SCHEDULE 14A
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Pacific Continental Corporation
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
[LOGO OF PACIFIC
CONTINENTAL
CORPORATION]
TO OUR SHAREHOLDERS:
You are cordially invited to attend the 2001 Annual Meeting of Shareholders
of Pacific Continental Corporation which will be held at 7:30 p.m. on Tuesday,
April 24, 2001, at Pacific Continental Bank's Olive Street Office, 111 West 7th
Avenue, Eugene, Oregon.
It is important that your shares be represented at the meeting. Whether or
not you plan to attend the meeting, you are requested to complete, date, sign
and return your Proxy in the envelope provided.
Sincerely,
/s/ J. Bruce Riddle
March 20, 2001 J. BRUCE RIDDLE
Chief Executive Officer
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that pursuant to call of its directors, the regular
Annual Meeting of the Shareholders of Pacific Continental Corporation
("Company") will be held at 111 West 7th Avenue, Eugene, Oregon, on Tuesday,
April 24, 2001, at 7:30 p.m., for the purpose of considering and voting upon the
following matters:
1. ELECTION OF DIRECTORS: Electing three persons to serve as directors, each
for a three-year term or until their successors are elected and qualified.
2. WHATEVER OTHER BUSINESS may properly be brought before the meeting or any
adjournment thereof.
Only those shareholders of record at the close of business on March 1,
2001, will be entitled to notice of the meeting and to vote at the meeting.
By Order of the Board of Directors
/s/ J. Bruce Riddle
Eugene, Oregon J. BRUCE RIDDLE
March 20, 2001 President and
Chief Executive Officer
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, WE URGE YOU TO SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE. IF YOU DO ATTEND THE
MEETING, YOU MAY THEN WITHDRAW YOUR PROXY. THE PROXY MAY BE REVOKED AT ANY TIME
PRIOR TO ITS EXERCISE.
PACIFIC CONTINENTAL CORPORATION
111 West 7th Avenue P.O. Box 10727
Eugene, OR 97401 Eugene, Oregon 97440-2727
PROXY STATEMENT
For Annual Meeting of Shareholders
to be held on April 24, 2001
INTRODUCTION
This Proxy Statement and the accompanying Proxy are furnished to the
shareholders of the Company in connection with the solicitation of proxies by
the Board of Directors of the Company for use at it's Annual Meeting of
Shareholders to be held on Tuesday, April 24, 2001, and any adjournments
thereof, for the purposes set forth in the accompanying Notice of Annual Meeting
of Shareholders. The date of this Proxy Statement is March 20, 2001. This
Proxy Statement and the accompanying Proxy and Notice of Annual Meeting were
first mailed to shareholders on or about March 20, 2001.
GENERAL INFORMATION
Purpose of the Meeting
The purpose of the meeting is to:
. Elect three persons to serve as directors of the Company.
Record Ownership; Quorum
Shareholders of record as of the close of business on March 1, 2001, are
entitled to one vote for each share of common stock of Pacific Continental
Corporation ("Common Stock") then held. As of March 1, 2001, the Company had
4,536,369 shares of Common Stock issued and outstanding. The presence, in
person or by proxy, of at least a majority of the total number of outstanding
shares of Common Stock entitled to vote is necessary to constitute a quorum at
the Annual Meeting. Abstentions will be counted as shares present and entitled
to vote at the Annual Meeting for purposes of determining the existence of a
quorum. Broker nonvotes will not be considered shares present and will not be
included in determining whether a quorum is present.
Solicitation of Proxies
The Board of Directors solicits proxies so that each shareholder has the
opportunity to vote on the proposal to be considered at the Annual Meeting. In
addition to the use of the mail, proxies may be solicited by personal interview
or telephone by directors, officers and employees of the Company or its bank
subsidiary, Pacific Continental Bank ("Bank"). It is not expected that
compensation will be paid for the solicitation of proxies.
When a Proxy card is returned properly signed and dated, the shares
represented by the Proxy will be voted in accordance with the instructions on
the Proxy card. Where no instructions are indicated, proxies will be voted FOR
the nominees.
1
Voting of Proxies by Record Holder
Shareholders who execute Proxies retain the right to revoke them at any
time. Proxies may be revoked by written notice delivered in person or mailed to
the Secretary of the Company or by filing a later Proxy prior to a vote being
taken at the Annual Meeting. Attendance at the Annual Meeting will not
automatically revoke a Proxy, but a shareholder in attendance may request a
ballot and vote in person, thereby revoking a prior granted Proxy.
Voting of Proxies by Beneficial Holder
If your shares are held by a bank, broker or other holder of record you
will receive instructions from the holder of record that you must follow in
order for your shares to be voted. If you want to attend the shareholder meeting
and vote in person, you will need to bring an account statement or letter form
the nominee indicating that you were the beneficial owner of the shares on the
record date.
Voting for Directors
The nominees for election as directors at the Annual Meeting who receive
the highest number of affirmative votes will be elected. Shareholders are not
permitted to cumulate their votes for the election of directors. Votes may be
cast for or withheld from the directors as a group, or for each individual
nominee. Votes that are withheld and broker non-votes will have no effect on the
outcome of the election because directors will be elected by a plurality of
votes cast.
Nominations for Directors
Nominations may be made in accordance with the prior notice provisions
contained in the Company's bylaws. These notice provisions require that a
shareholder provide the Company with written notice not less than ten (10) nor
more than fifty (50) days prior to any meeting of shareholders called for the
election of directors (or if less than twenty-one (21) days notice is given to
shareholders, within seven (7) days from the date the notice of meeting, was
mailed).
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PROPOSAL NO. 1 - ELECTION OF DIRECTORS
The Company's Articles of Incorporation provide that the number of
directors will be not less than six (6), with the specific number of directors
to be fixed in the Company's Bylaws. The Company's Bylaws currently provide for
a board of nine (9) directors. The Company's Articles of Incorporation require
that the terms of the directors be staggered so that approximately one-third of
the total number of directors is elected each year.
The directors being nominated for election at the 2001 Annual Meeting are:
Messrs. Larry G. Campbell, James W. Putney, and J. Bruce Riddle. Each will be
elected for a three-year term and will serve until their successors have been
elected and qualified.
At the board of directors' meeting of May 16, 2000, the board selected
Michael P. Coughlin to serve as a director of the Bank and Company until duly
elected at the 2001 Annual Meeting of Shareholders. Mr. Coughlin previously
served as the Chairman and CEO of Percon, Inc. Mr. Coughlin has chosen not to
seek election and resigned from the board of directors of the Bank and Company
effective March 13, 2001.
During 2000, founding Director and Chairman Kevin Murphy passed away. The
board and management wish to express their gratitude for Mr. Murphy's
unparalleled leadership and passion for Pacific Continental Bank, its
shareholders, and employees.
The Board of Directors recommends that you vote FOR the nominees to be
---
elected as directors.
If any of the nominees should refuse or be unable to serve, your Proxy will
be voted for such persons as are designated by the Board of Directors to replace
any such nominee. The Board of Directors presently has no knowledge that any
nominee will refuse or be unable to serve.
Nominees and Continuing Directors
The following tables set forth certain information with respect to the
director nominees (Messrs. Campbell, Putney, and Riddle) and the continuing
directors, including the number of shares beneficially held by each. Beneficial
ownership is a technical term broadly defined by the SEC to mean more than
ownership in the usual sense. In general, beneficial ownership includes any
shares a director or executive officer can vote or transfer and stock options
that are exercisable currently or become exercisable within 60 days. Except as
noted below, each holder has sole voting and investment power for all shares
shown as beneficially owned. Where beneficial ownership was less than one
percent of all outstanding shares, the percentage is not reflected in the table.
As of December 31, 2000, directors of the Company also served as directors of
the Bank.
3
Shares and
Percentage of
Common Stock
Principal Occupation Beneficially
Name, Age and of Director During Owned as of
Tenure as Director Last Five Years December 31, 2000
- ------------------ -------------------- -----------------
(1) (2)
Nominees for Director for Three-Year Term Expiring 2004
Larry G. Campbell, 60 President, L.G. Campbell Company; Inc. 35,487
Since 1982 Campbell Commercial Real Estate
James W. Putney, 61 Private Investor; VP and GM of KVAL 32,591 (3)
Since 1989 Television
J. Bruce Riddle, 56 President and CEO of Pacific Continental 168,296
Since 1980 Bank (3.55%)
Continuing Directors with Term Expiring 2002
Michael S. Holcomb, 57 Owner, Berjac of Oregon; Manager & 67,563 (4)
Since 1997 Partner Berjac Portland and Denver (1.43%)
Donald G. Montgomery, 61 Executive Vice President, Timber 13,044
Since 1996 Products, Co.
Continuing Directors with Term Expiring 2003
Robert A. Ballin, 59 Willis Corporation of Eugene 220,393
Since 1980 (4.66%)
Donald A Bick, 65 Attorney, Bick & Monte 43,866 (5)
Since 1972 (1.05%)
Ronald F. Taylor, 64 General Manager, Willamette Graystone, 17,569 (6)
Since 1973 Inc.
1. Shares held directly with sole voting and sole investment power, unless
otherwise indicated.
2. Includes shares that could be acquired within 60 days by the exercise of
stock options as follows: Ballin 7,125 shares; Bick 7,125 shares, Campbell
7,125 shares; Holcomb 3,000 shares; Montgomery 3,000 shares; Putney 7,125
shares; Riddle 13,688 shares; and Taylor 7,125 shares.
3. Includes 1,200 shares held as custodian for children.
4. Includes 8,293 shares held jointly with adult sons.
5. Includes 4,798 shares held as custodian for grandchildren, and 816 shares
held by spouse.
6. Includes 1,115 shares held by spouse.
INFORMATION REGARDING THE BOARD OF
DIRECTORS AND ITS COMMITTEES
The following sets forth information concerning the Board of Directors and
Committees of the Company and the Bank for the fiscal year ended December 31,
2000.
4
Board of Directors
The Company held 6 Board meetings and the Bank held 12 Board meetings in
2000. Each director attended at least 75% percent of the aggregate of (i) the
total number of meetings of the Boards of Directors, and (ii) the total number
of meetings held by all committees on which he served, except Mr. Murphy who,
because of illness, attended only one Bank board meeting.
Certain Committees of the Board of Directors
The Bank Board has established an Audit Committee, a Compensation Committee
and an Executive Committee. When the need arises the full Board serves as the
Nominating Committee. The committees of the Bank also act as the committees for
the Company.
Audit Committee. The Audit Committee is composed of independent directors
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(as defined by the Nasdaq listing standards) and operates under a formal written
charter adopted by the Board of Directors (see Appendix A to the Proxy
Statement.) The function of the Audit Committee includes reviewing the plan,
scope, and audit results of the independent auditors, as well as reviewing and
approving the services of the independent auditors. The Audit Committee reviews
or causes to be reviewed the reports of bank regulatory authorities and reports
its conclusions to the Board. The Audit Committee also reviews procedures with
respect to the records and business practices of the Company and Bank, and
reviews the adequacy and implementation of the internal auditing, accounting and
financial controls. Management is responsible for internal controls and the
financial reporting process. The independent accountants are responsible for
performing an independent audit of the consolidated financial statements in
accordance with generally accepted auditing standards and issues a report
thereon. The committee's responsibility is to monitor and oversee this process.
The Committee held three meetings during the year. For 2000, members of the
Audit Committee consisted of Messrs. Bick (Chairman), Coughlin, Montgomery,
Murphy and Putney.
Compensation Committee. The Compensation Committee met twice to review and
----------------------
approve the retirement and benefit plans, and to determine the salary and
incentive compensation for Mr. Riddle and certain other executive officers. For
2000, members of the Compensation Committee consisted of Messrs. Montgomery
(Chairman), Holcomb, Murphy, Riddle, and Taylor. However, Mr. Riddle, who is
the President and CEO of the Bank, did not participate in the Committee's or
Board's action on his compensation.
Executive Committee. The Executive Committee functions as a subcommittee of
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the full Board of Directors. It meets when directed by the Board and considers
matters for later report to the Board of Directors. Matters to be considered by
the committee may include new office locations, real estate purchases and lease
negotiations, merger and acquisition opportunities, and strategic planning. The
committee held five meetings during the year. For 2000, members of the
Executive Committee consisted of Messrs. Ballin (Chairman), Montgomery, Murphy,
Putney and Riddle.
Compensation of Directors
Director Fees. Pursuant to the Bank's Bylaws, the Bank has an established
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program for director compensation in which each director of the Bank receives a
fee of $1,150 for the first regularly scheduled meeting and $75 for each
committee meeting attended. The Chairman of the Board receives $1,265 for the
first regularly scheduled meeting and $100 for each committee meeting attended.
In addition to their directors' fees, directors participate in an incentive
bonus program. The program provides that directors may receive an annual bonus
of between $1,000 and $9,000, determined
5
by the Bank's return on average assets. For 2000, the bonus program resulted in
payments of $4,500 to each director, a total expenditure of $40,500.
Directors' Stock Option Plan. The Company maintains a director stock
----------------------------
option plan for the benefit of non-employee directors. The plan authorizes the
non-employee directors of the Board to administer the plan and to grant
nonqualified stock options to non-employee directors of the Company. The plan
provides that the exercise price of options granted must be not less than the
greater of (i) 100% of the fair market value; or (ii) the net book value of such
stock on the date of the grant. All options granted under the plan expire not
more than ten years from the date of grant and may be fully vested at the time
of the grant.
From time to time, the plan is amended or a new plan is adopted to provide
for additional shares. In 1999, the Board adopted and the shareholders approved
a new Director Stock Option Plan ("1999 DSOP"), providing for the grant of up to
100,000 shares of the Company's Common Stock. At December 31, 2000, 76,000
shares remained available for issuance under the 1999 DSOP, subject to
appropriate adjustments for any stock splits, stock dividends, or other changes
in the capitalization of the Company. No shares remain available for grant under
any of the other existing plans.
Directors' Stock Option Grants. During 2000, individual grants of stock
------------------------------
options under the director stock option plan were awarded. Each outside
director was awarded a fully vested 3,000 share option (24,000 shares total).
The option price was established at $9.25 per share. The options have a five-
year expiration.
EXECUTIVE COMPENSATION
The following table sets forth the compensation received by the Chief
Executive Officer and the four most highly compensated principal officers of the
Company, whose total compensation during the last fiscal year exceeded $100,000
during the last three fiscal years. The Bank pays all compensation of the
executive officers.
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SUMMARY COMPENSATION TABLE
=========================================================================================================================
Long Term Compensation
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Annual Compensation Awards Payouts
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Other Restricted Securities
Annual Stock Underlying LTIP All Other
Name and Principal Year Salary Bonus Compensation Awards Options/ Payouts Compensation
Position (1) (2) (3) SARs(#) (4)(5)
- -------------------------------------------------------------------------------------------------------------------------
J. Bruce Riddle, 2000 $237,650 $214,272 $0 $0 10,000 $0 $24,382
President and CEO 1999 $236,150 $229,000 $0 $0 0 $0 $24,551
1998 $219,092 $186,500 $0 $0 1,000 $0 $23,893
- -------------------------------------------------------------------------------------------------------------------------
Hal M. Brown 2000 $130,209 $ 64,000 $0 $0 10,000 $0 $21,994
Executive Vice 1999 $111,834 $ 74,000 $0 $0 0 $0 $20,358
President, Chief 1998 $103,700 $ 74,000 $0 $0 1,000 $0 $19,439
Operating Officer
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John M. Gyde, 2000 $101,287 $ 49,000 $0 $0 6,000 $0 $16,426
Executive Vice 1999 $ 98,938 $ 58,000 $0 $0 0 $0 $16,578
President, Senior 1998 $ 94,290 $ 58,000 $0 $0 1,000 $0 $16,049
Loan Officer
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T. Dean. Hansen, 2000 $ 84,528 $ 33,000 $0 $0 6,000 $0 $16,941
Senior Vice President 1999 $ 83,069 $ 34,000 $0 $0 0 $0 $16,706
Manager 1998 $ 80,335 $ 34,000 $0 $0 1,000 $0 $16,287
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Judy A. Thompson, 2000 $ 94,860 $ 28,000 $0 $0 6,000 $0 $16,167
Senior Vice President 1999 $ 86,474 $ 45,000 $0 $0 0 $0 $15,529
Manager 1998 $ 80,701 $ 45,000 $0 $0 1,000 $0 $14,782
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1. Includes director and committee fees paid to Mr. Riddle and Mr. Gyde during
2000, 1999, and 1998.
2. Includes director bonuses earned by Mr. Riddle.
3. Does not include amounts attributable to miscellaneous benefits received by
executive officers, including the use of company-owned automobiles and the
payment of certain club dues. In the opinion of management, the costs to the
Bank of providing such benefits to any individual executive officer during
the year ended December 31, 2000 did not exceed the lesser of $50,000 or 10%
of the total of annual salary and bonus reported for the individual.
4. Includes contributions accrued by the Bank during 2000 for the benefit of
Messrs. Riddle, Gyde, Brown, and Hansen and Ms. Thompson in the amounts of
$18,223, $10,407, $13,957, $9,100 and $10,168, respectively, pursuant to the
Bank's 401(k) Profit Sharing Plan.
5. Includes insurance premiums paid by the Bank during 2000 on behalf of
Messrs. Riddle, Gyde, Brown and Hansen and Ms. Thompson in the amounts of
$6,159, $6,019, $8,037, $7,841 and $5,999, respectively.
Stock Option Plans
The Company maintains an Incentive Stock Option Plan for the benefit of
employees of the Bank. A committee of non-employee directors of the Board
administers the plan. Under the terms of the plan, the committee may grant
employees of the Bank options in the form of "incentive" or "non-qualified"
stock options to purchase shares of the Company's Common Stock at a purchase
price of not less than the greater of (i) 100% of the fair market value; or (ii)
the net book value of such stock on the date of the grant (in the case of an
incentive stock option, the price may not be less than the fair market value).
The options have a term not exceeding ten years from the date the option is
granted.
From time to time, the Plan is amended or a new plan is adopted to provide
for additional shares. In 1999, the Board adopted and the shareholders approved
a new Incentive Stock Option Plan ("1999 Plan"). The 1999 Plan provides for the
grant of up to 500,000 shares of the Company's Common Stock. At December 31,
2000, 339,250 shares remained available for issuance under the 1999 Plan,
subject to appropriate adjustments for any stock splits, stock dividends, or
other changes in the capitalization of the Bank. No shares remain available for
grant under any of the other existing plans.
7
Stock Option Grants. The following table sets forth certain information
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concerning individual grants of stock options under the stock option plans
awarded to the named officers during the year ended December 31, 2000.
OPTION GRANTS IN LAST FISCAL YEAR
=======================================================================================================
Potential Realizable
Value at
Individual Grants Assumed Annual Rates
of Stock Price
Appreciation
for Option Term
- -------------------------------------------------------------------------------------------------------
% of Total
Options
Options Granted to Exercise Expiration
Name Granted (1) Employees Price Date 5% 10%
- -------------------------------------------------------------------------------------------------------
J. Bruce Riddle 10,000 6.1% $9.25 9-12-05 $25,556 $56,472
- -------------------------------------------------------------------------------------------------------
Hal M. Brown 10,000 6.1% $9.25 9-12-05 $25,556 $56,472
- -------------------------------------------------------------------------------------------------------
John M. Gyde 6,000 3.7% $9.25 9-12-05 $15,334 $33,883
- -------------------------------------------------------------------------------------------------------
T. Dean. Hansen 6,000 3.7% $9.25 9-12-05 $15,334 $33,883
- -------------------------------------------------------------------------------------------------------
Judy A. Thompson 6,000 3.7% $9.25 9-12-05 $15,334 $33,883
=======================================================================================================
1. Options granted under the employee stock option plans vest over a four-year
period, with 20% of the shares vested on the grant date. The remaining
shares vest 20% on each of the first, second, third, and fourth
anniversaries of the grant date.
Stock Option Exercises. The following table sets forth certain information
----------------------
concerning exercises of stock options pursuant to the Company's stock option
plans by the named executive officers during the year ended December 31, 2000
and stock options held at year-end.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR END OPTION VALUES
=======================================================================================================
Shares
Acquired on Value Number of Value of
Exercise Realized Unexercised Unexercised Options at
Name Options at Year End Year End (1)
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Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------------------------------------------------------------------------------
J. Bruce Riddle 0 $ 0 13,688 8,000 $ 0 $ 0
- -------------------------------------------------------------------------------------------------------
Hal M. Brown 0 $ 0 13,688 8,000 $ 0 $ 0
- -------------------------------------------------------------------------------------------------------
John M. Gyde 0 $ 0 12,888 4,800 $ 0 $ 0
- -------------------------------------------------------------------------------------------------------
T. Dean. Hansen 0 $ 0 8,700 4,800 $ 0 $ 0
- -------------------------------------------------------------------------------------------------------
Judy A. Thompson 0 $ 0 12,888 4,800 $ 0 $ 0
=======================================================================================================
1. On December 31, 2000, the estimated market price of the Common Stock was $
8.88. For purposes of the foregoing table, stock options with an exercise
price less than that amount are considered to be "in-the-money" and are
considered to have a value equal to the difference between this amount and
the exercise price of the stock option multiplied by the number of shares
covered by the stock option.
8
401(k) Profit Sharing Plan
The Bank has a 401(k) Profit Sharing Plan ("401(k) Plan") covering
substantially all employees. An employee must be at least 18 years of age and
have one year of service with the Bank to be eligible for the 401(k) Plan
("Effective Date"). Under the 401(k) Plan, participants may defer a percentage
of their compensation, the dollar amount of which may not exceed the limit as
governed by law. At the discretion of the Board, the Bank may also elect to pay
a discretionary matching contribution equal to a percentage of the amount of the
salary deferral made by the participant. The 401(k) Plan provides that
contributions made are 100% vested immediately upon the participant's Effective
Date. The expense relating to the Bank's 401(k) Plan for the year ended
December 31, 2000, was $328,355.
The Bank acts as the Plan Administrator of the 401(k) Plan. The 401(k)
Plan's trustees determine general investment options. The 401(k) Plan
participants make specific investment decisions.
Executive Severance Agreements
The Bank maintains Executive Severance Agreements with certain of its
executive officers. Under these agreements, the executive is entitled to
receive severance payments in the event his or her employment is terminated (i)
voluntarily or involuntarily within three years after a change in control (as
defined); or (ii) involuntarily within two years prior to the occurrence of a
change in control. Under the terms of these agreements, Messrs. Riddle and
Hansen and Ms. Thompson would be eligible to receive a lump sum payment equal to
the executive's highest compensation received during any of the most recent
three calendar years prior to or simultaneous with, the change in control; and
Messrs. Brown and Gyde would be eligible to receive an amount equal to one and
one-half times the executive's highest compensation received during any of the
most recent three calendar years prior to or simultaneous with, the change in
control.
Compensation Committee Report
The following is a report of the Compensation Committee of the Board of
Directors who are responsible for establishing and administering the Company's
Executive Compensation Program. The following report includes specific matters
relating to compensation during the year 2000.
Compensation Philosophy and Objectives. The philosophy underlying the
--------------------------------------
development and administration of the Company's annual and long-term
compensation plans is the alignment of the interests of executive management
with those of the shareholders. Key elements of this philosophy are:
* Establish compensation plans which deliver pay commensurate with the
Company's performance, as measured by operating, financial and
strategic objectives,
* Provide significant equity-based incentives for executives to ensure
that they are motivated over the long-term to respond to the Company's
business challenges and opportunities as owners, rather than just as
employees,
* Reward executives if shareholders receive an above-average return on
their investment over the long-term.
The objective for computing executive base salaries is to structure
salaries that are competitive within the marketplace. An incentive bonus is the
vehicle by which executives can earn additional compensation depending on
individual and Company performance relative to certain annual objectives.
9
The Company objectives are a combination of operating, financial and strategic
goals (such as loan and deposit levels, asset quality, earnings per share,
operating income, etc.) that are considered to be critical to the Company's goal
of building long-term shareholder value.
The incentive bonus program is administered by the Compensation Committee
and approved by the Board of Directors. Dollars for the bonus program are
accumulated based on the earnings of the Company. Return on average assets is
the ratio used for the calculation. Bonus pool dollars are allocated between the
employer's contribution to the Company's 401(k)/Profit Sharing Plan and the
incentive bonus.
The Company's current long-term incentive program consists of the 1999
Stock Option Plan. Grants are considered at the then value of the Company's
Common Stock, thereby providing an additional incentive for executives to build
shareholder value. Executives receive value from these grants if the Company's
Common Stock appreciates over the long-term.
Bank Performance and Compensation. Although year 2000 results were less
---------------------------------
than those budgeted, the Bank achieved operating and financial goals exceeding
those of its national peers. Specific measurements include asset quality, return
on average assets, return on average equity, operating income, and earnings per
share. Considering these accomplishments, which were not specifically weighted,
the Board awarded the Bank's President and Chief Executive, J. Bruce Riddle, an
incentive bonus payment.
Compensation Committee Interlocks and Insider Participation. Mr. J. Bruce
-----------------------------------------------------------
Riddle, the President and CEO of the Bank during 2000, serves as a member of the
Compensation Committee. Mr. Riddle does not vote on any matter affecting
compensation paid or awarded to him.
Executive Compensation Committee
Donald G. Montgomery (Chairman)
Michael S. Holcomb
J. Bruce Riddle (President and CEO)
Ronald F. Taylor
Audit Committee Report
The Audit Committee has met and held discussions with management and the
Company's independent accountants. Management represented to the Committee that
the Company's consolidated financial statements were prepared in accordance with
generally accepted accounting principles, and the Committee has reviewed and
discussed the audited consolidated financial statements with management and the
independent accountants. The Committee discussed with the independent
accountants matters required to be discussed by Statement on Auditing Standards
No. 61 (Communication with Audit Committees).
Our independent accountants also provided to the Committee the written
disclosures required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the Committee discussed
with the independent accountants that firm's independence.
Based on the Committee's review of the audited consolidated financial
statements and the various discussions with management and the independent
accountants noted above, the Committee recommended that the Board of Directors
include the audited consolidated financial statements in the
10
Company's Annual Report on Form 10-K for the year ended December 31, 2000, filed
with the Securities and Exchange Commission.
Audit Committee Members - Fiscal 2000
Donald A. Bick (Chairman)
Michael P. Coughlin
Donald G. Montgomery
Kevin G. Murphy
James W. Putney
STOCK PERFORMANCE GRAPH
The following line graph and table compares the total cumulative
shareholder return on the Company's Common Stock, based on reinvestment of all
dividends, to the cumulative total returns of the Standard & Poor's S&P
Composite 500 Index, the NASDAQ Banking Index and SNL Securities $250 to $500
Million Bank Asset Size Index ("SNL Index"). The graph assumes $100 invested on
December 31, 1995, in the Company's Common Stock and each of the indices.
CUMULATIVE TOTAL RETURN
[GRAPH]
December 31
- ----------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000
- ----------------------------------------------------------------------------
PCB (PCBK) $ 100 $ 107 $ 170 $ 200 $ 148 $ 104
SNL Index 100 130 225 201 187 180
S&P 500 100 123 164 211 255 232
NASDAQ Banks 100 132 221 220 211 241
In future proxy statements the Company will no longer include the NASDAQ
Banking Index, and will instead substitute the SNL Index. The SNL Index is
composed of banks closely resembling the Company, and is a more representative
index of peer performance. The SNL Index is made up of publicly
11
traded banks from all areas of the country with total assets between $250 and
$500 million. Conversely the NASDAQ Banking Index is composed of publicly traded
banks of all sizes and, because of average weighting, is more representative of
larger financial institution performance.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to named executive
officers who are not directors or nominees for directors. At December 31, 2000,
the Company was not aware of any persons who beneficially owned more than 5% of
the Company's Common Stock. The table indicates the number of shares of Common
Stock beneficially owned by each individual on December 31, 2000, and the
percentage of Common Stock outstanding on that date that the person's holdings
represented. However, where beneficial ownership was less than one percent of
all outstanding shares, the percentage is not reflected in the table.
============================================================================================================
Shares and Percentage
Relationship of Common Stock
Name, Address and Age with the Bank Beneficially Owned (1)
- ------------------------------------------------------------------------------------------------------------
Hal M. Brown, 47 Executive Vice President and 123,254
Chief Operating Officer (2.60%)
- ------------------------------------------------------------------------------------------------------------
John M. Gyde, 58 Executive Vice President Senior 81,129 (2)
Loan Officer (1.71%)
- ------------------------------------------------------------------------------------------------------------
Mitchell J. Hagstrom, 44 Senior Vice President 38,663 (3)
Manager Client Services
- ------------------------------------------------------------------------------------------------------------
T. Dean Hansen, 54 Senior Vice President Manager 44,161 (4)
- ------------------------------------------------------------------------------------------------------------
Judy A. Thompson, 54 Senior Vice President Manager 32,662
- ------------------------------------------------------------------------------------------------------------
All directors and executive officers as a group 921,678
(13 persons) (19.47%)
============================================================================================================
1. Share amounts include options to acquire shares that are exercisable within
60 days as follows: Messrs. Brown 13,688 shares, Gyde 12,888 shares;
Hagstrom 14,088 shares; Hansen 8,700 shares; and Ms. Thompson 12,888 shares.
2. Includes 23,329 shares held by spouse.
3. Includes 14,260 shares held in a charitable remainder trust and 212 shares
held as custodian for minor children
4. Includes 641 shares held for minor children and 1,358 shares by Mr. Hansen's
mother-in-law who resides in his home.
TRANSACTIONS WITH MANAGEMENT
The Bank has had, and expects to have in the future, banking transactions,
including loans, in the ordinary course of business with directors, executive
officers, and their associates, on substantially the same terms, including
interest rates and collateral, as those prevailing at the same time for
comparable transactions with other persons, which transactions do not involve
more than the normal risk of collection or present other unfavorable features.
All such loans were made in the ordinary course of the Bank's business, on
substantially the same terms, including interest rates and collateral, as those
12
prevailing at the time for comparable transactions with other customers and in
the opinion of management, do not involve any undue credit risk to the Bank.
COMPLIANCE WITH SECTION 16(a) FILING REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934, as amended, ("Section
16(a)") requires that all executive officers and directors of the Bank and all
persons who beneficially own more than 10 percent of the Company's Common Stock
file reports with the Securities and Exchange Commission with respect to
beneficial ownership of the Company's Securities. The Company has adopted
procedures to assist its directors and executive officers in complying with the
Section 16(a) filings.
Based solely upon the Company's review of the copies of the filings which
it received with respect to the fiscal year ended December 31, 2000, or written
representations from certain reporting persons, the Company believes that all
reporting persons made all filings required by Section 16(a) on a timely basis.
AUDITORS
Zirkle Long & Trigueiro LLC, Certified Public Accountants, performed the
audit of the consolidated financial statements for the Company for the year
ended December 31, 2000. Representatives of Zirkle Long & Trigueiro LLC will be
present at the Annual Meeting, and will have the opportunity to make a statement
if they so desire. They also will be available to respond to appropriate
questions.
At a future meeting, the Board will appoint independent auditors to audit
the Company's financial statements for 2001. The Board will review the scope of
any such audit and other assignments given to the auditors to access whether
such assignments would affect their independence.
Fees Paid to Independent Auditors
During the fiscal year ended December 31, 2000, fees paid to the Company's
independent auditors, Zirkle Long & Trigueiro LLC, consisted of the following:
Audit Fees. Audit fees billed to the Company by Zirkle Long & Trigueiro LLC
----------
during the 2000 fiscal year for audit of the annual financial statements and
review of those financial statements included in the quarterly reports on Form
10-Q totaled $61,049.
Financial Information Systems Design and Implementation Fees. The Company
------------------------------------------------------------
did not engage Zirkle Long & Trigueiro LLC to provide advice regarding financial
information systems design and implementation during the fiscal year ended
December 31, 2000.
All other Fees. Fees billed to the Company by Zirkle Long & Trigueiro LLC
--------------
during the 2000 fiscal year for all other non-audit services rendered, including
tax related services, totaled $16,125.
For the fiscal year 2000 the Audit Committee and Board considered and
deemed the services provided by Zirkle Long & Trigueiro LLC was compatible with
maintaining the principal accountant's independence.
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OTHER BUSINESS
The Board of Directors knows of no other matters to be brought before the
shareholders at the Annual Meeting. In the event other matters are presented
for a vote at the Meeting, the Proxy holders will vote shares represented by
properly executed Proxies in their discretion in accordance with their judgment
on such matters.
At the Meeting, management will report on the Company's business and
shareholders will have the opportunity to ask questions.
INFORMATION CONCERNING SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 2002 Annual
Shareholders' Meeting must be received by the Secretary of the Company prior to
November 21, 2001, for inclusion in the 2002 Proxy Statement and form of proxy.
In addition, if the Company receives notice of a shareholder proposal after
February 3, 2002, the persons named as proxies in such proxy statement will have
discretionary authority to vote on such shareholder proposal.
AVAILABLE INFORMATION
The Company currently files periodic reports and other information with the
SEC. Such information and reports may be read and copied at the SEC's Public
Reference Room at 450 Fifth Street, NW, Washington, D. C. 20549. You may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. Reports and information filed by the Company electronically are
available on the SEC Internet site at http://www.sec.gov.
REPORTS TO SHAREHOLDERS
A copy of the 2000 Annual Report to Shareholders accompanies this Proxy
Statement. Any shareholder may obtain from the Company, without charge, a copy
of the Company's Annual Report on Form 10-K filed with the Securities and
Exchange Commission under the Securities Exchange Act of 1934 for the year ended
December 31, 2000. Written requests for the Form 10-K should be addressed to
Mick Reynolds, Controller of Pacific Continental Bank, at P.O. Box 10727,
Eugene, Oregon 97440-2727.
By Order of the Board of Directors
/s/ Hal Brown
Eugene, Oregon HAL BROWN
March 20, 2001 Corporate Secretary
14
EXHIBIT A. AUDIT COMMITTEE CHARTER
PACIFIC CONTINENTAL CORPORATION
PACIFIC CONTINENTAL BANK
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of Directors
in fulfilling its oversight responsibilities by reviewing: the financial reports
and other financial information provided by the Company to any governmental body
or the public; the Company's systems of internal controls regarding finance,
accounting, and legal compliance; and the Company's auditing, accounting and
financial reporting processes generally. The Audit Committee's primary duties
and responsibilities are to:
. Serve as an independent and objective party to monitor the Company's
financial reporting process and internal control system.
. Review and appraise the audit efforts of the Company's independent
accountants and internal auditing practitioners.
. Provide an open avenue of communication among the independent accountants,
financial and senior management, internal auditing practitioners, and the
Board of Directors.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors as determined
by the Board, and consistent with the criteria for determining independence
under the National Association of Securities Dealers ("NASD"), each of whom
shall be independent directors, and free from any relationship that, in the
opinion of the Board, would interfere with the exercise of his or her
independent judgment as a member of the Committee. All members of the Committee
shall have a working familiarity with basic finance and accounting practices,
and at least one member of the Committee shall have accounting or related
financial management expertise, in conformity with applicable regulations of the
NASD. Committee members are encouraged to enhance their familiarity with
finance and accounting by participating in educational opportunities.
The members of the Committee shall be appointed by the Board at the annual
organizational meeting of the Board or until their successors shall be duly
appointed and qualified. Unless a Chair is elected by the full Board, the
members of the Committee may designate a Chair by majority vote of the full
Committee membership.
III. MEETINGS
The Committee shall meet at least four times annually, or more frequently as
circumstances dictate. As part of its job to foster open communication, the
Committee shall meet at least annually with management, internal auditing
partners and the independent accountants in separate executive sessions to
discuss any matters that the Committee or each of these groups believe should be
discussed privately. In
addition, the Committee or at least its Chair should meet with the independent
accountants and management quarterly to review the Company's financials
consistent with Section IV 4 below.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee will:
Documents/Reports Review
- ------------------------
1. Review the Company's annual financial statements and any material reports
or other financial information submitted to any regulatory body, or the
public, including any certification, report, opinion, or review rendered by
the independent accountants.
2. Review regular reports prepared by internal auditing practices and consider
management's response to these reports.
3. Review regulatory examination reports and consider management's response to
these reports.
4. Review with management, Company counsel, and independent accountants the
Form 1O-Q, Form 10-K and Proxy prior to their filing. The Chair of the
Committee may represent the entire Committee for purposes of this review.
Independent Accountants
- -----------------------
5. Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness and approve the
fees and other compensation to be paid to the independent accountants. On
an annual basis, the Committee will review and discuss with the accountants
all significant relationships the accountants have with the Company to
determine the accountants' independence.
6. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances
warrant.
7. Periodically consult with the independent accountants out of the presence
of management about internal controls and the fullness and accuracy of the
organization's financial statements.
Financial Reporting Processes
- -----------------------------
8. In consultation with the independent accountants and internal auditing
practitioners, review the integrity of the organization's financial
reporting processes, both internal and external.
9. Consider the independent accountants' judgments about the quality and
appropriateness of the Company's accounting principles as applied in its
financial reporting.
10. Consider and approve, if appropriate, major changes to the Company's
auditing and accounting principles and practices as suggested by the
independent accountants, management, or the internal auditing
practitioners.
Process Improvement
- -------------------
11. Review any significant disagreement among management and the independent
accountants or the internal auditing practitioners in connection with the
preparation of the financial statements or examination reports.
12. Review with the independent accountants, the internal auditing
practitioners and management the extent to which changes or improvements in
operating procedures or accounting practices, as approved by the Audit
Committee, have been implemented.
Miscellaneous and Legal Compliance
- ----------------------------------
13. Review activities, organizational structure, and qualifications of the
internal audit practitioners.
14. Review, with the organization's counsel, legal compliance matters including
corporate securities trading policies.
15. Review, with the organization's counsel, any legal matter that could have a
significant impact on the organization's financial statements.
16. Review and update this Charter periodically as conditions dictate.
17. Perform any other activities consistent with this Charter, the Company's
By-laws and governing law, as the Committee or the Board deems necessary or
appropriate.
PROXY
PACIFIC CONTINENTAL CORPORATION
PLEASE SIGN AND RETURN IMMEDIATELY
- ----------------------------------
This Proxy Is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Robert A. Ballin or J. Bruce Riddle, and each of
them (with full power to act alone), my Proxy, with full power of substitution
as Proxy, and hereby authorize Messrs. Ballin or Riddle to represent and to
vote, as designated below, all the shares of common stock of Pacific Continental
Corporation, held of record by the undersigned on March 1, 2001, at the Annual
Meeting of Shareholders to be held on April 24, 2001 ("Meeting"), or any
adjournment of such Meeting.
1. ELECTION OF DIRECTORS. A vote to elect the following nominees for a
three-year term.
A. I vote FOR all nominees listed below. [_]
B. I WITHHOLD AUTHORITY to vote for all nominees in the list below. [_]
Larry G. Campbell James W. Putney J. Bruce Riddle
C. I WITHHOLD AUTHORITY to vote for any individual whose name I have
struck a line through in the list above. [_]
2. WHATEVER OTHER BUSINESS may properly be brought before the Meeting or any
adjournment thereof.
THIS PROXY CONFERS AUTHORITY TO VOTE "FOR" AND WILL BE VOTED "FOR" THE
PROPOSAL LISTED UNLESS AUTHORITY IS WITHHELD OR A VOTE AGAINST OR AN
ABSTENTION IS SPECIFIED, IN WHICH CASE THIS PROXY WILL BE VOTED IN
ACCORDANCE WITH THE SPECIFICATION SO MADE.
Management knows of no other matters that may properly be, or which are likely
to be, brought before the Meeting. However, if any other matters are properly
presented at the Meeting, this Proxy will be voted in accordance with the
recommendations of management.
The Board of Directors recommends a vote FOR the listed directors.
---
______________________, 2001 SIGN BELOW:
(Date signed) -----------
NAME ________________________________________
NAME2 ________________________________________
NAME3 ________________________________________
ELIGIBLE SHARES: SHARES
WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN,
PLEASE GIVE FULL TITLE, IF MORE THAN ONE
TRUSTEE, ALL SHOULD SIGN. ALL JOINT
OWNERS MUST SIGN.
ACCT