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 16, 2007
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 16, 2007, 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 Moss-Adams LLP as independent auditors
of the Company to serve for the 2007 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 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
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 nominee."
Only those shareholders of record at the close of business on March 30,
2007, will be entitled to notice of and to vote at the Annual Meeting.
You are cordially invited to attend the Annual Meeting.
By Order of the Board of Directors
Thomas C. McGraw
Secretary
South San Francisco, California
April 16, 2007
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
Mailed to shareholders
on or about April 16, 2007
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
16, 2007. Only shareholders of record on March 30, 2007 (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 2,852,765 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
1
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 election of the nominees of the
Board of Directors and "FOR" ratification of the appointment of Moss Adams LLP
as independent auditors of the Company to serve for the 2007 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.
2
ANNUAL REPORT
A copy of the Annual Report of the Company for the fiscal year ended
December 31, 2006, 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, 2006, AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION.
WEBSITE
FNB Bancorp 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, quarterly reports on Form 10-Q, current reports on Form 8-K and
amendments to those reports filed or furnished pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934, are made available free of charge
on or through such website as soon as reasonably practicable after such material
is electronically filed with, or furnished to, the Securities and Exchange
Commission. Also made available on or through such website are the Section 16
reports of ownership and changes in ownership of the Company's Common Stock
which are filed with the Securities and Exchange Commission by the directors and
executive officers of the Company and by any person who owns more than 10
percent of the outstanding shares of Common Stock.
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 14.0 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").
3
PRINCIPAL SHAREHOLDERS
As of March 30, 2007, 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 281,565 9.87
26 Hillcrest Drive
Daly City, CA 94014
- --------------------------------------------------------------------------------
Thomas G. Atwood (2)
c/o Cypress Abbey Company 287,090 10.06
P.O. Box 516
Colma, CA 94014
- --------------------------------------------------------------------------------
Cede & Co.(3) 1,242,922 43.57
Box 20, Bowling Green Station
New York, NY 10004
================================================================================
(1) Based upon 2,852,765 shares outstanding.
(2) Includes 232,699 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.
No person known to the Company is the beneficial owner of more than
five percent (5%) of the shares held in the name of Cede & Co.
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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 nine (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.
5
===================================================================================================================
Shares Beneficially Owned
Nominee Age Positions Held With the Director as of March 31, 2007 (1)
Bank and Company Since
% of
Sole (2) Shared (3) Total
- -------------------------------------------------------------------------------------------------------------------
Michael R. Wyman 70 Chairman of the Board, 1978 for (4)
Director Bank; 4,004 28,190 1.13
2001 for
Company
- -------------------------------------------------------------------------------------------------------------------
Thomas C. McGraw 55 Chief Executive Officer, 1989 for (5)
Secretary, Director Bank; 3,375 141,356 5.07
2001 for
Company
- -------------------------------------------------------------------------------------------------------------------
Neil J. Vannucci 70 Director 1989 for (6)
Bank; 3,309 58,245 2.16
2001 for
Company
- -------------------------------------------------------------------------------------------------------------------
Edward J. Watson 59 Director 1996 for (7)
Bank; 6,747 -- .24
2001 for
Company
- -------------------------------------------------------------------------------------------------------------------
Lisa Angelot 49 Director 1999 for (8)
Bank; 14,985 -- .52
2001 for
Company
- -------------------------------------------------------------------------------------------------------------------
Jim D. Black 50 President, Director 2002 for (9)
Bank and 18,189 1,261 .68
Company
- -------------------------------------------------------------------------------------------------------------------
Anthony J. Clifford 44 Executive Vice President 2002 for (10)
and Chief Operating Bank and 10,519 -- .37
Officer, Director Company
- -------------------------------------------------------------------------------------------------------------------
Michael Pacelli 58 Director 2006 for (11)
Bank and 787 -- .03
Company
- -------------------------------------------------------------------------------------------------------------------
Merrie Turner Lightner 51 Director 2007 for (12)
Bank and -- -- --
Company
- -------------------------------------------------------------------------------------------------------------------
(13)
All directors and executive officers (11 persons) as a group 62,915 229,052 10.60
- -------------------------------------------------------------------------------------------------------------------
(1) This table is based upon information supplied by directors, executive
officers and principal shareholders. Percentages are based upon
2,852,765 shares outstanding.
(2) The named persons exercise sole voting and investment power with
respect to shares listed in this column.
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(3) The named persons share voting and investment power with respect to
shares listed in this column.
(4) Includes 28,190 shares held by the Wyman Family Trust for which Mr.
Wyman serves as co-trustee. Includes 1,970 shares of presently
exercisable stock options under the Company's 2002 Stock Option Plan.
Excludes 5,250 shares held in the Bank's Deferred Compensation Trust.
(5) Includes 141,356 shares held by the Thomas C. and Virginia K. McGraw
Family Trust for which Mr. McGraw serves as co-trustee. Includes 1,084
shares of presently exercisable stock options under the Company's Stock
Option Plan and 1,970 shares of presently exercisable stock options
under the Company's 2002 Stock Option Plan.
(6) Includes 58,245 shares held by the Vannucci Family Trust for which Mr.
Vanucci serves as co-trustee and 1,084 shares of presently exercisable
stock options under the Company's Stock Option Plan and 1,970 shares of
presently exercisable stock options under the Company's 2002 Stock
Option Plan.
(7) Includes 1,084 shares of presently exercisable stock options under the
Company's Stock Option Plan and 1,970 shares of presently exercisable
stock options under the Company's 2002 Stock Option Plan.
(8) Includes 1,473 shares held by Ms. Angelot as Custodian for Eric Angelot
and 350 shares held by Ms. Angelot as Custodian for Katherine
Brandenberger. A total of 281,565 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 851 shares of presently exercisable stock options under the
Company's Stock Option Plan and 1,970 shares of presently exercisable
stock options under the Company's 2002 Stock Option Plan.
(9) Includes 4,933 presently exercisable stock options under the Company's
Stock Option Plan, and 9,645 shares of presently exercisable stock
options under the Company's 2002 Stock Option Plan. Includes 238 shares
held in trust for Greg Black and includes 238 shares held in trust for
Janelle Black. Excludes 7,264 shares held in the Bank's Deferred
Compensation Trust.
(10) Includes 550 shares of presently exercisable stock options under the
Company's Stock Option Plan, and 9,645 shares of presently exercisable
stock options under the Company's 2002 Stock Option Plan. Excludes
4,337 shares held in the Bank's Deferred Compensation Trust.
(11) Includes 525 shares of presently exercisable stock options under the
Company's Stock Option Plan.
(12) Ms. Lightner became a director as of April 1, 2007 and is a nominee for
re-election.
(13) Includes a total of 18,313 shares of presently exercisable stock
options under the Company's Stock Option Plan and 36,168 shares of
presently exercisable stock options under the Company's 2002 Stock
Option Plan. Excludes 16,851 shares held by the Bank's Deferred
Compensation Trust for the accounts of Messrs. Wyman, Black, and
Clifford . See "Deferred Compensation Plan" herein.
7
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
Summary Compensation Table elsewhere herein (other than James B. Ramsey who
retired in January 2007), as well as for all other executive officers of the
Company and the Bank.
MichaelR. 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.
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.
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
8
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.
Merrie Turner Lightner Vice President and Chief Financial Officer of the
Lightner Property Group, Inc., based in San
Francisco, since 1984. Ms. Lightner is also an
attorney at law and a licensed real estate broker
since 1981, and a former commission president of
the San Francisco Rent Stabilization and
Arbitration Board from 1997 to 1998, then
Commissioner to April 2004. Ms. Lightner has
extensive business experience in real estate
management and development matters.
Michael Pacelli Director of the Company and First National Bank
since April 1, 2006. President of Bay Relations,
Inc. since 1992. He has been involved in public
relations and community organizations in San Mateo
County and San Francisco for over 25 years.
David A. Curtis Senior Vice President and Chief Financial Officer
of the Company and First National Bank since
December 2006. Senior Vice President and
Controller, Capital Corp of the West, Merced,
California (the holding company for County Bank),
from 1997 to November 2006. He became a Certified
Public Accountant in 1986.
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.
CORPORATE GOVERNANCE
The Directors are elected annually by the shareholders to oversee their
interest in the success of the commercial banking business of the Company and
the Bank. The Board of Directors, in turn, selects and oversees the members of
senior management who are charged with conducting the business of the Company
and the Bank under applicable standards of safety and soundness.
9
Code of Ethics
The Directors believe that the business of the Company and the Bank
should be conducted in accordance with the highest ethical standards and in
compliance with all laws, rules and regulations applicable to the Company and
the Bank. In keeping with this belief, the Board of Directors has adopted a Code
of Ethics, which applies to the members of the Board of Directors and all of the
officers and employees of the Company and the Bank. A copy of the Code of Ethics
is available to all shareholders, as described above under the heading, "Code of
Ethics."
Director Independence
The Board of Directors of the Corporation has evaluated the
independence of each of the members of the Board of Directors in accordance with
applicable laws and regulations, including the provisions of the Sarbanes-Oxley
Act of 2002 and the rules and regulations of the Securities and Exchange
Commission. For purposes of evaluating the independence of each member the Board
of Directors, the Board of Directors has adopted the definitions of director
independence specified in the Nasdaq listing standards (although the Common
Stock of the Company is not listed on the Nasdaq Stock Market).
The Board of Directors has determined that a majority of the Board of
Directors is comprised of "Independent Directors" within the requirements of the
foregoing laws, rules and regulations and listing standards. The Board of
Directors has further determined that Directors Thomas C. McGraw, Jim D. Black
and Anthony J. Clifford, who are employed as the Chief Executive Officer, the
President and Executive Vice President and Chief Operating Officer,
respectively, of the Company and the Bank, are not independent.
Committees of the Board of Directors
Effective 2007, the Company and First National Bank each have the same
committees and directors. The committees and their members are as follows:
Audit Committee. The current members are Edward J. Watson, Chair, Lisa
Angelot, Neil J. Vannucci and Michael R. Wyman.
Building Committee. The current members are Neil J. Vannucci, Chair,
Lisa Angelot, Jim D. Black, Anthony J. Clifford and Michael R. Wyman.
Compensation Committee. The current members are Edward J. Watson,
Chair, Lisa Angelot and Neil J. Vannucci.
Compliance Committee. The current members are Anthony J. Clifford,
Chair, and Jim D. Black.
Executive Committee. The current members are Michael R. Wyman, Chair,
Lisa Angelot, Anthony J. Clifford, Thomas C. McGraw and Michael Pacelli.
10
Loan and Discount Committee. The current members are Lisa Angelot,
Chair, Anthony J. Clifford, Merrie Turner Lightner, Thomas C. McGraw, Michael
Pacelli and Michael R. Wyman.
Nominating Committee. The current members are the entire Board.
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
pursuant to the Sarbanes-Oxley Act of 2002. Edward J. Watson has 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.
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 2006.
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
11
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
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 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 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 entire
Board of Directors regarding such matters.
The Compensation Committee investigates and advises the Board of
Directors as to employee benefit arrangements and conducts 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.
Membership and Meetings of the Board of Directors and its Committees
All members attended at least seventy-five percent (75%) of the
meetings of the Board of Directors and their Committees during 2006, except Mr.
Pacelli, who became a member on April 1, 2006.
12
The Company and the Bank have the same Committees, except as follows:
a) The Bank has a Compensation Committee, and the Company does not.
b) The Board of Directors of the Bank held Executive Committee meetings in 2006.
The Board of Directors of the Company did not.
c) The Bank has a Loan and Discount Committee. The Company does not.
d) The Company has a Nominating Committee. The Bank does not.
The following table shows the members of the Board of Directors and the
committees of the Board of Directors and the number of meetings held during
2006.
- ----------------------------------------------------------------------------------------------------------------------------------
Name Board Audit Compensation Executive Loan and Nominating
Committee Discount
- ----------------------------------------------------------------------------------------------------------------------------------
Lisa Angelot Member Member Member Chair Member
- ----------------------------------------------------------------------------------------------------------------------------------
Jim D. Black Member Member Member
- ----------------------------------------------------------------------------------------------------------------------------------
Anthony J. Clifford Member Member Member
- ----------------------------------------------------------------------------------------------------------------------------------
Thomas C. McGraw Member Member Member Member
- ----------------------------------------------------------------------------------------------------------------------------------
Michael Pacelli Member Member Member
- ----------------------------------------------------------------------------------------------------------------------------------
R. Albert Roensch * Member Member Member Member
- ----------------------------------------------------------------------------------------------------------------------------------
Neil J. Vannucci Member Member Member Member Member
- ----------------------------------------------------------------------------------------------------------------------------------
Edward J. Watson Member Chair Chair Member Member
- ----------------------------------------------------------------------------------------------------------------------------------
Michael R. Wyman Chair Chair Member Chair
- ----------------------------------------------------------------------------------------------------------------------------------
Number of 2006 meetings 12 5 1 6 30 4
- ----------------------------------------------------------------------------------------------------------------------------------
* Resigned effective December 31, 2006.
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
13
during 2006 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 $36,000 in
fees for attending meetings of the Board of Directors during 2006 except
Director Michael Pacelli, who joined on April 1, 2006, and received $27,000.
Each non-officer director of First National Bank is paid $3,000 per month. The
aggregate amount of director fees paid by First National Bank in 2006 was
$207,000. No separate compensation has been paid to the directors during 2006
for their attendance at meetings of the committees of the Board of Directors of
the Bank. Independent directors are eligible to participate in the FNB Bancorp
2002 Stock Option Plan as determined by the Board of Directors. During 2006,
each non-officer director of First National Bank was granted a non-statutory
option for 525 shares of the Company Common Stock pursuant to the FNB Bancorp
2002 Stock Option Plan.
The following table is a summary of the compensation earned by the
non-officer (independent) directors during 2006.
DIRECTORS COMPENSATION
- --------------------------------------------------------------------------------------------------------------------------
Name Fees Earned or Option Awards Change in Nonqualified Total
Paid in Cash (1) Deferred Compensation Earnings
(2)
- --------------------------------------------------------------------------------------------------------------------------
Michael R. Wyman $36,000 $ 865 $ -- $36,865
- --------------------------------------------------------------------------------------------------------------------------
Lisa Angelot $36,000 $1,174 $ -- $37,174
- --------------------------------------------------------------------------------------------------------------------------
Michael Pacelli $27,000 $ 490 $ -- $27,490
- --------------------------------------------------------------------------------------------------------------------------
Albert R. Roensch * $36,000 $ 171 $ -- $36,171
- --------------------------------------------------------------------------------------------------------------------------
Neil J. Vannucci $36,000 $1,174 $ -- $37,174
- --------------------------------------------------------------------------------------------------------------------------
* Resigned as a Director effective December 31, 2006.
(1) The value of the stock option award is the grant date fair value
computed in accordance with FAS 123R.
(2) The Company does not make Stock Awards nor does it have Non-Equity
Incentive Compensation plan for non-officer (independent) directors. Non-officer
directors do not participate in the Deferred Compensation Plan.
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
14
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, 2006, all Section 16(a)
filing requirements applicable to its officers, directors and any greater than
10% shareholders were complied with on a timely basis, with the exception of one
shareholder, Mr. Thomas G. Atwood (see "Principal Shareholders" on page 4,
above).
TRANSACTIONS WITH RELATED PERSONS
The Company has a policy that it does not enter into any transactions
covered under Item 404 of Regulation S-K with the exception of loans made by
First National Bank (see "Indebtedness of Management," below). There have been
no transactions, or series of similar transactions, during 2006, or any
currently proposed transaction, or series of similar transactions, to which the
Company or the Bank was or is to be a party, in which the amount involved
exceeded or will exceed $120,000 and in which any director, director-nominee or
executive officer of the Company or Bank, or any shareholder owning of record or
beneficially 5% or more of FNB Bancorp common stock, or any member of the
immediate family of any of the foregoing persons, had, or will have, a direct or
indirect material interest.
Indebtedness of Management
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 2006 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.
15
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 rights outstanding
that would result in the issuance of shares of the Company's Common Stock.
- --------------------------------------------------------------------------------------------------------------
Plan Category Number of securities Weighted-average Number of securities
to be issued upon exercise price of Remaining available for
exercise of outstanding options, future issuance
outstanding options, warrants and rights under equity
warrants and rights compensation plans
(excluding securities
Reflected in column (a)
(a) (b) (c)
- --------------------------------------------------------------------------------------------------------------
Equity compensation
plans approved by
security holders 254,915 $24.99 105,656
- --------------------------------------------------------------------------------------------------------------
Equity compensation
plans not approved by
security holders -- -- --
- --------------------------------------------------------------------------------------------------------------
Total 254,915 $24.99 105,656
- --------------------------------------------------------------------------------------------------------------
16
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Compensation Philosophy and Objectives
The Company's compensation programs and policies are designed to
enhance shareholder value by aligning the financial interests of the executive
officers with those of the shareholders. The Company competes with other
financial institutions by seeking to attract and retain a highly qualified
management team, utilizing compensation programs that reward superior
performance. The Board of Directors of the Company believes that its
compensation programs should:
o reflect the qualifications, skills, experience and responsibilities
of each officer on the management team;
o serve to attract and retain the most qualified individuals available
to the Company by being competitive with the compensation being paid to persons
having similar positions and responsibilities with other financial institutions
in the same or adjoining market areas;
o provide each officer on the management team with incentive and
motivation to achieve his or her personal goals, both short term and long term,
set in a manner which is consistent with the overall strategic goals of the
Company, as determined by the Board of Directors; and
o reward those officers whose performance, both individually and as a
member of the management team, is superior and meets the targets set by the
Board of Directors.
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 has been paid to the executive officers of the Company since 2002.
The compensation paid by First National Bank to its executive officers includes
payment for all services rendered by such officers to the Company, 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, including a review of
base salaries (the "fixed" portion of compensation) and a discretionary bonus
plan based on performance objectives (the "variable" or incentive portion of
compensation). This review by the Board of Directors is based on the
recommendations by the Compensation Committee of the Board of Directors.
Three members of the Company and Bank Board of Directors are also
executive officers of the Company and the Bank and all three abstain from the
executive compensation decisions made by the Board of Directors. Thomas C.
McGraw is Chief Executive Officer of the Company and the Bank; Jim D. Black is
17
President of the Company and the Bank; and Anthony J. Clifford is Executive Vice
President and Chief Operating Officer of the Company and the Bank. Messrs.
McGraw, Black and Clifford have served in such capacities since April 1, 2002.
Mr. McGraw also serves as Secretary of the Company (since inception of the
corporation in 2001) and the Bank (since 1989).
Salary, bonus and perquisite compensation are related to current
performance. The long-term components of compensation (equity incentives in the
form of stock options and post-termination benefits) are reviewed by the Board
of Directors in the context of the other compensation provided to executives,
but adjustments are not necessarily made each year. The grant of stock options
and the award of post-termination benefits are primarily intended to attract and
retain executive officers and other key employees to serve on the Company's
management team over an extended period of time, and only secondarily to reward
current employment.
The Company has two stock option plans: the FNB Bancorp Stock Option
Plan (formerly the First National Bank of Northern California 1997 Stock Option
Plan) and the FNB Bancorp 2002 Stock Option Plan. 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 Plan shall
have been terminated), become available for future grants. The stated purposes
of the FNB Bancorp 2002 Stock Option Plan, as amended (adopted by the Board of
Directors on June 28, 2002 and approved by the shareholders on May 14, 2003) are
to attract and retain the best available personnel for positions of substantial
responsibility and to provide additional incentive to the key officers of the
Company and the Bank by encouraging them to acquire a proprietary interest in
the Company and, in general, to promote the success of the Company's business.
The Board of Directors believes that the grant of stock options is consistent
with the best interests of the shareholders because an officer's ownership of
shares of Company stock will give such officer a long-term interest in the
Company's overall performance and success. Generally, stock options are granted
to eligible employees in the second quarter of each fiscal (calendar) year.
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, 2006, a total of 58,849 shares were reserved for options previously granted
and outstanding under the FNB Bancorp Stock Option Plan, including options for
an aggregate of 36,473 shares of Common Stock (as adjusted for stock dividends
paid in 1999, 2000, 2001, 2002, 2003, 2004, 2005 and 2006) which have been
granted to the five officers of the Company identified in the "Summary
Compensation Table" above. (This does not include David A. Curtis, who is not
yet entitled to option grants). 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, Vannucci and Watson
18
have been granted non-statutory stock options for an aggregate of 3,019 shares
of Common Stock (as adjusted for stock dividends paid in 1999, 2000, 2001, 2002,
2003, 2004, 2005 and 2006) which were fully vested on the dates of grant and are
exercisable (at a price of $18.95 per share for options granted in 1999; at a
price of $17.86 per share for options granted in 2000; and at a price of $18.69
per share for options granted in 2001) over a period of 10 years from the grant
dates.
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.
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, 2006, a total of 196,066 shares of Common Stock were
reserved for issuance pursuant to the 2002 Plan, (all as adjusted for the
Company's 2006 stock dividend). Options for an aggregate of 83,778 shares of
Common Stock (adjusted for the stock dividends paid in 2002, 2003, 2004, 2005
and 2006) have been granted to the five officers of the Company identified in
the "Summary Compensation Table" below pursuant to the 2002 Plan. (This does not
include David A. Curtis, who is not yet entitled to option grants). 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, Pacelli, Vannucci, Watson and
Wyman and former director Roensch have been granted non-statutory stock options
for an aggregate of 9,692 shares of Common Stock (adjusted for the stock
dividends paid in 2002, 2003, 2004, 2005 and 2006) which were fully vested on
the dates of grant and are exercisable (at a price of $21.55 per share for
options granted in 2002, at a price of $20.57 for options granted in 2003, at a
price of $28.07 per share for options granted in 2004, at a price of $27.26 for
options granted in 2005 and at a price of $34.52 per share for options granted
in 2006) 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.
19
FNB Bancorp Savings 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.
The Plan is now called the "FNB Bancorp Savings Plan." 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 2006 was $600,000. 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 Savings Plan. The profit sharing
element of the Savings Plan is funded by the Bank. The employee contribution
element of the Savings Plan is funded by the employee.
Each year, the Board of Directors of the Bank decides whether to make a
profit sharing contribution to the FNB Bancorp Savings Plan, and the amount of
that contribution. Each participant in the Plan who is employed on the last day
of the Plan year, including executive officers, receives a share of that
contribution, based on the amount of his or her compensation relative to the
compensation of all other participants. By funding the profit sharing element of
the Plan and also allowing employees to make their own contributions to the
Plan, the Company believes that all participants are motivated to contribute to
the ongoing success of First National Bank as measured by its growth in assets,
deposits, loans, capital, earnings and profitability.
Employment Contracts. There are no employment contracts between the
Company or First National Bank and the executive officers named in the tables
below (other than the Salary Continuation Agreements, the Management Continuity
Agreements, the Deferred Compensation Plan and the Company's stock option
plans). First National Bank has established a Deferred Compensation Plan and
participation is open to all officers of the Bank with the title of Vice
President or higher, which includes the named executive 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. Additional
information about the Deferred Compensation Plan is set forth below, together
with a summary of contributions, earnings and withdrawals in respect of the
accounts of the named executive officers, set forth in a table named
"Nonqualified Deferred Compensation."
Role of Management
The annual compensation recommendations made to the Board of Directors
by the Compensation Committee are based on data and information gathered from
sources outside the Company and the Bank and additional input provided to the
members of the Compensation Committee by the executive officers. The executive
officers of First National Bank during 2006 were: Thomas C. McGraw, Chief
Executive Officer and Secretary; Jim D. Black, President; Anthony J. Clifford,
20
Executive Vice President and Chief Operating Officer; James B. Ramsey, Senior
Vice President and Chief Financial Officer (Mr. Ramsey retired in January 2007
and was succeeded by David A. Curtis as Senior Vice President and Chief
Financial Officer); and Charles R. Key, Senior Vice President and Director of
Information Technology. Input provided to the Compensation Committee is compiled
and coordinated on behalf of all executive officers by an Executive Management
Group, composed of Messrs. McGraw, Black and Clifford, who consult with the
other executive officers during this process. As already indicated, Messrs.
McGraw, Black and Clifford are members of the Company and Bank Board of
Directors so they abstain from executive compensation decisions made by the
Board.
Compensation Committee
The current members of the Compensation Committee of the Board of
Directors are Lisa Angelot, Neil J. Vannucci and Edward J. Watson. Only
independent members of the Board of Directors may serve on the Compensation
Committee. Each current 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 Compensation Committee advises the Board of Directors as to all
employee benefit arrangements and, based on its investigations and review,
reports to the Board of Directors on its recommendations with regard to
executive compensation, including bonus compensation. 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. The Compensation Committee reviews each
executive officer's total compensation package, including base salary, cash
bonus and stock option awards, and qualified and non-qualified retirement and
deferred compensation benefits. The Compensation Committee also meets as needed
throughout the year in order to review year-to-date financial performance, as
compared to budget and as compared to the financial performance of competitors,
and generally to monitor the target total compensation of each executive
officer. The Compensation Committee utilizes independent compensation reports to
assist in the analysis of compensation packages but did not utilize the services
of independent compensation consultants during 2006.
The Compensation Committee operates under a written charter adopted by
the Board of Directors. A copy of the Compensation Committee Charter is included
in this Proxy Statement as Appendix A. At least once a year, the Compensation
Committee reviews and assesses the Charter and recommends any proposed changes
to the Board of Directors for approval.
Compensation Committee Interlocks and Insider Participation
During the year 2006, Lisa Angelot, Neil J. Vannucci and Edward J.
Watson were the only persons who served as members of the Compensation Committee
of the Board of Directors. None of these members is or has been an officer or
employee of the Company or the Bank, whether during 2006 or at any time since
21
incorporation of the Company in 2001, and none of them has been a participant in
any transaction or would be a participant to a currently proposed transaction
with the Company or the Bank in which such member had or will have a direct or
indirect material interest, except for loans made by First National Bank to such
member in the ordinary course of business, made on substantially the same terms,
including interest rates and collateral, as those prevailing at the same time
for comparable loans with persons not related to the Bank, and which loans did
not involve more than the normal risk of collectibility or present other
unfavorable features. In addition, during 2006, no member of the Compensation
Committee or any executive officer of the Company or the Bank served as a
director or member of the compensation committee of any other entity.
Components of Compensation
The Company's compensation program consists of five components, namely,
(1) base salary; (2) cash incentives (bonuses); (3) equity incentives (stock
options); (4) perquisites; and (5) post-employment pay and benefits. These
components as a group are intended to compensate each executive officer fairly
for his or her services, and to reward such officer based on the Company's
overall performance plus his or her individual performance during the year,
according to the position held by such officer. In reviewing each officer's
compensation package, the Compensation Committee considers the mix of total pay,
benefits and perquisites, together with the competitive market for persons
having the same or a similar skill-set as possessed by such officer.
Base Salary. Base salary is related to the individual executive
officer's level of responsibility and comparison with comparable employers in
the banking 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.
On December 15, 2006, effective as of January 1, 2007 for the year
2007, the Board of Directors approved the following base salaries: Mr. McGraw's
salary was increased to $230,000; Mr. Black's salary was increased to $220,000;
Mr. Clifford's salary was increased to $210,000; Mr. Curtis' salary was set at
$175,000; and Mr. Key's salary was increased to $157,000. The compensation paid
to Messrs. McGraw (CEO), Black (President), Clifford (EVP), Ramsey (retired
CFO), Curtis (current CFO) and Key (SVP) during 2006 is set forth in the
"Summary Compensation Table" below.
22
Cash Incentive Compensation. First National Bank does not have a formal
bonus plan. The Board of Directors, at its discretion, awards annual bonuses to
its executive officers and during 2006 awarded bonuses to Messrs. McGraw, Black,
Clifford, Ramsey (retired CFO) and Key (which are set forth in the "Summary
Compensation Table" below). The Board of Directors of the Bank decides annually
whether to make a profit sharing contribution to the FNB Bancorp Savings Plan,
and the amount of that contribution. The executive officers participate in the
Savings Plan and the amounts credited to their respective accounts for 2006 are
included in the "Summary Compensation Table" below. Historically, the Board of
Directors has approved annual target accruals of approximately 16 percent, in
the aggregate, of eligible salaries for a contribution to the Savings Plan and a
cash bonus pool, combined. The total contribution to the Savings Plan for 2006
was $600,000 and the total cash bonus pool for 2006 was $589,000.
The following table sets forth certain summary information concerning
compensation paid to the Chief Executive Officer, the Chief Financial Officer
the former Chief Financial Officer (now retired), and the three next most highly
compensated executive officers of the Company (as a group, the "Named Executive
Officers") during the year ended December 31, 2006:
=====================================================================================================================
SUMMARY COMPENSATION TABLE
=====================================================================================================================
Name and Year Salary Bonus Option Deferred All Total
Principal Position Awards Compen- Other
sation Compen-
Earnings sation
($) ($) ($) ($) ($) ($)
(b) (c) (d) (e) (f) (g) (h)
- ---------------------------------------------------------------------------------------------------------------------
Thomas C. McGraw, Chief 2006 222,600 55,000 1,174 -- 17,799 296,573
Executive Officer
- ---------------------------------------------------------------------------------------------------------------------
Jim D. Black, President 2006 220,000 51,000 14,788 4,736 53,884 334,408
- ---------------------------------------------------------------------------------------------------------------------
Anthony J. Clifford, 2006 192,000 50,000 14,783 2,145 37,523 296,451
Executive Vice President,
Chief Operating Officer
- ---------------------------------------------------------------------------------------------------------------------
James B. Ramsey, 2006 170,000 50,000 10,397 8,461 122,747 361,605
Senior Vice President,
Chief Financial Officer
- ---------------------------------------------------------------------------------------------------------------------
David A. Curtis, 2006 17,275 -- -- -- -- 17,275
Senior Vice President,
Chief Financial Officer
- ---------------------------------------------------------------------------------------------------------------------
Charles R. Key, Senior 2006 150,000 30,000 10,368 -- 12,136 202,504
Vice President, Director,
Information Technology
- ---------------------------------------------------------------------------------------------------------------------
The Company does not grant Stock Awards. The Company does not have a
Pension Plan (but see discussion of the individual Salary Continuation
Agreements, below). Column (g) above represents profit-sharing contribution to
the FNB Bancorp Savings Plan.
Equity Incentive Compensation. At its discretion, the Board of
Directors grants stock options to key officers of the Company and First National
Bank who are primarily responsible for the growth and management of its
23
business. As of December 31, 2006, a total of 254,915 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 120,251 shares of common
stock (as adjusted for stock dividends paid in 1999, 2000, 2001, 2002, 2003,
2004, 2005 and 2006) which have been granted to Messrs. McGraw, Black, Clifford,
Ramsey and Key. Both stock option plans have been approved by the shareholders
of the Company. The number of shares granted to an employee is based on several
factors, including employee performance and the value placed on the expected
future performance of the employee, retention of the employee and, in some
cases, internal or external pay equity. The Board of Directors believes that
grants of stock options have enhanced and will continue to enhance the Company's
ability to attract, reward and motivate executive officers and other key
employees.
A summary of the stock options granted to the Named Executive Officers during
2006, including the exercise prices, is set forth in the following table:
2006 GRANTS OF PLAN-BASED AWARDS
----------------------------------------------------------------------------------------------
Name Grant Number of Securities Exercise or Base Price of
Date Underlying Options Option Awards ($/Sh)
(# shares) (1)
----------------------------------------------------------------------------------------------
Thomas C. McGraw 06/23/2006 525 $34.52
----------------------------------------------------------------------------------------------
Jim D. Black 06/23/2006 5,512 $34.52
----------------------------------------------------------------------------------------------
Anthony J. Clifford 06/23/2006 5,512 $34.52
----------------------------------------------------------------------------------------------
Charles R. Key 06/23/2006 2,940 $34.52
----------------------------------------------------------------------------------------------
James B. Ramsey -- -- --
----------------------------------------------------------------------------------------------
(1) The exercise price of an incentive stock option is set at the fair market
value of the shares on the date of grant. All options granted to such officers
and currently outstanding are incentive stock options, vesting at the rate of 20
percent per year over the period of 5 years from date of grant and are
exercisable for a period of 10 years from the grant date.
A summary of the stock options outstanding and held by such officers as of
December 31, 2006 is set forth below in the table of "Outstanding Equity Awards
at Fiscal Year-End 2006" and a summary of the stock options exercised and vested
is set forth below in the table of "Option Exercises." The Company does not
issue Stock Awards.
24
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2006
- ---------------------------------------------------------------------------------------------
Option Awards
- ---------------------------------------------------------------------------------------------
Name Number of Number of Option Option
Securities Securities Exercise Expiration
Underlying Underlying Price Date
Unexercised Unexercised ($)
Option - # Option - #
Excercisable Unexercisable
- ---------------------------------------------------------------------------------------------
Thomas C. McGraw 233 -- 20.63 5/13/2008
222 -- 18.95 4/28/2009
315 -- 17.86 6/28/2010
314 -- 18.69 6/29/2011
318 -- 21.55 7/24/2012
365 -- 20.57 5/23/2013
376 -- 28.07 5/26/2014
386 -- 27.26 6/24/2015
525 -- 34.52 6/23/2016
- ------------------------------------------------------------------------------------------
Jim D. Black 3,063 766 21.55 7/24/2012
3,281 2,188 20.57 5/23/2013
2,199 3,300 28.07 5/26/2014
1,102 4,411 27.26 6/24/2015
-- 5,512 34.52 6/23/2016
- ------------------------------------------------------------------------------------------
Anthony J. Clifford 550 -- 18.69 6/29/2011
3,063 766 21.55 7/24/2012
3,281 2,188 20.57 5/23/2013
2,199 3,300 28.07 5/26/2014
1,102 4,411 27.26 6/24/2015
-- 5,512 34.52 6/23/2016
- ------------------------------------------------------------------------------------------
James B. Ramsey 1,860 -- 20.63 5/13/2008
1,772 -- 18.95 4/28/2009
2,588 160 18.69 6/29/2011
2,552 639 21.55 7/24/2012
2,188 1,459 20.57 5/23/2013
-- 2,258 28.07 5/26/2014
-- 3,087 27.26 6/24/2015
- ------------------------------------------------------------------------------------------
Charles R. Key 1,768 -- 20.63 5/13/2008
1,624 -- 18.95 4/28/2009
2,587 -- 17.86 6/28/2010
2,748 -- 18.69 6/29/2011
2,552 639 21.55 7/24/2012
2,188 1,459 20.57 5/23/2013
1,157 1,737 28.07 5/26/2014
606 2,426 27.26 6/24/2015
-- 2,940 34.52 6/23/2016
- ------------------------------------------------------------------------------------------
25
OPTION EXERCISES
--------------------------------------------------------------
Option Awards
--------------------------------------------------------------
Number of Value
--------------------------------------------------------------
Name Shares Acquired Realized
--------------------------------------------------------------
on Exercise On Exercises
--------------------------------------------------------------
(#) ($)
--------------------------------------------------------------
Thomas C. McGraw -- --
--------------------------------------------------------------
Jim D. Black -- --
--------------------------------------------------------------
Anthony J. Clifford 8,146 $139,359
--------------------------------------------------------------
James B. Ramsey 2,526 $52,031
--------------------------------------------------------------
Charles R. Key -- --
--------------------------------------------------------------
Perquisites. The Board of Directors believes that offering certain
perquisites is important to the operations of the Company and will assist the
Company in its efforts to recruit and retain key employees. Messrs. McGraw,
Black and Clifford are provided with the use of Company-owned automobiles. The
aggregate amount of perquisites and other personal benefits or property received
by executive officers during 2006 is not shown under the column for "All Other
Compensation in the "Summary Compensation Table" above because the aggregate
amount of such compensation received by each executive officer is less than
$5,000.
Post-Employment Compensation. The Company has no pension or retirement
plan but First National Bank has previously entered into individual salary
continuation agreements with four current and former executive officers.
First National Bank has entered into Salary Continuation Agreements
(the "Agreements") with Michael R. Wyman (current Chairman of the Board of
Directors and former Chief Executive Officer--in 1996), James B. Ramsey (Senior
Vice President and Chief Financial Officer--in 1998, amended in 2004), Jim D.
Black (President--in 2004) and Anthony J. Clifford (Executive Vice President and
Chief Operating Officer--in 2004). 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; annual benefits to be paid to Mr. Ramsey or his
designated beneficiary of up to $70,000 per year over a period of 20 years;
annual benefits to be paid to Mr. Black or his designated beneficiary of up to
$122,600 per year over a period of 20 years; and annual benefits to be paid to
Mr. Clifford or his designated beneficiary of up to $140,700 per year over a
period of 20 years. Such benefits were effective for Mr. Wyman upon his
attaining 66 years of age, and will be effective for each of Messrs. Ramsey,
Black and Clifford upon (i) attainment of age 65, or upon 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 of control" of First National Bank (as defined in the Agreements). First
National Bank has purchased life insurance policies on the life of Messrs. Wyman
(in 1996), Ramsey (in 2004, in addition to the 1998 policy), Black (in 2004) and
Clifford (in 2004). First National Bank is the sole owner and beneficiary or
co-beneficiary under such life insurance policies, which policies indirectly
offset the anticipated costs for certain death, disability and
26
post-employment/retirement benefits for Messrs. Wyman, Ramsey, Black and
Clifford. First National Bank has entered into Split- Dollar Agreements with
Messrs. Ramsey, Black and Clifford, each of which designates the Bank as
beneficiary of the insurance policies after the interest of Messrs. Ramsey,
Black and Clifford have been paid to their respective designated beneficiaries.
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
consolidated balance sheet of FNB Bancorp.
Potential Payments Upon Termination or Change-in-Control
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. Each Management Continuity Agreement has
been renewed annually and currently expires on July 20, 2007 (subject to further
renewal).
The Company and the Bank do not make contributions to nonqualified deferred
compensation plans. The contributions made by the Named Executive Officers to
the Bank's Deferred Compensation Plan in 2006 are set forth in the following
table:
2006 NONQUALIFIED DEFERRED COMPENSATION
- ----------------------------------------------------------------------------------------------------------------------
Name Executive Aggregate Aggregate Aggregate
Contributions in Earnings in Withdrawals/ Balance at
Last Fiscal Year Last Fiscal Year Distributions Last Fiscal Year-End
- ----------------------------------------------------------------------------------------------------------------------
Thomas C. McGraw -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
Jim D. Black $53,000 $4,736 -- $331,757
- ----------------------------------------------------------------------------------------------------------------------
Anthony J. Clifford $27,250 $2,145 -- $140,487
- ----------------------------------------------------------------------------------------------------------------------
James B. Ramsey $43,000 $8,461 -- $621,162
- ----------------------------------------------------------------------------------------------------------------------
Charles R. Key -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
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,
27
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
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 December 31, 2006, the Deferred
Compensation Trust held an aggregate of 25,119 shares of Common Stock, and held
shares of Common Stock for the accounts of Messrs. Black, Clifford and Ramsey,
representing approximately 0.88% of the total shares outstanding on such date
(consisting of 6,903 shares for Jim D. Black; 3,991 shares for Anthony J.
Clifford; 4,210 shares for James B. Ramsey; and no shares for Thomas C. McGraw
and Charles R. Key).
Compensation Committee Report
The members of the Compensation Committee have reviewed and discussed
the foregoing Compensation Discussion and Analysis with management and, based on
such review and discussion, the Compensation Committee has recommended to the
Board of Directors that the Compensation Discussion and Analysis be included in
this proxy statement and in the FNB Bancorp Annual Report on Form 10-K for the
year ended December 31, 2006.
Respectfully submitted by the members of the Compensation Committee,
Edward J. Watson, Chairman
Lisa Angelot
Neil J. Vannucci
28
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The firm of Moss Adams LLP, which served the Company as independent
auditors for the 2006 fiscal year, has been recommended by the Audit Committee
of the Board of Directors of the Company to serve as independent auditors for
the 2007 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 Moss Adams LLP as
independent auditors of the Company, to serve for the 2007 fiscal year.
A representative of Moss Adams 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 two fiscal years of the Company ended December 31, 2006, and
during the subsequent interim period through April 16, 2007, neither the Company
nor First National Bank of Northern California consulted with Moss Adams 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 (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 Moss Adams LLP to the Company for
professional services rendered for the integrated audit of the consolidated
financial statements of the Company for the fiscal year ended December 31, 2006,
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, 2006,
June 30, 2006 and September 30, 2006, were $222,500.
All Other Fees
Moss Adams LLP billed $12,000 for the audit of the FNB Bancorp Savings
Plan during the fiscal year ended December 31, 2006.
The Audit Committee of the Board of Directors of the Company has
approved each professional service rendered by Moss Adams LLP during the fiscal
year 2006, and the Audit Committee has considered whether the provision of
non-audit services would be compatible with maintaining the independence of Moss
Adams LLP.
29
Vote Required
Ratification of the appointment of Moss Adams LLP as the Company's
independent auditors for the 2007 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 Moss Adams LLP as
independent auditors of the Company for the 2007 fiscal year, and recommends a
vote "FOR" ratification of the appointment of Moss Adams LLP.
AUDIT COMMITTEE REPORT
During 2006, the Audit Committee consisted of the following members of
the Company's Board of Directors: Edward J. Watson (Chairman), Neil J. Vannucci
and Michael R. Wyman. 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.
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.
The Audit Committee has reviewed and discussed the audited financial
statements of the Company for the fiscal year ended December 31, 2006, with the
Company's management. The Committee has discussed with Moss Adams 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 Moss
Adams LLP required by Independence Standards Board Standard No. 1 (Independence
Discussion with Audit Committees) and the Committee has discussed the
independence of Moss Adams LLP with that firm.
30
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, 2006, for the filing with the Securities and
Exchange Commission.
Submitted by the Audit Committee:
Edward J. Watson, Chairman
Neil J. Vannucci
Michael R. Wyman
SHAREHOLDERS' PROPOSALS
Next year's Annual Meeting of Shareholders will be held on May 21,
2008. The deadline for shareholders to submit proposals for inclusion in the
proxy statement and form of proxy for the 2008 Annual Meeting of Shareholders is
January 31, 2008. 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 16, 2007
31
APPENDIX A
----------
FNB BANCORP
-----------
COMPENSATION COMMITTEE CHARTER
------------------------------
The Compensation Committee of FNB Bancorp and First National Bank of Northern
California is a committee of three members appointed by the entire Board of
Directors. The current members of the Committee are Lisa Angelot, Edward Watson
and Neil Vannucci, each being an outside, non-employee Director who is
"independent" for purposes of Rule 16b-3 of the Securities Exchange Act of 1934
and Section 162(m) of the Internal Revenue Code.
The members of the Compensation Committee serve at the pleasure of the Board of
Directors, until such time as their successors are appointed. From time to time,
the Board of Directors may designate one of the three members to serve as the
Chairperson of the Compensation Committee, for such period as the Board of
Directors may deem appropriate.
The Compensation Committee is charged with making recommendations to the Board
of Directors in regard to appropriate compensation plans, procedures, and
programs for the employees of First National Bank of Northern California.
The Committee shall communicate with executive management to schedule meetings,
develop agendas and obtain all information necessary for discussions regarding
salary, bonus, profit sharing, cash bonus, stock option grants, and benefit
plans for employees.
The Committee will meet at least annually, and more frequently as deemed
necessary by the members to review or evaluate current policy or practice, with
the CEO, the President, the COO, and the CFO and to obtain management
recommendations for all categories of compensation. The CEO, the President, the
COO and the CFO will not be present at the Compensation Committee meetings
during any discussion regarding his/her personal compensation.
The Compensation Committee will carry out the following responsibilities as
assigned by the Board of Directors:
Develop First National Bank of Northern California's compensation philosophy and
evaluate that philosophy each year, to ensure compliance with the goals and
objectives of the entire Board.
Evaluate the Chief Executive Officer's performance with regard to the Board's
expectations and the Bank's annual results.
Evaluate, discuss, and adjust as necessary executive management's
recommendations regarding salary, bonus, and stock option awards to employees.
32
Analyze and evaluate any compensation issues that are not subject to approval of
the shareholders of FNB Bancorp.
Report regularly to the full Board of Directors on all compensation matters
which the Compensation Committee has considered.
Record and maintain minutes of Compensation Committee meetings and the
recommendations and actions taken by the Compensation Committee.
At least annually, review and evaluate the form of this Charter and make
recommendations to the full Board of Directors regarding any changes which the
members of the Compensation Committee may decide to propose.
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.
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.
35
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 16, 2007
|
| 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 16, 2007, 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 16, 2007, 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 MOSS ADAMS LLP AS INDEPENDENT AUDITORS OF THE COMPANY TO
| SERVE FOR THE 2007 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 MOSS ADAMS LLP AS INDEPENDENT
| AUDITORS OF THE COMPANY TO SERVE FOR THE 2007 FISCAL YEAR.
|
| (Continued and to be signed on other side)
|
FNB BANCORP
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 16, 2007
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.
FOLD AND DETACH HERE
- --------------------------------------------------------------------------------------------------------------------------------
|
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED "FOR" THE FOLLOWING ITEMS: |
|
1. [ ] To elect as Directors the nine (9) [ ] WITHHOLD AUTHORITY to vote |
nominees listed below (except as indicated for all nominees listed below. |
to the contrary below). |
|
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 05. Michael Pacelli |
02. Thomas C. McGraw 06. Neil J. Vannucci |
03. Lisa Angelot 07. Edward J. Watson |
04. Merrie Turner Lightner 08. Jim D. Black |
09. Anthony J. Clifford |
| Please Detach Here
| You Must Detach This Portion of the
EXCEPTION ______________________________________________________________________ | Proxy Card Before Returning in the
| Enclosed Envelope
|
2. To ratify the appointment of MOSS ADAMS [ ] FOR [ ] AGAINST [ ] ABSTAIN |
LLP as independent auditors of the |
Company to serve for the 2007 fiscal year. |
|
3. In their discretion, to transact such |
other business as may properly come |
before the meeting. |
|
|
Authorized Signature(s) |
|
____________________________________ |
|
____________________________________ |
|
Date: ________________, 2007 |
|
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. |
|
|