Attached files
file | filename |
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EX-31.2 - ConnectOne Bancorp, Inc. | v182519_ex31-2.htm |
EX-31.1 - ConnectOne Bancorp, Inc. | v182519_ex31-1.htm |
EX-24.1 - ConnectOne Bancorp, Inc. | v182519_ex24-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K/A
(Amendment
No. 1)
(adding
Items 10–14, and revising certain exhibits)
(Mark
One)
x
|
ANNUAL REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
|
For
the Fiscal Year Ended December 31, 2009
OR
o
|
TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
|
For the Transition Period
from to
Commission
File Number: 000-11486
CENTER
BANCORP, INC.
(Exact
Name of Registrant as Specified in Its Charter)
New Jersey
|
52-1273725
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
(IRS Employer
Identification Number)
|
2455
Morris Avenue, Union, NJ 07083-0007
(Address
of Principal Executive Offices, Including Zip Code)
(908)
688-9500
(Registrant’s
Telephone Number, Including Area Code)
Securities
registered pursuant to Section 12(b) of the Exchange Act:
Common
Stock, No Par Value
(Title of
Class)
Securities
registered pursuant to Section 12(g) of the Exchange Act: None
Indicate
by checkmark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
Yes o No x
Indicate
by checkmark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Act. Yes or No x
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x No o
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Regulation S-T (232,405 of this chapter) during
the preceding 12 months (or for such shorter period that the registrant has
required to submit and post such files.)Yes o No o Not
applicable
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of Registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of the Form 10-K or any amendment to the
Form 10-K. o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
definition of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Securities Exchange Act of
1934.
Large
Accelerated Filer o
|
Accelerated
Filer x
|
Non-Accelerated
o
|
Small
Reporting
Company
o
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act) Yes o or No x
The
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold or the average bid and ask price of such common equity, as of the last
business day of the registrant’s most recently completed second fiscal
quarter — $78.3 million
Shares
Outstanding on March 1, 2010
Common
Stock, no par value: 14,574,872 shares
DOCUMENTS
INCORPORATED BY REFERENCE
None
EXPLANATORY
NOTE
This
Amendment No. 1 on Form 10-K/A to the Annual Report on Form 10-K for the fiscal
year ended December 31, 2009 (the “Annual Report”) of Center Bancorp, Inc. (the
“Company” or “Center Bancorp”) filed with the Securities and Exchange Commission
(the “SEC”) on March 16, 2010 is filed solely for the purpose of including
information that was to be incorporated by reference from the Company’s
definitive proxy statement pursuant to Regulation 14A of the Securities Exchange
Act of 1934. The Company will not file its proxy statement for its 2010 annual
meeting of shareholders within 120 days of its fiscal year ended December 31,
2009, and is therefore amending and restating in their entirety Items 10, 11,
12, 13 and 14 of Part III of the Annual Report. In all material
respects, the information presented under these Items is identical to the
information contained in Center Bancorp’s preliminary proxy statement filed with
the SEC on April 2, 2010. In addition, pursuant to
Rule 13a-14(a) under the Securities Exchange Act of 1934, the Company is
including with this Amendment No. 1 certain currently dated
certifications.
Except as
described above, no other amendments are being made to the Annual
Report. This Form 10-K/A does not reflect events occurring after the
March 16, 2010 filing of our Annual Report or modify or update the disclosure
contained in the Annual Report in any way other than as required to reflect the
amendments discussed above and reflected below.
TABLE OF
CONTENTS
Item
|
Page
|
||
10.
|
3
|
||
11.
|
6
|
||
12.
|
34
|
||
13.
|
38
|
||
14.
|
39
|
||
PART
IV
|
15.
|
40
|
|
41
|
|||
43
|
-2-
The
By-Laws of Center Bancorp, Inc. (“Center Bancorp” or the “Company”) provide that
the Company’s Board will consist of not less than five nor more than twenty-five
members. The exact number of directors is fixed and determined from time to time
by resolution of the full Board or by resolution of the shareholders at any
annual or special meeting. The Company’s Board has set the
number of directors at eleven.
The
Company’s common stock is listed on the Nasdaq Global Select Market and Center
Bancorp is governed by the listing standards applicable thereto. The
Board’s Audit Committee consists of Raymond Vanaria (Chairman), James J.
Kennedy, Elliot Kramer, Howard Kent, Harold Schechter and William
Thompson. All members of the Audit Committee of the Board of
Directors have been determined to be “independent directors” pursuant to the
definition contained in Rule 4200(a)(15) of the National Association of
Securities Dealers’ Marketplace Rules and under the SEC’s Rule
10A-3.
The
Company’s Board of Directors has determined that one of the members of the Audit
Committee, Raymond Vanaria, constitutes an “audit committee financial expert”,
as such term is defined by the SEC. As noted above, Mr. Vanaria - as well as the
other members of the Audit Committee - has been determined to be
“independent”.
The
following table sets forth the members of the Company’s Board of Directors,
their principal occupations for at least the past five years, their ages, the
year in which they became a director of Center Bancorp and Union Center National
Bank (“UCNB” or the “Bank”) and director positions held currently or at any time
during the last five years.
Name
|
Occupation
|
Age
|
Director
Since
|
|||
Alexander
A. Bol
|
Owner,
Alexander
|
62
|
1994
|
|||
A.
Bol A.I.A.
|
||||||
(architectural
firm);
|
||||||
Chairman
of the Board
|
||||||
of
Center Bancorp and
|
||||||
UCNB
(2001-Present)
|
||||||
John
J. DeLaney, Jr.
|
Shareholder,
Lindabury,
|
55
|
2006
|
|||
McCormick,Estabrook
|
||||||
&
Cooper, P.C. (successor to
|
||||||
Cooper Rose
& English, LLP)
|
||||||
(law
firm); Mayor of Morristown,
|
||||||
New
Jersey (1998-2005)
|
||||||
James
J. Kennedy
|
Managing
Partner,
|
54
|
2000
|
|||
KV
Solar, LLC
|
||||||
(energy
conservation
|
||||||
design
and installation
|
||||||
firm)
(2006-2008);
|
||||||
Managing
Partner,
|
||||||
KV1
Asset Management, LLC
|
||||||
(hedge
fund management
|
||||||
company)(1998-Present)
|
-3-
Howard
Kent
|
Member,
Real
|
62
|
2008
|
|||
Estate
Equities Group,
|
||||||
LLC
(real estate investment
|
||||||
and
management
|
||||||
business)
|
||||||
Phyllis
S. Klein
|
Partner,
Donahue, Hagan, Klein,
|
48
|
March 25, 2010
|
|||
Newsome
& O’Donnell, P.C.
|
||||||
(law
firm)
|
||||||
Elliot
I. Kramer
|
Shareholder,
|
58
|
2008
|
|||
Goldman
& Kramer PC
|
||||||
(law
firm)
|
||||||
Nicholas
Minoia
|
Member,
Diversified
|
54
|
2009
|
|||
Properties,
L.L.C.
|
||||||
(full-service
real estate
|
||||||
group)
|
||||||
Harold
Schechter
|
Chief
Financial
|
65
|
2007
|
|||
Officer,
Global Design
|
||||||
Concepts,
Inc. (importer
|
||||||
and
distributor of accessories
|
||||||
and
handbags) (2005-Present)
|
||||||
Lawrence
B.
|
Manager
of
|
62
|
2007
|
|||
Seidman
|
various
investment
|
|||||
funds;
Also a director of Stonegate
|
||||||
Bank
(January 2009-Present)
|
||||||
William
A.
|
General
Manager,
|
52
|
1994
|
|||
Thompson
|
Uniselect
USA
|
|||||
(auto
parts distributor)
|
||||||
(2007-Present);
Vice
|
||||||
President
of Thompson & Co.
|
||||||
(auto
parts distributor)
|
||||||
Raymond
Vanaria
|
Member, Malesardi,
|
51
|
2007
|
|||
Quackenbush,
|
||||||
Swift
& Company, LLC
|
||||||
(accounting
firm)
|
There is
no family relationship, by blood, marriage or adoption, between any of the
foregoing directors and any other officer, director or employee of Center
Bancorp or UCNB.
-4-
The
following table sets forth the name and age of each executive officer of Center
Bancorp, the period during which each such person has served as an officer of
the Company or UCNB and each such person’s business experience (including all
positions with the Company and UCNB) for the past five years:
Name and Age
|
Officer Since
|
Business Experience
|
||
Anthony
C. Weagley Age – 48
|
1996
the Company 1985 the Bank
|
President
and Chief Executive Officer of the Company (April
2008 – Present); President, Chief Executive Officer and Chief
Financial Officer of the Company (August 2007 – March 2008);
President and Chief Executive Officer of the Bank (March
2008 – Present); President, Chief Executive Officer and Chief
Financial Officer of the Bank (August 2007 – February 2008);
Vice President & Treasurer of the Company (1996 – August
2007); Senior Vice President & Cashier of the Bank
(1996 – August 2007); Vice President & Cashier of the Bank
(1991 – 1996)
|
||
William
Boylan Age – 45
|
2008
the Company 2007 the Bank
|
Vice
President of the Company (July 2008 – Present); Senior Vice
President of the Bank (January 2008 – Present); Vice President
of the Bank (December 2007 – January 2008); Senior Vice
President, Northern State Bank (August 2006 – November 2007);
and Senior Vice President, NVE Bank (1997 – July
2006)
|
||
Mark
S. Cardone Age – 47
|
2001
the Company 2001 the Bank
|
Vice
President of the Company and Senior Vice President & Branch
Administrator of the Bank (2001 – Present)
|
||
Julie
D’Aloia Age – 48
|
1999
the Company 1998 the Bank
|
Vice
President of the Company (2001 – Present); Secretary of the
Company (1998 – Present); Corporate Secretary of the Company
(1998 – August 2007); Senior Vice President of the Bank
(2001 – Present); Secretary of the Bank
(1998 – Present); Assistant-To-The-President of the Bank
(1995 – August 2007); Corporate Secretary of the Bank
(1998 – August 2007)
|
||
Joseph
D. Gangemi Age – 29
|
2008
the Company 2004 the Bank
|
Executive
Assistant to Chief Executive Officer, Investor Relations Officer and
Corporate Secretary of the Company and the Bank (June
2008 – Present); Executive Assistant to Chief Executive Officer
and Investor Relations Officer of the Bank (January 2008 – June
2008); Executive Assistant to Chief Executive Officer of the Bank (August
2007 – January 2008); Executive Assistant to Chief Financial
Officer of the Bank (August 2005 – August 2007); Finance
Assistant of the Bank (November 2004 – August 2005); Teller of
the Bank (February 2004 – November 2004)
|
||
Ronald
Shapiro Age – 58
|
2008
the Company 2007 the Bank
|
Vice
President and Senior Lending Officer of the Company (July
2008 – Present); Senior Vice President and Senior Lending
Officer of the Bank (July 2008 – Present); Vice President of the
Bank (October 2007 – July 2008); Director of Lender Services,
The Schonbraun McCann Group (real estate finance consulting firm)
(February 2006 – August 2007); and Director and Mid Atlantic
Regional Manager of Artesia Mortgage Capital Corporation (August
2004 – December 2005)
|
||
Lori
A. Wunder Age – 46
|
1998
the Company 1995 the Bank
|
Vice
President of the Company and Senior Vice President of the Bank
(1998 – Present); Vice President of the Bank
(1997 – 1998); Assistant Vice President of the Bank
(1996 – 1997); and Assistant Cashier of the Bank
(1995 – 1996)
|
||
Stephen
J. Mauger Age – 60
|
2010
the Company
2010
the Bank
|
Vice
President, Treasurer and Chief Financial Officer of the Company (March 25,
2010 - Present); Senior Vice President and Chief Financial Officer of the
Bank (March 8, 2010 - Present); Executive Vice President, Chief Financial
Officer and Secretary of Platinum Financial Services, Inc./Platinum Bank
and Trust, N.A. (2008 – 2009); Senior Vice President, Treasurer and Chief
Financial Officer of Greater Community Bancorp, Totowa, NJ (2005 – 2008);
Vice President, Risk Management and Assurance, Greater Community Bancorp,
Totowa, NJ (2004 – 2005)
|
-5-
Code
of Ethics
We are
required to disclose whether we have adopted a code of ethics that applies to
our principal executive officer, principal financial officer, principal
accounting officer or controller or persons performing similar
functions. We have adopted such a code of ethics and have posted a
copy of the code on our internet website at the internet
address: http://www.ucnb.com. Copies
of the code may be obtained free of charge from our website at the above
internet address.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934 requires our directors, executive
officers and persons holding more than 10% of a registered class of the equity
securities of Center Bancorp to file with the SEC and to provide us with initial
reports of ownership, reports of changes in ownership and annual reports of
ownership of our common stock and other equity securities. As a result of the
adoption of the Sarbanes-Oxley Act of 2002, the reporting obligations with
respect to certain transactions were accelerated to 48 business hours after the
transaction. Based solely upon a review of such reports furnished to us, we
believe that all such Section 16(a) reports were timely filed with respect to
the year ended December 31, 2009, except that director Alexander A. Bol in
September 2009 inadvertently reported two stock purchases one day late and three
days late, respectively, director Lawrence Seidman inadvertently reported seven
stock purchases from one to four days late, James Kenney reported a purchase in
the Company’s rights offering 90 days late, all other directors reported
purchases in the rights offering seven days late in October 2009 as a result of
delays in the process of allocating shares in the rights offering and all
directors inadvertently reported 30 days late stock options granted to them in
March 2009.
Item
11. Executive Compensation.
Compensation Discussion
and Analysis
General
As part
of the SEC’s executive compensation disclosure requirements, issuers must
provide a “Compensation Discussion and Analysis” in which issuers explain
the material elements of their compensation of executive officers by describing
the following:
|
·
|
the
objectives of the issuer’s compensation
programs;
|
|
·
|
the
conduct that the compensation programs are designed to
reward;
|
-6-
|
·
|
the
elements of the compensation
program;
|
|
·
|
the
rationale for each of the elements of the compensation
program;
|
|
·
|
how
the issuer determines the amount (and, where applicable, the formula) for
each element of the compensation program;
and
|
|
·
|
how
each element and the issuer’s decisions regarding that element fit into
the issuer’s overall compensation objectives and affect decisions
regarding other elements of the compensation
program.
|
Our
compensation philosophy is dictated by the Compensation Committee of our Board
of Directors. The duties and responsibilities of the Compensation Committee,
which consists entirely of independent directors of the Board, are
to:
|
·
|
provide
guidance regarding the design of our employee benefit
plans;
|
|
·
|
oversee
the investments of our 401(k) plan and qualified pension
plan;
|
|
·
|
establish
the compensation of our chief executive officer, subject to the terms of
any employment agreement;
|
|
·
|
with
input from our chief executive officer, establish or recommend to our
Board the compensation of our other executive officers, subject to the
terms of any existing employment agreements;
and
|
|
·
|
monitor
our overall compensation policies and employee benefit
plans.
|
Our chief
executive officer participates in determinations regarding the compensation and
design of our benefit programs for all employees, but does not participate in
setting his own compensation.
Our
Compensation Objectives and the Focus of Our Compensation Rewards
We
believe that an appropriate compensation program should draw a balance between
providing rewards to executive officers while at the same time effectively
controlling compensation costs. We reward executive officers in order to
attract highly qualified individuals, to retain those individuals in a highly
competitive marketplace for executive talent and to incentivize them to perform
in a manner that maximizes our corporate performance. Accordingly, we have
sought to structure our executive compensation with a focus on
pay-for-performance. We seek to offer executive compensation programs that
align each individual’s financial incentives with our strategic direction and
corporate values.
We view
executive compensation as having three key elements:
-7-
|
·
|
a
current cash compensation program consisting of salary and cash bonus
incentives;
|
|
·
|
long-term
equity incentives reflected in grants of stock options and/or restricted
stock; and
|
|
·
|
other
executive retirement benefits and
perquisites.
|
These
programs aim to provide our executives with an overall compensation package that
is competitive with comparable financial institutions, and aligns individual
performance with our long-term business objectives.
We
annually review our mix of short term performance incentives versus longer term
incentives, and incorporate in our compensation reviews the data from studies
performed as to appropriate competitive levels of compensation and
benefits. We do not have set percentages of short term versus long term
incentives. Instead, we look to provide a reasonable balance of those
incentives.
We also
periodically “benchmark” our compensation programs to industry available
databases and to a peer group. The process has involved hiring independent
compensation consulting firms to perform studies that employ the following
processes:
|
·
|
gathering
data from industry specific global and regional compensation databases
based upon company size for each executive
position;
|
|
·
|
determining
an appropriate peer group of financial institutions based upon similar
size and geography;
|
|
·
|
developing
data points for salary and total cash compensation comparisons and equity
opportunities;
|
|
·
|
averaging
peer group and database statistics together to produce a relevant “market”
at the data points for salary, total cash compensation and equity and
comparing our positions to the “market”
data;
|
|
·
|
evaluating
other compensation components, including executive benefits as compared to
competitive standards; and
|
|
·
|
comparing
our compensation levels to the “market” and determining our relative
positioning for competitiveness as to salary, total cash compensation and
non-cash compensation.
|
We did
not engage in any benchmarking analyses during 2009.
-8-
Although
we gain considerable knowledge about the competitiveness of our compensation
programs by conducting periodic studies, we recognize that each financial
institution is unique and that significant differences between institutions in
regard to executive compensation practices exist. We believe that the
combination of executive compensation programs that we provide fulfill our
objectives of providing a competitive level of compensation and benefits in
order to attract and retain key executives. We also believe that our
incentive programs appropriately reward performance to achieve profitability and
growth while at the same time allowing us to maintain controls over our
compensation costs.
Historically,
our policy for allocating between long-term and currently paid compensation has
been to ensure adequate base compensation to attract and retain personnel, while
providing incentives to maximize long-term value for our company and our
shareholders. Likewise, we provide cash compensation in the form of base salary
to meet competitive salary norms and, when appropriate, we have rewarded good
performance on an annual basis in the form of bonus compensation. We have
provided non-cash compensation to reward superior performance against specific
objectives and long-term strategic goals. Our compensation package for
2009 for the executive officers named in the Summary Compensation Table below
ranged, as a percentage of total compensation, from 95.4% to 86.9% in cash
compensation and 13.1% to 4.6% in non-cash compensation, including
benefits. No equity awards were granted in 2009.
Impact
of our Participation in the Treasury’s Capital Purchase Program
In
response to unprecedented market turmoil, the Emergency Economic Stabilization
Act (“EESA”) was enacted on October 3, 2008. Under EESA, the United
States Treasury (the “Treasury”) established the TARP Capital Purchase Program,
pursuant to which the Treasury purchases preferred stock and warrants from
financial institutions. On January 12, 2009, the Treasury purchased $10,000,000
of our non-convertible preferred stock (the “Preferred Shares”) under the TARP
Capital Purchase Program.
Participants
in the TARP Capital Purchase Program were required to accept several
compensation-related limitations associated with this Program. In January 2009,
five of our executive officers (Messrs. Weagley, Abrahamian, Shapiro and Boylan
and Ms. Wunder) agreed in writing to accept the compensation standards in
existence at that time under the TARP Capital Purchase Program and thereby cap
or eliminate some of their contractual or legal rights. The provisions agreed to
were as follows:
-9-
|
·
|
No golden parachute
payments. The term “golden parachute payment”
under the TARP Capital Purchase Program (as distinguished from the
definition under the Stimulus Act referred to below) refers to a severance
payment resulting from involuntary termination of employment, or from
bankruptcy of the employer, that exceeds three times the terminated
employee’s average annual compensation over the five years prior to
termination. Our senior executive officers have agreed to forego all
golden parachute payments for as long as they remain “senior executive
officers” (the CEO, the CFO and the three highest-paid executive officers
other than the CEO and CFO) and the Treasury continues to hold the equity
or debt securities that we issued to it under the TARP Capital Purchase
Program (the period during which the Treasury holds those securities is
referred to by us as the “CPP Covered
Period”).
|
|
·
|
Clawback of Bonus and
Incentive Compensation if Based on Certain Material Inaccuracies.
Our senior executive officers agreed to a
“clawback provision”. Any bonus or incentive compensation paid to
them during the CPP Covered Period is subject to recovery or “clawback” by
us if the payments were based on materially inaccurate financial
statements or any other materially inaccurate performance metric criteria.
The senior executive officers acknowledged that each of our compensation,
bonus, incentive and other benefit plans, arrangements and agreements
(including golden parachute, severance and employment agreements)
(collectively, “Benefit Plans”) with respect to them was deemed amended to
the extent necessary to give effect to such clawback and the restriction
on golden parachute payments.
|
|
·
|
No Compensation Arrangements
that Encourage Excessive Risks. We are required to review our
Benefit Plans to ensure that they do not encourage senior executive
officers to take unnecessary and excessive risks that threaten the value
of our company. To the extent any such review requires revisions to any
Benefit Plan with respect to our senior executive officers, they agreed to
negotiate such changes promptly and in good
faith.
|
During
the CPP Covered Period, we are not permitted to take federal income tax
deductions for compensation paid to the senior executive officers in excess of
$500,000 per year, subject to certain exceptions.
On
February 17, 2009, the American Recovery and Reinvestment Act of 2009 (the
“Stimulus Act”) was enacted. The Stimulus Act contains several provisions
designed to establish executive compensation and governance standards for
financial institutions (such as us) that received or will receive financial
assistance under TARP. In certain instances, the Stimulus Act modified the
compensation-related limitations contained in the TARP Capital Purchase Program;
however, the Stimulus Act also created additional compensation-related
limitations and directed the Treasury to establish standards for executive
compensation applicable to participants in TARP. In their January 2009
agreements, our executives did not waive their rights with respect to the
provisions implemented by the Stimulus Act; other employees now covered by these
provisions were not asked and did not agree to waive their rights. The
compensation-related limitations applicable to us which have been added or
modified by the Stimulus Act are as follows:
-10-
|
·
|
No severance payments.
Under the Stimulus Act, the term “golden
parachutes” is defined to include any severance payment resulting from
involuntary termination of employment, except for payments for services
performed or benefits accrued. Under the Stimulus Act, we are prohibited
from making any severance payment to our “senior executive officers”
(defined in the Stimulus Act as the five highest paid senior executive
officers) and our next five most highly compensated employees during the
period that the Preferred Shares are
outstanding.
|
|
·
|
Recovery of Incentive
Compensation if Based on Certain Material Inaccuracies. The
Stimulus Act contains the “clawback provision” discussed above but extends
its application to any bonus awards and other incentive compensation paid
to any of our senior executive officers and our next 20 most highly
compensated employees during the period that the Preferred Shares are
outstanding that is later found to have been based on materially
inaccurate financial statements or other materially inaccurate
measurements of performance.
|
|
·
|
No Compensation Arrangements
that Encourage Earnings Manipulation. Under the
Stimulus Act, during the period that the Preferred Shares are outstanding,
we are prohibited from entering into compensation arrangements that
encourage manipulation of our reported earnings, or that provide
incentives to take unnecessary or excessive risks, to enhance the
compensation of any of our
employees.
|
|
·
|
Limit on Incentive
Compensation. The Stimulus Act contains a
provision that prohibits the payment or accrual of any bonus, retention
award or incentive compensation to our highest paid employee (presently,
Mr. Weagley) while the Preferred Shares are outstanding other than awards
of long-term restricted stock that (i) do not fully vest while the
Preferred Shares are outstanding, (ii) have a value not greater than
one-third of the total annual compensation of such employee and
(iii) are subject to such other restrictions as will be determined by
the Treasury. The prohibition on bonuses does not preclude payments
required under written employment contracts entered into on or prior to
February 11, 2009.
|
|
·
|
Compensation and Human
Resources Committee Functions. The Stimulus
Act requires that our Compensation Committee be comprised solely of
independent directors and that it meet at least semiannually to discuss
and evaluate our employee compensation plans in light of an assessment of
any risk posed to us from such compensation
plans.
|
-11-
|
·
|
Compliance
Certifications. The Stimulus Act requires
an annual written certification by our chief executive officer and chief
financial officer with respect to our compliance with the provisions of
the Stimulus Act.
|
|
·
|
Treasury Review of Excessive
Bonuses Previously Paid. The Stimulus Act
directs the Treasury to review all compensation paid to our senior
executive officers and our next 20 most highly compensated employees to
determine whether any such payments were inconsistent with the purposes of
the Stimulus Act or were otherwise contrary to the public interest. If the
Treasury makes such a finding, the Treasury is directed to negotiate with
us and the applicable employee for appropriate reimbursements to the
federal government with respect to the compensation and
bonuses.
|
|
·
|
Say on Pay.
Under the Stimulus Act, we are required to have a
“say on pay vote” by the shareholders on executive compensation at our
shareholder meetings during the period that the Preferred Shares are
outstanding. As was the case for last year’s annual meeting of
shareholders, this requirement will apply to our 2010 annual meeting of
shareholders.
|
Specific
Elements of Our Compensation Program
We have
described below the specific elements of our compensation program for executive
officers.
Salary. While consolidation
continues within the banking industry, and recent experience continues to
demonstrate that there remains a limited supply of qualified experienced
executives, we believe that it is important that we retain a competitive salary
structure in order to retain our existing qualified officers and maintain a base
pay structure consistent with the structures utilized for the compensation of
similarly situated executives in the industry and at similarly sized
institutions. We maintain salary guidelines for our executive officers as part
of a structured salary pay scale that is reviewed periodically based upon
industry standards developed through studies by independent compensation
consulting firms engaged by our Compensation Committee for that purpose. We
believe that a key objective of our salary structure is to maintain reasonable
“fixed” compensation costs by targeting base salaries at a competitive average,
taking into effect performance as well as seniority.
Certain
of the officers named in our Summary Compensation Table below (each of the
officers named in that table are referred to in this proxy statement as our
“Named Officers”) who continue to serve as our executive officers were parties
to employment agreements that establish base salary levels. From year-to-year,
the Named Officers’ salary levels subject to those employment agreements may be
increased, but may not be decreased. Other executive officers are employed at
will but in certain instances have a change in control agreement that provides
for additional compensation in the event of the termination of their employment
in connection with certain business combinations.
-12-
Mr.
Weagley’s employment agreement entitled him to receive $25,000 of our common
stock on December 31, 2009 as part of his annual compensation in lieu of salary.
This grant was made in January 2010 and, accordingly, is not included in the
tables contained in this proxy statement. The grant was effected
under our 2009 Equity Incentive Plan.
Short-Term Incentive Compensation. We
maintain an Achievement Incentive Plan, which we refer to as our “AIP”. Our AIP
is designed to motivate the plan participants and to correlate total cash
compensation to performance in a manner designed to provide meaningful
incentives for executive officers in general and to provide competitive levels
of total cash compensation. Under the terms of the AIP, our officers are
eligible to receive incentive pay for performance. For our Chief Executive
Officer, Anthony C. Weagley, performance goals relate solely to the performance
of Center Bancorp and its subsidiaries. For all other participants, goals relate
both to individual performance and overall corporate performance. Individual
performance goals vary by officer job function and are adjusted each year based
upon our tactical and strategic objectives. The extent to which we achieve our
corporate goals and profitability as compared to budget, are factors considered
in the corporate performance portion of our AIP. Under the AIP, performance
goals at both the Bank-wide level and the individual performance level are
impacted by subjective factors and by substantial discretion within the
Compensation Committee. Thus, for example, while the bank-wide portion of the
performance goals are tied to Union Center National Bank’s strategic plan and
budget, after year-end, the Compensation Committee examines not only whether the
Bank has reached targeted budget goals but also how the Bank reached the levels
that it actually reached. If, in fact, the Bank reaches a budget goal but does
so in a manner that is not consistent with certain specific objectives reflected
in the strategic plan, bonus amounts payable with respect to bank-wide
performance may be reduced or eliminated.
The
targeted incentive performance levels under our AIP are established after
consideration of industry practices and norms gathered from our periodic
benchmarking studies. For 2009, targeted awards as a percentage of salary were:
for the Chief Executive Officer: 30%, Senior Vice Presidents: 20%, Vice
Presidents: 15%, and Assistant Vice Presidents and Assistant Cashiers: 10%.
Based upon actual performance, up to 140% of the targeted award percentage may
be achieved. Participants are determined annually by the CEO and approved by the
Board of Directors and are assigned specific objectives throughout the year
which comprise the individuals’ respective “personal” goals. These personal
goals typically represent at least 50% of the total available payout, and can
range to up to 100% of the total available payout under the plan. “Bank” goals
may account for up to 50% of the total payout, but are typically no more than
25% of the total available payout. For 2009 and until the repayment to the
Treasury of the TARP Capital Purchase Program investment, the Chief Executive
Officer is not eligible to participant in the AIP due to prohibitions applicable
to participants in the TARP Capital Purchase Program.
-13-
For 2009,
one or more of the following performance criteria for Center Bancorp and its
subsidiaries was specified for each executive who participated in the
AIP:
Bank Goals and
Objectives:
|
·
|
Achievement
of the Budget (Net income target of $5.1
million)
|
|
·
|
Return
on Equity (Target of 6.23%)
|
|
·
|
Efficiency
Ratio (68% based on plan)
|
|
·
|
Employee
Turnover (25% or less)
|
|
·
|
Deposit
Growth (Target level of $747.7
million)
|
|
·
|
Loan
Growth (Target level of $755.9
million)
|
|
·
|
Satisfactory
Examination Results
|
|
·
|
Achieving
Strategic Planning Objectives
|
Individual Goals and
Objectives (which are designed to drive achievement of the targets described
above) for 2009 included:
|
·
|
Increasing
Capital and Replacing Cash
|
|
·
|
Reducing
High Cost Borrowings
|
|
·
|
Maintaining
or Improving the Bank’s Regulatory
Ratings
|
|
·
|
Profitability
|
|
·
|
Systems
uptime (maintaining systems uptime to both internal end users and
clients)
|
|
·
|
Completion
of Strategic Computer Conversions to Outsourced
Vendors
|
During
2009, the Company also maintained a Loan Incentive Plan. Participants include
individual loan executives from the Chief Lending Officer to each individual
loan officer who is in good standing and has received satisfactory performance
evaluations. This incentive plan provides quarterly cash payments linked to nine
different quantifiable measures or production objectives. The plan is tied to
Bank-wide and individual performance. The plan provides a pool, based on each
individual’s production, used to pay out incentives for quantifiable credit and
performance goals which are weighted for the specific profitability and quality
measures. The Loan Incentive Plan prohibits or reduces payments to participating
executives in the event the delinquency ratio exceeds stated levels, credits
deteriorate and/or loan losses increase. Participants in the Loan Incentive Plan
may not participate in the AIP. For 2009, the targeted performance goals for all
participants in the Loan Incentive Plan included the following:
·
|
Deposit
growth
|
·
|
Fee
Income Growth
|
·
|
New
Loans
|
·
|
Loan
Credit Risk Rating
|
-14-
·
|
Portfolio
ROA
|
·
|
Improving
Loan Portfolio Delinquencies
|
·
|
Improving
Loan Review Rating
|
A
participant in the AIP or Loan Incentive Plan must have at least a satisfactory
performance appraisal in order to be eligible for an incentive
award.
In light
of the Company’s 2009 performance, the Compensation Committee and our Board
determined that no AIP awards would be granted to our Chief Executive Officer or
to any of the other Named Officers with respect to 2009
performance. Mr. Shapiro and Mr. Boylan received awards under the
Loan Incentive Plan. See the “Summary Compensation
Table.”
Long-Term Incentive
Compensation. We provide long-term incentives to the Named
Officers through our stock incentive plans. During 2009, our Named Officers
became eligible to participate in our 2009 Equity Incentive Plan. We refer to
that plan as our “2009 Stock Plan”. From time to time, the Compensation
Committee has granted stock options and/or restricted stock awards to our
executive officers. Stock options have been granted at an exercise
price equal to the then current market price of our common
stock. Options and restricted stock awards under the 2009 Stock Plan
are granted on an ad
hoc basis taking into account financial performance and results. No
options were granted to our senior executive officers in 2006, 2007, 2008 or
2009.
In 2006,
our Board established the Center Bank Open Market Share Purchase Incentive Plan,
which we refer to as the “PIP”. We established the PIP in order to
encourage ownership and retention of our common stock by our executive
officers. Under the PIP, any executive officer who applies up to 50%
of his or her cash bonus to the purchase of our common stock in the open market
will receive an additional cash amount to cover the Federal, State or local
income taxes on the portion of the bonus used to make these
purchases. To be eligible for the bonus, the purchased shares must be
held by the executive officer for at least 30 days. Since no cash
bonuses were paid to the Named Officers in connection with performance during
2006, 2007, 2008 or 2009, no open market purchases were made under the PIP for
those years.
Other Elements of Compensation for
Executive Officers. In order to attract and retain qualified
executives, we provide executives with certain benefits and perquisites,
consisting primarily of retirement benefits through our 401(k) Plan, executive
life insurance and automobile allowances. Details of the values of
these benefits and perquisites may be found in the footnotes and narratives to
the Summary Compensation Table below.
-15-
Employment
Agreements
For many
years, we have had employment agreements with Anthony C. Weagley and Lori A.
Wunder. In connection with its review of our employment agreements in 2007 and
2008, our Compensation Committee approved an extension of the term of each of
the employment agreements with Mr. Weagley and Ms. Wunder through December 31,
2009. Although the terms of these agreements were extended until
December 31, 2009, the multiple for determining the amount of severance and
benefits that the executive would be entitled to receive in the event of a
termination without cause or a resignation for “good reason” was limited by our
Compensation Committee to two, even if termination of the executive’s employment
occurs when there is more than two years remaining in the term. If,
however, the executive’s employment is terminated or he or she resigns for “good
reason” following a “Change in Control Event”, then the multiple for determining
severance pay and benefits will be three (as was previously provided by their
employment agreements). We made similar changes in employment agreements for
other executive officers who are not Named Officers.
In 2008,
we further amended Mr. Weagley’s employment agreement. Mr. Weagley’s amended and
restated employment agreement revised the compensation structure upon
termination of employment so that the multiple for determining his severance pay
and benefits will be three regardless of whether or not his termination of
employment occurs in connection with a Change in Control Event and eliminated a
tax gross-up provision which could have added substantial expense in the event
that the payment of benefits upon termination were to involve so-called “excess
parachute payments.”
Our
Compensation Committee has expressed an intention not to enter into formal
employment agreements with newly hired or promoted senior vice
presidents. Instead, the Compensation Committee has expressed a
desire to enter into non-competition agreements with new senior vice presidents.
Such agreements generally provide for enhanced compensation in the event that a
change in control occurs while the applicable executive officer is employed by
us. We entered into a change in control agreement with Ronald Shapiro, our
senior lending officer, in July 2008. See “Executive
Compensation - Employment Agreements.”
Compliance
with Sections 162(m), EESA and 409A of the Internal Revenue Code
Section
162(m) of the Internal Revenue Code denies a deduction to any publicly held
corporation for compensation paid to certain “covered employees” in a taxable
year to the extent that compensation exceeds $1,000,000 for a covered employee.
Certain performance-based compensation that has been approved by our
shareholders is not subject to this limitation. As a result, stock options
granted under our 2009 Stock Plan are not subject to the limitations of Section
162(m). However, restricted stock awards under our 2009 Stock Plan generally
will not be treated as performance-based compensation. Restricted stock award
grants made to date by us have not been at levels that, together with other
compensation, approached the $1,000,000 limit. Also, since we retain discretion
over bonuses under the AIP and the Loan Incentive Plan, those bonuses also will
not qualify for the exemption for performance-based compensation. The
Compensation Committee intends to provide executive compensation in a manner
that will be fully deductible for federal income tax purposes, so long as that
objective is consistent with overall business and compensation objectives.
However, we reserve the right to use our judgment to authorize compensation
payments that do not comply with the exemptions in Section 162(m) when we
believe that such payments are appropriate and in the best interests of our
shareholders, after taking into consideration changing business conditions or
the executive officer’s performance.
-16-
While our
Preferred Shares are outstanding, we are not permitted to take federal income
tax deductions for compensation paid to the senior executive officers in excess
of $500,000 per year, subject to certain exceptions.
It is
also our intention to maintain our executive compensation arrangements in
conformity with the requirements of Section 409A of the Internal Revenue Code,
which imposes certain restrictions on deferred compensation
arrangements.
Summary
of Cash and Certain Other Compensation
The
following table sets forth, for the years ended December 31, 2007, 2008 and
2009, a summary of the compensation earned by Anthony C. Weagley, A. Richard
Abrahamian and our three other most highly compensated executive officers who
were employed by us as of December 31, 2009. Mr. Weagley served as our chief
financial officer throughout 2007 and through March 2008 and as our chief
executive officer since August 23, 2007. Mr. Abrahamian served as our chief
financial officer from March 27, 2008 until the effective date of his
resignation, which was February 19, 2010. We refer to the executive officers
named in this table as the “Named Officers”, we refer to Center Bancorp as
“Center” and we refer to Union Center National Bank as “UCNB.”
-17-
SUMMARY
COMPENSATION TABLE
Name and Principal
Position
(a)
|
Year
(b)
|
Salary
($)
(c)
|
Bonus
($)
(d)
|
Stock
Awards
($)
(e)
|
Option
Awards
($)
(f)
|
Non-Equity
Incentive Plan
Compensation
(g)
|
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
(h)
|
All Other
Compensation
($)
(i)
|
Total
($)
(j)
|
||||||||||||||||||
Anthony
C. Weagley,
|
2009
|
250,000
|
-
|
-
|
-
|
-
|
19,973
|
17,802
|
287,775
|
||||||||||||||||||
President
and Chief
|
2008
|
225,000
|
-
|
25,000
|
-
|
-
|
16,657
|
16,425
|
283,082
|
||||||||||||||||||
Executive
Officer of Center and UCNB from August 23, 2007 to
Present; Vice President and Treasurer of Center and Sr. Vice
President and Cashier of UCNB (prior periods) (Mr. Weagley continued to
serve as Chief Financial Officer of Center until March 27, 2008 and as
Chief Financial Officer of UCNB until February 2008)
|
2007
|
195,312
|
-
|
-
|
-
|
-
|
16,089
|
30,495
|
241,896
|
||||||||||||||||||
A.
Richard Abrahamian,
|
2009
|
175,100
|
-
|
-
|
-
|
-
|
-
|
8,512
|
183,612
|
||||||||||||||||||
Vice
President, Treasurer
|
2008
|
148,750
|
10,000
|
-
|
-
|
10,200
|
-
|
6,300
|
175,250
|
||||||||||||||||||
and
Chief Financial Officer of Center, March 27, 2008 to February 19, 2010;
Vice President and Treasurer of Center, February 19, 2008 to March 27,
2008; Senior Vice President and Chief Financial Officer of UCNB, February
19, 2008 to February 19, 2010
|
2007
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Lori
A. Wunder,
|
2009
|
132,612
|
-
|
-
|
-
|
-
|
14,295
|
4,515
|
151,422
|
||||||||||||||||||
Vice
President of
|
2008
|
128,750
|
-
|
-
|
-
|
7,725
|
(732
|
)
|
4,622
|
140,365
|
|||||||||||||||||
Center;
Senior Vice President of UCNB
|
2007
|
125,000
|
-
|
-
|
-
|
-
|
15,674
|
30,540
|
171,214
|
||||||||||||||||||
Ronald
M. Shapiro
|
2009
|
165,856
|
-
|
-
|
-
|
50,908
|
-
|
15,113
|
231,877
|
||||||||||||||||||
Vice
President & Senior
|
2008
|
132,500
|
12,500
|
-
|
-
|
29,361
|
-
|
6,708
|
181,069
|
||||||||||||||||||
Lending
Officer of Center and Senior Vice President and Senior Lending Officer of
UCNB July 1, 2008 to Present; Vice President of UCNB October 15, 2007 to
July 1, 2008
|
2007
|
22,279
|
-
|
-
|
-
|
-
|
-
|
-
|
22,279
|
||||||||||||||||||
William
J. Boylan
|
2009
|
128,925
|
-
|
-
|
-
|
61,036
|
-
|
17,005
|
206,966
|
||||||||||||||||||
Vice
President of Center
|
2008
|
125,000
|
-
|
-
|
-
|
21,750
|
-
|
7,825
|
154,575
|
||||||||||||||||||
July
31, 2008 to Present and Senior Vice President of UCNB January 15, 2008 to
Present; Vice President of UCNB December 3, 2007 to January 15,
2008
|
2007
|
8,750
|
20,000
|
-
|
-
|
-
|
-
|
-
|
28,750
|
Mr.
Abrahamian, Mr. Shapiro and Mr. Boylan first joined UCNB on February 19, 2008,
October 15, 2007 and December 3, 2007, respectively. Their compensation is shown
for all periods when they were employed by Center or UCNB. Mr.
Abrahamian resigned on January 28, 2010. Mr. Weagley and Ms. Wunder were
employed by Center and UCNB for all periods covered by the table above;
accordingly, the table reflects compensation for Mr. Weagley and Ms. Wunder for
all capacities served during such periods.
-18-
For us,
2007 was a difficult year. Accordingly, we did not pay bonuses to any
of the Named Officers for performance during 2007 and we did not grant stock
awards or stock options to any of the Named Officers during 2007. Furthermore,
the Named Officers did not receive any compensation from non-equity incentive
plans with respect to performance during 2007. Both 2008 and 2009 were also
challenging, given the extraordinary turmoil in the global
economy. Nevertheless, we were profitable, with a substantial portion
of our earnings derived from core operations in 2008 and 2009. As a
result, limited bonus compensation was paid during 2008 to the Named
Officers. Any bonuses granted under the AIP or the Loan Incentive
Program are shown in the Non-Equity Incentive Plan Compensation
column. (Such amounts were inadvertently included under the 2008
Bonus column in the 2008 proxy statement, but are correctly reflected in the
Non-Equity Incentive Plan Compensation column above.) For a
description of the AIP and the Loan Incentive Plan, see “Compensation Discussion
and Analysis.” We also paid sign-on bonuses with respect to certain
new members of senior management in 2007 and 2008. Earnings for 2009
were impacted by significantly lower short-term interest rates, intense
competition for deposits in the Company’s marketplace and the continuing
volatility in the financial markets. No bonuses were paid to the
Named Officers during 2009 and no amounts were paid to the Named Officers for
2009 under non-equity incentive plans, other than the amounts paid to Mr.
Shapiro and Mr. Boylan under the Loan Incentive Plan, which are set forth in the
Non-Equity Incentive Plan Compensation column.
In the
table above:
|
·
|
when
we refer to “stock awards,” we are referring to the aggregate grant date
fair value computed in accordance with FASB ASC Topic
718. Pursuant to Mr. Weagley’s employment agreement, he was
entitled to receive shares of common stock having a value of $25,000 on
December 31, 2009. As this stock award was actually awarded to
Mr. Weagley in January 2010, it is not included in the table
above. Also pursuant to his employment agreement, Mr. Weagley
received 3,028 shares of Center Bancorp common stock on December 31, 2008
having a value of $25,000, and this amount is included under the column
“Stock Awards” for 2008. This stock award was fully vested on
the grant date;
|
|
·
|
when
we refer to an “incentive plan”, we are referring to a plan that provides
compensation to incentivize performance over a specified period, whether
such performance is measured by reference to our financial performance,
our stock price or any other performance measure (including individual
performance). A “non-equity incentive plan” is an incentive
plan in which benefits are not valued by reference to
FAS 123R. Our AIP and our Loan Incentive Plan are
non-equity incentive plans;
|
-19-
|
·
|
when
we refer to changes in pension values in column “h” above, we are
referring to the aggregate change in the present value of the Named
Officer’s accumulated benefit under the Union Center National Bank Pension
Plan from the measurement date used for preparing our 2006 year-end
financial statements to the measurement date used for preparing our 2007
year-end financial statements (in the case of our 2007 compensation), from
the measurement date used for preparing our 2007 year-end financial
statements to the measurement date used for preparing our 2008 year-end
financial statements (in the case of our 2008 compensation) and from the
measurement date used for preparing our 2008 year-end financial statements
to the measurement date used for preparing our 2009 year-end financial
statements (in the case of our 2009
compensation);
|
|
·
|
the
Named Officers did not receive any nonqualified deferred compensation
earnings during 2007, 2008 or 2009; when we refer to “nonqualified
deferred compensation earnings” in this table, we are referring to
above-market or preferential earnings on compensation that is deferred on
a basis that is not tax-qualified, such as earnings on a nonqualified
defined contribution plan;
|
|
·
|
“all
other compensation” includes the following for
2009:
|
|
§
|
for
Mr. Weagley: $10,800 represents expense with respect to an automobile
allowance; $6,250 represents matching payments that we made under our
401(k) plan; and $752 represents payment for group term-life
insurance;
|
|
§
|
for
Mr. Abrahamian: $7,200 represents expense with respect to an automobile
allowance and $1,312 represents payment for group term-life
insurance;
|
|
§
|
for
Ms. Wunder: $3,986 represents matching payments that we made under our
401(k) plan and $529 represents payment for group term-life
insurance;
|
|
§
|
for
Mr. Shapiro: $7,200 represents expense with respect to an automobile
allowance; $6,723 represents matching payments that we made under our
401(k) plan; and $1,190 represents payment for group term-life insurance;
and
|
|
§
|
for
Mr. Boylan: $7,200 represents expense with respect to an automobile
allowance; $8,645 represents matching payments that we made under our
401(k) plan; and $1,160 represents payment for group term-life
insurance.
|
Grants
of Plan-Based Awards
During
2009, our Named Officers did not receive stock awards or stock
options. The amounts under “Estimated Future Payouts Under Non-Equity
Incentive Plan Awards” represents the threshold (minimum), target and maximum
cash amounts that could have been earned by each Named Officer under the
Company’s AIP and, for Mr. Shapiro and Mr. Boylan, the Loan Incentive Plan, if
specified performance targets had been attained. As none of the AIP
targets were attained, no amounts were paid under the AIP for
2009. Mr. Shapiro and Mr. Boylan received amounts under the Loan
Incentive Plan in 2009. Those amounts are included in the Summary
Compensation Table above. For a description of the various
performance targets, please see the description of the AIP and the Loan
Incentive Plan under the Compensation Discussion and Analysis
above.
-20-
|
All other
|
All other
|
|
|||||||||||||||||||||||||||||
|
Stock
|
Option
|
||||||||||||||||||||||||||||||
|
Awards:
|
Awards:
|
Exercise
|
Grant Date
|
||||||||||||||||||||||||||||
|
Number of
|
Number of
|
or Base
|
Fair Value
|
||||||||||||||||||||||||||||
|
Estimated Future Payouts Under Non-
|
Shares of
|
Securities
|
Price of
|
of Stock
|
|||||||||||||||||||||||||||
|
Grant
|
Equity Incentive Plan Awards
|
Stock or
|
Underlying
|
Option
|
and Option
|
||||||||||||||||||||||||||
Name
|
Date
|
Threshold
|
Target
|
Maximum
|
Units
|
Options
|
Awards
|
Awards
|
||||||||||||||||||||||||
(a)
|
(b)
|
($)(c)
|
($)(d)
|
($)(e)
|
(#)(i)
|
(#)(j)
|
($/Sh)(k)
|
($)(l)
|
||||||||||||||||||||||||
Anthony
C. Weagley
|
—
|
—
|
75,000
|
105,000
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||||
A.
Richard Abrahamian
|
—
|
—
|
35,020
|
49,028
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||||
Lori
A. Wunder
|
—
|
—
|
26,522
|
37,131
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||||
Ronald
M. Shapiro
|
—
|
—
|
40,000
|
(1)
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||||
William
J. Boylan
|
—
|
—
|
40,000
|
(1)
|
—
|
—
|
—
|
—
|
(1) The
executive could also be entitled to a percentage overrun of additional incentive
over the target, as outlined in the incentive plan document.
Outstanding
Equity Awards at December 31, 2009
The
following table sets forth, for each of the Named Officers, information
regarding stock options and unvested stock awards outstanding at December 31,
2009. As indicated in the table, as of that date, all stock options
held by the Named Officers were exercisable and all stock awards were
vested.
Option Awards
|
Stock Awards
|
|||||||||||||||||||||||
Name
(a)
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
(b)
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Non-
Exercisable
(c)
|
Option
Exercise
Price
($)
(e)
|
Option
Expiration
Date
(f)
|
Number of
Shares or Units
of Stock That
Have Not
Vested
(#)
(g)
|
Market Value of
Shares or Units of
Stock That Have Not
Vested
($)
(h)
|
||||||||||||||||||
Anthony
C. Weagley
|
4,631
|
0
|
8.97
|
6/20/2012
|
|
|
||||||||||||||||||
9,595
|
0 |
10.64
|
10/19/2015
|
0 | ||||||||||||||||||||
A.
Richard Abrahamian
|
0
|
0
|
-
|
-
|
0
|
0
|
||||||||||||||||||
Lori
A. Wunder
|
4,631
|
|
8.97
|
6/20/2012
|
|
|
||||||||||||||||||
6,519
|
0 |
10.64
|
10/19/2015
|
0 | 0 | |||||||||||||||||||
Ronald
M. Shapiro
|
0
|
0
|
-
|
-
|
0
|
0
|
||||||||||||||||||
William
J. Boylan
|
0
|
0
|
-
|
-
|
0
|
0
|
In the
table above, we are disclosing:
|
·
|
in
column “b”, the number of shares of our common stock underlying
unexercised stock options that were exercisable as of December 31, 2009;
and
|
-21-
|
·
|
in
columns “e” and “f”, respectively, the exercise price and expiration date
for each stock option that was outstanding as of December 31,
2009.
|
Options
Exercised and Stock Vested
As
indicated in the following chart, none of the Named Officers held any stock
awards that vested during 2009 and none of the Named Officers, other than Mr.
Weagley, exercised any stock options during 2009. The phrase “value
realized on exercise” represents the number of shares of common stock set forth
in column (b) multiplied by the difference between the market price of our
common stock on the date of exercise and the Named Officer’s exercise
price.
|
Option Awards
|
Stock Awards
|
||||||||||||||
Name
(a)
|
Number of Shares
Acquired
on Exercise
(#)
(b)
|
Value
Realized on
Exercise
($)
(c)
|
Number of
Shares
Acquired
on Vesting
(#) (d)
|
Value
Realized on
Vesting
($)
(e)
|
||||||||||||
Anthony
C. Weagley
|
1,757
|
3,813
|
-
|
-
|
||||||||||||
1,650
|
3,614
|
|||||||||||||||
1,730
|
2,612
|
|||||||||||||||
A.
Richard Abrahamian
|
-
|
-
|
-
|
-
|
||||||||||||
Lori
A. Wunder
|
-
|
-
|
-
|
-
|
||||||||||||
Ronald
M. Shapiro
|
-
|
-
|
-
|
-
|
||||||||||||
William
J. Boylan
|
-
|
-
|
-
|
-
|
Pension
Benefits
The
following table sets forth, for each of the Named Officers, information
regarding the benefits payable under each of our plans that provides for
payments or other benefits at, following, or in connection with such Named
Officer’s retirement. Those plans are summarized below the following
table. The following table does not provide information regarding
tax-qualified defined contribution plans or nonqualified defined contribution
plans.
-22-
Name
(a)
|
Plan
Name
(b)
|
|
Number
of
Years of
Credited
Service
(#)
(c)
|
|
|
Present
Value of
Accumulated
Benefit
($)
(d)
|
|
|
Payments
During
Last
Fiscal
Year
($)
(e)
|
|
||||
Anthony
C. Weagley
|
Union
Center National Bank
Pension
Plan Trust
|
23
|
220,198
|
—
|
||||||||||
|
||||||||||||||
A.
Richard Abrahamian
|
—
|
—
|
—
|
—
|
||||||||||
Lori
A. Wunder
|
Union
Center National
Bank
Pension Plan Trust
|
12
|
115,536
|
—
|
||||||||||
|
||||||||||||||
Ronald
M. Shapiro
|
—
|
—
|
—
|
—
|
||||||||||
|
||||||||||||||
William
J. Boylan
|
—
|
—
|
—
|
—
|
In the
table above:
|
·
|
we have determined the years of
credited service based on the same pension plan measurement date that we
used in preparing our audited financial statements for the year ended
December 31, 2009; we refer to that date as the “Plan Measurement
Date”;
|
|
·
|
when we use the phrase “present
value of accumulated benefit”, we are referring to the actuarial present
value of the Named Officer’s accumulated benefits under our pension plans,
calculated as of the Plan Measurement
Date;
|
|
·
|
the present value of accumulated
benefits shown in the table above have been determined using the
assumptions set forth in our audited financial statements for the year
ended December 31, 2009; and
|
|
·
|
column “e” refers to the dollar
amount of payments and benefits, if any, actually paid or otherwise
provided to the Named Officer during 2009 under our pension
plans.
|
The Union
Center National Bank Pension Trust - which we refer to as the “Pension Plan” -
is intended to be a tax-qualified defined benefit plan under Section 401(a) of
the Internal Revenue Code. The Pension Plan, which has been in effect
since March 15, 1950, generally covers employees of Union Center National Bank
and Center Bancorp who have attained age 21 and completed one year of
service. The normal retirement (age 65) pension payable under the
Pension Plan is generally equal to 44% of a participant’s highest average
compensation over a 5-year period. Compensation means a participant’s
W-2 wages, increased by certain reductions such as 401(k)
contributions. The normal retirement benefit is proportionately
reduced if a participant has less than 25 years of service at age
65. None of our Named Officers was eligible to retire with a normal
retirement pension as of December 31, 2009.
-23-
A
participant may retire before or after age 65. A participant will qualify for
immediate commencement of an early retirement pension if he or she retires after
attaining age 60 and completing at least six years of service. A participant who
completes five years of service is entitled to a vested pension commencing at
normal retirement age or after meeting the early retirement requirements. Early
retirement and vested pension benefits are calculated in the same manner as a
normal retirement pension, but are multiplied by a fraction the numerator of
which is the participant’s years of service and the denominator of which is the
number of years of service the participant would have accumulated through normal
retirement. Benefits payable prior to normal retirement are also subject to
adjustment for actuarial equivalence, using age and interest factors specified
by the Pension Plan. Based upon their ages and years of service, none of our
Named Officers is currently eligible for an early retirement pension under the
Pension Plan.
Pension
Plan benefits are generally payable in the form of a life annuity or a joint and
survivor annuity. However, a participant may elect to receive his or
her pension in a lump sum. All forms of benefit are actuarially
equivalent to a single life annuity form.
Nonqualified
Deferred Compensation
The Union
Center National Bank Deferred Compensation Plan for Senior Executives and
Directors was terminated in 2008.
Stock
Option Plans
We
currently maintain the 2009 Equity Incentive Plan, under which our Compensation
Committee may grant “incentive stock options” as defined under the Internal
Revenue Code, non-qualified stock options, restricted stock awards and
restricted stock unit awards to employees, including officers, and consultants.
We previously maintained our 1999 Employee Stock Incentive Plan and our 1993
Employee Stock Option Plan, both of which have expired. No additional grants may
be made under those plans. We adopted all of these plans in order to attract and
retain qualified officers and employees and, with respect to the 2009 Equity
Incentive Plan, consultants. Under the 1999 Employee Stock Incentive Plan, our
Compensation Committee was able to grant incentive stock options, non-qualified
stock options and restricted stock awards to our employees, including our
officers. Under the 1993 Employee Stock Option Plan, our Compensation Committee
was able to grant incentive stock options and non-qualified stock options to our
officers and employees.
A total
of 400,000 shares of common stock were authorized for issuance under the 2009
Equity Incentive Plan. All of these 400,000 shares were available for future
grants as of January 1, 2010. As of December 31, 2009, we had 165 employees, all
of whom are eligible to participate in the 2009 Equity Incentive Plan. Future
grants under the 2009 Equity Incentive Plan have not yet been determined. No
option will be exercisable more than ten years from the date of grant and no
option or other award may be granted after March 26, 2019 under our 2009 Equity
Incentive Plan.
We
initially had 435,153 shares of our common stock authorized for issuance under
the 1999 Employee Stock Incentive Plan (as adjusted for stock splits and stock
dividends) and we initially had 633,194 shares authorized for issuance under the
1993 Employee Stock Option Plan (as adjusted for stock splits and stock
dividends).
-24-
The
following table provides information about our common stock that may be issued
upon the exercise of options, warrants and rights under our 2009 Equity
Incentive Plan, 1999 Employee Stock Incentive Plan, 1993 Employee Stock Option
Plan, 1993 Outside Director Stock Option Plan and 2003 Non-Employee Director
Stock Option Plan as of December 31, 2009. These plans were our only equity
compensation plans in existence as of December 31, 2009. As of December 31,
2009, awards could only be granted under the 2009 Equity Incentive Plan and 2003
Non-Employee Director Stock Option Plan.
Plan Category
|
Number of Securities
to be Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights
(a)
|
Weighted Average
Exercise Price
of Outstanding
Options,
Warrants and
Rights
(b)
|
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected in Column
(a))
(c)
|
|||||||||
Equity
Compensation Plans Approved by
Shareholders
|
192,002
|
7.67
– 15.73
|
1,079,622
|
|||||||||
Equity
Compensation Plans Not Approved by Shareholders
|
-
|
-
|
-
|
|||||||||
Total
|
192,002
|
7.67
– 15.73
|
1,079,622
|
Employment
Agreements
Anthony
Weagley
On April
4, 2008, Anthony Weagley, our current chief executive officer, entered into an
amended and restated employment agreement. The agreement provided for a term
that expired on December 31, 2009, without any renewal. However, if a Change in
Control Event (as defined) occurred during the term of the agreement, the
agreement would automatically extend for a period of three years after that
event. The agreement provided for a salary of $225,000 per year, the issuance of
$25,000 of stock on December 31, 2008 and 2009, participation in our AIP, a car
allowance and health and life insurance and benefits under our 401(k) Plan. In
the event that Mr. Weagley had been terminated without “Cause” or he terminated
with “Good Reason” (each as defined by the agreement), he would be entitled to
receive (a) a lump sum severance payment equal to three (3) times the sum of (i)
his annual base salary as in effect immediately prior to the termination, (ii)
the largest annual cash bonus he ever received or receives from us (the “Weagley
Largest Bonus”), (iii) the amount recorded on his W-2 (for the calendar year
preceding the calendar year in which the termination occurs) that is
attributable to fringe benefits provided to him by us, and (iv) the maximum
matching contribution that could have been made under our 401(k) plan if he had
remained employed by us for an additional year following the date of
termination; (b) a lump sum payment equal to the excess, if any, of (x) the lump
sum present value of the benefit that Mr. Weagley would have been entitled to
receive under our tax-qualified defined benefit pension plan (the “Pension
Plan”) had he continued to be employed by us for an additional three year period
following the termination (assuming that he continued during such period to
receive a salary equal to the salary in effect on the date of termination and an
annual incentive bonus equal to the Weagley Largest Bonus), over (y) the lump
sum present value of the benefit that Mr. Weagley is entitled to receive under
the Pension Plan as of the date of his termination of employment; (c) in certain
circumstances, COBRA coverage for eighteen months; (d) continued life insurance
coverage for three years, and (e) acceleration of all unvested stock options.
Substantially all of the payments and benefits were conditioned upon Mr.
Weagley’s execution, delivery and non-revocation of a general release in favor
of Center Bancorp and related parties. As indicated above, the agreement
terminated on December 31, 2009.
-25-
Lori
Wunder
Lori A.
Wunder entered into an employment agreement with us that, as amended and
restated as of January 1, 2007, provided for an initial term that expired on
December 31, 2009 and contained a renewal provision that, in effect, assured her
of at least two years’ notice of termination in the absence of a Change in
Control Event (as defined) and three years’ notice of termination in connection
with a Change in Control Event. On December 3, 2007, Ms. Wunder agreed to
amendments to her employment agreements which provide for a term that expired on
December 31, 2009, without any renewal. However, if a Change in Control
Event (as defined in her agreement) had occurred during the term of the
agreement, the agreement would automatically extend for a period of three years
after that event.
Under the
December 3, 2007 amendment, effective from January 1, 2008, the Company was
obligated to provide Ms. Wunder with an automobile expense reimbursement of
forty-four cents per mile based on a daily mileage log for Bank business, but
was no longer obligated to provide Ms. Wunder with an automobile as had
been required prior to such amendment. Title to the automobile then being driven
by and in the possession of Ms. Wunder was transferred from the Bank to Ms
Wunder without additional payment by her. The amended employment agreement
required the Company to provide Ms. Wunder with life insurance, short and
long-term disability insurance health insurance, pension benefits and benefits
under the Bank’s 401(k) Plan to the extent that such benefits were provided on
December 3, 2007, together with any benefit enhancements that may be added to
such plans in the future. The monetary amount of such benefits received by each
employee will be in accordance with the terms and conditions of such
plans.
-26-
The
agreement provided that if the employment of Ms. Wunder were terminated without
“Cause” or she terminated with “Good Reason” (each as defined by the agreement)
during the term, she would receive a lump sum payment equal to two times (three
times if the termination was in connection with a Change in Control Event) the
sum of the annual rate of salary that she was receiving at the time of
termination and the largest bonus she ever received from the Company under the
AIP. In addition, she would receive a lump sum payment equal to the
difference between the amount of benefits, if any, that she would have accrued
under our Pension Plan, as well as the amount of additional contributions that
we would have made on her behalf under our 401(k) Plan, had her employment
continued for a period of two additional years (three years if the termination
was in connection with a Change in Control Event). Further, any
unvested stock options held by Ms. Wunder would become fully vested and the
Company would continue health, life and long-term care insurance coverage for
her for an additional two years (or three years if the termination was in
connection with a Change in Control Event. As indicated above, the
agreement with Ms. Wunder terminated on December 31, 2009.
Richard
Abrahamian and Ronald M. Shapiro
On April
15, 2008, we entered into a change in control agreement with Richard Abrahamian,
our former chief financial officer, who resigned from the Company on January 28,
2010. The agreement provided that it would terminate on February 2, 2010, and
was not subject to automatic renewal thereafter. However, if a “Change in
Control Event” had occurred at any time prior to February 2, 2010, then the term
of the change in control agreement would automatically be extended for a period
of one year from the date of such Change in Control Event.
On
November 21, 2008, we entered into a change in control agreement with Ronald
Shapiro, our chief lending officer. The agreement will terminate on July 14,
2010 and is not subject to automatic renewal thereafter. However, if a “Change
in Control Event” occurs at any time prior to July 14, 2010, then the term of
the change in control agreement will automatically be extended for a period
of one year from the date of such Change in Control Event.
The
change in control agreements permitted Mr. Abrahamian and permits Mr. Shapiro to
resign within 180 days after the occurrence of a Change in Control Event
(as defined). Upon termination of employment by such Named Officer
for “Good Reason” (as defined) with respect to a Change in Control Event that
occurs during the term of the agreement or upon termination of such Named
Officer’s employment by us without “Cause” (as defined) within one year after a
Change in Control Event, such Named Officer is entitled to: (a) a lump sum
severance payment equal to three (3) times the sum of (i) his annual base salary
as in effect immediately prior to the termination, (ii) the largest annual cash
bonus he ever received or receives from us (the “Largest Bonus”), (iii) the
amount recorded on his W-2 (for the calendar year preceding the calendar year in
which the termination occurs) that is attributable to fringe benefits provided
to him by us, and (iv) the maximum matching contribution that could have been
made under our 401(k) plan if he had remained employed by us for an additional
year following the date of termination; (b) a lump sum payment equal to the
excess, if any, of (x) the lump sum present value of the benefit that such Named
Officer would have been entitled to receive under our Pension Plan had he
continued to be employed by us for an additional three year period following the
termination (assuming that he continued during such period to receive a salary
equal to the salary in effect on the date of termination and an annual incentive
bonus equal to the Largest Bonus), over (y) the lump sum present value of the
benefit that such Named Officer is entitled to receive under the Pension Plan as
of the date of his termination of employment; (c) in certain circumstances,
COBRA coverage for eighteen months; (d) continued life insurance coverage for
three years, and (e) acceleration of all unvested stock
options. Substantially all of the payments and benefits are
conditioned upon such Named Officer’s execution, delivery and non-revocation of
a general release in favor of Center Bancorp and related parties. The
agreement with Mr. Abrahamian has terminated.
-27-
General
The
employment agreement for Ms. Wunder contained a “gross up” provision which
provided for additional payments in the event that any amounts payable or
benefits provided to her pursuant to her employment agreement were subject to
certain excise taxes imposed by Section 4999 of the Internal Revenue Code. The
agreements for Messrs. Weagley an Abrahamian provided, and for Mr. Shapiro,
provides for a reduction in benefits if necessary to assure that the
compensation payable thereunder is not subject to such excise
taxes.
Had Mr.
Weagley, Mr. Abrahamian, Ms. Wunder or Mr. Shapiro been involuntarily terminated
as of December 31, 2009 in connection with a Change in Control Event, the
approximate amounts that Mr. Weagley and Ms. Wunder would have been entitled to
receive under their respective employment agreements, and the approximate
amounts that Mr. Abrahamian and Mr. Shapiro would have been entitled to receive
under their respective change in control agreements, based upon their
compensation for 2009 and disregarding any restrictions on severance payments
applicable while we remain a participant in the TARP Capital Purchase Program,
are: for Mr. Weagley: $963,940; for Ms. Wunder: $515,807; for Mr. Abrahamian:
$619,855; and for Mr. Shapiro: $683,782. Mr. Weagley also would have been
entitled to the same approximate amount had his employment been involuntarily
terminated as of December 31, 2009 other than in connection with a Change in
Control Event. Had Ms. Wunder been involuntarily terminated as of December 31,
2009 other than in connection with a Change in Control Event, the estimated
amount that she would have been entitled to, based upon her compensation for
2009, is $351,209. Had Mr. Abrahamian or Mr. Shapiro been involuntarily
terminated as of December 31, 2009 other than in connection with a Change in
Control Event, they would not have been entitled to severance and other
separation benefits under their respective change in control
agreements.
Compensation
of Directors
The
following table sets forth certain information regarding the compensation we
paid to our directors during 2009. None of our directors received compensation
under any non-equity incentive plan during 2009. The Union Center National Bank
Directors’ Retirement Plan and the Union Center National Bank Deferred
Compensation Plan for Senior Executives and Directors were both terminated in
2008. Mr. Barth served as a director until his retirement on May 27, 2009. Ms.
Curtis served as a director until her retirement on March 24, 2010. Ms. Klein is
not included in the following table since she was appointed to the Board on
March 25, 2010.
-28-
Director
Compensation
Name
(a)
|
Fees
Earned or
Paid in
Cash
($)
(b)
|
Stock
Awards
($)
(c)
|
Option
Awards
($)
(d)
|
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
(f)
|
All Other
Compensation
($)
(g)
|
Total
($)
(h)
|
||||||||||||||||||
Hugo
Barth, III
|
6,533
|
-
|
5,151
|
-
|
-
|
11,684
|
||||||||||||||||||
Alexander
Bol
|
40,400
|
-
|
5,151
|
-
|
-
|
45,551
|
||||||||||||||||||
Brenda
Curtis
|
19,300
|
-
|
5,151
|
-
|
-
|
24,451
|
||||||||||||||||||
John
DeLaney
|
19,300
|
-
|
5,151
|
-
|
-
|
24,451
|
||||||||||||||||||
James
J. Kennedy
|
23,650
|
-
|
5,151
|
-
|
-
|
28,801
|
||||||||||||||||||
Howard
Kent
|
28,850
|
-
|
5,151
|
-
|
-
|
34,001
|
||||||||||||||||||
Elliot
I. Kramer
|
21,250
|
-
|
5,151
|
-
|
-
|
26,401
|
||||||||||||||||||
Nicholas
Minoia
|
24,100
|
-
|
5,151
|
-
|
-
|
29,251
|
||||||||||||||||||
Harold
Schechter
|
21,100
|
-
|
5,151
|
-
|
-
|
26,251
|
||||||||||||||||||
Lawrence
Seidman
|
27,650
|
-
|
5,151
|
-
|
-
|
32,801
|
||||||||||||||||||
William
Thompson
|
24,400
|
-
|
5,151
|
-
|
-
|
29,551
|
||||||||||||||||||
Raymond
Vanaria
|
29,500
|
-
|
5,151
|
-
|
-
|
34,651
|
In the table above:
·
|
when we refer to “Fees Earned or
Paid in Cash” in column “b”, we are referring to all cash fees that we
paid or were accrued in 2009, including annual retainer fees, committee
and /or chairmanship fees and meeting
fees;
|
·
|
when we refer to “stock awards”
or “option awards”, we are referring to the
aggregate grant date fair value computed in accordance with FASB ASC Topic
718;
|
·
|
the grant date fair value for
each of the option awards made to our directors during 2009 was $1.48 per
share; an option covering 3,473 shares of common stock was granted to each
non-employee director on March 1, 2009; the options vest in 25%
increments, beginning one year after the grant
date;
|
·
|
the aggregate number of option
awards outstanding for each director at December 31, 2009 were for Mr.
Bol, 16,456 shares; Ms. Curtis, 20,673 shares; Mr. DeLaney, 10,419 shares;
Mr. Kennedy, 60,563 shares; Mr. Kent, 3,473 shares; Mr. Kramer, 3,473
shares; Mr. Minoia, 0 shares; Mr. Schechter, 6,946 shares; Mr.
Seidman, 6,946 shares; Mr. Thompson, 14,761 shares; and Mr. Vanaria, 6,946
shares;
|
·
|
when we refer to “Change in
Pension Value and Nonqualified Deferred Compensation Earnings”, we are
referring to the aggregate change in the present value of each director’s
accumulated benefit under all defined benefit and actuarial plans from the
measurement date used for preparing our 2008 year-end financial statements
to the measurement date used for preparing our 2009 year-end financial
statements; and
|
·
|
the directors did not receive any
Nonqualified Deferred Compensation Earnings during
2009.
|
-29-
The table
above does not include fees paid during 2009 to Mr. Bol’s architectural firm
(less than $40,000 during 2009), Mr. DeLaney’s law firm (less than $2,500 during
2009) or entities owned by Mr. Minoia. See “Compensation Committee
Interlocks and Insider Participation.”
1993
Outside Director Stock Option Plan
Our 1993
Outside Director Stock Option Plan was adopted in order to attract and retain
qualified directors. Pursuant to our 1993 Outside Director Stock Option Plan,
each non-employee member of our Board received a one-time stock option covering
36,181 shares of our common stock (as adjusted for stock splits and stock
dividends). These options become exercisable in three installments,
commencing one year after the date of grant, at a per share exercise price equal
to the fair market value of one share of our common stock on the date of grant.
Such options may not be exercised more than ten years after their date of
grant. No options were permitted to be granted under our 1993 Outside
Director Stock Option Plan after November 17, 2003.
We
initially had 569,876 shares of our common stock authorized for issuance under
our 1993 Outside Director Stock Option Plan (as adjusted for stock splits
and stock dividends).
2003
Non-Employee Director Stock Option Plan
Our 2003
Non-Employee Director Stock Option Plan was adopted in order to attract and
retain qualified directors. Our 2003 Non-Employee Director Stock
Option Plan initially provided that on June 1 of each year, directors who served
continuously on our Board during the twelve months immediately preceding such
date and who were not employed by us or any of our subsidiaries during that
twelve month period would be granted a stock option covering 3,000 shares of
common stock. These options vest over a four year period, subject to
acceleration in certain instances. For an eligible director who
remained on our Board for the periods listed below, the operation of the 2003
Non-Employee Director Stock Option Plan as initially adopted would be as
follows:
Date
|
Effect
|
|
June
1, 2004
|
An
option covering 3,000 shares is granted; we will refer to this
option as “Option A”; no shares are purchasable under Option
A.
|
|
June
1, 2005
|
An
option covering 3,000 shares is granted; we will refer to this option as
“Option B”); 750 shares are purchasable under Option A; and no
shares are purchasable under Option B.
|
|
June
1, 2006
|
An
option covering 3,000 shares is granted; we will refer to this
option as “Option C”; 1,500 shares are purchasable under Option
A; 750 shares are purchasable under Option B; and no shares are
purchasable under Option C.
|
|
June
1, 2007
|
An
option covering 3,000 shares is granted; we will
refer to this option as “Option D”; 2,250 shares are
purchasable under Option A; 1,500 shares are purchasable under
Option B; 750 shares are purchasable under Option C; and no shares
are purchasable under Option
D.
|
-30-
During
2004, 2005, 2006 and 2007, after giving effect to stock splits and stock
dividends, we granted options covering 3,308, 3,473, 3,473 and 3,473 shares,
respectively, to each non-employee member of our Board pursuant to our 2003
Non-Employee Director Stock Option Plan.
On
February 28, 2008, our Board adopted amendments to the 2003 Non-Employee
Director Stock Option Plan providing that options covering 3,473 shares would be
granted on March 1 of each year, commencing March 1, 2008, to directors who
served continuously on our Board during the six months immediately preceding
such date and who were not employed by us or any of our subsidiaries during that
six month period. No changes were made to the vesting provisions of the 2003
Non-Employee Director Stock Option Plan.
All of
the options granted in 2004 and 2005 are fully exercisable, three quarters of
the options granted in 2006, one half of the options granted in 2007, one half
of the options granted in 2008 and one quarter of the options granted in 2009
are exercisable on or before April 1, 2010. We initially had 551,250 shares of
our common stock authorized for issuance under our 2003 Non-Employee Director
Stock Option Plan (as adjusted for stock splits and stock dividends) and 452,874
shares remained available for grant as of January 1, 2010.
There are
no fees paid to any director of Center Bancorp for any meeting of the Center
Bancorp Board of Directors. The chairman of the Audit Committee and the chairman
of the Compensation Committee receive $500 for each committee meeting
attended. Members of the Audit Committee and the Compensation
Committee receive $300 for each committee meeting attended. Alexander A. Bol,
Chairman of the Board of Union Center National Bank, receives a $15,000 annual
retainer and $900 for each meeting of Union Center National Bank’s Board that he
attends. All other directors of Union Center National Bank who are
not officers of that Bank receive a $7,000 annual retainer and $900 for each
meeting of the Union Center National Bank Board that they attend.
Compensation
Committee Interlocks and Insider Participation
The
Compensation Committee consists of Alexander A. Bol, John J. DeLaney, Jr.,
Phyllis S. Klein (since March 25, 2010), Lawrence B. Seidman and William A.
Thompson. Of the persons named, only Mr. Bol has served as an officer and/or
employee of Center Bancorp or Union Center National Bank. Brenda
Curtis, who served as a director until her resignation on March 24, 2010, also
served on the Compensation Committee during 2009. Mr. Weagley
participates in determinations regarding compensation of all employees other
than himself.
Compensation
Committee Report
The
Compensation Committee has reviewed and discussed the information provided under
the caption “Compensation Discussion and Analysis” set forth
above. Based on that review and those discussions, the Compensation
Committee recommended to our Board that such “Compensation Discussion and
Analysis” be included in this proxy statement.
-31-
In
addition, in accordance with U.S. Treasury regulations applicable to
participants in the TARP Capital Purchase Program, the Compensation Committee of
Center Bancorp’s Board of Directors certifies that:
(1)
|
It
has reviewed with senior risk officers the senior executive officer (SEO)
compensation plans and has made all reasonable efforts to ensure that
these plans do not encourage SEOs to take unnecessary and excessive risks
that threaten the value of Center
Bancorp.
|
(2)
|
It
has reviewed with senior risk officers the employee compensation plans and
has made all reasonable efforts to limit any unnecessary risks that the
plans pose to Center Bancorp.
|
(3)
|
It
has reviewed the employee compensation plans to eliminate any features of
these plans that would encourage manipulation of reported earnings of
Center Bancorp to enhance the compensation of any
employee.
|
During
the period after September 14, 2009, the Compensation Committee has at least
every six months reviewed (i) with the Company’s Senior Risk Officer
compensation plans to ensure that the senior executive officer compensation
plans do not encourage the senior executive officers to take unnecessary and
excessive risks that threaten the value of the Company, (ii) with the Company’s
Senior Risk Officer, the Company’s employee compensation plans and has made all
reasonable efforts to limit any unnecessary risks these plans pose to the
Company, and (iii) the Company’s employee compensation plans to eliminate any
features of the these plans that would encourage the manipulation of reported
earnings of the Company to enhance the compensation of any
employee.
As
required under Treasury’s initial interim final rule related to the TARP
executive compensation limitations issued in October 2008, the Company’s Senior
Risk Officer in May 2009 reviewed with the Committee, at the direction of the
Company’s primary federal regulator, the Company’s executive incentive
compensation plans to ensure that the Company’s executive officers were not
encouraged to take unnecessary and excessive risks that could threaten the value
of the Company. As required by the June 2009 interim final rule, the Committee
engaged in December 2009, with the assistance of the Company’s Senior Risk
Officer, in a broader review that included all of the Company’s incentive
compensation plans for all employees. This latter review included discussion,
evaluation and review of the plans applicable to the Company’s senior executive
officers and other eligible officers to ensure that such plans do not encourage
such officers to take unnecessary and excessive risks that threaten the value of
the Company; discussion, evaluation and review of all employee plans in light of
the risks posed to the Company by such plans and how to limit such risks
(including ensuring the plans do not encourage behavior focused on short-term
results rather than long-term value creation); and discussion, evaluation and
review of all employee plans to ensure the plans do not encourage the
manipulation of reported earnings to enhance the compensation of any of the
Company’s employees.
-32-
In
meeting with the Company’s Senior Risk Officer and other members of executive
management, the Committee identified the Company’s senior executive officer
compensation plans. For 2009, these plans were the Achievement Incentive Plan
(“AIP”) and the Loan Incentive Plan. The Committee also reviewed the Company’s
other non-senior executive officer compensation plan, the 2009 Branch Management
Incentive Compensation Program.
The
Committee’s review of the Company’s AIP concluded with a determination by the
Committee that the plan did not encourage unnecessary and excessive risks that
threatened the value of the Company and did not encourage manipulation of the
Company’s reported earnings to enhance the compensation of any of the Company’s
employees. The AIP contained a soundness threshold that conditions any incentive
payments to any plan participants on attaining very specific quantifiable goals
verified by the CEO and Board of Directors. The review concluded that the
exclusion of the CEO, due to TARP limitations, who must approve all awards under
the Plan, provided a significant restraint to actions resulting in
inappropriately higher risk to the Company. Furthermore, the plan limits the
maximum amount of payout and participant inclusion in the Plan is determined
annually and inclusion in one year does not guarantee inclusion in subsequent
years, thus further limiting the risk to the Company. In connection with the
review in December 2009, it was noted that the Company’s chief executive
officer was subject to the cash bonus prohibition for the TARP period, and thus
not eligible to participate in the AIP. The December 2009 review
recommended consideration of certain changes, including a minimum Company
profitability requirement. The review also concluded that consideration be given
to adopting a pooled incentive derived from the financial statements, which
would allow for better peer comparisons. These recommendations will be
considered for adoption in any future plans. In light of the
Company’s 2009 performance, the Compensation Committee and our Board of
Director’s determined that no AIP awards for 2009 would be granted to any of the
SEOs participating in the AIP due to overall Company performance falling short
of budget expectations.
The
review of the Company’s Loan Incentive Plan, which was modified during 2009 to
incorporate additional risk mitigators, concluded with a determination by the
Committee that the plan did not encourage unnecessary or excessive risks that
threatened the value of the Company or that
encouraged the manipulation of the Company’s earnings to enhance the
compensation of any of the Company’s loan officers. During 2009, the Company
required participants to be in good standing and prohibited awards based on
transactions approved solely under the officer’s
authority. Additionally, the plan requires that awards will be
eligible only for loans that meet safety and soundness underwriting standards.
Incentive awards earned under the plan may be adjusted based on current and
historical credit quality results as measured by actual delinquency levels.
Unacceptable performance in subsequent periods allows the Company to recover
(“clawback”) previously paid awards. The Company believes that there are
adequate controls and clawback provisions embedded within the plan to mitigate
the risk associated with the plan. Officers that participate in the Loan
Incentive Plan do not participate in the AIP. The December 2009 review
recommended incorporating a deferral feature to allow for the evaluation of the
time horizon associated with realizing the impact of loans generated in the
current period.
-33-
After its
review of these incentive compensation arrangements, the Committee was able to
conclude that none of these arrangements encourage manipulation of the Company’s
reported earnings to enhance the compensation of any of the Company’s
employees.
Alexander
A. Bol
John J.
DeLaney
Phyllis
S. Klein
Lawrence
B. Seidman
William
A. Thompson
Item
12.
|
In a
joint Schedule 13D filing made on December 7, 2009, on behalf of Seidman and
Associates, L.L.C., Seidman Investment Partnership, L.P., Seidman Investment
Partnership II, L.P., Broad Park Investors, LLC, Chewy Gooey Cookies, LP,
LSBK06-08, LLC, Lawrence Seidman, clients of Lawrence Seidman, CBPS, LLC, Dennis
Pollack, Harold Schechter and Raymond Vanaria, such persons stated that as of
December 4, 2009, they beneficially own a total of 3,021,804 shares of our
common stock, representing 20.7% of the shares outstanding as of October 31,
2009, as disclosed in the Company’s Quarterly Report on Form 10-Q filed with the
Securities and Exchange Commission (“SEC”) on November 9, 2009. Seidman
and Associates, L.L.C., Seidman Investment Partnership, L.P., Seidman Investment
Partnership II, L.P., LSBK06-08, LLC and Lawrence Seidman have an address of 100
Misty Lane, Parsippany, New Jersey 07054. Mr. Seidman also has an address
of 19 Veteri Place, Wayne, New Jersey 07470. Broad Park Investors, L.L.C.
and Chewy Gooey Cookies, L.P. have an address of 80 Main Street, West Orange,
New Jersey 07052. Mr. Pollack has an address of 825 Third Avenue, New
York, New York 10022. Mr. Schechter has an address of 34 33rd
Street, New York, New York 10001. Mr. Vanaria has an address of 155
North Dean Street, Englewood, New Jersey 07631. CBPS, LLC has an address
of One Rockefeller Plaza, New York, NY 10020.
We are
not aware of any other person or entity that owned of record or beneficially
more than five percent of our outstanding common stock as of the record
date.
-34-
The
following table sets forth, for each of our directors, the number of shares of
our common stock which they beneficially owned as of January 31, 2010 and
their percentage of common stock ownership as of January 31, 2010:
Name
|
Shares of
Common
Sock
Held
Beneficially
Directly and
Indirectly
|
Percent
of
Shares
Outstanding
|
||||||
Alexander
A. Bol
|
123,827 | (a) | 0.85 | |||||
John
J. DeLaney, Jr.
|
9,089 | 0.06 | ||||||
James
J. Kennedy
|
66,817 | 0.46 | ||||||
Howard
Kent
|
134,381 | (b) | 0.92 | |||||
Phyllis
S. Klein
|
- | - | ||||||
Elliot
I. Kramer
|
1,989 | 0.01 | ||||||
Nicholas
Minoia
|
10,840 | 0.07 | ||||||
Harold
Schechter
|
9,055 | 0.06 | ||||||
Lawrence
B. Seidman
|
3,050,198 | (c) | 20.93 | |||||
William
A. Thompson
|
80,922 | (c)(d) | 0.56 | |||||
Raymond
Vanaria
|
54,347 | (c)(e) | 0.37 |
-35-
(a)
|
Includes 2,342 shares owned by
Mr. Bol’s spouse.
|
(b)
|
Includes 114,303 shares owned
jointly with Mr. Kent’s
spouse.
|
(c)
|
See the description above
regarding the 13D filing made by Mr. Seidman and others. The shares
reflected in the table above for Mr. Schechter and Mr. Vanaria do not
include any shares other than shares directly owned by them. The
shares reflected in the table for Mr. Seidman reflect all shares
beneficially owned by the persons named in the 13D filing as of January
31, 2010.
|
(d)
|
Includes 13,936 shares held by
Mr. Thompson’s spouse and
children.
|
(e)
|
Includes 3,685 shares held by Mr.
Vanaria’s spouse.
|
The
shares set forth in the table above include the following number of shares
subject to options exercisable by April 1, 2010: Mr. Bol, 9,508 shares;
Mr. DeLaney, 4,340 shares; Mr. Kennedy, 53,615 shares; Mr. Kent, 868
shares; Ms. Klein, 0 shares; Mr. Kramer, 868 shares; Mr. Minoia, 0 shares;
Mr. Schechter, 2,604 shares; Mr. Seidman, 2,604 shares; Mr. Thompson, 7,813
shares; and Mr. Vanaria, 2,604 shares.
Anthony
C. Weagley, our President and Chief Executive Officer, beneficially owned 36,748
shares of our common stock as of January 31, 2010, including 14,226 shares
subject to options exercisable by April 1, 2010. A. Richard
Abrahamian resigned as our Chief Financial Officer on January 28, 2010. He
did not beneficially own any shares of our common stock as of the date of his
resignation. Ronald Shapiro, our Chief Lending Officer, beneficially owned
6,116 shares of our common stock as of January 31, 2010, including 0 shares
subject to options exercisable by April 1, 2010. Lori A. Wunder, one of our
Senior Vice Presidents, beneficially owned 14,903 shares of our common stock as
of January 31, 2010, including 11,150 shares subject to options exercisable by
April 1, 2010. William Boylan, another one of our Senior Vice Presidents,
beneficially owned 389 shares of our common stock as of January 31, 2010,
including 0 shares subject to options exercisable by April 1,
2010.
-36-
Phyllis
S. Klein was appointed to the Boards of Directors of the Company and Union
Center National Bank on March 25, 2010. She did not own any shares of our
common stock on that date or on January 31, 2010. Also on March 25, 2010,
Stephen Mauger was named Vice President, Treasurer and Chief Financial Officer
of Center Bancorp. He did not own any shares of our common stock on that
date or on January 31, 2010.
As of
January 31, 2010, the total number of shares of our common stock directly and
beneficially owned by all of our current directors and executive officers as a
group (19 persons) amounted to 3,635,027 shares or 24.9% of the common
stock outstanding, including 126,170 shares subject to options exercisable by
April 1, 2010. In addition, as of January 31, 2010, the total number of shares
of our common stock directly and beneficially owned by officers of Union Center
National Bank (and not Center Bancorp) amounted to 56,164 shares, or 0.39% of
the common stock outstanding.
The
following table provides information about our common stock that may be issued
upon the exercise of options, warrants and rights under our 2009 Equity
Incentive Plan, 1999 Employee Stock Incentive Plan, 1993 Employee Stock Option
Plan, 1993 Outside Director Stock Option Plan and 2003 Non-Employee Director
Stock Option Plan as of December 31, 2009. These plans were our only equity
compensation plans in existence as of December 31, 2009. As of December 31,
2009, awards could only be granted under the 2009 Equity Incentive Plan and 2003
Non-Employee Director Stock Option Plan.
Plan Category
|
Number of Securities
to be Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights
(a)
|
Weighted Average
Exercise Price
of Outstanding
Options,
Warrants and
Rights
(b)
|
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected in Column
(a))
(c)
|
|||||||||
Equity
Compensation Plans Approved by
Shareholders
|
192,002
|
7.67
– 15.73
|
1,079,622
|
|||||||||
Equity
Compensation Plans Not Approved by Shareholders
|
-
|
-
|
-
|
|||||||||
Total
|
192,002
|
7.67
– 15.73
|
1,079,622
|
-37-
Since the
adoption of the Sarbanes-Oxley Act in July 2002, there has been a growing public
and regulatory focus on the independence of directors. In response, Nasdaq
adopted amendments to its definition of independence. Additional requirements
relating to independence are imposed by the Sarbanes-Oxley Act with respect to
members of the Audit Committee. Our Board has determined that the
members of the Audit Committee satisfy all applicable definitions of
independence. Our Board has also determined that the following members of our
Board (including all members of our Nominating and Compensation Committees)
satisfy the Nasdaq definition of independence: Alexander A. Bol, John J.
DeLaney, Jr., James J. Kennedy, Howard Kent, Phyllis S. Klein, Elliot I Kramer,
Harold Schechter, Lawrence Seidman, William A. Thompson and Raymond
Vanaria.
During
2009, the Company paid various entities in which Mr. Minoia, a director of
Center Bancorp and Union Center National Bank, is a principal, an
amount of approximately $449,766 for contracting work performed at one of the
Bank’s branches, rental income for one of the Bank’s branch locations and
in connection with general contracting work on an OREO property.
Certain
of our directors and officers and their associates have had loan transactions
with Union Center National Bank in the ordinary course of business during 2009.
All such transactions with these directors and officers and their associates
were made in the ordinary course of business on substantially the same terms,
including interest rates and collateral, as those prevailing at the time of such
transactions for comparable persons not related to us or Union Center National
Bank and did not involve more than a normal risk of collectability or present
other unfavorable features.
Policies
and Procedures Concerning Related Party Transactions
The Audit Committee of the Board of
Directors has adopted written procedures governing related party
transactions. The procedures include the following:
¨
|
all
related party transactions that have been previously approved by the full
Board of Directors will not be included in the transactions that are
approved by the Audit Committee;
|
¨
|
any
single related party transaction up to $10,000 is automatically deemed to
be pre-approved by the Audit
Committee;
|
¨
|
the
Chairman of the Audit Committee is authorized to approve, prior to
payment, related party transactions over $10,000 but not exceeding
$50,000, and may override any previously approved transaction;
and
|
-38-
¨
|
related
party transactions over $50,000 must be approved, prior to payment, by a
majority of the members of the Audit
Committee.
|
The Audit
Committee reviews related party transactions at least on a monthly
basis. By “related party transaction,” we mean a transaction between
the Company or any of its subsidiaries, on the one hand, and an executive
officer, director or immediate family member of an executive officer or a
director, on the other hand.
In
accordance with the requirements of the Sarbanes-Oxley Act of 2002 and the Audit
Committee’s charter, all audit and audit-related work and all non-audit work
performed by our principal independent accountant is approved in advance by the
Audit Committee, including the proposed fees for such work. The Audit Committee
is informed of each service actually rendered that was approved through its
pre-approval process.
Audit Fees. Audit
fees billed or expected to be billed to us by our principal independent
accountant for the audit of the financial statements included in our Annual
Report on Form 10-K for the years ended December 31, 2008 and 2009, and reviews
of the financial statements included in our Quarterly Reports on Form 10-Q
during 2008 and 2009, totaled $238,321 and $242,959, respectively.
Audit-Related
Fees. A total of $30,887 and $38,029 in audit-related fees was
billed for fiscal years 2008 and 2009, respectively. Such services are defined
as services which are reasonably related to the performance of the audit or
review of our financial statements but are not reported under the immediately
preceding paragraph.
Tax Fees. We were
billed an aggregate of $15,387 and $25,152 by our principal independent
accountant for the fiscal years ended December 31, 2008 and 2009, respectively,
for tax services, principally representing advice regarding the preparation of
income tax returns.
All Other Fees. We
were billed $0 and $0 by our principal independent accountant for the fiscal
years ended December 31, 2008 and 2009, respectively, for all services not
covered in the immediately three preceding paragraphs.
Other Matters. The
Audit Committee has determined that the provision of all services provided by
our principal independent accountant during the years ended December 31, 2008
and December 31, 2009 is compatible with maintaining the independence of our
principal independent accountant.
-39-
The following exhibits are filed
herewith:
24.1
|
Power
of Attorney
|
31.1
|
Certification
of the Chief Executive Officer as required by Rule 13a-14(a), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
31.2
|
Certification
of Chief Financial Officer as required by Rule 13a-14(a), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
-40-
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, Center Bancorp, Inc. has duly caused this Amendment No. 1 to its Annual
Report on Form 10-K for the year ended December 31, 2009 to be signed on its
behalf by the undersigned, thereunto duly authorized.
CENTER
BANCORP, INC.
|
|
April
29, 2010
|
|
/s/
Anthony C. Weagley
|
|
Anthony
C. Weagley
|
|
President
and Chief Executive Officer
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, this Amendment No. 1
to the Registrant’s Annual Report on Form 10-K for the year ended December 31,
2009 has been signed by the following persons on behalf of the
Registrant, in the capacities described below, on April 29,
2010.
/s/
Alexander A. Bol*
|
Chairman
of the Board
|
|
Alexander
A. Bol
|
||
/s/
John J. DeLaney, Jr.*
|
Director
|
|
John
J. DeLaney, Jr.
|
||
/s/
James J. Kennedy*
|
Director
|
|
|
||
James
J. Kennedy
|
||
/s/
Howard Kent*
|
Director
|
|
|
||
Howard
Kent
|
||
/s/
Phyllis Klein*
|
Director
|
|
Phyllis
Klein
|
||
/s/
Elliot I. Kramer*
|
Director
|
|
|
||
Elliot
I. Kramer
|
||
/s/
Nicolas Minoia*
|
Director
|
|
|
||
Nicholas
Minoia
|
-41-
/s/
Harold Schechter*
|
Director
|
|
|
||
Harold
Schechter
|
||
/s/
Lawrence B. Seidman*
|
Director
|
|
|
||
Lawrence
B. Seidman
|
||
/s/
William A. Thompson*
|
Director
|
|
|
||
William
A. Thompson
|
||
/s/
Raymond Vanaria*
|
Director
|
|
|
||
Raymond
Vanaria
|
||
/s/
Anthony C. Weagley
|
President
and Chief Executive Officer
|
|
|
||
Anthony
C. Weagley
|
||
/s/
Stephen J. Mauger
|
Chief
Financial and Accounting Officer
|
|
Stephen
J. Mauger
|
*/s/
Anthony C. Weagley
|
Anthony
C. Weagley
|
Attorney-in-fact
|
-42-
The following exhibits are filed
herewith:
24.1
|
Power
of Attorney
|
31.1
|
Certification
of the Chief Executive Officer as required by Rule 13a-14(a), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
31.2
|
Certification
of Chief Financial Officer as required by Rule 13a-14(a), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
-43-