UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Soliciting Material Pursuant to
[_] Confidential, For Use of the ss. 240.14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
PEAPACK-GLADSTONE FINANCIAL CORPORATION
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(Name of Registrant as Specified In Its Charter)
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PEAPACK-GLADSTONE FINANCIAL CORPORATION
158 ROUTE 206 NORTH
GLADSTONE, NEW JERSEY 07934
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON TUESDAY, APRIL 22, 2008
To Our Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Peapack-Gladstone Financial Corporation will be held at Fiddler's Elbow Country
Club, 811 Rattlesnake Bridge Road, Bedminster Township, New Jersey, on Tuesday,
April 22, 2008, at 2:00 p.m. local time for the purpose of considering and
voting upon the following matters:
1. Election of eleven directors to serve until the expiration of their
terms and thereafter until their successors shall have been duly
elected and qualified.
2. Such other business as may properly come before the meeting or any
adjournment thereof.
Only shareholders of record at the close of business on March 10, 2008,
are entitled to receive notice of, and to vote at, the meeting.
You are urged to read carefully the attached proxy statement relating
to the meeting.
Shareholders are cordially invited to attend the meeting in person.
Whether or not you expect to attend the meeting, we urge you to date and sign
the enclosed proxy form and return it in the enclosed envelope as promptly as
possible. You may revoke your proxy by filing a later-dated proxy or a written
revocation of the proxy with the Corporate Secretary of Peapack-Gladstone prior
to the meeting. If you attend the meeting, you may revoke your proxy by filing a
later-dated proxy or written revocation of the proxy with the Corporate
Secretary of the meeting prior to the voting of such proxy.
By Order of the Board of Directors
ANTOINETTE ROSELL,
CORPORATE SECRETARY
Gladstone, New Jersey
March 21, 2008
YOUR VOTE IS IMPORTANT. PLEASE SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENVELOPE PROVIDED.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE SHAREHOLDER MEETING TO BE HELD ON APRIL 22, 2008
This Proxy Statement and our Annual Report are available at
http://phx.corporate-ir.net/phoenix.zhtml?c=100168&p=irol-proxy
PEAPACK-GLADSTONE FINANCIAL CORPORATION
158 ROUTE 206 NORTH
GLADSTONE, NEW JERSEY 07934
PROXY STATEMENT
DATED MARCH 21, 2008
GENERAL PROXY STATEMENT INFORMATION
This proxy statement is furnished to the shareholders of
Peapack-Gladstone Financial Corporation ("Peapack-Gladstone") in connection with
the solicitation by the Board of Directors of Peapack-Gladstone of proxies for
use at the Annual Meeting of Shareholders to be held at Fiddler's Elbow Country
Club, 811 Rattlesnake Bridge Road, Bedminster Township, New Jersey on Tuesday,
April 22, 2008 at 2:00 p.m. local time. This proxy statement is first being
mailed to shareholders on approximately March 21, 2008.
VOTING INFORMATION
Outstanding Securities and Voting Rights
The record date for determining shareholders entitled to notice of, and
to vote at, the meeting is March 10, 2008. Only shareholders of record as of the
record date will be entitled to notice of, and to vote at, the meeting.
On the record date 8,289,111 shares of Peapack-Gladstone's common
stock, no par value, were outstanding and eligible to be voted at the meeting.
Each share of Peapack-Gladstone's common stock is entitled to one vote.
Required Vote
The election of directors requires the affirmative vote of a plurality
of Peapack-Gladstone's common stock voted at the meeting, whether voted in
person or by proxy. At the meeting, inspectors of election will tabulate both
ballots cast by shareholders present and voting in person, and votes cast by
proxy. Under applicable New Jersey law and Peapack-Gladstone's certificate of
incorporation and by-laws, abstentions and broker non-votes are counted for
purpose of establishing a quorum but otherwise do not count.
All shares represented by valid proxies received pursuant to this
solicitation will be voted FOR the election of the 11 nominees for director who
are named in this proxy statement, unless the shareholder specifies a different
choice by means of the proxy or revokes the proxy prior to the time it is
exercised. Should any other matter properly come before the meeting, the persons
named as proxies will vote upon such matters according to their discretion.
Revocability of Proxy
Any shareholder giving a proxy has the right to attend and to vote at
the meeting in person. A proxy may be revoked prior to the meeting by filing a
later-dated proxy or a written revocation if it is sent to the Secretary of
Peapack-Gladstone, Antoinette Rosell, at 158 Route 206 North, Gladstone, New
Jersey, 07934, and is received by Peapack-Gladstone in advance of the meeting. A
proxy may be revoked at the meeting by filing a later-dated proxy or a written
revocation with the Secretary of the meeting prior to the voting of such proxy.
Solicitation of Proxies
This proxy solicitation is being made by the Board of Peapack-Gladstone
and its agent Laurel Hill Advisory Group, LLC, and the costs of the solicitation
will be borne by Peapack-Gladstone. In addition to the use of the mails, proxies
may be solicited personally or by telephone, e-mail or facsimile transmission by
directors, officers and employees of Peapack-Gladstone and its subsidiaries or
Laurel Hill who, with the exception of Laurel Hill, will not be specially
compensated for such solicitation activities. The amount Peapack-Gladstone will
pay Laurel Hill for its proxy solicitation services is $6,500 plus certain out
of pocket costs. Peapack-Gladstone will also make arrangements with brokers,
dealers, nominees, custodians and fiduciaries to forward proxy soliciting
materials to the beneficial owners of shares held of record by such persons, and
Peapack-Gladstone may reimburse them for their reasonable expenses incurred in
forwarding the materials.
PROPOSAL 1 - ELECTION OF DIRECTORS
DIRECTOR INFORMATION
Peapack-Gladstone's certificate of incorporation and by-laws authorize
a minimum of 5 and a maximum of 25 directors, but leave the exact number to be
fixed by resolution of Peapack-Gladstone's Board of Directors. The Board has
currently fixed the number of directors at 11 and the Board is presently
comprised of 11 members. Directors are elected annually by the shareholders for
one-year terms. Peapack-Gladstone's Nominating Committee has recommended to the
Board the 11 current directors for reelection to serve for one-year terms
expiring at Peapack-Gladstone's 2008 Annual Meeting of Shareholders and until
their successors shall have been duly elected and qualified. If, for any reason,
any of the nominees become unavailable for election, the proxy solicited by the
Board will be voted for a substitute nominee selected by the Board. The Board
has no reason to believe that any of the named nominees is not available or will
not serve if elected.
Unless a shareholder indicates otherwise on the proxy, the proxy will
be voted for the persons named in the table below to serve until the expiration
of their terms, and thereafter until their successors have been duly elected and
qualified.
The following table sets forth the names and ages of the Board's
nominees for election, the nominees' position with Peapack-Gladstone (if any),
the principal occupation or employment of each nominee for the past five years
and the period during which each nominee has served as a director of
Peapack-Gladstone. The nominee's prior service as a director includes prior
service as a director of Peapack-Gladstone Bank (the "Bank") prior to the
formation of the holding company.
NOMINEES FOR ELECTION AS DIRECTORS
Principal Occupation or Employment
Name and Position Director for the Past Five Years;
With Peapack-Gladstone Age Since Other Company Directorships
================================================================================
Anthony J. Consi, II 62 2000 Retired; previously Senior Vice President
of Finance and Operations, Weichert
Realtors
Pamela Hill 70 1991 President of Ferris Corp., a real estate
management company; previously Vice
President of Ferris Corp.
Frank A. Kissel 57 1989 Chairman and CEO of Peapack-Gladstone
Chairman and CEO and the Bank
John D. Kissel 55 1987 Real Estate Broker, Turpin Real Estate,
Inc.
James R. Lamb 65 1993 Principal of James R. Lamb, P.C.,
Attorney at Law.
Edward A. Merton 67 1981 President of Merton Excavating and
Paving Co.
F. Duffield Meyercord 61 1991 Partner of Carl Marks Advisory Group,
LLC; President, Meyercord Advisors,
Inc.; Director of Wayside Technology
Group (formerly Programmer's Paradise,
Inc.)
John R. Mulcahy 69 1981 Retired; previously President of Mulcahy
Realty and Construction.
Robert M. Rogers, 49 2002 President and COO of Peapack-Gladstone
President and COO and the Bank
Philip W. Smith, III 52 1995 President, Phillary Management, Inc.,
a real estate management company.
Craig C. Spengeman, 52 2002 President, PGB Trust and Investments, a
President, PGB Trust and division of the Bank and Executive Vice
Investments President of Peapack-Gladstone
Frank A. Kissel and John D. Kissel are brothers.
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RECOMMENDATION AND VOTE REQUIRED ON PROPOSAL 1
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE `FOR' THE
NOMINATED SLATE OF DIRECTORS INCLUDED IN PROPOSAL 1. Directors will be elected
by a plurality of the votes cast at the meeting.
CORPORATE GOVERNANCE
General
The business and affairs of Peapack-Gladstone are managed under the
direction of the Board of Directors. Members of the Board are kept informed of
Peapack-Gladstone's business through discussions with the Chairman and
Peapack-Gladstone's other officers, by reviewing materials provided to them and
by participating in meetings of the Board and its committees. All members of the
Board also served as directors of Peapack-Gladstone's subsidiary bank,
Peapack-Gladstone Bank, during 2007. The Board of Directors of Peapack-Gladstone
held five meetings during 2007. During 2007, all directors of Peapack-Gladstone
attended no fewer than 75% of the total number of meetings of
Peapack-Gladstone's Board and meetings of committees on which such director
served. It is Peapack-Gladstone's policy to encourage director attendance at the
Annual Meeting absent a compelling reason such as illness. Last year, all but
one director attended the Annual Meeting.
Our Board of Directors believes that the purpose of corporate
governance is to maximize shareholder value in a manner consistent with legal
requirements. The Board has adopted corporate governance principles, which the
Board and senior management believe promote this purpose. We periodically review
these governance principles, the rules and listing standards of the American
Stock Exchange (the "AMEX") and Securities and Exchange Commission (the "SEC")
regulations.
Director Independence
The Board has determined that a majority of the directors and all
current members of the Nominating, Compensation, and Audit Committees are
"independent" for purposes of Section 121 of the American Stock Exchange Company
Guide, and that the members of the Audit Committee are also "independent" for
purposes of Section 10A-3 of the Securities Exchange Act of 1934 and Section 803
of the American Stock Exchange Company Guide. The Board based these
determinations primarily on a review of the responses of the directors and
executive officers to questions regarding employment and transaction history,
affiliations and family and other relationships and on discussions with the
directors. The independent directors are Anthony J. Consi, II, Pamela Hill,
James R. Lamb, Edward A. Merton, F. Duffield Meyercord, John R. Mulcahy, and
Philip W. Smith, III.
To assist it in making determinations of independence, the Board has
concluded that the following relationships are immaterial and that a director
whose only relationships with Peapack-Gladstone fall within these categories is
independent:
o A loan made by the Bank to a director, his or her immediate family
member or an entity affiliated with a director or his or her
immediate family member, or a loan personally guaranteed by such
persons if such loan (i) complies with state and federal regulations
on insider loans, where applicable; and (ii) is not classified by
the Bank's credit committee or by any bank regulatory agency which
supervised the Bank as substandard, doubtful or loss.
o A deposit, trust, insurance brokerage, securities brokerage or
similar customer relationship between Peapack-Gladstone or its
subsidiaries and a director, his or her immediate family member or
an affiliate of his or her immediate family member if such
relationship is on customary and usual market terms and conditions.
o The employment by Peapack-Gladstone or its subsidiaries of any
immediate family member of the director if the employee serves below
the level of a senior vice president.
o Annual contributions by Peapack-Gladstone or its subsidiaries to any
charity or non-profit corporation with which a director is
affiliated if the contributions do not exceed an aggregate of
$20,000 in any calendar year and the contribution is made in the
name of Peapack-Gladstone.
o Purchases of goods or services by Peapack-Gladstone or any of its
subsidiaries from a business in which a director or his or her
immediate family member is a partner, shareholder or officer, if the
director or his or her immediate family member owns five percent or
less of the equity interests of that business and does not serve as
an executive officer of the business.
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o Purchases of goods or services by Peapack-Gladstone, or any of its
subsidiaries, from a director or a business in which the director or
his or her immediate family member is a partner, shareholder or
officer if the annual aggregate purchases of goods or services from
the director, his or her immediate family member or such business in
the last calendar year does not exceed the greater of $60,000 or two
percent of the gross revenues of the business.
o Fixed retirement benefits paid or payable to a director either
currently or on retirement.
The following categories or types of transactions, relationships or
arrangements were considered by the Board in determining that each listed
director is independent in accordance with the AMEX listing standards and
Peapack-Gladstone's Corporate Governance Principles.
Independent Director Category or Type
-------------------- ----------------
Mr. Consi Deposits
Ms. Hill Deposits, Trust
Mr. Lamb Loans, Deposits, Trust
Mr. Merton Loans, Deposits, Trust
Mr. Meyercord Loans, Deposits, Trust
Mr. Mulcahy Loans, Deposits, Trust
Mr. Smith Loans, Deposits, Trust, Employment of
Immediate Family Member below
level of Senior Vice President
Executive Sessions of Non-Management Directors
Our Corporate Governance Principles require the Board to provide for at
least semi-annual executive sessions to include non-management directors. At
least once a year, the Board holds an executive session including only
independent directors. Peapack-Gladstone's Board has chosen to rotate the
presiding director for each meeting among the Chairperson of the Audit,
Compensation, and Nominating Committees.
Shareholder Communication with Directors
The Board of Directors has established the following procedures for
shareholder communications with the Board of Directors:
o Shareholders wishing to communicate with the Board of Directors
should send any communication to the Board of Directors,
Peapack-Gladstone Financial Corporation, c/o Secretary of
Peapack-Gladstone, Antoinette Rosell, at 158 Route 206 North,
Gladstone, New Jersey, 07934. Any such communication should state
the number of shares owned by the shareholder.
o The Corporate Secretary will forward such communication to the Board
of Directors or as appropriate to the particular Committee Chairman,
unless the communication is a personal or similar grievance, a
shareholder proposal or related communication, an abusive or
inappropriate communication, or a communication not related to the
duties or responsibilities of the Board of Directors, in which case
the Corporate Secretary has the authority to disregard the
communication. All such communications will be kept confidential to
the extent possible.
o The Corporate Secretary will maintain a log of, and copies of, all
communications, for inspection and review by any Board member, and
shall regularly review all such communications with the Board or the
appropriate Committee Chairman.
The Board of Directors has also established the following
procedures for shareholder communications with the rotating chairman of the
executive sessions of the non-management directors of the Board:
o Shareholders wishing to communicate with the presiding director of
executive sessions should send any communication to the presiding
director of executive sessions, Peapack-Gladstone Financial
Corporation, c/o Corporate Secretary of Peapack-Gladstone,
Antoinette Rosell, at 158 Route 206 North, P.O. Box 178, Gladstone,
New Jersey, 07934. Any such communication should state the number of
shares owned by the shareholder.
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o The Corporate Secretary will forward such communication to the then
presiding director, unless the communication is a personal or
similar grievance, a shareholder proposal or related communication,
an abusive or inappropriate communication, or a communication not
related to the duties or responsibilities of the non-management
directors, in which case the Corporate Secretary has the authority
to disregard the communication. All such communications will be kept
confidential to the extent possible.
o The Corporate Secretary will maintain a log of, and copies of, all
communications, for inspection and review by the presiding director
of executive sessions, and shall regularly review all such
communications with the presiding director at the next meeting.
Committees of the Board of Directors
In 2007, the Board of Directors maintained an Audit Committee, a
Nominating Committee and a Compensation Committee.
Audit Committee
---------------
Mr. Consi serves as Chair of the Audit Committee. Other members of the
Audit Committee are Messrs. Mulcahy, Smith and Ms. Hill. The Audit Committee met
nine times during 2007.
The Board of Directors has determined that at least one member of the
Audit Committee meets the American Stock Exchange standard of being financially
sophisticated. The Board of Directors has also determined that Mr.
Consi meets the SEC criteria of an "audit committee financial expert."
The Audit Committee operates pursuant to a charter. The charter can be
viewed at the Investor Relations link on our website www.pgbank.com. The charter
gives the Audit Committee the authority and responsibility for the appointment,
retention, compensation and oversight of our independent auditors, including
pre-approval of all audit and non-audit services to be performed by our
independent auditors. Other responsibilities of the Audit Committee pursuant to
the charter include: reviewing the scope and results of the audit with our
independent auditors; reviewing with management and our independent auditors
Peapack-Gladstone's interim and year-end operating results including press
releases; considering the appropriateness of the internal accounting and
auditing procedures of Peapack-Gladstone; considering our outside auditors'
independence; reviewing examination reports by bank regulatory agencies;
reviewing audit reports prepared by the accounting firm which conducts the
internal audit functions for Peapack-Gladstone; and reviewing the response of
management to those reports. The Audit Committee reports to the full Board
concerning pertinent matters coming before it.
Nominating Committee
--------------------
Peapack-Gladstone's Nominating Committee consists of Messrs. Smith
(Chair), Consi, Lamb, Merton, Meyercord, Mulcahy and Ms. Hill. The Nominating
Committee met two times during 2007.
The Nominating Committee operates under a written charter setting out
the functions and responsibilities of this committee. The charter can be viewed
at the Investor Relations link on our website www.pgbank.com. The Nominating
Committee reviews qualifications of and recommends to the Board candidates for
election as director of Peapack-Gladstone and the Bank, considers the
composition of the Board, recommends committee assignments, and discusses
management succession for the Chairman and the CEO positions. The Nominating
Committee develops corporate governance principles which include director
qualifications and standards; director responsibilities; director orientation
and continuing education; limitations concerning service on other boards;
director access to management and records, criteria for annual self-assessment
of the Board, its committees, management and the effectiveness of their
functioning. The committee is also charged with reviewing the Board's adherence
to the Corporate Governance Principles and the Code of Business Conduct and
Ethics. The Nominating Committee reviews recommendations from shareholders
regarding corporate governance and director candidates. The procedure for
submitting recommendations of director candidates is set forth below under the
caption "Nomination of Directors."
Compensation Committee
----------------------
Peapack-Gladstone's Compensation Committee consists of Messrs.
Meyercord (Chair), Merton and Consi. During 2007, the Compensation Committee met
two times.
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The Compensation Committee operates under a written charter setting out
the functions and responsibilities of this committee. The charter can be viewed
at the Investor Relations link on our website www.pgbank.com. The Compensation
Committee determines CEO compensation, sets general compensation levels for all
officers and employees and sets specific compensation for executive officers. It
also administers our stock option plans and makes awards under those plans. The
Board has approved its charter, which delegates to the Compensation Committee
the responsibility to recommend Board compensation.
The Compensation Committee annually reviews, considers, and approves
all compensation and awards to executive officers, including the CEO, the
President, Executive Vice Presidents, Senior Vice Presidents and First Vice
Presidents. Included in this process is a thorough analysis and consideration of
overall Bank performance, individual job performance, the overall need of the
Bank to attract, retain and incent executive talent, and the total cost of the
compensation programs.
Nomination of Directors
Nominations for director may be made only by the Board of Directors or
a committee of the Board or by a shareholder of record entitled to vote. The
Board of Directors has established minimum criteria for members of the Board.
These include:
o Directors are encouraged to live and/or work in the communities
served by Peapack-Gladstone's subsidiary bank.
o Directors shall beneficially own or agree to acquire at least
$25,000 (market value) of Peapack-Gladstone stock.
o Directors shall be experienced in business, shall be financially
literate and shall be respected members of their communities.
o Directors shall be of high ethical and moral standards and have
sound personal finances.
o A Director may not serve on the board of directors of any other bank
that serves the same market area as Peapack-Gladstone and may only
serve on the boards of three other publicly-traded companies.
o If there is a vacancy, the Nominating Committee shall evaluate the
qualifications of persons who may be recommended to it as potential
candidates based on information the Committee may deem relevant.
The Nominating Committee has adopted a policy regarding consideration
of director candidates recommended by shareholders. The Nominating Committee
will consider nominations made by shareholders. In order for a shareholder to
make a nomination, the shareholder must provide a notice along with the
additional information and supporting materials to our Corporate Secretary not
less than 120 days or more than 150 days prior to the first anniversary of the
date of the preceding year's annual meeting. The shareholder wishing to propose
a candidate for consideration by the Nominating Committee must have a
significant stake in Peapack-Gladstone. To qualify for consideration by the
Nominating Committee, the shareholder submitting the candidate must demonstrate
that he or she has been the beneficial owner of at least one percent of
Peapack-Gladstone's outstanding shares for a minimum of one year prior to the
submission of the request. In addition, the Nominating Committee has the right
to require any additional background or other information from any director
candidate or the recommending shareholder, as it may deem appropriate. For our
annual meeting in the year 2009, we must receive this notice on or after
November 23, 2008, and on or before December 23, 2008. The following factors, at
a minimum, are considered by the Nominating Committee as part of its review of
all director candidates and in recommending potential director candidates to the
Board:
o appropriate mix of educational background, professional background
and business experience to make a significant contribution to the
overall composition of the Board;
o if the Committee deems it applicable, whether the candidate would be
able to read and understand fundamental financial statements and
considered to be financially sophisticated as described in the AMEX
rules, or considered to be an audit committee financial expert as
defined pursuant to the Sarbanes-Oxley Act of 2002;
o if the Committee deems it applicable, whether the candidate would be
considered independent under the AMEX rules and the Board's
additional independence guidelines set forth in Peapack-Gladstone's
Corporate Governance Principles;
o demonstrated character and reputation, both personal and
professional, consistent with that required for a bank director;
o willingness to apply sound and independent business judgment;
o ability to work productively with the other members of the Board;
o availability for the substantial duties and responsibilities of a
Peapack-Gladstone director; and
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o meets the additional criteria set forth in the Peapack-Gladstone's
Corporate Governance Principles.
You can obtain a copy of the full text of our policy regarding
shareholder nominations by writing to Antoinette Rosell, Secretary,
Peapack-Gladstone Financial Corporation, 158 Route 206 North, P.O. Box 178,
Gladstone, New Jersey 07934.
Code of Business Conduct and Ethics and Corporate Governance Principles
Peapack-Gladstone has adopted a Code of Business Conduct and Ethics,
which applies to Peapack-Gladstone's chief executive officer, principal
financial officer, principal accounting officer and to all other
Peapack-Gladstone directors, officers and employees. The Code of Business
Conduct and Ethics is available in the Investor Relations section of
Peapack-Gladstone's website located at www.pgbank.com. The Code of Business
Conduct and Ethics is also available in print to any shareholder who requests
it. Peapack-Gladstone will disclose any substantive amendments to or waiver from
provisions of the Code of Business Conduct and Ethics made with respect to a
director or executive officer on our website and to the extent required by AMEX
and SEC rules, in a Current Report on Form 8-K.
We have also adopted Corporate Governance Principles, which are
intended to provide guidelines for the governance of Peapack-Gladstone by the
Board and its committees. The Corporate Governance Principles are available at
the Investor Relations section of Peapack-Gladstone's website located at
www.pgbank.com.
DIRECTOR COMPENSATION
The following table summarizes the compensation of the non-employee
directors of Peapack-Gladstone in 2007.
-------------------------------------------------------------------------------------------------------
Option Change in Pension Value and
Fees Earned or Paid Awards Nonqualified Deferred Compensation
Name (4) in Cash (1) (2) Earnings (3) (5) Total
(a) (b) (c) (d)
-------------------------------------------------------------------------------------------------------
Anthony J. Consi, II $ 39,100 $ 4,501 $ 5,000 $ 48,601
-------------------------------------------------------------------------------------------------------
Pamela Hill 25,700 4,501 8,000 38,201
-------------------------------------------------------------------------------------------------------
John D. Kissel 32,200 4,501 2,000 38,701
-------------------------------------------------------------------------------------------------------
James R. Lamb, Esq. 21,400 4,501 7,000 32,901
-------------------------------------------------------------------------------------------------------
Edward A. Merton 20,000 4,501 8,000 32,501
-------------------------------------------------------------------------------------------------------
F. Duffield Meyercord 27,500 4,501 5,000 37,001
-------------------------------------------------------------------------------------------------------
John R. Mulcahy 59,200 4,501 15,000 78,701
-------------------------------------------------------------------------------------------------------
Philip W. Smith, III 38,500 4,501 2,000 45,001
-------------------------------------------------------------------------------------------------------
(1) Peapack-Gladstone pays its directors an $8,000 annual retainer for
service on the Board, and $500 for each regular Bank Board meeting
they attend and $400 for each committee meeting they attend.
Committee Chairs and Audit Committee members receive an additional
$2,000 annual retainer. The Audit Committee Chair receives an
additional $16,000 annual retainer. The Compensation Committee
Chair receives an additional $10,000 annual retainer and the
Compensation Committee members receive an additional $1,000 annual
retainer. Frank A. Kissel, Robert M. Rogers and Craig C.
Spengeman, as full-time employees, were not compensated for
services rendered as directors.
(2) Includes amortization of stock option grants in accordance with
SFAS No. 123R, see Note 12 - Stock Option Plans of
Peapack-Gladstone's Annual Report on Form 10-K for the year ended
December 31, 2007 for additional information on SFAS No. 123R
valuation methodology. The 1998 and 2002 Stock Option Plans for
Outside Directors provide for the award of non-qualified stock
options to each non-employee director. The 2006 Long-Term Stock
Incentive Plan provides for the award of non-qualified stock
options, stock appreciation rights or restricted stock to each
non-employee director. The plans provide that grants are made
based upon recommendations from the Compensation Committee to the
Board and a vote from the full Board.
Under each of the plans, the exercise price for the option shares
may not be less than the fair market value of the common stock on
the date of grant of the option. The options granted under these
plans are, in general, exercisable not earlier than one year after
the date of grant, at a price equal to the fair market value of
the common stock on the date of grant, and expire not more than
ten years after the date of grant.
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The following table represents the shares awarded, the grant date
fair market value of the underlying stock and the aggregate number
of options outstanding at December 31, 2007, for each of the
following participants:
--------------------------------------------------------------------------------------
Number of Grant Date Fair Aggregate Number of Stock
Shares Awarded Market Value of Awards Outstanding at
Name 1/3/2007 Options Awarded 12/31/2007
--------------------------------------------------------------------------------------
Anthony J. Consi, II 2,200 $ 61,820 21,702
--------------------------------------------------------------------------------------
Pamela Hill 2,200 61,820 24,741
--------------------------------------------------------------------------------------
John D. Kissel 2,200 61,820 22,214
--------------------------------------------------------------------------------------
James R. Lamb, Esq. 2,200 61,820 24,781
--------------------------------------------------------------------------------------
Edward A. Merton 2,200 61,820 24,782
--------------------------------------------------------------------------------------
F. Duffield Meyercord 2,200 61,820 24,782
--------------------------------------------------------------------------------------
John R. Mulcahy 2,200 61,820 16,152
--------------------------------------------------------------------------------------
Philip W. Smith, III 2,200 61,820 16,364
--------------------------------------------------------------------------------------
(3) Peapack-Gladstone has a retirement plan for eligible non-employee
directors of Peapack-Gladstone and/or its Subsidiaries. The plan
provides 5 years of annual benefits to directors with 10 or more
years of service, which commence after a director has retired from
the Board. The annual benefit is equal to 25 percent of the
director's final compensation and increases by 5 percent for each
year of service in excess of 10. The maximum benefit is limited to
50 percent of final compensation. No director was credited with
more than 10 years of service when the plan became effective,
regardless of how long the person had served as director as of the
effective date. If a director with 10 years of service ceases to
be a director as a result of death or disability, or a director
with 5 years of service ceases to be a director following a change
in control, the director will be credited with a total of 15 years
of service for plan purposes. In the event that the director dies
prior to receipt of all benefits, the payments continue to the
director's beneficiary or estate.
(4) Peapack-Gladstone has a nonqualified deferred compensation plan
for non-employee directors covering retainer fees and the
aggregate of all fees for service and attendance at Board and
committee meetings. Participation is optional. As of January 1,
2005, the plan is frozen and no further contributions may be made.
Interest is paid on the deferred fees equal to that which would
have been credited if such deferred fees were invested in the
Peapack-Gladstone Money Market Account, which yields 2.99 percent
as of February 29, 2008. The provisions of the deferred
compensation plan are designed to comply with certain rulings of
the Internal Revenue Service under which the deferred amounts are
not taxed until received. Under the deferred compensation plan,
the directors who elect to defer their fees receive the fees
either (i) in a lump sum on the first day of the calendar quarter
following termination of service as director, or on the first day
of a calendar quarter that is at least 5 years following the date
of the original deferral election, or (ii) in substantially equal
annual installments over a period of between 2 to 10 years,
commencing in January of the calendar year following the calendar
year during which the director ceases serving as director. In the
event the director dies, within a reasonable period of time
following his or her death, the amount credited to the director's
deferred compensation account shall be paid in a lump sum to the
director's beneficiary or estate.
(5) The amount in this column represents the change in pension value.
There were no above-market, nonqualified deferred compensation
earnings.
8
BENEFICIAL OWNERSHIP OF COMMON STOCK
Certain Beneficial Owners
The following table sets forth as of February 29, 2008 certain
information as to beneficial ownership of each person known to Peapack-Gladstone
to own beneficially more than 5 percent of the outstanding common stock of
Peapack-Gladstone. The beneficial owner in the table below has sole voting and
investment power as to all his shares.
Number of Shares
Name of Beneficial Owner Beneficially Owned Percent of Class
=======================================================================
James M. Weichert 801,435 9.66%
Stock Ownership of Directors and Executive Officers
The following table sets forth as of February 29, 2008 the number of
shares of Peapack-Gladstone's common stock beneficially owned by each of the
directors/nominees, the executive officers of Peapack-Gladstone for whom
individual information is required to be set forth in this proxy statement (the
"named executive officers") pursuant to the regulations of the SEC, and by all
directors and executive officers as a group.
--------------------------------------------------------------------------------------
Number of Shares
Name of Beneficial Owner Beneficially Owned (1) Percent of Class (2)
--------------------------------------------------------------------------------------
Arthur F. Birmingham 46,639 (3) *
--------------------------------------------------------------------------------------
Garrett P. Bromley 41,597 (4) *
--------------------------------------------------------------------------------------
Anthony J. Consi, II 73,943 (5) *
--------------------------------------------------------------------------------------
Pamela Hill 116,883 (6) 1.41%
--------------------------------------------------------------------------------------
Frank A. Kissel 145,017 (7) 1.73%
--------------------------------------------------------------------------------------
John D. Kissel 61,598 (8) *
--------------------------------------------------------------------------------------
James R. Lamb 43,688 (9) *
--------------------------------------------------------------------------------------
Edward A. Merton 48,246 (10) *
--------------------------------------------------------------------------------------
F. Duffield Meyercord 44,113 (11) *
--------------------------------------------------------------------------------------
John R. Mulcahy 34,749 (12) *
--------------------------------------------------------------------------------------
Robert M. Rogers 52,215 (13) *
--------------------------------------------------------------------------------------
Philip W. Smith, III 47,608 (14) *
--------------------------------------------------------------------------------------
Craig C. Spengeman 56,695 (15) *
--------------------------------------------------------------------------------------
All directors and executive officers 812,991 9.40%
as a group (13 persons)
--------------------------------------------------------------------------------------
9
NOTES:
* Less than one percent
(1) Beneficially owned shares include shares over which the named
person exercises either sole or shared voting power or sole or
shared investment power. It also includes shares owned (i) by
a spouse, minor children or by relatives sharing the same
home, (ii) by entities owned or controlled by the named person
and (iii) by other persons if the named person has the right
to acquire such shares within 60 days by the exercise of any
right or option. Unless otherwise noted, all shares are owned
of record or beneficially by the named person.
(2) The number of shares of common stock used in calculating the
percentage of the class owned includes shares of common stock
outstanding as of February 29, 2008, and 362,831 shares
purchasable pursuant to options exercisable within 60 days of
February 29, 2008.
(3) This total includes 936 shares owned by Mr. Birmingham's wife,
3,421 shares allocated to Mr. Birmingham under
Peapack-Gladstone's Profit Sharing Plan and 29,812 shares
purchasable pursuant to options exercisable within 60 days of
February 29, 2008.
(4) This total includes 1,413 shares allocated to Mr. Bromley
under Peapack-Gladstone's Profit Sharing Plan and 29,812
shares purchasable pursuant to options exercisable within 60
days of February 29, 2008.
(5) This total includes 19,942 shares purchasable pursuant to
options exercisable within 60 days of February 29, 2008.
(6) This total includes 22,981 shares purchasable pursuant to
options exercisable within 60 days of February 29, 2008 and
24,945 shares held in a trust for which Ms. Hill is a
beneficiary.
(7) This total includes 3,348 shares owned by Mr. Frank A.
Kissel's wife, 9,051 shares allocated to Mr. Kissel under
Peapack-Gladstone's Profit Sharing Plan and 63,170 shares
purchasable pursuant to options exercisable within 60 days of
February 29, 2008.
(8) This total includes 1,609 shares owned by Mr. John D. Kissel's
wife, 5,547 shares owned by Mr. Kissel's children and 20,454
shares purchasable pursuant to options exercisable within 60
days of February 29, 2008.
(9) This total includes 3,057 shares owned by Mr. Lamb's wife and
23,021 shares purchasable pursuant to options exercisable
within 60 days of February 29, 2008.
(10) This total includes 23,022 shares purchasable pursuant to
options exercisable within 60 days of February 29, 2008.
(11) This total includes 23,022 shares purchasable pursuant to
options exercisable within 60 days of February 29, 2008 and of
this total, 19,705 shares were pledged as security to a loan
with Peapack-Gladstone Bank.
(12) This total includes 2,108 shares owned by Mr. Mulcahy's wife
and 11,440 shares purchasable pursuant to options exercisable
within 60 days of February 29, 2008.
(13) This total includes 5,268 shares allocated to Mr. Rogers under
Peapack-Gladstone's Profit Sharing Plan and 35,323 shares
purchasable pursuant to options exercisable within 60 days of
February 29, 2008.
(14) This total includes 6,903 shares owned by Mr. Smith's wife,
1,351 shares owned by Mr. Smith's children and 12,712 shares
purchasable pursuant to options exercisable within 60 days of
February 29, 2008 and of this total, 15,052 shares were
pledged as security to a loan with Peapack-Gladstone Bank.
(15) This total includes 868 shares owned by Mr. Spengeman's wife,
6,178 shares allocated to Mr. Spengeman under
Peapack-Gladstone's Profit Sharing Plan and 36,720 shares
purchasable pursuant to options exercisable within 60 days of
February 29, 2008.
10
COMPENSATION DISCUSSION AND ANALYSIS
The fundamental objective of Peapack-Gladstone's named executive
officer compensation program is to fairly compensate our named executive
officers in a way that best advances the interests of the shareholders.
Peapack-Gladstone feels that shareholder interests are best advanced through the
retention of superior executive talent and the alignment of shareholder and
executive interests.
Peapack-Gladstone compensates our named executive officers with a mix
of base salary, bonus and equity compensation designed to be competitive with
comparable employers and to align management's incentives with the interests of
our shareholders.
The base salary we pay our named executives is determined by a
combination of factors, including but not limited to an analysis of market
comparables, skill set, level of responsibility, individual performance and
Peapack-Gladstone's overall performance.
We design the incentive compensation (bonus and equity compensation) to
align the interests of our named executive officers with the short and long-term
interests of shareholders. We align named executive officer and shareholder
short-term interests by linking bonus awards to individual performance and
Peapack-Gladstone's overall performance over the prior year. We align named
executive officer and shareholder long-term interests by awarding equity
compensation to our named executive officers. Both bonus and equity compensation
are awarded on a discretionary basis.
Peapack-Gladstone feels that our salary, bonus and equity compensation
is both fair and reflective of market conditions within our business and
geography.
The Decision Process
The Compensation Committee of the Board of Directors is responsible for
establishing and overseeing policies governing annual and long-term compensation
programs for the named executive officers, and for making recommendations to the
Board of Directors on actual named executive officer compensation levels. The
Chief Executive Officer provides advice to the Compensation Committee relative
the compensation of the four other named executive officers. The Compensation
Committee makes all of its determinations based on discretion.
After the Compensation Committee makes its recommendations to the Board
of Directors, the Board of Directors (without the presence of the named
executive officers) makes the final determination of compensation paid to
Peapack-Gladstone's named executive officers.
Elements of Compensation
Peapack-Gladstone's direct compensation consists of base salary, an
annual cash award (our bonus), and equity compensation. Our base salaries are
linked to individual performance, level of responsibility, the competitive
market and Peapack-Gladstone's overall performance.
We design our base salaries in significant part to attract and retain
talented executives who can help drive long-term shareholder value. Because the
markets in which we operate present current and potential executives with many
high-paying alternatives, we believe we must keep our base salaries competitive,
or risk losing executive talent.
Our cash bonuses are linked to individual performance, level of
responsibility, and Peapack-Gladstone's overall performance. The assessment of
these factors is subjective and is made by the Compensation Committee. On the
basis of this assessment, the Compensation Committee uses its discretion to
determine the amount of the cash bonus. We feel that linking cash bonuses to
individual performance and Peapack-Gladstone's overall performance places a
portion of individual compensation at risk--thereby motivating individual
performance while at the same time correlating Peapack-Gladstone's overall
compensation to Peapack-Gladstone's overall performance.
11
Our equity compensation is linked to the degree to which the executive
is in a position to influence Peapack-Gladstone's long-term performance. We feel
the rationale behind equity compensation is straightforward: by allowing our
executives to participate in the long-term appreciation of our shares, these
executives will work and make decisions to maximize Peapack-Gladstone's
long-term performance. The Compensation Committee in its discretion determines
the amount, type and timing of our equity compensation. In the past our equity
compensation has consisted of stock options. In 2006 the Committee decided to
make smaller stock option grants every year, as opposed to the prior practice of
making larger stock option grants once every two or three years.
Compensation Review
We commissioned a compensation review by Pearl Meyer & Partners in 2005
(hereinafter referred to as the Pearl Meyer review). The Pearl Meyer review
established a market composite based upon the average of two surveys: the proxy
peer group and the 2004/2005 Watson Wyatt Financial Institutions Benchmark
Survey for institutions with assets of $500 million to $1.9 billion. The proxy
peer group included data from the following 20 publicly traded institutions:
Bryn Mawr Bank Corporation, Center Bancorp, Inc., Chemung Financial Corporation,
Columbia Bancorp, First Chester County Corporation, First United Corporation,
Greater Community Bancorp, Hudson Valley Holding Corp., Interchange Financial
Services Corporation, Intervest Bancshares Corporation, Lakeland Bancorp,
Incorporated, OceanFirst Fiancial Corp., PennFed Financial Services, Inc., Royal
Bancshares of Pennsylvania, Inc., Sandy Spring Bancorp, Inc., Shore Bancshares,
Inc., Sterling Financial Corporation, Tompkins Trustco., Inc. Univest
Corporation of Pennsylvania and Washington Trust Bancorp, Inc.
For 2005 base salaries, the Pearl Meyer review found that the 50th
percentile of the competitive composite was $355,000 for Mr. Frank A. Kissel,
$232,000 for Mr. Robert M. Rogers, $218,000 for Mr. Craig C. Spengeman, $176,000
for Mr. Arthur F. Birmingham and $160,000 for Mr. Garrett P. Bromley. When
subject to cost-of-living adjustments in 2006 (3.3%) and 2007 (2.3%), these
benchmark salaries increase to $375,000 for Mr. Kissel, $245,000 for Mr. Rogers,
$230,000 for Mr. Spengeman, $186,000 for Mr. Birmingham and $169,000 for Mr.
Bromley. As to bonuses, the Pearl Meyer review found that the 50th percentile of
the market composite translated to a bonus equal to 41% of Mr. Kissel's base
salary, 40% of Mr. Roger's base salary, 28% of Mr. Spengeman's base salary, 27%
of Mr. Birmingham's base salary and 30% of Mr. Bromley's base salary. The Pearl
Meyer review also included data on change in control agreement terms found
within the proxy peer group, and specifically found that typical change in
control arrangements within our competitive market included termination benefits
equal to three times salary and bonus for the Chief Executive Officer and two
times salary and bonus for other named executive officers. The Pearl Meyer
review did not include data on the economic value of stock options issued or the
terms of benefit plans or employment contracts provided within the competitive
market.
2007 Compensation--Facts and Analysis
In establishing compensation for named executive officers, the
Compensation Committee considers many factors including but not limited to
Peapack-Gladstone's overall performance, the individual's performance, the Pearl
Meyer review and annual pay raise survey data.
Mr. Kissel's base salary for 2007 of $321,903 was $53,246 below the
50th percentile of the competitive composite, including cost-of-living
adjustments, and was set by the Compensation Committee, in its discretion, based
on the Pearl Meyer review, including cost-of-living adjustments, his performance
in executing his responsibilities in 2006 and his anticipated performance in
2007 and future years. The Committee also considered Mr. Kissel's ability to
develop and motivate employees to meet Peapack-Gladstone's short and long-term
objectives, as well as Peapack-Gladstone's overall performance. Finally, the
Committee considered annual pay raise survey data from the Conference Board,
Mercer Consulting, America's Community Bankers, SHRM, WorldatWork, Hewitt
Associates, LR Webber Associates, BLR Northeast and the Kiplinger Washington
Letter (hereinafter referred to as the annual pay raise survey), which found an
average planned increase in executive salaries, from 2006 to 2007, of 3.8%. Mr.
Kissel's 2007 salary of $321,903 represented a 3.5% increase over his 2006
salary of $311,017.
The Compensation Committee, in its discretion, also awarded Mr. Kissel
a bonus in 2007 equal to 15% of his base salary, based on his individual
performance and Peapack-Gladstone's overall performance in 2007. This compares
to a median market composite bonus equal to 41% of base salary. Mr. Kissel's
bonus level was significantly lower than his bonus level in 2005, which equaled
30% of his base salary, but somewhat higher than his bonus level in 2006, which
equaled 12% of his base salary. The Committee feels that the bonus level should
take into account not only the individual performance of Mr. Kissel, who the
Committee felt performed very well, but also the actual performance of
Peapack-Gladstone; in 2005 Mr. Kissel's bonus was relatively higher to reflect
Peapack-Gladstone's strong performance that year, in 2006 Mr. Kissel's bonus was
significantly lower to reflect the challenges which Peapack-Gladstone faced in
2006, and in 2007 Mr. Kissel's bonus was somewhat higher than 2006 to reflect
Peapack-Gladstone's improved performance.
12
To further align Mr. Kissel's and the shareholders' long-term
interests, the Committee awarded Mr. Kissel 5,000 stock options in 2007, valued
at $51,150 using the Black Scholes option-pricing model and representing 16% of
Mr. Kissel's base salary. The Committee determined the size of the award, in its
discretion, through consideration of the ability of Mr. Kissel to positively
influence the long-term performance of Peapack-Gladstone and Peapack-Gladstone's
actual performance. The Pearl Meyer review did not include data on the economic
value of stock options issued within the competitive market.
Mr. Roger's 2007 base salary of $204,847 was $40,321 below the 50th
percentile of the competitive composite, including cost-of-living adjustments.
Mr. Roger's 2007 salary represented a 3.5% increase over his 2006 salary of
$197,920. Mr. Spengeman's 2007 base salary of $234,112 was $3,739 above the 50th
percentile of the competitive composite, including cost-of-living adjustments.
Mr. Spengeman's 2007 salary represented a 3.5% increase over his 2006 salary of
$226,195. Mr. Birmingham's 2007 base salary of $175,583 was $10,407 below the
50th percentile of the competitive composite, including cost-of-living
adjustments. Mr. Birmingham's 2007 salary represented a 3.5% increase over his
2006 salary of $169,646. Mr. Bromley's 2007 base salary of $161,000 was $8,081
below the 50th percentile of the competitive composite, including cost-of-living
adjustments. Mr. Bromley's 2007 salary represented an 8.6% increase over his
2006 salary of $148,234. The Committee awarded Mr. Bromley an 8.6% increase, as
compared to 3.5% increases for the other four named executive officers, to
reflect competitive market pressures. Each of the increases compared to a 3.8%
average planned increase found by the annual pay raise survey.
The Compensation Committee, in its discretion, awarded each of Mr.
Rogers, Mr. Spengeman, Mr. Birmingham and Mr. Bromley a bonus in 2007 equal to
15% of base salary, based on individual performance and Peapack-Gladstone's
overall performance in 2007. This compares to median market composite bonuses of
40%, 28%, 27%, and 30% of base salaries for Mr. Rogers, Mr. Spengeman, Mr.
Birmingham and Mr. Bromley, respectively. The 15% bonus level was significantly
lower than the bonus level awarded to these individuals in 2005, which in each
case equaled 30% of base salary, but somewhat higher than the bonus level in
2006, which in each case equaled 12% of his base salary. The Committee feels
that bonus levels should take into account not only the performance of each of
these individuals, who the Committee felt performed very well, but also the
overall performance of Peapack-Gladstone; in 2005 the bonus awarded these
individuals was relatively higher to reflect Peapack-Gladstone's strong
performance that year, in 2006 the bonus awarded these individuals was
significantly lower to reflect the challenges which Peapack-Gladstone faced in
2006, and in 2007 the bonus awarded these individuals was somewhat higher than
2006 to reflect Peapack-Gladstone's improved performance.
To further align their and the shareholders' long-term interests, the
Committee awarded 4,000 stock options to each of Mr. Rogers and Mr. Spengeman
and 3,500 stock options to each of Mr. Birmingham and Mr. Bromley. Based upon
the Black Scholes option-pricing model these stock options were valued at
$40,920 for each of Mr. Rogers and Mr. Spengeman and $35,805 for each of Mr.
Birmingham and Mr. Bromley and represented 20%, 17%, 20% and 22%, respectively,
of Mr. Rogers', Mr. Spengeman's, Mr. Birmingham's and Mr. Bromley's 2007 base
salary. The Committee determined the size of the awards, in its discretion,
through consideration of the ability of each individual to positively influence
the long-term performance of Peapack-Gladstone and Peapack-Gladstone's actual
performance. The Pearl Meyer review did not include data on the economic value
of stock options issued within the competitive market.
Peapack-Gladstone Benefit Plans--Facts and Analysis
Peapack-Gladstone provides bank-sponsored insurance and retirement
benefit plans to our named executive officers. The benefit packages are designed
to assist named executive officers in providing for their own financial security
in a way that recognizes individual needs and preferences.
The basic insurance package includes health, dental, vision, disability
and basic group life insurance. The Committee believes that these basic benefits
are currently sought after by able employees, and that to attract and retain
able employees Peapack-Gladstone must offer these benefits to its employees,
including its named executive officers.
In addition to providing a term life insurance benefit to each of the
named executive officers, Peapack-Gladstone has also purchased bank owned life
insurance and entered into a split-dollar plan with the named executive officers
and certain other employees to provide current and post-employment life
insurance in an amount which ranges from a minimum benefit of $25,000 to 2.5
times the executive's annual base salary. A life insurance benefit of 2.5 times
a participant's annual base salary vests if prior to the termination of
employment there is a change in control or the participant becomes disabled. A
benefit of 2.5 times the participant's salary is paid if the participant dies
while employed by Peapack-Gladstone. The participant also is entitled to a
vested post-employment life insurance benefit based on years of service and the
participant's age as of the date of termination of employment. This vested
benefit ranges from a minimum of 1.0 times base annual salary at age 50 to a
maximum of 2.5 times annual base salary at age 60, in each case after completion
of 15 years of service. There is a minimum benefit of $25,000 if the participant
does not reach the vesting levels. Bank owned life insurance assists
Peapack-Gladstone in offsetting the rising costs of employee benefits by
providing Peapack-Gladstone with
13
current income prior to the death of an insured, and a lump-sum payment upon the
death of an insured. Peapack-Gladstone owns the cash surrender value of the
policies and records the increases in the cash surrender value as income.
Further, and more importantly, upon the death of an insured Peapack-Gladstone
will receive cash equal to the cash surrender value of the policy and excess
life insurance over the amount paid to the insured's beneficiary. The Committee
feels that bank owned life insurance is primarily a good investment for
Peapack-Gladstone, and secondarily a supplementary life insurance benefit for
many of our officers, including our named executive officers.
Peapack-Gladstone provides retirement benefits to named executive
officers through a combination of plans that qualify under the Internal Revenue
Code. Peapack-Gladstone maintains a traditional defined benefit pension plan
designed to provide financial security to substantially all salaried employees
in retirement. Named executive officers who are age 21 or older and have
completed one year of service and worked at least 1,000 hours are eligible for
the defined benefit plan. Participants are eligible for monthly benefit payments
upon reaching age 65. The plan permits early retirement at age 50 with 15 years
of service. If a participant terminates employment before he is eligible for
normal or early retirement, he will be entitled to 100% of the accrued benefit,
provided he has completed five or more years of service. Employees with less
than five years of service receive no benefit. Monthly retirement benefits are
equal to the sum of the following: (a) a participant's accrued pension benefit
as of January 1, 1989; (b) 2.2% of the participant's average compensation,
multiplied by his benefit years, on or after January 1, 1989, but not to exceed
25 benefit years; and (c) 0.75% (0.6875% effective January 1, 1994) of a
participant's average excess compensation, multiplied by his benefit years on or
after January 1, 1989, but not to exceed 25 benefit years. The plan also
provides death and disability benefits to or on behalf of eligible participants.
It is the policy of Peapack-Gladstone to fund not less than the minimum-funding
amount required by the Employee Retirement Income Security Act. The Committee
feels that the defined benefit pension plan gives Peapack-Gladstone an advantage
in attracting and retaining able employees within our competitive employment
market.
Peapack-Gladstone has established a qualified defined contribution plan
under Section 401(k) of the Internal Revenue Code of 1986, as amended, covering
substantially all salaried employees over the age of twenty-one with at least
twelve months of service and whose participation is not prohibited by the 401(k)
plan. Under the savings portion of the 401(k) plan, employees may contribute up
to 15 percent of their pay (up to a maximum of $15,000 in 2006) to their
elective account via payroll withholding. Annually, Peapack-Gladstone adds a
matching contribution equal to fifty percent of the employee contribution, up to
a maximum of $250 per year. In addition, the Committee may recommend a
discretionary contribution to the profit sharing portion of the 401(k) plan. The
profit sharing portion is based on base salary with a cap ($220,000 in 2006) and
is non-contributory. Contributions to the profit sharing portion are invested in
Peapack-Gladstone's common stock. The Committee believes that able employees
demand 401(k) plans, and that to attract and retain able employees
Peapack-Gladstone must offer these benefits to its employees, including its
named executive officers.
Change in Control Agreements--Facts and Analysis
We have entered into change in control agreements that give the named
executive officers certain benefits in the event of a change in control. Each of
these agreements require Peapack-Gladstone or its successor to pay certain
termination benefits if (a) there is a change in control and (b) a named
executive officer either resigns for good reason or is terminated without cause.
Under these circumstances Peapack-Gladstone or its successor would be required
to pay aggregate amounts equal to three times the highest annual salary and
bonuses paid during any calendar year during the three years prior to the change
in control plus continue certain health and other benefits. This compares to
three times salary and bonus for the Chief Executive Officer and two times
salary and bonus for other named executive officers typically found within the
proxy peer group as reported by the Pearl Meyer review. In the event that the
severance payments and benefits under the agreements, together with any other
parachute payments, would constitute an excess parachute payment under Section
280G of the Internal Revenue Code, the payments would be increased in an amount
sufficient to pay the excise taxes and other income and payroll taxes necessary
to allow the named executive officers to retain the same net amount, after such
taxes, as each was otherwise entitled to receive. The Pearl Meyer review found
that 57% of other firms within the proxy peer group that offer change in control
agreements likewise gross up change in control payments to cover taxes. The
Committee feels these agreements are necessary to encourage our named executive
officers to approach an advantageous merger or acquisition transaction without
regard to immediate loss of salary and benefits. The Committee also feels that,
given the high degree of consolidation within the banking business, these
agreements are necessary to attract and retain talented named executive
officers.
14
Employment Contracts--Facts and Analysis
We are a party to employment agreements that give the named executive
officers certain benefits. These agreements, each with a term of two years,
provide among other things for (i) participation during the employment term in
all compensation and employee benefits plans for which any salaried employees of
Peapack-Gladstone are eligible, (ii) an annual base salary and (iii)
discretionary bonus payments with respect to each calendar year. Under these
agreements, if a named executive officer's employment is terminated without
cause, Peapack-Gladstone shall pay the executive's base salary for a period
equal to two years from the effective date of such termination. In the event
that Peapack-Gladstone terminates a named executive officer's employment for
cause or pursuant to retirement, permanent disability or death,
Peapack-Gladstone shall pay the named executive officer any earned but unpaid
base salary as of the date of termination of employment. The employment
agreements also include certain non-compete and non-solicitation provisions. The
Committee feels Peapack-Gladstone would be unable to attract and retain talented
senior executives without employment agreements, which are customary in the
competitive market.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Company has reviewed and discussed
with management the Compensation Discussion and Analysis and based on such
review and discussions the Compensation Committee has recommended to the Board
that the Compensation Discussion and Analysis be included in Peapack-Gladstone's
annual report on Form 10-K and the Proxy Statement.
The Compensation Committee
of the Board of Directors
F. Duffield Meyercord, Chairman
Edward A. Merton
Anthony J. Consi, II
15
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth compensation information for
Peapack-Gladstone's named executive officers.
---------------------------------------------------------------------------------------------------------------------
Change in Pension
Value and
Nonqualified Deferred
Compensation All Other
Name and Principal Salary Bonus Option Earnings (2) Compensation ($) Total
Position Year ($) ($) Awards (1) ($) ($)
(a) (b) (c) (d) (e) (f) (g)
---------------------------------------------------------------------------------------------------------------------
Frank A. 2007 321,903 48,584 10,230 81,595 8,929 471,241
Kissel 2006 311,017 37,322 -- 70,276 8,146 426,761
Chairman of the Board
and CEO of
Peapack-Gladstone and
the Bank
---------------------------------------------------------------------------------------------------------------------
Arthur F. 2007 175,583 26,337 7,161 61,077 4,808 274,966
Birmingham 2006 169,646 20,358 -- 59,961 4,559 254,524
Executive Vice
President and CFO of
Peapack-Gladstone and
the Bank
---------------------------------------------------------------------------------------------------------------------
Craig C. 2007 234,112 35,116 8,184 61,697 7,311 346,420
Spengeman 2006 226,195 27,143 -- 51,519 10,018 314,875
President of PGB
Trust and Investments
and Executive Vice
President of
Peapack-Gladstone
---------------------------------------------------------------------------------------------------------------------
Robert M. 2007 204,847 30,727 8,184 43,338 9,168 296,264
Rogers 2006 197,920 23,750 -- 48,227 9,343 279,240
President and COO of
Peapack-Gladstone and
the Bank
---------------------------------------------------------------------------------------------------------------------
Garrett P. 2007 161,000 24,150 7,161 87,372 10,093 289,776
Bromley 2006 148,234 17,788 -- 73,603 9,942 249,567
Executive Vice
President
---------------------------------------------------------------------------------------------------------------------
(1) Includes amortization of stock option grants in accordance with
SFAS No. 123R, see Note 12 - Stock Option Plans of
Peapack-Gladstone's Annual Report on Form 10-K for the year ended
December 31, 2007 for additional information on SFAS No. 123R
valuation methodology. The 1998 and 2002 Stock Option Plans
provide for the award of incentive stock options to each named
executive officer. The 2006 Long-Term Stock Incentive Plan
provides for the award of non-qualified stock options, stock
appreciation rights or restricted stock to each named executive
officer. The plans provide that grants are made based upon
recommendations from the Compensation Committee to the Board and a
vote from the full Board.
16
Under each of the plans, the exercise price for the option shares
may not be less than the fair market value of the common stock on
the date of grant of the option. The options granted under these
plans are, in general, exercisable not earlier than one year after
the date of grant, at a price equal to the fair market value of
the common stock on the date of grant, and expire not more than
ten years after the date of grant.
(2) The amount in this column represents the change in pension value.
There were no nonqualified deferred compensation earnings.
2007 Grants of Plan-Based Awards
The following table represents each stock option grant awarded to a
named executive officer in 2007 and their total value calculated in accordance
with FAS No. 123R. Additional details regarding these stock option grants may be
found in the Compensation Discussion and Analysis of this proxy.
----------------------------------------------------------------------------------------------
All Other
Option Awards: Grant Date
Number of Exercise or Base Fair Value of
Securities Price of Option Stock and
Grant Date Underlying Options Awards Option Awards
----------------------------------------------------------------------------------------------
Name (1) (#) ($/Share) ($)
----------------------------------------------------------------------------------------------
Frank A. Kissel 1/3/2007 5,000 28.10 51,150
----------------------------------------------------------------------------------------------
Arthur F. Birmingham 1/3/2007 3,500 28.10 35,805
----------------------------------------------------------------------------------------------
Craig C. Spengeman 1/3/2007 4,000 28.10 40,920
----------------------------------------------------------------------------------------------
Robert M. Rogers 1/3/2007 4,000 28.10 40,920
----------------------------------------------------------------------------------------------
Garrett P. Bromley 1/3/2007 3,500 28.10 35,805
----------------------------------------------------------------------------------------------
(1) The per share grant date fair market value under SFAS No. 123R on
the stock option grant for the named executives was $10.23.
17
Outstanding Equity Awards at Fiscal Year-End
The following table represents stock options outstanding for each named
executive officer as of December 31, 2007.
----------------------------------------------------------------------------------------------------------------------
Option Awards
----------------------------------------------------------------------------------------------------------------------
Number of Securities Underlying Number of Securities Underlying Option Exercise
Unexercised Options Exercisable Unexercised Options Price Option
Name (#) (1) Unexercisable (#) ($) Expiration Date
(a) (b) (c) (d) (e)
----------------------------------------------------------------------------------------------------------------------
Frank A. Kissel 29,347 (2) -- 18.28 2/19/2009
5,324 (2) -- 16.86 1/11/2011
27,499 (3) -- 28.89 1/9/2014
5,000 (4) 5,000 28.10 1/3/2017
----------------------------------------------------------------------------------------------------------------------
Arthur F. Birmingham 5,870 (2) -- 18.66 2/5/2009
3,993 (2) -- 16.86 1/11/2011
19,249 (3) -- 28.89 1/9/2014
3,500 (4) 3,500 28.10 1/3/2017
----------------------------------------------------------------------------------------------------------------------
Craig C. Spengeman 5,870 (2) -- 18.66 2/5/2009
1,398 (2) -- 13.68 9/14/2010
3,992 (2) -- 16.86 1/11/2011
2,661 (2) -- 13.62 5/10/2011
21,999 (3) -- 28.89 1/9/2014
4,000 (4) 4,000 28.10 1/3/2017
----------------------------------------------------------------------------------------------------------------------
Robert M. Rogers 5,870 (2) -- 18.66 2/5/2009
3,993 (2) -- 16.86 1/11/2011
2,661 (2) -- 13.62 5/10/2011
21,999 (3) -- 28.89 1/9/2014
4,000 (4) 4,000 28.10 1/3/2017
----------------------------------------------------------------------------------------------------------------------
Garrett P. Bromley 5,870 (2) -- 18.66 2/5/2009
3,993 (2) -- 16.86 1/11/2011
19,249 (3) -- 28.89 1/9/2014
3,500 (4) 3,500 28.10 1/3/2017
----------------------------------------------------------------------------------------------------------------------
(1) In the event of a Change in Control, all Options outstanding on the
date of such Change in Control shall become immediately and fully
exercisable. All options expire not more than ten years after the
date of grant.
(2) Stock options were originally to vest at a rate of 20% per year for
five years; however, on December 11, 2003, the Board of Directors
accelerated the vesting of the remaining unvested options. All
options granted were exercisable at that time, at a price equal to
the fair market value of the common stock on the date of grant.
(3) Stock options were immediately vested and all options were
exercisable at that time, at a price equal to the fair market value
of the common stock on the date of the grant.
(4) Stock options granted on January 3, 2007, vest at a rate of 20% per
year for five years and are exercisable not earlier than one year
after the date of the grant, at a price equal to the fair market
value of the common stock on the date of the grant.
18
Option Exercises and Stock Vested
The following table shows the stock options exercised in 2007 and the
value realized upon exercise.
-----------------------------------------------------------------------------
Option Awards
-----------------------------------------------------------------------------
Number of Shares Value Realized
Name Acquired on Exercise (#) on Exercise ($)
(a) (b) (c)
-----------------------------------------------------------------------------
Frank A. Kissel 12,491 192,986
-----------------------------------------------------------------------------
Arthur F. Birmingham 7,396 122,357
-----------------------------------------------------------------------------
Craig C. Spengeman 4,744 83,494
-----------------------------------------------------------------------------
Robert M. Rogers 9,244 143,744
-----------------------------------------------------------------------------
Garrett P. Bromley 8,237 131,874
-----------------------------------------------------------------------------
Pension Benefits
The following table shows the pension plan in which each named
executive officer participates, the number of years of credited service and the
present value of the accumulated benefits.
--------------------------------------------------------------------------------------------------
Number of Years Present Value of
Name Plan Name Credited Service (#) Accumulated Benefit ($)
(a) (b) (c) (d)
--------------------------------------------------------------------------------------------------
Frank A. Kissel Peapack-Gladstone Bank
Employees' Retirement Plan 18 700,234
--------------------------------------------------------------------------------------------------
Arthur F. Birmingham Peapack-Gladstone Bank
Employees' Retirement Plan 11 418,692
--------------------------------------------------------------------------------------------------
Craig C. Spengeman Peapack-Gladstone Bank
Employees' Retirement Plan 22 486,897
--------------------------------------------------------------------------------------------------
Robert M. Rogers Peapack-Gladstone Bank
Employees' Retirement Plan 20 369,574
--------------------------------------------------------------------------------------------------
Garrett P. Bromley Peapack-Gladstone Bank
Employees' Retirement Plan 10 498,789
--------------------------------------------------------------------------------------------------
Peapack-Gladstone maintains a traditional defined benefit pension plan
designed to provide financial security to substantially all salaried employees
in retirement. Named executive officers who are age 21 or older and have
completed one year of service and worked at least 1,000 hours are eligible for
the defined benefit plan. Participants are eligible for monthly benefit payments
upon reaching age 65. The plan permits early retirement at age 50 with 15 years
of service. Frank A. Kissel and Craig C. Spengeman were eligible for early
retirement at December 31, 2007, with the same benefits as normal retirement. If
a participant terminates employment before he is eligible for normal or early
retirement, he will be entitled to 100% of the accrued benefit, provided he has
completed five or more years of service. Employees with less than five years of
service receive no benefit. Monthly retirement benefits are equal to the sum of
the following: (a) a participant's accrued pension benefit as of January 1,
1989; (b) 2.2% of the participant's average salary, multiplied by his benefit
years, on or after January 1, 1989, but not to exceed 25 benefit years; and (c)
0.75% (0.6875% effective January 1, 1994) of a participant's average excess
compensation, multiplied by his benefit years on or after January 1, 1989, but
not to exceed 25 benefit years. The plan also provides death and disability
benefits to or on behalf of eligible participants.
19
Change-In-Control Arrangements
Peapack-Gladstone and the Bank entered into Change-in-Control
Agreements with Frank A. Kissel, Craig C. Spengeman, Robert M. Rogers, Arthur F.
Birmingham, and Garrett P. Bromley as of December 20, 2007, each of which
provides for benefits in the event of a termination without "cause" or for "good
reason" following a merger or acquisition of Peapack-Gladstone. The
Change-in-Control Agreements also include certain non-disclosure provisions,
which survive the termination of the Executives' employment and the expiration
of the Agreements. A more detailed description of the change in control
agreements may be found in the Compensation Discussion and Analysis section of
this proxy.
Employment Agreements
Peapack-Gladstone and the Bank entered into employment agreements (the
"Employment Agreements") with each of Frank A. Kissel, Craig C. Spengeman,
Robert M. Rogers, Arthur F. Birmingham and Garrett P. Bromley as of January 1,
2008 for a period of two years to expire on December 31, 2009, specifically set
forth in the Compensation Discussion and Analysis section of this proxy.
Employment agreements with named executive officers are customary in the
marketplace, and Peapack-Gladstone feels it would be at a competitive
disadvantage if it did not enter into such agreements.
The following table shows the potential payments under each named
executive's change-in-control or employment agreement if he had terminated
employment with the Bank at December 31, 2007, under each of the following
retirement or termination circumstances (i) death; (ii) disability or dismissal
for cause; (iii) retirement or resignation; (iv) dismissal without cause; and
(v) dismissal without cause or resignation for good reason following a
change-in-control of Peapack-Gladstone on December 31, 2007. These payments are
considered estimates as of specific dates as they contain some assumptions
regarding stock, price, life expectancy, salary and non-incentive compensation
amounts and income tax rates and laws.
Dismissal without
Cause or Resignation
Disability or Dismissal without For Good Reason
Dismissal for Retirement or Cause (no Change (following a Change
Death Cause Resignation In Control)(1)(3) In Control)(1)(2)(3)
------------------------------------------------------------------------------------------
Frank A. Kissel
Amounts payable in full on indicated
date of termination:
Severance - Salary $ -- $ -- $ -- $ 643,806 $ 1,351,005
Stock Option Acceleration (4) -- -- -- -- --
Welfare Benefits Continuation -- -- -- -- 27,209
Parachute Penalty - Tax Gross-up (5) -- -- -- -- 442,307
------------------------------------------------------------------------------------------
Subtotal -- -- -- 643,806 1,820,521
Present value of annuities commencing on
indicated date of termination:
Pension Plan 700,234 700,234 700,234 700,234 700,234
------------------------------------------------------------------------------------------
Total $ 700,234 $ 700,234 $ 700,234 $ 1,344,040 $ 2,520,755
==========================================================================================
Arthur F. Birmingham
Amounts payable in full on indicated
date of termination:
Severance - Salary $ -- $ -- $ -- $ 351,166 $ 690,207
Stock Option Acceleration (4) -- -- -- -- --
Welfare Benefits Continuation -- -- -- -- 16,834
Parachute Penalty - Tax Gross-up (5) -- -- -- -- 222,890
------------------------------------------------------------------------------------------
Subtotal -- -- -- 351,166 929,931
Present value of annuities commencing on
indicated date of termination:
Pension Plan 418,692 418,692 418,692 418,692 418,692
------------------------------------------------------------------------------------------
Total $ 418,692 $ 418,692 $ 418,692 $ 769,858 $ 1,348,623
==========================================================================================
20
Dismissal without
Cause or Resignation
Disability or Dismissal without For Good Reason
Dismissal for Retirement or Cause (no Change (following a Change
Death Cause Resignation In Control)(1)(3) In Control)(1)(2)(3)
------------------------------------------------------------------------------------------
Craig C. Spengeman
Amounts payable in full on indicated
date of termination:
Severance - Salary $ -- $ -- $ -- $ 468,224 $ 951,852
Stock Option Acceleration (4) -- -- -- -- --
Welfare Benefits Continuation -- -- -- -- 36,842
Parachute Penalty - Tax Gross-up (5) -- -- -- -- 311,191
------------------------------------------------------------------------------------------
Subtotal -- -- -- 468,224 1,299,885
Present value of annuities commencing on
indicated date of termination:
Pension Plan 486,897 486,897 486,897 486,897 486,897
------------------------------------------------------------------------------------------
Total $ 486,897 $ 486,897 $ 486,897 $ 955,121 $ 1,786,782
==========================================================================================
Robert M. Rogers
Amounts payable in full on indicated
date of termination:
Severance - Salary $ -- $ -- $ -- $ 409,694 805,116
Stock Option Acceleration (4) -- -- -- -- --
Welfare Benefits Continuation -- -- -- -- 36,842
Parachute Penalty - Tax Gross-up (5) -- -- -- -- 259,999
==========================================================================================
Subtotal -- -- -- 409,694 1,101,957
Present value of annuities commencing on
indicated date of termination:
Pension Plan 369,574 369,574 369,574 369,574 369,574
--------------- --------------- --------------- --------------- ------------------
Total $ 369,574 $ 369,574 $ 369,574 $ 779,268 $ 1,471,531
==========================================================================================
Garrett P. Bromley
Amounts payable in full on indicated
date of termination:
Severance - Salary $ -- $ -- $ -- $ 322,000 $ 603,639
Stock Option Acceleration (4) -- -- -- -- --
Welfare Benefits Continuation -- -- -- -- 27,209
Parachute Penalty - Tax Gross-up (5) -- -- -- -- 198,138
------------------------------------------------------------------------------------------
Subtotal -- -- -- 322,000 828,986
Present value of annuities commencing on
indicated date of termination:
Pension Plan 498,789 498,789 498,789 498,789 498,789
------------------------------------------------------------------------------------------
Total $ 498,789 $ 498,789 $ 498,789 $ 820,789 $ 1,327,775
==========================================================================================
(1) The term "cause" means (i) willful and continued failure by a named
executive officer to perform the officer's duties, (ii) willful
misconduct by the named executive officer which causes material
injury to the Corporation or its successor or (iii) the conviction
of a crime, other than a traffic violation, drunkenness, drug abuse,
or excessive absenteeism other than for illness.
(2) The term "good reason" means a change in job description, location,
compensation or benefits.
21
(3) The term "change in control" means (i) the acquisition of the
Corporation's securities representing 25% or more of the voting
power of all its securities, (ii) the first purchase of the
Corporation's common stock pursuant to a tender or exchange offer,
(iii) the shareholder approval of (a) a merger or consolidation of
the Corporation into another corporation wherein the other
corporation exercises control over the Corporation, (b) a sale or
disposition of all or substantially all of the Corporation's assets
or (c) a plan of liquidation or dissolution of the Corporation, (iv)
a change in board membership such that over a two year period the
directors constituting the Board at the beginning of such period do
not constitute two thirds of the Board of the Corporation or a
successor corporation at the end of such period, or (v) a sale of
(a) the common stock of the Corporation following which a person or
entity other than the Corporation or its affiliates owns a majority
thereof or (b) all or substantially all of the Corporation's assets.
(4) Under Peapack-Gladstone's various stock option plans, unvested stock
options would immediately vest in the event of a change in control;
however, at December 31, 2007, the market value of
Peapack-Gladstone's stock is less than the grant price of all
unvested options Named executive officers would have three years
from the date of termination following a change in control to
exercise the vested options.
(5) The excise tax gross-up was calculated using marginal tax rate of
57.15% (37.15% income and employment taxes, plus the 20% excise
tax).
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires that Peapack-Gladstone's
executive officers, directors and persons who own more than ten percent of a
registered class of Peapack-Gladstone's common stock, file reports of ownership
and changes in ownership with the SEC. Based upon copies of reports furnished by
insiders, all Section 16(a) reporting requirements applicable to insiders during
2007 were satisfied on a timely basis except for 13 Forms 4, which were filed
late on behalf of Arthur F. Birmingham, Garrett P. Bromley, Anthony J. Consi,
Pamela Hill, Frank A. Kissel, John D. Kissel, James R. Lamb, Edward A. Merton,
F. Duffield Meyercord, John R. Mulcahy, Robert M. Rogers, Craig C. Spengeman and
Philip W. Smith III.
TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS
The Bank may purchase an undetermined amount of mortgage loans from
Weichert Mortgage Company ("Weichert Mortgage") during 2008. Weichert Mortgage
is wholly owned by James M. Weichert, who beneficially owns 9.66 percent of
Peapack-Gladstone's outstanding common stock. Any purchases by the Bank from
Weichert Mortgage will be on terms that are substantially the same, or at least
as favorable to, the Bank as those offered by Weichert Mortgage to other
unaffiliated entities. During 2007, the Bank did not purchase any mortgages from
Weichert Mortgage. There are no guarantees that any purchases will be made in
the future.
In addition to the matters discussed above and discussed under the
caption "Compensation Committee Interlocks and Insider Participation," directors
and officers and their associates were customers of and had transactions with
the Bank during the year ended December 31, 2007, and it is expected that such
persons will continue to have such transactions in the future. All deposit
accounts, loans, and commitments comprising such transactions were made in the
ordinary course of business of the Bank on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons, and, in the opinion of management of
Peapack-Gladstone, did not involve more than normal risks of collectibility or
present other unfavorable features.
22
REPORT OF THE AUDIT COMMITTEE
To the Board of Directors of Peapack-Gladstone Financial Corporation:
We have reviewed and discussed with management Peapack-Gladstone's
audited consolidated financial statements as of and for the year ended December
31, 2007.
We have discussed with the independent registered public accounting
firm the matters required to be discussed by Statement on Auditing Standards No.
61, Communication with Audit Committees, as amended, by the Auditing Standards
Board of the American Institute of Certified Public Accountants.
We have received and reviewed the written disclosures and the letter
from the independent registered public accounting firm required by Independence
Standard No. 1, Independence Discussions with Audit Committee, as amended, by
the Independence Standards Board, and have discussed with the auditors the
auditors' independence.
Based on the reviews and discussions referred to above, we recommend to
the Board of Directors that the consolidated financial statements referred to
above be included in Peapack-Gladstone's Annual Report on Form 10-K for the year
ended December 31, 2007.
THE AUDIT COMMITTEE
ANTHONY J. CONSI, II, CHAIRMAN
JOHN R. MULCAHY
PHILIP W. SMITH, III
PAMELA HILL
March 4, 2008
23
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors appointed Crowe Chizek
and Company LLC as independent registered public accounting firm to examine
Peapack-Gladstone's consolidated financial statements for the fiscal years
ending December 31, 2007 and 2008 and to render other professional services as
required.
On November 10, 2006, the Audit Committee of the Board of Directors of
Peapack-Gladstone dismissed KPMG LLP ("KPMG") as the principal accountants for
Peapack-Gladstone upon completion of the audit of Peapack-Gladstone's
consolidated financial statements as of and for the year ended December 31,
2006, and the issuance of their reports thereon. Concurrently, the Audit
Committee appointed Crowe Chizek and Company LLC ("Crowe") as the principal
accountants for Peapack-Gladstone for the year ending December 31, 2007. The
dismissal of KPMG as the principal accountants for Peapack-Gladstone became
effective on March 16, 2007.
During the Corporation's two most recent fiscal years and the
subsequent period through March 16, 2007, neither the Corporation nor anyone
acting on the Corporation's behalf consulted with Crowe regarding: (1) the
application of accounting principles to a specified transaction or the type of
audit opinion that might be rendered on Peapack-Gladstone's financial
statements, or (2) any of the matters or events set forth in Item 304(a)(2)(ii)
of Regulation S-K.
In connection with the audits of the Corporation's consolidated
financial statements for the fiscal years ended December 31, 2005 and 2006, and
the subsequent interim period through March 16, 2007, there were (1) no
disagreements with KPMG on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedures, which
disagreements if not resolved to KPMG's satisfaction would have caused KPMG to
make reference in connection with their opinion to the subject matter of the
disagreements in its audit reports on the consolidated financial statements of
Peapack-Gladstone or (2) no reportable events. Further, the audit reports of
KPMG on the consolidated financial statements of Peapack-Gladstone and
subsidiary as of and for the years ended December 31, 2006 and 2005 did not
contain an adverse opinion or disclaimer of opinion and were not qualified or
modified as to uncertainty, audit scope, or accounting principles, except that
KPMG's report on the consolidated financial statements of Peapack-Gladstone and
subsidiary as of and for the years ended December 31, 2006 and 2005, contained a
separate paragraph stating that "as discussed in Note 14 to the consolidated
financial statements, effective January 1, 2006, Peapack-Gladstone adopted SEC
Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year Financial
Statements." The audit reports of KPMG on management's assessment of the
effectiveness of internal control over financial reporting and the effectiveness
of internal control over financial reporting as of December 31, 2006 and 2005
did not contain an adverse opinion or disclaimer of opinion and were not
qualified or modified as to uncertainty, audit scope or accounting principles.
Aggregate fees for the fiscal years ending December 31, 2007 and
December 31, 2006, billed by the Corporation's independent registered public
accounting firms, Crowe Chizek and Company LLC ("Crowe") and KPMG LLP ("KPMG"),
respectively, were as follows:
Crowe KPMG
Type of Service 2007 2006
------------------------------ ---------- -----------
Audit Fees (1) $ 162,500 $ 222,750
Audit-Related Fees (2) 24,000 25,000
Tax Fees (3) -- --
All Other Fees (4) -- 4,500
---------- -----------
Total $ 186,500 $ 252,250
========== ===========
(1) Comprised of the audit of Peapack-Gladstone's annual financial
statements and reviews of Peapack-Gladstone's quarterly financial
statements, as well as statutory audits of Peapack-Gladstone's
subsidiaries, attest services, and consents to SEC filings. Also
includes the audit of Peapack-Gladstone's internal control over
financial reporting for 2006.
2) Comprised of fees for audit of retirement and 401(k) plans.
3) Comprised of services for tax compliance, tax return preparation,
tax advice, and tax planning.
4) Comprised of fees for consents and filings.
24
AUDIT COMMITTEE PRE-APPROVAL PROCEDURES
The Audit Committee has adopted a formal policy concerning the
pre-approval of audit and non-audit services to be provided by the independent
registered public accounting firm to Peapack-Gladstone. The policy requires that
all services to be performed by Crowe Chizek and Company LLC,
Peapack-Gladstone's independent registered public accounting firm, including
audit services, audit-related services and permitted non-audit services, be
pre-approved by the Audit Committee. Specific services being provided by the
independent registered public accounting firm are regularly reviewed in
accordance with the pre-approval policy. At subsequent Audit Committee meetings,
the Committee receives updates on the services actually provided by the
independent registered public accounting firm, and management may present
additional services for approval. All services rendered by Crowe Chizek and
Company LLC are permissible under applicable laws and regulations. Each new
engagement of Crowe Chizek and Company LLC was approved in advance by the Audit
Committee.
SHAREHOLDER PROPOSALS
New Jersey corporate law requires that the notice of shareholders'
meeting (for either a regular or special meeting) specify the purpose or
purposes of such meeting. Thus, any substantive proposals, including shareholder
proposals, must be referred to in Peapack-Gladstone's notice of shareholders'
meeting for such proposal to be properly considered at a meeting of
Peapack-Gladstone.
Proposals of shareholders which are eligible under the rules of the SEC
to be included in Peapack-Gladstone's year 2009 proxy materials must be received
by the Secretary of Peapack-Gladstone no later than November 21, 2008.
If Peapack-Gladstone changes its 2009 Annual Meeting date to a date
more than 30 days from the date of its 2008 Annual Meeting, then the deadline
referred to in the preceding paragraph will be changed to a reasonable time
before Peapack-Gladstone begins to print and mail its proxy materials. If
Peapack-Gladstone changes the date of its 2009 Annual Meeting in a manner that
alters the deadline, Peapack-Gladstone will so state under Item 5 of the first
quarterly report on Form 10-Q it files with the SEC after the date change or
notify its shareholders by another reasonable means.
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING
The Board of Directors knows of no business that will be presented for
consideration at the meeting other than that stated in this proxy statement.
Should any other matter properly come before the meeting or any adjournment
thereof, it is intended that proxies in the enclosed form will be voted in
respect thereof in accordance with the judgment of the person or persons voting
the proxies.
WHETHER YOU INTEND TO BE PRESENT AT THE MEETING OR NOT, YOU ARE URGED
TO RETURN YOUR SIGNED PROXY PROMPTLY.
By Order of the Board of Directors
FRANK A. KISSEL,
CHAIRMAN
Gladstone, New Jersey
March 21, 2008
PEAPACK-GLADSTONE'S ANNUAL REPORT FOR THE YEAR-ENDED DECEMBER 31, 2007 IS BEING
MAILED TO THE SHAREHOLDERS WITH THIS PROXY STATEMENT. HOWEVER, SUCH ANNUAL
REPORT IS NOT INCORPORATED INTO THIS PROXY STATEMENT AND IS NOT DEEMED TO BE A
PART OF THE PROXY SOLICITING MATERIAL.
25
[X]PLEASE MARK VOTES
AS IN THIS EXAMPLE
REVOCABLE PROXY
PEAPACK-GLADSTONE FINANCIAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
The undersigned hereby appoints John D. Kissel, James R. Lamb and Philip W.
Smith, III, or any one of them, as Proxy, each with full power to appoint his
substitute and hereby authorizes them to represent and to vote, as designated
below, all of the shares of common stock of Peapack-Gladstone Financial
Corporation (the "Corporation"), standing in the undersigned's name at the
Annual Meeting of Shareholders of the Corporation to be held on April 22, 2008
at 2:00 p.m. or any adjournment thereof. The undersigned hereby revokes any and
all proxies heretofore given with respect to the meeting.
With- For
hold All
1. ELECTION OF ELEVEN (11) DIRECTORS For Authority Except
[_] [_] [_]
Anthony J. Consi, II Pamela Hill Frank A. Kissel John D. Kissel
James R. Lamb Edward A. Merton F. F. Duffield Meyercord John R. Mulcahy
Robert M. Rogers Philip W. Smith, III Craig C. Spengeman
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except"and write that nominee's name in the space provided below.
--------------------------------------------------------------------------------
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Meeting.
This Proxy, when properly signed will be voted in the manner directed herein by
the undersigned shareholder. IF NO DIRECTION is made, this Proxy will be voted
"FOR" the election of all eleven nominees for Director.
PLEASE CHECK BOX IF YOU PLAN TO ATTEND THE MEETING. [_]
Please sign exactly as names appear above. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor, administrator,
trustee or guardian, please give full corporate names by President or other
authorized officer. If a partnership or limited liability company, please sign
in the entity name by an authorized person.
------------------------
Please be sure to sign and date | Date |
this Proxy in the box below. | |
--------------------------------------------------------------------------------
| |
| |
-----------Shareholder sign above----------Co-holder (if any) sign above-------
--------------------------------------------------------------------------------
^Detach above card, sign, date and mail in postage paid envelope provided.^
PEAPACK-GLADSTONE FINANCIAL CORPORATION
--------------------------------------------------------------------------------
PLEASE ACT PROMPTLY
SIGN, DATE &MAIL YOUR PROXY CARD TODAY
--------------------------------------------------------------------------------
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
----------------------------------------
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