SCHEDULE 14A INFORMATION
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 Section 240.14a-11(c) or Section 240.14a-12
FNB BANCORP
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(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: NA
(2) Aggregate number of securities to which transaction applies: NA
(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): NA
(4) Proposed maximum aggregate value of transaction: NA
(5) Total fee paid: NA
[ ] 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: NA
(2) Form, Schedule or Registration Statement No.: NA
(3) Filing Party: NA
(4) Date Filed: NA
FNB BANCORP
975 El Camino Real
South San Francisco, California 94080
--------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be Held Wednesday, May 19, 2004
7:30 P.M.
--------------------
TO THE SHAREHOLDERS OF FNB BANCORP:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Annual Meeting") of FNB BANCORP, a California corporation (the "Company") will
be held at the Basque Cultural Center, 599 Railroad Avenue, South San Francisco,
California, on Wednesday, May 19, 2004, at 7:30 p.m., for the following
purposes:
1. To elect the nine (9) incumbent directors identified in the
accompanying proxy statement;
2. To ratify the appointment of KPMG LLP as independent auditors
of the Company to serve for the 2004 fiscal year; and
3. To transact such other business as may properly come before
the Annual Meeting and any adjournment or adjournments
thereof.
Section 7 of the Bylaws of the Company provides for the nomination of
directors as follows:
"Nominations for election to the Board of Directors may be made by the
Board of Directors or by any shareholder entitled to vote for the election of
directors. Nominations, other than those made by the Board of Directors, shall
be made in writing and shall be delivered or mailed, with first-class United
States mail postage prepaid, to the Secretary not less than 20 days nor more
than 50 days prior to any meeting of shareholders called for the election of
directors; provided, however, that if less than 25 days notice of the meeting is
given to the shareholders, such nomination shall be mailed or delivered to the
Secretary not later than the close of business on the seventh day following the
day on which the notice of the meeting was mailed. Shareholder nominations shall
contain the following information: (a) the name, age, business address and, if
known, residence address of each proposed nominee; (b) the principal occupation
or employment of each proposed nominee; (c) the total number of shares of
capital stock of the corporation that are beneficially owned by each proposed
nominee and by the nominating shareholder; (d) the name and residence address of
the notifying shareholder; and (e) any other information the corporation must
2
disclose regarding director nominees in the corporation's proxy solicitation.
Nominations not made in accordance with this Section may be disregarded by the
Chairman of the meeting, and if the Chairman so instructs, the inspectors of
election may disregard all votes cast for each such nominee."
Only those shareholders of record at the close of business on April 11,
2004, will be entitled to notice of and to vote at the Annual Meeting.
As an added convenience, a shareholder can choose to vote by telephone
or by using the Internet as indicated on the proxy card. If you vote by
telephone or electronically through the Internet, there is no need to return the
proxy card. Please refer to the attached proxy statement for a more complete
description of the procedures for telephone and Internet voting.
You are cordially invited to attend the Annual Meeting.
By Order of the Board of Directors
/s/ THOMAS C. MCGRAW
-----------------------------------------
Thomas C. McGraw
Secretary
South San Francisco, California
April 21, 2004
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE VOTE BY
TELEPHONE, OR BY THE INTERNET, OR SIGN AND RETURN THE ENCLOSED PROXY CARD AS
PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
3
Mailed to shareholders on
or about April 21, 2004
FNB BANCORP
975 El Camino Real
South San Francisco, California 94080
Telephone (650) 588-6800
PROXY STATEMENT
INFORMATION CONCERNING THE SOLICITATION
This Proxy Statement is being furnished to the shareholders of FNB
Bancorp, a California corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors for use at the Annual Meeting
of Shareholders (the "Annual Meeting") to be held at Basque Cultural Center, 599
Railroad Avenue, South San Francisco, California, at 7:30 p.m. on Wednesday, May
19, 2004. Only shareholders of record on April 11, 2004 (the "Record Date"),
will be entitled to notice of and to vote at the Annual Meeting. At the close of
business on the Record Date, the Company had outstanding and entitled to be
voted 2,518,679 shares of its no par value Common Stock (the "Common Stock").
Shareholders may vote their shares by mail without attending the Annual
Meeting, whether their shares of Common Stock are held in their names or through
a broker, bank or other nominee. Instructions for voting by mail are set forth
on the enclosed proxy card. For shares held through a broker, bank or other
nominee, shareholders may vote by submitting their voting instructions to the
broker, bank or other nominee. Voting instructions may be given by mail, by
telephone or by using the Internet, if the broker, bank or other nominee makes
those methods available to the shareholder, in which case the procedures will be
enclosed with the Proxy Statement forwarded by the broker, bank or other
nominee.
The presence in person or by proxy of a majority of the shares entitled
to vote is necessary to constitute a quorum at the Annual Meeting. Abstentions
and broker non-votes will be counted for purposes of determining the presence or
absence of a quorum. "Broker non-votes" are shares held by brokers or nominees
who are present in person or represented by proxy, but which are not voted on a
particular matter because under applicable rules the broker cannot vote on the
matter in the absence of instructions from the beneficial owner. The effect of
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abstentions and broker non-votes on the calculation of the required vote on
specific proposals to be brought before the Annual Meeting is discussed under
each proposal, where applicable.
Shareholders of Common Stock are entitled to one vote for each share
held, except that for the election of directors each shareholder has cumulative
voting rights and is entitled to as many votes as shall equal the number of
shares held by such shareholder multiplied by the number of directors to be
elected. Each shareholder may cast all of his or her votes for a single
candidate or distribute such votes among any or all of the candidates as he or
she chooses. However, no shareholder shall be entitled to cumulate votes (in
other words, cast for any candidate a number of votes greater than the number of
shares of stock held by such shareholder) unless such candidate's name has been
placed in nomination prior to the voting and the shareholder has given notice at
the Annual Meeting prior to the voting of the shareholder's intention to
cumulate votes. If any shareholder has given such notice, all shareholders may
cumulate their votes for candidates in nomination. Prior to voting, an
opportunity will be given for shareholders or their proxies at the Annual
Meeting to announce their intention to cumulate their votes. The proxy holders
are given, under the terms of the proxy, discretionary authority to cumulate
votes on shares for which they hold a proxy.
Any person giving a proxy in the form accompanying this Proxy Statement
has the power to revoke that proxy prior to its exercise. The proxy may be
revoked prior to the Annual Meeting by delivering to the Secretary of the
Company either a written instrument revoking the proxy or a duly executed proxy
bearing a later date. The proxy may also be revoked by the shareholder by
attending and voting in person at the Annual Meeting. The proxy will be voted as
directed by the shareholder giving the proxy and if no directions are given on
the proxy, the proxy will be voted "FOR" the nominees of the Board of Directors
and "FOR" ratification of the appointment of KPMG LLP as independent auditors of
the Company to serve for the 2004 fiscal year, and at the proxy holders'
discretion, on such other matters, if any, which may come before the Annual
Meeting (including any proposal to adjourn the meeting).
The Company will bear the entire cost of preparing, assembling,
printing and mailing proxy materials furnished by the Board of Directors to
shareholders. Copies of proxy materials will be furnished to brokerage houses,
fiduciaries and custodians to be forwarded to the beneficial owners of the
Common Stock. The Company will reimburse brokerage houses, fiduciaries,
custodians and others holding Common Stock in their names or names of nominees
or otherwise for reasonable out-of-pocket expenses incurred in sending proxy
materials to the beneficial owners of such Common Stock. In addition to the
solicitation of proxies by use of the mail, some of the officers, directors and
regular employees of the Company may (without additional compensation) solicit
proxies by telephone, Internet or personal interview, the costs of which will be
borne by the Company.
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ANNUAL REPORT
A copy of the Annual Report of the Company for the fiscal year ended
December 31, 2003, including audited consolidated financial statements of the
Company (the "Annual Report") is enclosed with this Proxy Statement. Additional
copies of the Annual Report are available upon request to the Secretary of the
Company, Thomas C. McGraw, at FNB Bancorp, 975 El Camino Real, South San
Francisco, California 94080.
THE ANNUAL REPORT INCLUDES A COPY OF THE COMPANY'S ANNUAL REPORT ON
FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003, AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION.
WEBSITE
The Company and First National Bank of Northern California maintain an
Internet website at http://www.fnbnorcal.com. The Company's Annual Report on
Form 10-K, as well as quarterly reports (on Form 10-Q), current reports (on Form
8-K) and other reports filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended, may be accessed
free of charge through such website.
CODE OF ETHICS
The Board of Directors has adopted a "code of ethics" as defined under
applicable rules promulgated by the Securities and Exchange Commission pursuant
to the Sarbanes-Oxley Act of 2002. The code of ethics requires that the
Company's directors, officers (including the principal executive, financial and
accounting officers, or controller and persons performing similar functions) and
employees conduct business in accordance with the highest ethical standards and
in compliance with all laws, rules and regulations applicable to the Company.
The code of ethics is intended to supplement the provisions of any other
personnel policies of the Company or codes of conduct which may establish
additional standards of ethical behavior applicable to the Company's directors,
officers and employees. The code of ethics was filed as Exhibit 14.1 to the
Company's Annual Report on Form 10-K for the year ended December 31, 2003, and a
copy of the code of ethics may be obtained through the Company's website by
following the instructions for accessing reports filed with the Securities and
Exchange Commission (see above, under the heading "Website").
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PRINCIPAL SHAREHOLDERS
As of April 11, 2004, no person known to the Company owned beneficially
or of record more than five percent (5%) of the outstanding shares of its Common
Stock, except as indicated in the chart below:
================================ ======================== =================
Amount and Nature of Percentage of
Name and Address Beneficial Ownership Ownership(1)
- -------------------------------- ------------------------ -----------------
The Ricco Lagomarsino Trust 243,228 9.64
26 Hillcrest Drive
Daly City, CA 94014
- -------------------------------- ------------------------ -----------------
Thomas G. Atwood 248,002(2) 9.83
c/o Cypress Abbey Company
P.O. Box 516
Colma, CA 94014
- -------------------------------- ------------------------ -----------------
The Bank Funds, LLC 169,839 6.73
208 South LaSalle Street,
Suite 1680
Chicago, IL 60604
- -------------------------------- ------------------------ -----------------
Cede & Co.(3) 1,015,215 49.30
Box 20, Bowling Green Station
New York, NY 10004
================================ ======================== =================
(1) Based upon 2,518,679 shares outstanding.
(2) Includes 201,016 shares owned by Cypress Abbey Company, a corporation in
which Mr. Atwood is the principal shareholder.
(3) Cede & Co. is the nominee of The Depository Trust Company of New York, New
York, and acts as the record owner of securities held in "street name" for
a number of brokerage firms and other financial institutions.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS OF THE COMPANY
The Bylaws of the Company provide a procedure for nomination for
election of members of the Board of Directors, which procedure is printed in
full in the Notice of Annual Meeting of Shareholders accompanying this Proxy
Statement. Nominations not made in accordance therewith may be disregarded by
the Chairman of the Meeting, and upon his instructions the tellers of votes may
disregard all votes cast for such nominee(s).
The Bylaws of the Company provide that the Board of Directors shall
consist of not less than five nor more than nine shareholders, the exact number
to be fixed and determined from time to time by resolution of a majority of the
full Board of Directors or by resolution of a majority of the shareholders at
any annual or special meeting thereof. The current number of directors has been
fixed by resolution of the Board of Directors at nine (9). The directors to be
elected at the Annual Meeting shall hold office for one year and until their
successors are elected and have qualified. The nine (9) nominees receiving the
highest number of affirmative votes of the shares present in person or
represented by proxy and entitled to vote for them shall be elected as
directors. Only votes cast "FOR" a nominee will be counted in determining
whether that nominee has been elected as a director.
All proxies will be voted for the election of the following ninet (9)
nominees recommended by the Board of Directors, unless authority to vote for the
election of any director or directors is withheld by the shareholder on the
proxy card. All of the nominees are incumbent Directors. If any nominee should
unexpectedly decline or be unable to act as a director, the proxies may be voted
for a substitute nominee to be designated by the Board of Directors. The Board
of Directors has no reason to believe that any nominee will become unavailable
and has no present intention to nominate persons in addition to or in lieu of
those named below.
The following table sets forth information with respect to beneficial
ownership of the Common Stock of the Company by those persons nominated by the
Board of Directors for election as directors, as well as all directors and
executive officers of FNB Bancorp and its subsidiary, First National Bank of
Northern California, a national banking association (herein called the "Bank" or
"First National Bank"), as a group. There is no family relationship between any
of the directors and/or executive officers, except that Edward J. Watson is
related by marriage to Anthony J. Clifford. The Company has only one class of
shares outstanding, Common Stock.
8
=========================== ======= ========================= ============= ==================================
Shares Beneficially Owned
as of April 11, 2004 (1)
Nominee Age Positions Held Director
With the Bank Since % of
and Company Sole (2) Shared (3) Total
- --------------------------- ------- ------------------------- ------------- ---------- ----------- -----------
Michael R. Wyman 67 Chairman of the Board, 1978 for
Director Bank; 4,942 24,353 1.16(4)
2001 for
Company
- --------------------------- ------- ------------------------- ------------- ---------- ----------- -----------
Thomas C. McGraw 52 Chief Executive 1989 for
Officer, Secretary, Bank; 1,803 122,389 4.95(5)
Director 2001 for
Company
- --------------------------- ------- ------------------------- ------------- ---------- ----------- -----------
Neil J. Vannucci 67 Director 1989 for
Bank; 1,745 50,314 2.06(6)
2001 for
Company
- --------------------------- ------- ------------------------- ------------- ---------- ----------- -----------
Edward J. Watson 56 Director 1996 for
Bank; 4,667 -- .18(7)
2001 for
Company
- --------------------------- ------- ------------------------- ------------- ---------- ----------- -----------
Daniel J. Modena 70 Director 1996 for
Bank; 1,524 1,166 .09(8)
2001 for
Company
- --------------------------- ------- ------------------------- ------------- ---------- ----------- -----------
Lisa Angelot 46 Director 1999 for
Bank; 11,867 -- .46(9)
2001 for
Company
- --------------------------- ------- ------------------------- ------------- ---------- ----------- -----------
Jim D. Black 47 President, Director 2002 for
Bank and 9,267 981 .41(10)
Company
- --------------------------- ------- ------------------------- ------------- ---------- ----------- -----------
Anthony J. Clifford 41 Executive Vice 2002 for
President and Chief Bank and 5,646 -- .22(11)
Operating Officer, Company
Director
- --------------------------- ------- ------------------------- ------------- ---------- ----------- -----------
R. Albert Roensch 65 Director 2003 for
Bank and 210 -- .01
Company
- --------------------------------------------------------------------------- ---------- ----------- -----------
All directors and executive officers (11 persons) as a group
53,569 149,203 9.90(12)
- --------------------------------------------------------------------------- ---------- ----------- -----------
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(1) This table is based upon information supplied by directors, executive
officers and principal shareholders. Percentages are based upon 2,518,679
shares outstanding.
(2) The named persons exercise sole voting and investment power with respect to
shares listed in this column.
(3) The named persons share voting and investment power with respect to shares
listed in this column.
(4) Includes 24,353 shares held by the Wyman Family Trust for which Mr. Wyman
serves as co-trustee. Includes 590 shares of presently exercisable stock
options under the Company's 2002 Stock Option Plan. Excludes 6,251 shares
held in the Bank's Deferred Compensation Trust.
(5) Includes 122,389 shares held by the Thomas C. and Virginia K. McGraw Family
Trust for which Mr. McGraw serves as co-trustee. Includes 935 shares of
presently exercisable stock options under the Company's Stock Option Plan
and 590 shares of presently exercisable stock options under the Company's
2002 Stock Option Plan.
(6) Includes 50,314 shares held by the Vannucci Family Trust for which Mr.
Vanucci serves as co-trustee and 935 shares of presently exercisable stock
options under the Company's Stock Option Plan and 590 shares of presently
exercisable stock options under the Company's 2002 Stock Option Plan.
(7) Includes 935 shares of presently exercisable stock options under the
Company's Stock Option Plan and 590 shares of presently exercisable stock
options under the Company's 2002 Stock Option Plan.
(8) Includes 935 shares of presently exercisable stock options under the
Company's Stock Option Plan and 590 shares of presently exercisable stock
options under the Company's 2002 Stock Option Plan.
(9) Includes 1,274 shares held by Ms. Angelot as Custodian for Eric Angelot and
304 shares held by Ms. Angelot as Custodian for Katherine Brandenberger. A
total of 243,228 shares are held by The Ricco Lagomarsino Trust for which
Ms. Angelot serves as one of the co-trustees. Ms. Angelot disclaims
beneficial ownership of such shares. Includes 734 shares of presently
exercisable stock options under the Company's Stock Option Plan and 590
shares of presently exercisable stock options under the Company's 2002
Stock Option Plan.
(10) Includes 5,809 presently exercisable stock options under the Company's
Stock Option Plan. Includes 207 shares held in trust for Greg Black and
includes 207 shares held in trust for Janelle Black. Excludes 1,635 shares
held in the Bank's Deferred Compensation Trust.
(11) Includes 5,573 presently exercisable stock options under the Company's
Stock Option Plan. Excludes 1,882 shares held in the Bank's Deferred
Compensation Trust.
(12) Includes a total of 24,595 shares of presently exercisable stock options
under the Company's Stock Option Plan and 5,964 shares of presently
exercisable stock options under the Company's 2002 Stock Option Plan.
Excludes 13,381 shares held by the Bank's Deferred Compensation Trust for
the accounts of Messrs. Wyman, Black, Clifford and Ramsey. See "Deferred
Compensation Plan" herein.
- ---------------------
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The following table sets forth certain information as of the Record
Date with respect to each Director of the Company and the Bank, each person
nominated for election as a Director, and each executive officer named in the
Executive Compensation table elsewhere herein, as well as for all other
executive officers of the Company and the Bank.
Michael R. Wyman Chairman of the Board of Directors of the Company
since 2001. Chairman of the Board of Directors of
First National Bank since 1999 and Director of
First National Bank since 1983. Retired as Chief
Executive Officer of the Company and First National
Bank effective March 31, 2002. Previously, Chief
Executive Officer of First National Bank since 1983
and President of First National Bank from 1983 to
1996.
Thomas C. McGraw Director and Secretary of the Company since 2001.
Chief Executive Officer of the Company and First
National Bank since April 1, 2002. Director and
Secretary of First National Bank since 1989, and
President and Chief Operating Officer of First
National Bank from October 2001 until April 1,
2003. Formerly, self-employed communications
consultant in San Mateo and Marin Counties, since
1987.
Neil J. Vannucci Director of the Company since 2001. Director of
First National Bank since 1989. Director of U.S.
Concrete since 1999. President of Bay Cities
Building Materials from 1995 to 1999.
Edward J. Watson Director of the Company since 2001. Director of
First National Bank since 1996. Certified Public
Accountant. Attorney and partner in the law firm of
Watson & Lanctot LLP, formerly known as Dreher,
Garfinkle & Watson.
Daniel J. Modena Director of the Company since 2001. Director of
First National Bank since 1996. Attorney and
partner in the law firm of Modena & Royce in South
San Francisco since 1961.
Lisa Angelot Director of the Company since 2001. Director of
First National Bank since 1999. Property manager
for the Lagomarsino Properties in Daly City since
1992. Her grandfather was Ricco Lagomarsino,
Founding Director and Chairman of First National
Bank.
Jim D. Black Director of the Company and First National Bank
since March 2002. President of the Company and
First National Bank since April 1, 2002. Formerly,
Senior Vice President and Senior Lending Officer of
First National Bank and an employee since 1981.
11
Anthony J. Clifford Director of the Company and First National Bank
since March 2002. Executive Vice President and
Chief Operating Officer of the Company and First
National Bank since April 1, 2002. Formerly, Vice
President and Branch Administrator of First
National Bank since 1995; Vice President and Branch
Manager of First National Bank since 1990; and
Assistant Vice President and Branch Manager of
First National Bank since 1983.
R. Albert Roensch Director of the Company and First National Bank
since December 19, 2003. Formerly, President and
Chief Executive Officer of America California Bank
(1999 to 2003). Founding President and Chief
Executive Officer and Chairman of Pacific Coast
Bankers' Bank (1995 to 1999). Mr. Roensch has more
than forty years of commercial banking experience.
James B. Ramsey Senior Vice President and Chief Financial Officer
of the Company since 2001. Senior Vice President,
Chief Financial Officer and Cashier of First
National Bank since 1997. Formerly, Vice
President/Controller of Mid-Peninsula Bank in Palo
Alto since 1994, Senior Vice President and Chief
Financial Officer of Codding Bank in Rohnert Park,
California since 1989, and Executive Vice-President
and Chief Financial Officer of Pajaro Valley Bank
since 1982.
Charles R. Key Senior Vice President and Director of Information
Systems of First National Bank and an employee
since 1970.
None of the directors of the Company is a director of any other company
with a class of securities registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended, or subject to the requirements of Section
15(d) of such Act or any company registered as an investment company under the
Investment Company Act of 1940, whose common stock is registered pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended.
Committees of the Board of Directors
The Company has an Audit Committee and a Compensation Committee. In
addition, the entire Board of Directors of the Company functions as the
Nominating Committee. The current members of the Company's Audit Committee are
Edward J. Watson, Neil J. Vannucci and R. Albert Roensch. The current members of
the Company's Compensation Committee are Lisa Angelot, Neil J. Vannucci and
Edward J. Watson.
The members of the Audit Committee select and oversee the Company's
independent public accountants, analyze the results of internal and regulatory
examinations and monitor the financial and accounting organization, reporting
and controls. Each member of the Audit Committee is "independent" as defined
under applicable rules promulgated by the Securities and Exchange Commission
12
pursuant to the Sarbanes-Oxley Act of 2002. Edward J. Watson and R. Albert
Roensch have each been designated by the Board of Directors as an "audit
committee financial expert" as defined under applicable rules promulgated by the
Securities and Exchange Commission pursuant to the Sarbanes-Oxley Act of 2002.
Reference should be made to the Audit Committee Report set forth below in this
Proxy Statement for additional information regarding the functions of the Audit
Committee.
The members of the Company's Audit Committee met five (5) times during
2003 and the members of the Company's Compensation Committee met once during
2003. During 2003, the Company's Board of Directors held twelve (12) regularly
scheduled meetings and two (2) "executive sessions" which only the non-employee
directors attended, each of whom is "independent" as defined under applicable
rules promulgated by the Securities and Exchange Commission pursuant to the
Sarbanes-Oxley Act of 2002. All incumbent directors of the Company attended at
least seventy-five percent (75%) of the meetings of the board of directors and
the committees of which they were members during 2003.
A majority of the members of the Company's Board of Directors, each of
whom is "independent" as defined under applicable rules promulgated by the
Securities and Exchange Commission pursuant to the Sarbanes-Oxley Act of 2002,
has established procedures for receipt and delivery of shareholder
communications addressed to the Board of Directors. Any such shareholder
communications, including communications by employees of the Company solely in
their capacity as shareholders, should be mailed or delivered to the Company
addressed as follows: Board of Directors, FNB Bancorp, 975 El Camino Real, South
San Francisco, CA 94080.
The Company encourages the members of its Board of Directors to attend
the Company's annual meeting of shareholders each year. A majority of the
directors attended the Company's Annual Meeting of shareholders held in 2003.
In performing the functions of a nominating committee, the Board of
Directors has responsibility for considering appropriate candidates as
directors. The Board of Directors believes that the participation of the full
Board of Directors in considering candidates is efficient in view of the size of
the Board of Directors. Candidates are selected by a majority of directors who
are "independent" as defined under applicable rules promulgated by the
Securities and Exchange Commission pursuant to the Sarbanes-Oxley Act of 2002,
in accordance with a Nominating Charter adopted by a majority of such
independent directors. The Nominating Charter includes a policy for
consideration of candidates proposed by shareholders. Any recommendations by
shareholders will be evaluated by the Board of Directors in the same manner as
any other recommendation and in each case in accordance with the Nominating
Charter. Shareholders that desire to recommend candidates for consideration by
the Company's Board of Directors should mail or deliver written recommendations
to the Company addressed as follows: Board of Directors, FNB Bancorp, 975 El
Camino Real, South San Francisco, CA 94080. Each recommendation should include
biographical information indicating the background and experience of the
candidate that qualifies the candidate for consideration as a director for
evaluation by the Board of Directors. In addition to minimum standards of
independence for non-employee directors and financial literacy, the Board of
Directors considers various other criteria including the candidate's experience
13
and expertise, financial resources, ability to devote the time and effort
necessary to fulfill the responsibilities of a director and involvement in
community activities in the market areas served by the Company and First
National Bank that may enhance the reputation of the Company and the Bank. The
Company and the Bank operate in a highly regulated industry and are subject to
the supervision, regulation and periodic examination by state and federal
banking regulatory authorities including the Board of Governors of the Federal
Reserve System, the Office of the Comptroller of the Currency and the Federal
Deposit Insurance Corporation. Directors of the Company and the Bank are subject
to certain rules and regulations and potential liabilities not otherwise
applicable to directors of non-banking organizations. Consequently, evaluation
of candidates by the Company's Board of Directors may include more extensive
inquiries into personal background information including confirmation of the
accuracy and completeness of background information by (a) requiring candidates
to complete questionnaires to elicit information of the type required to be
disclosed by the Company in reports filed with the Securities and Exchange
Commission or such federal banking regulatory authorities, (b) conducting
background investigations by qualified independent organizations experienced in
conducting criminal and civil investigatory reviews, and (c) such other personal
and financial reviews and analyses as the Board of Directors may deem
appropriate in connection with the consideration of candidates. Shareholders who
wish to nominate a candidate for election to the Company's Board of Directors,
as opposed to recommending a potential nominee for consideration by the Board of
Directors, are required to comply with the advance notice and any other
requirements of the Company's bylaws, applicable laws and regulations. The Board
of Directors may elect to use third parties in the future to identify or
evaluate candidates for consideration by the Board of Directors. The Nominating
Charter adopted by the Board of Directors is attached to this Proxy Statement as
Appendix A.
First National Bank has an Audit Committee, a Loan and Discount
Committee (which functions as an executive committee of the Board of Directors)
and a Compensation Committee.
First National Bank does not have a nominating committee, but the Loan
and Discount Committee functions as the Bank's nominating committee, as
necessary. Since March 15, 2002, the Company has been the sole shareholder of
the Bank.
The current members of the Bank's Audit Committee are Edward J. Watson,
Neil J. Vannucci and R. Albert Roensch. The principal functions of the Audit
Committee are (1) to examine and review both internal audit controls and
regulatory audit reports and to meet with the First National Bank auditors
concerning audit procedures and controls and (2) to monitor the First National
Bank investments.
The current members of the Bank's Loan and Discount committee are
Michael R. Wyman, Thomas C. McGraw, Daniel J. Modena and Lisa Angelot. The
principal functions of the Loan and Discount Committee are to oversee loans and
investments and the routine operations of First National Bank by delegation from
the board of directors and to advise and report to the full board regarding such
matters.
The members of the Bank's Compensation Committee are Lisa Angelot, Neil
J. Vannucci and Edward J. Watson. The Compensation Committee investigates and
advises the board of directors as to employee benefit arrangements and conducts
14
executive searches whenever First National Bank proposes to hire executive
personnel. The Compensation Committee also reports to the board of directors
with regard to executive compensation, including bonus compensation.
The board of directors of First National Bank met a total of twelve
(12) times during 2003. During this same period, the Loan and Discount Committee
met nineteen (19) times, the Audit Committee met five (5) times and the
Compensation Committee met once. All incumbent directors of the Bank attended at
least seventy-five percent (75%) of the meetings of the board of directors and
the committees of which they were members during 2003.
Compensation of Directors
No fees or other compensation has been paid to the non-officer
directors of the Company since incorporation of the Company on February 28,
2001. The Company became the holding company for First National Bank, effective
March 15, 2002. No separate fees were paid to the directors of the Company
during 2003 for their attendance at meetings of the board of directors or for
their attendance at meetings of the committees of the board of directors.
Each non-officer director of First National Bank was paid $30,000 in
fees for attending meetings of the board of directors during 2003. The aggregate
amount of such fees paid by First National Bank in 2003 was $152,500. No fees
were paid to the directors during 2003 for their attendance at meetings of the
committees of the board of directors of the Bank. During 2003, each non-officer
director of First National Bank was granted a non-statutory option for 315
shares of common stock pursuant to the FNB Bancorp 2002 Stock Option Plan.
Board Compensation Committee Report
Set forth below is the Report of the members of the Compensation
Committee of the Board of Directors of the Company and the Bank:
The Company was formed in 2001 to become the holding company of First
National Bank. After approval by the shareholders of the Bank, the holding
company reorganization became effective on March 15, 2002. No separate
compensation was paid to the executive officers of the Company during 2002 and
2003. The compensation paid by First National Bank to its executive officers
during 2003 included payment for all services rendered by such officers to the
Company during 2003, including their attendance at meetings of the board of
directors and their attendance at meetings of committees of the board of
directors of the Company.
The compensation of the executive officers of First National Bank is
reviewed and approved annually by the board of directors based on the
recommendations by the Compensation Committee. During 2003, Lisa Angelot, Neil
J. Vanucci and Edward J. Watson served as members of the Bank's Compensation
Committee. Each such member of the Compensation Committee is "independent" as
defined under applicable rules promulgated by the Securities and Exchange
Commission pursuant to the Sarbanes-Oxley Act of 2002. The executive officers of
First National Bank during 2003 were: Thomas C. McGraw, Chief Executive Officer
and Secretary; Jim D. Black, President; Anthony J. Clifford, Executive Vice
15
President and Chief Operating Officer; James B. Ramsey, Senior Vice President
and Chief Financial Officer; and Charles R. Key, Senior Vice President and
Director of Information Systems.
The Compensation Committee's philosophy is that compensation should be
designed to reflect the value created for shareholders while supporting First
National Bank's strategic goals. The Compensation Committee reviews the
compensation of the executive officers annually to insure that First National
Bank's compensation programs are related to financial performance and consistent
generally with employers of comparable size in the industry. Other than as
described herein, there are no other employment contracts between First National
Bank and any officer of First National Bank. Annual compensation for First
National Bank's executive officers includes the components described below.
Base salary is related to the individual executive officer's level of
responsibility and comparison with comparable employers in the industry. The
board of directors reviews and sets base salaries annually, taking into
consideration the recommendations of the Chief Executive Officer (for executive
officers other than the Chief Executive Officer). In conducting its review of
salaries, the board of directors takes into consideration the overall
performance of First National Bank.
The board of directors determines the base salary for the Chief
Executive Officer by (a) examining the financial performance of First National
Bank against its present goals; (b) examining the financial performance of First
National Bank as compared to the banking industry generally; (c) evaluating the
overall performance of the Chief Executive Officer; and (d) comparing the base
salary of the Chief Executive Officer to that of other chief executive officers
in the banking industry in the market area of First National Bank.
The compensation paid to Messrs. McGraw, Black, Clifford, Ramsey and
Key during 2003 is set forth in the table of "Executive Compensation" below. On
December 19, 2003, effective as of January 1, 2004, the board of directors
approved the following base salaries: Mr. McGraw's salary was increased to
$205,538; Mr. Black's salary was increased to $192,938; Mr. Clifford's salary
was increased to $176,400; Mr. Ramsey's salary was increased to $159,223; and
Mr. Key's salary was increased to $142,128.
First National Bank does not have a formal bonus plan. The board of
directors, at its discretion, awarded bonuses to its executive officers during
2003, including bonuses to Messrs. Black, Clifford, Ramsey and Key (which are
set forth in the table of "Executive Compensation" below). Bonus compensation is
based on the return on beginning shareholder equity for each year and individual
performance criteria are established by the Compensation Committee for each
executive officer.
The entire board of directors can, at its discretion, grant stock
options to key officers of the Company and First National Bank who are primarily
responsible for the growth and management of its business. As of December 31,
2003, a total of 221,097 shares were reserved for options previously granted and
currently outstanding under the FNB Bancorp Stock Option Plan (successor as of
March 15, 2002, to the First National Bank of Northern California 1997 Stock
Option Plan) and the FNB Bancorp 2002 Stock Option Plan, including options for
an aggregate of 59,974 shares of common stock (as adjusted for stock dividends
16
paid in 1999, 2000, 2001, 2002 and 2003) which have been granted to Messrs.
McGraw, Black, Clifford, Ramsey and Key. A summary of the stock options granted
to such officers during 2003, including the exercise prices, is set forth below
in the table of "Option/SAR Grants In Last Fiscal Year." The exercise price of
an incentive stock option is set at the fair market value of the shares on the
date of grant. All options granted and currently outstanding are incentive stock
options, vesting at the rate of 20 percent per year over the period of 5 years
from date of grant and are exercisable for a period of 10 years from the grant
date.
Submitted by the Compensation Committee:
Lisa Angelot
Neil J. Vannucci
Edward J. Watson
17
Equity Compensation Plan Information
The chart below lists information regarding common stock issuable upon
the exercise of stock options, the weighted average exercise price of those
options and the number of shares available for issuance under the FNB Bancorp
Stock Option Plan and the FNB Bancorp 2002 Stock Option Plan. The Company has no
other equity compensation plan and there are no warrants or other rights
outstanding that would result in the issuance of shares of the Company's common
stock.
- ------------------------------- --------------------------- -------------------------- --------------------------
Plan Category Number of securities to be Weighted-average exercise Number of securities
issued upon exercise of price of outstanding remaining available for
outstanding options, options, warrants and future issuance under
warrants and rights rights equity compensation plans
(excluding securities
reflected in column (a))
(a) (b) (c)
- ------------------------------- --------------------------- -------------------------- --------------------------
Equity compensation plans
approved by security holders 156,820 $24.62 162,549
- ------------------------------- --------------------------- -------------------------- --------------------------
Equity compensation plans not
approved by security holders -0- -0- -0-
- ------------------------------- --------------------------- -------------------------- --------------------------
Total 156,820 $24.62 162,549
- ------------------------------- --------------------------- -------------------------- --------------------------
18
Executive Compensation
Set forth below is the compensation of the Chief Executive Officer of
the Company and the Bank and the other most highly compensated officers (whose
total annual salary and bonus exceeds $100,000) for services in all capacities
to the Company and the Bank during the three years ended December 31, 2003.
=====================================================================================
Annual Compensation
- -------------------------------------------------------------------------------------
Name and Position Year Salary Bonus (1) All Other
Compensation(2)(3)
- ---------------------------------- -------- ------------ --------- ------------------
Thomas C. McGraw, 2001 $ -- $ --
Chief Executive Officer, 2002 177,681 -- --
Secretary 2003 205,538 20,000 13,001
- ---------------------------------- -------- ------------ --------- ------------------
Jim D. Black, 2001 $149,695 $44,000 $13,674
President 2002 168,592 35,200 14,203
2003 183,750 24,640 12,847
- ---------------------------------- -------- ------------ --------- ------------------
Anthony J. Clifford, 2001 $120,000 $34,000 $11,720
Executive Vice President, 2002 152,916 34,000 12,882
Chief Operating Officer 2003 168,000 23,800 11,746
- ---------------------------------- -------- ------------ --------- ------------------
James B. Ramsey, 2001 $147,003 $40,000 $13,674
Senior Vice President, 2002 144,240 32,000 12,151
Chief Financial Officer 2003 159,223 22,500 10,602
- ---------------------------------- -------- ------------ --------- ------------------
Charles R. Key, 2001 $125,004 $30,000 $13,535
Senior Vice President, 2002 128,760 24,000 11,098
Director, Information Systems 2003 135,360 18,000 9,463
================================== ======== ============ ========= ==================
(1) Bonuses are indicated for the years upon which they are based, and are
payable in the same year.
(2) Each of Messrs. McGraw, Black and Clifford is provided with the use of a
Company-owned automobile. No executive officer received perquisites or
other personal benefits in excess of the lesser of $50,000 or 10 percent of
each such officer's total annual salary and bonus during 2001, 2002 or
2003.
(3) Amounts shown represent contributions to The First National Bank Profit
Sharing and 401(k) Plan for the accounts of the named officers.
19
The following table sets forth certain information concerning the
granting of options under the FNB Bancorp 2002 Stock Option Plan during the year
ended December 31, 2003 (adjusted for the 2003 stock dividend).
Option/SAR Grants In Last Fiscal Year
- ------------------------------------------------------------------------------------ --------------------
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term (3)
- ------------------------------------------------------------------------------------ --------------------
Number of Percentage of
Securities Total
Underlying Options/SARs
Option/SARs Granted to Exercise or
Granted Employees in Base Price Expiration
Name (#) (1) Fiscal Year ($Sh) (2) Date 5% 10%
- ---------------------------- ------------ -------------- -------------- ------------ --------- ----------
Thomas C. McGraw 315 0.8% 23.81 5/23/2013 4,717 11,953
- ---------------------------- ------------ -------------- -------------- ------------ --------- ----------
Jim D. Black 4,725 11.3% 23.81 5/23/2013 70,751 179,296
- ---------------------------- ------------ -------------- -------------- ------------ --------- ----------
Anthony J. Clifford 4,725 11.3% 23.81 5/23/2013 70,751 179,296
- ---------------------------- ------------ -------------- -------------- ------------ --------- ----------
James B. Ramsey 3,150 7.5% 23.81 5/23/2013 47,167 119,531
- ---------------------------- ------------ -------------- -------------- ------------ --------- ----------
Charles R. Key 3,150 7.5% 23.81 5/23/2013 47,167 119,531
- ---------------------------- ------------ -------------- -------------- ------------ --------- ----------
(1) Options granted under the FNB Bancorp 2002 Stock Option Plan were either
incentive options or nonstatutory options and become exercisable in
accordance with a vesting schedule established at the time of grant.
Vesting cannot extend beyond ten (10) years from the date of grant. All
options granted to the named executive officers are incentive stock options
and have an exercise price equal to the fair market value of the Company's
common stock on the date of grant. Options granted under the FNB Bancorp
2002 Stock Option Plan are adjusted to protect against dilution in the
event of certain changes in the Company's capitalization, including stock
splits and stock dividends, and upon a change in control of the Company,
all outstanding options will become fully vested and exercisable.
(2) The exercise price was determined based upon the average of the bid and
asked price of the Company's common stock on the grant date.
(3) In accordance with Securities and Exchange Commission rules, these columns
show gains that might exist for the respective options, assuming that the
market price of the stock appreciates from the date of grant over the 10
year option term at the annualized rates of 5% and 10%, respectively.
20
The following table sets forth the number of shares of the Company's
Common Stock acquired by each of the named executive officers upon the exercise
of stock options during the fiscal year 2003, if any, the net value realized
upon exercise, the number of shares of the Company's common stock represented by
outstanding stock options held by each of the named executive officers as of
December 31, 2003, the value of such options based on the average of the bid and
asked price of the Company's common stock, and certain information concerning
unexercised options under the Company's stock option plans.
Aggregated Option/SAR Exercises In Last Fiscal Year And
FY-End Option/SAR Values
- ------------------------------------------------------------------------------------------------------
Number of Securities Value of
Underlying Unexercised
Shares Unexercised in-the-Money
Acquired Options/SARs at Options/SARs at
on Value Fiscal Year-End (#) Fiscal Year-End ($)
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable (1)
- ----------------------------- ----------- ---------- ------------------------ ------------------------
Thomas C. McGraw -- -- 1,525 -- 11,294 --
- ----------------------------- ----------- ---------- ------------------------ ------------------------
Jim D. Black -- -- 5,809 9,997 45,104 67,853
- ----------------------------- ----------- ---------- ------------------------ ------------------------
Anthony J. Clifford -- -- 5,573 9,971 43,402 67,637
- ----------------------------- ----------- ---------- ------------------------ ------------------------
James B. Ramsey -- -- 5,672 7,980 44,348 55,363
- ----------------------------- ----------- ---------- ------------------------ ------------------------
Charles R. Key -- -- 5,491 7,954 42,997 55,147
- ----------------------------- ----------- ---------- ------------------------ ------------------------
(1) The aggregate value has been determined based upon the average of the bid
and asked price for the Company's common stock at year-end, minus the
exercise price.
Employment Contracts and Termination of Employment and Change in Control
Arrangements
Employment Contracts. There are no employment contracts between the
Company or First National Bank and the executive officers named in the tables
above, other than the Salary Continuation Agreements, the Management Continuity
Agreements, the Deferred Compensation Plan and the Company's stock option plans,
as described below. Effective March 15, 2002, the Company assumed all of the
Bank's rights and obligations under the Bank's 1997 Stock Option Plan (re-named
the FNB Bancorp Stock Option Plan). All other employee benefit plans of the
Bank, existing on that date, are to be continued, modified or assumed by the
Company as determined by mutual agreement of the Bank and the Company, in
accordance with applicable laws, regulations and tax rules.
Salary Continuation Agreements. First National Bank purchased life
insurance policies on the life of Michael R. Wyman on December 21, 1996, and on
the life of James B. Ramsey on December 30, 1998. First National Bank also
21
entered into Salary Continuation Agreements with Messrs. Wyman and Ramsey in the
form proposed by Clark/Bardes Consulting (the "Agreements"). First National Bank
is the sole owner and beneficiary under such life insurance policies, which
policies indirectly offset the anticipated costs for certain death, disability
and post-employment/retirement benefits for Messrs. Wyman and Ramsey. The cash
surrender value of each insurance policy, which is expected to increase over the
term of the policy, is included among the "other assets" on the balance sheet of
First National Bank. The Agreements provide for annual benefits to be paid to
Mr. Wyman or his designated beneficiary of up to $60,000 per year over a period
of 15 years; and annual benefits to be paid to Mr. Ramsey or his designated
beneficiary of up to $50,000 per year over a period of 20 years. Such benefits
are effective in each case upon: (i) attainment of 66 years of age (65 in the
case of Mr. Ramsey) or his death or disability prior to such time if he is
actively employed by First National Bank at the time; (ii) termination of his
employment by First National Bank without "cause" (as defined in the
Agreements); and (iii) termination or constructive termination of his employment
by First National Bank after the occurrence of a "change in control" of First
National Bank (as defined in the Agreements).
Management Continuity Agreements. On July 20, 2000, First National Bank
entered into Management Continuity Agreements with Jim D. Black, Charles R. Key
and Anthony J. Clifford. Each Agreement provides for the payment of a severance
benefit to the officer upon termination of employment after a "change in
control" of First National Bank (as defined in the Agreements). The purpose of
the Agreements is to maintain sound and vital management of First National Bank,
thereby protecting its best interests, in the event of a proposed change in
control of First National Bank. The amount of the benefit payable under each
Agreement is two times the "base annual salary" of the relevant officer for the
twelve month period immediately preceding a "change in control." In addition, if
any payment of the benefit constitutes an "excess parachute payment" that is
subject to an excise tax imposed by the Internal Revenue Code of 1986, as
amended, First National Bank will increase the amounts payable to the extent
necessary to place the officer in the same after-tax position that would have
existed had no excise tax been imposed. First National Bank can elect to pay
benefits in a lump sum payment or in monthly installments over a period not
exceeding two years following the date of termination of employment. Each
Management Continuity Agreement continues for two years from July 20, 2000, and
is subject to automatic one year renewals thereafter, unless First National Bank
gives written notice of non-renewal.
Deferred Compensation Plan. First National Bank has established a
Deferred Compensation Plan. Participation in the Plan is open to all officers of
First National Bank with the title Vice President or higher. The Deferred
Compensation Plan consists of a Deferred Compensation Trust, dated November 1,
1997, with The Mechanics Bank serving as Trustee, and individual Deferred
Compensation Agreements between First National Bank and each of the
participating officers. The funds contributed to the Plan are those of the
individual participant, and represent income earned and/or bonuses granted as an
employee of First National Bank. No funds of First National Bank may be
contributed to the Plan. Under the Plan, a participant may elect to defer the
receipt of a portion of his or her cash salary and/or bonus. First National Bank
maintains a record of the deferred compensation for each participant, and at the
time of distribution, is obligated to effect the distribution as well as
collection of any and all taxes due at such time. Each participant may elect
22
whether he or she will receive distribution of his or her entire account,
subject to applicable tax withholding requirements, upon reaching a specified
age, or upon passage of at least five years or upon termination of employment.
In order to discharge its obligations in respect of such deferred compensation,
First National Bank makes contributions of the deferred compensation specified
by the participants to the Deferred Compensation Trust, which are then invested
in accordance with the instructions of the participants. The principal and any
earnings in the Trust are held separate and apart from other funds of First
National Bank and are used for the discharge of First National Bank's
obligations to the participants. As of April 7, 2003, the Deferred Compensation
Trust held an aggregate of 7,130 shares of Common Stock for the accounts of
Messrs. McGraw, Black, Clifford, Ramsey and Key, representing approximately
0.28% of the total shares outstanding on such date (consisting of 1,492 shares
for Jim D. Black; 1,492 shares for Anthony J. Clifford; 3,675 shares for James
B. Ramsey; and no shares for Thomas C. McGraw and Charles R. Key.
FNB Bancorp Stock Option Plan. The board of directors of the Bank
adopted the First National Bank of Northern California 1997 Stock Option Plan
(the "Bank Stock Option Plan"), which was approved by the shareholders of First
National Bank at the 1997 Annual Meeting, held on October 15, 1997. Pursuant to
the holding company reorganization which became effective March 15, 2002, the
Bank Stock Option Plan became the FNB Bancorp Stock Option Plan. As of December
31, 2003, a total of 156,820 shares were reserved for options previously granted
and outstanding under the FNB Bancorp Stock Option Plan, including options for
an aggregate of 58,447 shares of Common Stock (as adjusted for stock dividends
paid in 1999, 2000, 2001, 2002 and 2003) which have been granted to the five
officers of the Company identified in the table of "Executive Compensation"
above. Also, see "Board Compensation Committee Report" above. All such options
granted and currently outstanding are incentive stock options, vesting at the
rate of 20 percent per year over the period of 5 years from date of grant and
are exercisable for a period of 10 years from the grant date. Directors Angelot,
Modena, Vannucci, Watson and Wyman have been granted non-statutory stock options
for an aggregate of 3,539 shares of Common Stock (as adjusted for stock
dividends paid in 1999, 2000, 2001, 2002 and 2003) which were fully vested on
the dates of grant and are exercisable (at a price of $21.94 per share for
options granted in 1999; at a price of $20.67 per share for options granted in
2000; at a price of $21.64 per share for options granted in 2001; at a price of
$24.94 per share for options granted in 2002) over a period of 10 years from the
grant dates. No options have been granted under the FNB Bancorp Stock Option
Plan since March 15, 2002, and no further options are expected to be granted
under the FNB Bancorp Stock Option Plan, except that if any outstanding option
should expire, terminate or become unexercisable for any reason without having
been exercised in full, the unpurchased shares which were subject to the option
shall, unless the FNB Bancorp Stock Option Plan shall have been terminated,
become available for future grants under the FNB Bancorp Stock Option Plan. Upon
consummation of any plan of reorganization, merger or consolidation of the
Company with one or more other banks or corporations as a result of which the
Company is not the surviving entity, or upon the sale of all or substantially
all the assets of the Company to another bank or corporation, then all
outstanding unexercised options shall become immediately exercisable in
accordance with the terms of the FNB Bancorp Stock Option Plan and the Plan
shall terminate.
23
FNB Bancorp 2002 Stock Option Plan. The Board of Directors of the
Company adopted the FNB Bancorp 2002 Stock Option Plan (the "2002 Plan") on June
28, 2002, which was approved by the shareholders at the 2003 Annual Meeting,
held on May 14, 2003. A total of 200,000 shares of Common Stock were reserved
for issuance pursuant to the 2002 Plan (after giving effect to the Company's
2002 stock dividend). The 2002 Plan provides for the grant of incentive stock
options ("Incentive Options") and nonstatutory stock options ("Nonstatutory
Options"). The terms and provisions of the Plan are substantially the same as
the FNB Bancorp Stock Option Plan.
As of December 31, 2003, a total of 210,000 shares of Common Stock were
reserved for issuance pursuant to the 2002 Plan, including 136,395 shares for
options granted and outstanding under the 2002 Plan as of that date (all as
adjusted for the Company's 2003 stock dividend). Options for an aggregate of
16,065 shares of Common Stock (adjusted for the stock dividend paid in 2003)
have been granted to the five officers of the Company identified in the table of
"Executive Compensation" above pursuant to the 2002 Plan. Also, see "Board
Compensation Committee Report" above. All such options granted and currently
outstanding under the 2002 Plan are incentive stock options, vesting at the rate
of 20 percent per year over the period of 5 years from the date of grant and are
exercisable for a period of 10 years from the grant date. Non-employee directors
Angelot, Modena, Vannucci, Watson and Wyman have been granted non-statutory
stock options for an aggregate of 2,950 shares of Common Stock (adjusted for the
stock dividend paid in 2003) which were fully vested on the dates of grant and
are exercisable (at a price of $23.81 per share for options granted in 2003)
over a period of 10 years from the grant dates.
Upon the dissolution, liquidation or sale of the Company, or a merger
or consolidation in which the Company is not the surviving entity, outstanding
options which would otherwise terminate in accordance with the 2002 Plan will
become exercisable in full for such period as is determined by the Board of
Directors of the Company or a Stock Option Committee appointed by the Board (but
in any event not more than 15 days) prior to the consummation of such event.
After the consummation of such an event, such outstanding options will
terminate.
Profit Sharing Plan
On August 26, 1969, the Bank established The First National Bank Profit
Sharing and 401(k) Plan (the "Plan") under provisions which allow the Bank to
make a contribution on behalf of each eligible employee. Each year, the Board of
Directors of the Bank decides whether to make a profit sharing contribution to
the Plan, and the amount of that contribution. The profit sharing contribution
to the Plan for 2003 was $475,000. Each participant in the Plan who is employed
on the last day of the Plan year receives a share of that contribution based on
the amount of his or her compensation relative to the compensation of all other
participants. The accounts of the participants vest according to a schedule of
years of service with the Bank. The Mechanics Bank acts as Trustee for the
Profit Sharing Plan Trust, and the Trustee invests all the assets of the Plan in
four common trust funds maintained by the Trustee. On January 1, 1998, the Plan
was amended to allow any eligible employee to make voluntary contributions to
the Plan, and to direct the investment of such voluntary contributions from a
menu of available options. Both the profit sharing provisions and the employee
contribution provisions are elements of the 401(k) Plan. The profit sharing
element of the Plan is funded by the Bank. The employee contribution element of
the Plan is funded by the employee.
24
Comparison of First National Bank/FNB Bancorp Shareholder Return
Set forth below is a line graph comparing the annual percentage change
in the cumulative total return on First National Bank common stock and FNB
Bancorp common stock with the cumulative total return of the SNL Securities
Index of Pink Banks (asset size of $100 million to $500 million) and the Russell
2000 Index as of the end of each of the last five fiscal years. Effective March
15, 2002, First National Bank became the wholly owned subsidiary of FNB Bancorp.
Thereafter, the common stock of FNB Bancorp has been quoted on the OTC Bulletin
Board under the symbol "FNBG.OB."
The graph assumes that $100.00 was invested on December 31, 1998 in
First National Bank common stock and each index, and that all dividends were
reinvested. Returns have been adjusted for any stock dividends and stock splits
declared by First National Bank and FNB Bancorp. Shareholder returns over the
indicated period should not be considered indicative of future shareholder
returns.
25
- --------------------------------------------------------------------------------
FNB BANCORP
- --------------------------------------------------------------------------------
[GRAPHIC CHART OMITTED]
Total Return Performance
Period Ending
----------------------------------------------------------------------
Index 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
- -----------------------------------------------------------------------------------------------------------------
FNB Bancorp 100.00 93.32 100.80 105.70 109.19 144.70
Russell 2000 100.00 121.26 117.59 120.52 95.83 141.11
SNL $100M-$500M OTC-BB & Pink Banks * 100.00 91.07 76.98 88.68 106.37 144.49
* SNL $100M-$500M Pink Banks Index consists of Pink Sheet and OTC Bulletin
Board-traded banks with between $100M and $500M in total assets.
Note: The foregoing graph was prepared by SNL Financial LC ("SNL") at the
request of the Company for purposes of this Proxy Statement. All information
provided by SNL in the graph has been gathered by SNL from sources believed by
SNL to be reliable and true and accurate in both form and substance.
26
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers and any
persons who own more than 10% of a registered class of the Company's equity
securities to file with the Securities and Exchange Commission (the "SEC")
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Officers, directors and any greater
than 10% shareholders are required by the SEC to furnish the Company with copies
of all Section 16(a) forms they file.
On March 15, 2002, the Company registered its common stock under
Section 12(g) of the Exchange Act, at which time the Company's directors,
officers and any person who owned more than 10% of such common stock became
subject to Section 16(a) of the Exchange Act.
To the Company's knowledge, based solely on a review of such reports
furnished to the Company and written representations that no other reports were
required, during the fiscal year ended December 31, 2003, all Section 16(a)
filing requirements applicable to its officers, directors and any greater than
10% shareholders were complied with on a timely basis, except that Mr. Roensch
(who became a director of the Company in December 2003) inadvertently filed one
late report, being his initial report of ownership.
Certain Relationships and Related Transactions
Through its banking subsidiary, First National Bank, the Company has
had, and expects in the future to have banking transactions, including loans and
other extensions of credit, in the ordinary course of its business with many of
the Company's directors and officers and their associates, including
transactions with corporations of which such persons are directors, officers or
controlling shareholders, on substantially the same terms (including interest
rates and collateral) as those prevailing for comparable transactions with
others. Management believes that in 2003 such transactions comprising loans did
not involve more than the normal risk of collectibility or present other
unfavorable features. Loans to executive officers of First National Bank are
subject to limitations as to amount and purposes prescribed in part by the
Federal Reserve Act, as amended, and the regulations of the Office of the
Comptroller of the Currency.
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The firm of KPMG LLP, which served the Company as independent auditors
for the 2003 fiscal year, has been recommended by the Audit Committee of the
Board of Directors of the Company to serve as independent auditors for the 2004
fiscal year, and the Board of Directors has approved the Audit Committee
recommendation. In this Proposal No. 2, the shareholders of the Company are
being asked to ratify the appointment of KPMG LLP as independent auditors of the
Company, to serve for the 2004 fiscal year.
27
The firm of Grant Thornton LLP served First National Bank of Northern
California as its independent auditors for the 2001 fiscal year. Upon
consummation of a plan of reorganization approved by the shareholders of the
Bank, effective March 15, 2002, the Bank became a wholly owned subsidiary of the
Company. On September 27, 2002, the Board of Directors of the Company approved
the recommendation of the Audit Committee of the Board of Directors to change
the firm serving as the independent auditors for the Company and the Bank. On
September 30, 2002, Grant Thornton LLP was notified of its dismissal and
termination as the Company's independent auditors and the Company engaged KPMG
LLP as the Company's independent auditors for the 2002 fiscal year, effective as
of September 30, 2002.
The reports of Grant Thornton LLP on the financial statements of First
National Bank of Northern California, as of and for the fiscal years ended
December 31, 2000 and 2001, did not contain an adverse opinion or a disclaimer
of opinion, and were not qualified or modified as to uncertainty, audit scope or
accounting principles
During the fiscal years of First National Bank of Northern California
ended December 31, 2000 and 2001, and during the subsequent interim period
through September 30, 2002, there were no disagreements with Grant Thornton LLP
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of Grant Thornton LLP, would have caused it to make a
reference to the subject matter of the disagreements in connection with its
reports.
A representative of KPMG LLP is expected to attend the Annual Meeting
and will have an opportunity to make a statement if the representative desires
to do so, and the representative is expected to be available to respond to
appropriate questions.
During the fiscal years of First National Bank of Northern California
ended December 31, 2000 and 2001, and during the subsequent interim period
through September 30, 2002, neither the Company nor First National Bank of
Northern California consulted with KPMG LLP regarding (i) the application of
accounting principles to a specified transaction, either completed or proposed,
or the type of audit opinion that might be rendered on the financial statements
of the Company or First National Bank of Northern California, or (ii) any matter
that was either the subject of a disagreement or a reportable event under the
rules of the Securities and Exchange Commission.
Audit Fees
The aggregate fees billed by Grant Thornton LLP to the Company for
professional services rendered for the audit of the financial statements of
First National Bank of Northern California for the fiscal years ended December
31, 2000 and 2001, included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2003, and for the review of the financial
statements included in the Company's Quarterly Reports on Form 10-Q for the
quarterly periods ended March 31, 2002, and June 30, 2002 and ended March 31,
2003 and June 30, 2003, were $25,243 and $13,365, respectively.
28
The aggregate fees billed by KPMG to the Company for professional
services rendered for the audit of the Company's consolidated financial
statements for the fiscal years ended December 31, 2002 and 2003, were $116,450
and $101,600, respectively.
All Other Fees
Other than the fees for services described above under "Audit Fees," no
fees were billed to the Company by Grant Thornton LLP or KPMG LLP for services
rendered to the Company or First National Bank of Northern California for the
fiscal years ended December 31, 2002 and 2003.
The Audit Committee of the Board of Directors of the Company has
approved each professional service rendered by Grant Thornton LLP and KPMG LLP
during the fiscal years 2002 and 2003, and the Audit Committee has considered
whether the provision of non-audit services would be compatible with maintaining
the independence of Grant Thornton LLP and KPMG LLP.
Vote Required
Ratification of the appointment of KPMG LLP as the Company's
independent auditors for the 2004 fiscal year requires the affirmative vote of
the holders of a majority of the shares of Common Stock present or represented
by proxy and voting at the Annual Meeting.
Recommendation of Management
The Board of Directors of the Company has approved the recommendation
of the Audit Committee of the Board of Directors to appoint KPMG LLP as
independent auditors of the Company for the 2004 fiscal year, and recommends a
vote "FOR" ratification of the appointment of KPMG LLP.
AUDIT COMMITTEE REPORT
The Audit Committee consists of the following members of the Company's
Board of Directors: Edward J. Watson (Chairman), Neil J. Vannucci and R. Albert
Roensch. Each of the members of the Audit Committee is "independent" as defined
under applicable rules promulgated by the Securities and Exchange Commission
pursuant to the Sarbanes-Oxley Act of 2002. The Committee operates under a
written charter adopted by the Board of Directors which is included in this
Proxy Statement as Appendix B.
Management is responsible for the Company's internal controls and the
financial reporting process. The independent accountants are responsible for
performing an independent audit of the Company's consolidated financial
statements in accordance with generally accepted accounting principles and to
issue a report thereon. The Audit Committee's responsibility is to monitor and
oversee these processes.
29
The Audit Committee's responsibilities include assisting the Board of
Directors in fulfilling its responsibility for oversight of the quality and
integrity of the accounting, auditing, internal control and financial reporting
practices of the Company. The Committee's primary responsibilities are to: (1)
serve as an independent and objective party to monitor the Company's financial
reporting process and internal control system; (2) review and evaluate the audit
efforts of the Company's independent accountants and the outsource internal
audit firm; (3) evaluate the Company's quarterly financial performance as well
as its compliance with laws and regulations; (4) oversee management's
establishment and enforcement of financial policies and business practices; and
(5) facilitate communication among the independent accountants, financial and
senior management, counsel, the outsource internal audit firm and the Board of
Directors.
During 2003, the Audit Committee reviewed the Company's audit
requirements in view of its new holding company structure, the passage of the
Sarbanes-Oxley Act of 2002, and the need for broad-based, local financial
institution resources. The Audit Committee decided to solicit bids for these
services. After considering the submissions, it was unanimously decided by the
Audit Committee that KPMG LLP best suited the Company's needs as to resources,
local expertise, financial institution practice and cost. On September 27, 2002,
the Board of Directors of the Company approved the recommendation of the Audit
Committee to change the firm serving as the independent auditors for the Company
and the Bank. The Company engaged KPMG LLP as the Company's independent auditors
for the 2002 fiscal year, effective as of September 30, 2002, and KPMG LLP began
providing audit review services to the Company with respect to the preparation
of the Company's Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2002. The Company also engaged KPMG LLP as the Company's
independent auditors for the 2003 fiscal year.
The Audit Committee has reviewed and discussed the audited financial
statements of the Company for the fiscal year ended December 31, 2003, with the
Company's management. The Committee has discussed with KPMG LLP, the Company's
independent auditors, the matters required to be discussed by Statement on
Auditing Standards No. 61 (Communication with Audit Committees). The Committee
has also received the written disclosures and the letter from KPMG LLP required
by Independence Standards Board Standard No. 1 (Independence Discussion with
Audit Committees) and the Committee has discussed the independence of KPMG LLP
with that firm.
Based on the Audit Committee's review and discussions noted above, the
Committee recommended to the Board of Directors that the Bank's audited
financial statements be included in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2003, for the filing with the Securities and
Exchange Commission.
Submitted by the Audit Committee:
Edward J. Watson, Chairman
Neil J. Vannucci
R. Albert Roensch
30
SHAREHOLDERS' PROPOSALS
Next year's Annual Meeting of Shareholders will be held on May 18,
2005. The deadline for shareholders to submit proposals for inclusion in the
proxy statement and form of proxy for the 2005 Annual Meeting of Shareholders is
January 31, 2005. All proposals should be submitted by Certified Mail, Return
Receipt Requested, to the Secretary, FNB Bancorp, 975 El Camino Real, South San
Francisco, California 94080.
South San Francisco, California
April 21, 2004
31
APPENDIX A
----------
FNB BANCORP
NOMINATING CHARTER
------------------
I. Purpose
The purpose of the Nominating Charter is to establish a written charter
concerning the process of identifying, evaluating and nominating
candidates, including candidates proposed by shareholders, for election
to the Board of Directors.
II. Board Functioning as Nominating Committee
The Board of Directors of FNB Bancorp (the "Company") performs the
functions of a nominating committee. Candidates proposed as nominees
for election to the Company's Board of Directors shall be evaluated and
selected by the independent members of the Board of Directors. Director
independence shall be determined in accordance with applicable rules of
the Securities and Exchange Commission.
III. Nomination Process
1. Candidates shall be evaluated based on the criteria
established by the Board of Directors which may include (a)
satisfactory results of any background investigation, (b)
experience and expertise, (c) financial resources, (d) time
availability, (e) community involvement, and (f) such other
criteria as the Board of Directors may determine to be
relevant. Candidates evaluated for consideration as nominees
must meet with the Board of Directors.
2. Any candidate nominated for election to the Board of Directors
must receive a majority of votes in favor of nomination from
independent members of the Board of Directors. Directors who
are not independent shall not vote, but may be present during
the voting.
3. Each candidate may be required to complete one or more
questionnaires and provide such additional information as the
Board of Directors shall deem necessary or appropriate. Such
information shall include a personal financial statement and a
background investigation using an outside firm which shall,
among other matters, include (a) verification of the accuracy
of information provided by the candidate, and (b) a review of
criminal history records.
32
4. Each existing member of the Board of Directors whose term is
ending must be evaluated for nomination to be re-elected. This
review will include review of attendance, participation,
continuing education, investment in shares, business
development and community involvement. In lieu of the
information required to be provided by new candidates for
election to the Board of Directors described above in
paragraph 3, the Board of Directors may rely upon the
information contained in the most recent annual Directors and
Officers Questionnaire completed by the existing member of the
Board of Directors, subject to such updated information as the
Board of Directors may deem appropriate. An existing member of
the Board of Directors must be nominated for re-election by a
majority vote of the independent members of the Board of
Directors, not counting such existing member.
IV. Annual Nominations
The Board of Directors shall evaluate and select nominees for election
(a) annually prior to distribution of the Company's proxy solicitation
materials and (b) at such other times as may be appropriate to fill
vacancies in accordance with the Company's bylaws.
V. Conflicts
Any conflicts between the provisions of this Charter and the provisions
of the Company's bylaws shall be resolved in favor of the bylaw
provisions and nothing contained herein shall be construed as an
amendment of the Company's bylaws.
33
APPENDIX B
----------
FNB BANCORP
AUDIT COMMITTEE CHARTER
-----------------------
This Audit Committee Charter has been adopted by the Board of Directors
of FNB Bancorp (the "Company"). The Audit Committee of the Board shall review
and reassess this charter annually and recommend any proposed changes to the
Board for approval.
Membership
The audit committee will be composed of not less than three (3) members
of the board of directors. They will be selected by the board of directors,
taking into account prior experience in matters to be considered by the
committee, probable availability at times required for consideration of such
matters, and their individual independence and objectivity.
The committee's membership will meet the requirements of the audit
committee policy of Nasdaq. Accordingly, all of the members will be directors
independent of management and free from relationships that, in the opinion of
the board of directors, would interfere with the exercise of independent
judgment as a committee member.
No officers or employees of the Company or its subsidiaries will serve
on the committee. A former officer of the Company or any of its subsidiaries may
serve on the committee (even though the former officer may by receiving pension
or deferred compensation payments from the Company) if, in the opinion of the
board of directors, the former officer will exercise independent judgment and
will significantly assist the committee to function. However, a majority of the
committee will be directors who were not formerly officers of the Company or any
of its subsidiaries.
When considering relationships that might affect independence,
including possible affiliate status, the board of directors will give
appropriate consideration, in addition to its audit committee policy, to
guidelines issued by Nasdaq, which are provided to assist boards of directors in
observing the spirit of Nasdaq policy.
The board of directors shall appoint one member of the audit committee
to serve as the chairman. The chairman shall be responsible for leadership of
the committee, including scheduling and presiding over meetings, preparing
agendas and making regular reports to the board of directors. The chairman will
also maintain regular liaison with the Chief Executive Officer, the Chief
Financial Officer, the lead independent audit partner and the outsource internal
audit firm.
34
Actions of the Committee
The committee's activities will include the following actions:
o Oversight of the financial statements and relations with the
independent auditors.
o Instruct the independent auditors that the board of directors is the
client in its capacity as the shareholders' representative.
o Expect the independent auditors to meet with the board of directors at
least annually so the board has a basis on which to recommend the
independent auditors' appointment to the shareholders or to ratify its
selection of the independent auditors.
o Expect financial management and the independent auditors to analyze
significant financial report issues and practices on a timely basis.
o Expect financial management and the independent auditors to discuss
with the audit committee:
o Qualitative judgments about whether current or proposed
accounting principles and disclosures are appropriate, not
just acceptable; and
o Aggressiveness or conservatism of accounting principles and
financial estimates.
o Expect the independent auditors to provide the audit committee with:
o Independent judgments about the appropriateness of the
Company's current or proposed accounting principles and
whether current or proposed financial disclosures are clear;
o Views on whether the accounting principles chosen by
management are conservative, moderate, or aggressive as they
relate to income, asset, and liability recognition, and
whether these accounting principles are commonly used;
o Reasons why accounting principles and disclosure practices
used for new transactions or events are appropriate;
o Reasons for accepting or questioning significant estimates
made by management; and
o Views on how selected accounting principles and disclosure
practices affect shareholder and public attitudes about the
Company.
Actions taken on the board's behalf that require board notification but not
board approval:
o Review and approve the scope of the Company's audit and that of its
subsidiaries as recommended by the independent auditors and the
President;
o Review and approve the scope of the Company's annual profit and pension
trust audits;
o Answer questions raised by shareholders during an annual shareholders'
meeting on matters relating to the committee's activities if asked to
do so by the board of directors' chairperson; and
o Ask the President to have the outsourced internal audit firm study a
particular area of interest or concern to the audit committee.
35
Matters requiring the committee's review and study before making a
recommendation for the board of directors' action:
o Appointment of the independent auditors;
o Implementation of major accounting policy changes;
o SEC registration statements to be signed by the board of directors; and
o The auditors' reports and financial statements prior to publication in
the annual report.
Matters requiring the committee's review and study before providing summary
information to the board of directors:
o Accounting policy changes proposed or adopted by organizations such as
the Financial Accounting Standards Board (FASB), the Securities and
Exchange Commission (SEC), and the American Institute of Certified
Public Accountants (AICPA), or by comparable bodies outside the United
States;
o The independent auditors' assessment of the strengths and weaknesses of
the Company's financial staff, systems, controls, and other factors
that might be relevant to the integrity of the financial statements;
o Quarterly financial statement review before publication;
o Administration of the Company's "conflict of interest" policies as may
be set by the board of directors from time to time;
o The performance of management and operating personnel under the
Company's code of ethics as may be adopted by the board of directors
from time to time;
o Gaps and exposures in insurance programs;
o Reports about the Company or its subsidiaries submitted by agencies of
governments in countries in which the Company or it subsidiaries may
operate; and
o Periodic SEC filings and the adequacy of programs and procedures to
assure compliance with SEC rules and regulations and the rules and
regulations of Nasdaq.
36
- --------------------------------------------------------------------------------
|
| FNB BANCORP
|
| Solicited by the Board of Directors
| for the Annual Meeting of Shareholders
| on May 19, 2004
|
| The undersigned holder of Common Stock acknowledges receipt of a copy of
| the Notice of Annual Meeting of Shareholders of FNB BANCORP and the
| accompanying Proxy Statement dated April 21, 2004, and revoking any
| Proxy heretofore given, hereby constitutes and appoints Thomas C.
| McGraw, Neil J.Vannucci and Edward J. Watson, and each of them, with
| full power of substitution, as attorneys and proxies to appear and vote
| all shares of Common Stock of FNB BANCORP, a California corporation,
| outstanding in the name of the undersigned which the undersigned could
| vote if personally present and acting at the Annual Meeting of
| Shareholders of FNB BANCORP, to be held at the Basque Cultural Center,
| 599 Railroad Avenue, South San Francisco, California, on Wednesday,
| May 19, 2004, at 7:30 p.m. or at any adjournments thereof, upon the
| following items as set forth in the Notice of Meeting and Proxy
| Statement and to vote according to their discretion on all matters which
| may be properly presented for action at the meeting or any adjournments
| thereof. The above-named proxy holders are hereby granted discretionary
| authority to cumulate votes represented by the shares covered by this
| Proxy in the election of directors.
|
| THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS
| NOMINATED BY THE BOARD OF DIRECTORS AND "FOR" RATIFICATION OF THE
| APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITORS OF THE COMPANY TO SERVE
| FOR THE 2004 FISCAL YEAR. THE PROXY, WHEN PROPERLY EXECUTED, WILL BE
| VOTED AS DIRECTED. IF NO DIRECTION IS MADE, IT WILL BE VOTED "FOR" THE
| ELECTION OF DIRECTORS NOMINATED BY THE BOARD OF DIRECTORS AND "FOR"
| RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITORS OF
| THE COMPANY TO SERVE FOR THE 2004 FISCAL YEAR.
|
| (Continued and to be signed on other side)
FNB BANCORP
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 19, 2004
The Board of Directors recommends a Vote AUTHORITY GIVEN FOR on Proposal 1; and,
FOR on Proposal 2.
INSTRUCTIONS
------------
[X] Mark, sign and date your proxy card
[X] Detach your proxy card at the perforations
[X] Return your proxy card in the postage paid envelope provided
THIS PROXY IS SOLICITED BY, AND ON BEHALF OF, THE BOARD OF DIRECTORS AND MAY BE
REVOKED PRIOR TO ITS EXERCISE.
[GRAPHIC OMITTED] FOLD AND DETACH HERE [GRAPHIC OMITTED]
- --------------------------------------------------------------------------------------------------------------------------------
|
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED "FOR" THE FOLLOWING ITEMS: |
|
1. [ ] AUTHORITY GIVEN FOR all nine (9) [ ] WITHHOLD AUTHORITY to vote |
(except as indicated to the contrary below) for all nominees listed below. |
|
To approve INSTRUCTION: To withhold authority to vote for any individual |
nominee, strike a line through the nominee's name in the list below: |
|
01. Michael R. Wyman 06. Lisa Angelot |
02. Thomas C. McGraw 07. Jim D. Black |
03. Neil J. Vannucci 08. Anthony J. Clifford |
04. Edward J. Watson 09. R. Albert Roensch |
05. Daniel J. Modena |
| Please Detach Here
|[GRAPHIC OMITTED] You must [GRAPHIC OMITTED]
EXCEPTION ______________________________________________________________________ | Detach This Portion of the Proxy Card
| Before Returning in the Enclosed Envelope
FOR AGAINST ABSTAIN |
|
2. To ratify the appointment of KPMG LLP [ ] FOR [ ] AGAINST [ ] ABSTAIN |
as independent auditors of the Company |
to serve for the 2004 fiscal year. |
|
3. In their discretion, to transact such other business as may properly |
come before the meeting. |
|
|
Authorized Signature(s) |
|
____________________________________ |
|
____________________________________ |
|
Date: ________________, 2004 |
|
Please please give date and sign |
exactly as your name(s) appears. |
When signing as attorney, executor, |
administrator, trustee, or guardian, |
please give full title. If more than |
one trustee, all should sign. All |
joint owners should sign. WHETHER OR |
NOT YOU PLAN TO ATTEND THIS MEETING, |
PLEASE SIGN AND RETURN THIS PROXY AS |
PROMPTLY AS POSSIBLE IN THE ENCLOSED |
POSTAGE-PAID ENVELOPE. |
|
I/we do _ or do not _ expect to |
attend this meeting. |
|