executive officers, directors and greater than
10% beneficial owners were timely complied with.
RELATIONSHIP WITH INDEPENDENT AUDITORS
Bancorp's independent auditors during the most recent year were Ernst &
Young LLP, 2001 Market Street, Philadelphia, PA 19103. Based upon the
recommendation of the Audit Committee, the board of directors has selected Ernst
& Young LLP to be Bancorp's independent auditors for 2001. The selection of
Bancorp's independent auditors is not being submitted to shareholders because
there is no legal requirement to do so. A representative of Ernst & Young LLP is
expected to be present at the Annual Meeting and to have the opportunity to make
a statement, if he desires to do so, and to be available to respond to
appropriate questions.
Audit Fees. The aggregate fees of Ernst & Young LLP for professional
services rendered for the audit of the Company's annual financial statements for
the fiscal year ended December 31, 2001 (the "2001 fiscal year") and the reviews
of the financial statements included in the Company's Form 10-Qs for the 2001
fiscal year totaled $545,000.
Financial Information Systems Design and Implementation Fees. During the
2001 fiscal year, no fees were billed for professional services related to
financial information systems design and implementation by Ernst & Young LLP.
All Other Fees. The aggregate fees for services rendered by Ernst & Young
LLP, other than for audit and information technology services, described in the
preceding two paragraphs, totaled $240,000 for the 2001 fiscal year including
$190,000 for various audit related services and the balance for various tax,
nonattest, and advisory services.
The Audit Committee has considered whether the provision of services
covered in the preceding two paragraphs is compatible with maintaining Ernst &
Young LLP's independence.
SHAREHOLDER PROPOSALS
Pursuant to the proxy rules promulgated under the Exchange Act, Bancorp
shareholders are notified that the deadline for providing Bancorp timely notice
of any shareholder proposal to be submitted outside of the Rule 14a-8 process
for consideration at Bancorp's Annual Meeting to be held in 2003 (the "2003
Annual Meeting") will be March 5, 2003. As to all such matters which Bancorp
does not have notice on or prior to March 5, 2003, discretionary authority shall
be granted to the persons designated in Bancorp's proxy related to the 2003
Annual Meeting to vote on such proposal.
A shareholder proposal for the 2003 Annual Meeting must be submitted to
Bancorp at its headquarters located at the Commerce Atrium, 1701 Route 70 East,
Cherry Hill, NJ 08034, Attention: C. Edward Jordan, Jr., by December 20, 2002 to
receive consideration for inclusion in Bancorp's proxy materials relating to the
2003 Annual Meeting. Any such proposal must also comply with the proxy rules
under the Exchange Act, including Rule 14a-8.
19
OTHER MATTERS
Bancorp is not currently aware of any matters which will be brought before
the Annual Meeting (other than procedural matters) which are not referred to in
the enclosed Notice of Annual Meeting. Nevertheless, the enclosed proxy confers
discretionary authority to vote with respect to those matters described in Rule
14a-4(c) under the Exchange Act, including matters that the board of directors
does not know, a reasonable time before proxy solicitation, are to be presented
at the Annual Meeting. If any such matters are presented at the Annual Meeting,
then the persons named in the enclosed proxy will vote in accordance with their
best judgment.
A COPY OF BANCORP'S ANNUAL REPORT TO THE SEC ON FORM 10-K FOR THE YEAR
ENDED DECEMBER 31, 2001 WILL BE FURNISHED WITHOUT CHARGE TO ANY SHAREHOLDER UPON
WRITTEN REQUEST TO C. EDWARD JORDAN, JR., EXECUTIVE VICE PRESIDENT, COMMERCE
BANCORP, INC., COMMERCE ATRIUM, 1701 ROUTE 70 EAST, CHERRY HILL, NEW JERSEY,
08034-5400.
By Order of the Board of Directors
ROBERT C. BECK
Secretary
20
PROXY
This proxy is solicited on behalf of the Board of Directors
COMMERCE BANCORP, INC.
The undersigned hereby appoints Morton N. Kerr and Daniel J. Ragone and
each of them, as proxies of the undersigned, each with power to act without the
other and with power of substitution, and hereby authorizes each of them to
represent and vote, as designated on the other side, all the shares of stock of
Commerce Bancorp, Inc. (the "Company") which the undersigned is entitled to
vote, standing in the name of the undersigned with all powers which the
undersigned would possess if present, at the Annual Meeting of Shareholders of
the Company to be held on May 21, 2002, or any postponement or adjournment
thereof. The undersigned hereby directs this proxy to be voted as indicated on
the reverse side.
(Continued, and to be marked, dated and signed, on the other side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
UNLESS YOU SPECIFY OTHERWISE, THIS PROXY WILL BE VOTED "FOR" Please mark [X]
THE ELECTION OF THE NOMINEES AS DIRECTED. your votes as
indicated in
this example
1. FOR the election of the following nominees to the Board of Directors for
the ensuing year:
01 Vernon W. Hill, II, 02 Robert C. Beck, 03 Jack R Bershad,
04 Joseph E. Buckelew, 05 Donald T. DiFrancesco, 06 C. Edward Jordan, Jr.,
07 Morton N. Kerr, 08 Steven M. Lewis, 09 George E. Norcross, III,
10 Daniel J. Ragone, 11 William A. Schwartz, Jr.,
12 Joseph T. Tarquini, Jr. and 13 Frank C. Videon, Sr.
FOR all nominees listed [ ] WITHHOLD AUTHORITY [ ]
above (except as to vote for all nominees
marked to the contrary) listed above
To withhold authority to vote for any individual nominee, write the nominee's
name in the space provided below.
- --------------------------------------------------------------------------------
2. In their discretion, upon other matters as may properly come before the
meeting or any adjournments thereof.
A majority of such attorneys and proxies, or their substitutes at the
meeting, or any adjournment or adjournments thereof, may exercise all of
the powers hereby given. Any proxy to vote any of the shares, with respect
to which the undersigned is or would be entitled to vote, heretofore given
to any person or persons other than the persons named above, is revoked.
IN WITNESS WHEREOF, the undersigned has signed and sealed this proxy and
hereby acknowledges receipt of a copy of the notice of such meeting and
proxy statement relating thereto.
Shareholder(s) Shareholder(s) Printed Name of
Signature Signature Shareholder(s) Date
------------- ---------- ---------- -----
NOTE: Signature(s) should correspond with name appearing on stock
certificate(s). When signing in a fiduciary or representative capacity, sign
full title as such. When more than one owner, each should sign.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
ANNUAL MEETING OF SHAREHOLDERS
OF
COMMERCE BANCORP, INC.
Tuesday, May 21, 2002
5:30 p.m.
COMMERCE UNIVERSITY BUILDING
17000 HORIZON WAY
MT. LAUREL, NEW JERSEY
(856) 751-9000