SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the Appropriate Box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
PEAPACK-GLADSTONE FINANCIAL CORPORATION
(Name of Registrant as Specified in its Charter)
(Name of Person Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing with which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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4) Date Filed:
PEAPACK-GLADSTONE FINANCIAL CORPORATION
158 ROUTE 206 NORTH
GLADSTONE, NEW JERSEY 07934
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON TUESDAY, APRIL 27, 2004
To Our Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Peapack-Gladstone Financial Corporation will be held at Peapack-Gladstone's Loan
and Administration Building, 158 Route 206 North, Gladstone, New Jersey, on
Tuesday, April 27, 2004, at 2:00 p.m. local time for the purpose of considering
and voting upon the following matters:
1. Election of thirteen 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, 2004,
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 do so, 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 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 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 26, 2004
YOUR VOTE IS IMPORTANT. PLEASE SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENVELOPE PROVIDED.
PEAPACK-GLADSTONE FINANCIAL CORPORATION
158 ROUTE 206 NORTH
GLADSTONE, NEW JERSEY 07934
PROXY STATEMENT
DATED MARCH 26, 2004
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 Peapack-Gladstone's Loan and
Administration Building, 158 Route 206 North, Gladstone, New Jersey on Tuesday,
April 27, 2004 at 2:00 p.m. local time. This proxy statement is first being
mailed to shareholders on approximately March 26, 2004.
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, 2004. 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, 7,432,168 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 thirteen 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 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 who will not be specially compensated
for such solicitation activities. 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 13 and the Board is presently
comprised of 13 members. Directors are elected annually by the shareholders for
one-year terms. Peapack-Gladstone's Nominating Committee has nominated the
thirteen current directors for reelection to serve for one-year terms expiring
at the Corporation's 2005 Annual Meeting of Shareholders and until their
successors shall have been duly elected and qualified.
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
Name and Position Director Principal Occupation or
With the Company Age Since Employment for Past Five Years
------------------------------------------------------------------------------------------------------------------------------------
Anthony J. Consi, II 58 2000 Senior Vice President of Finance and Operations, Weichert Realtors;
Previously Chairman of Chatham Savings, FSB.
Pamela Hill 66 1991 President of Ferris Corp., a real estate management company; previously
Vice President of Ferris Corp.
T. Leonard Hill 92 1944 Chairman Emeritus of the Board of Peapack-Gladstone and the Bank;
previously Chairman of Peapack-Gladstone and the Bank; Chairman of
Ferris Corp., a real estate management company.
Frank A. Kissel 53 1989 Chairman and CEO of Peapack-Gladstone and the Bank; previously
Chairman and CEO President and CEO of Peapack-Gladstone and the Bank.
John D. Kissel 51 1987 Real Estate Broker, Turpin Real Estate, Inc.
James R. Lamb 61 1993 Principal of James R. Lamb, P.C., Attorney at Law.
Edward A. Merton 63 1981 President of Merton Excavating and Paving Co.
F. Duffield Meyercord 57 1991 Managing Director and Partner of Carl Marks Consulting Group, LLC;
Managing Director, Meyercord Advisors, Inc.; Director of Programmer's
Paradise, Inc.
John R. Mulcahy 65 1981 Retired; previously President of Mulcahy Realty and Construction.
Robert M. Rogers, 45 2002 President and COO of Peapack-Gladstone and the Bank; previously
President and COO Executive Vice President and COO of Peapack-Gladstone and the Bank;
previously Senior Vice President and COO of Peapack-Gladstone and the
Bank.
Philip W. Smith, III 48 1995 President, Phillary Management, Inc., a real estate management company.
Craig C. Spengeman, 48 2002 President, PGB Trust and Investments, a division of the Bank and
President, PGB Trust and Executive Vice President of Peapack-Gladstone; previously Executive
Investments Vice President and Senior Trust Officer of Peapack-Gladstone and the
Bank; previously Senior Vice President and Senior Trust Officer of
Peapack-Gladstone and the Bank.
Jack D. Stine 82 1976 Retired. Trustee, Proprietary House Association.
T. Leonard Hill is the father of Pamela Hill. Frank A. Kissel and John D. Kissel
are brothers.
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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 2003. The Board of Directors of Peapack-Gladstone
held five meetings during 2003. During 2003, 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
two directors 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 and Securities and Exchange Commission 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(m)(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, James R. Lamb, Edward A. Merton,
F. Duffield Meyercord, John R. Mulcahy, Philip W. Smith III, and Jack D. Stine.
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.
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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 own five (5%) percent
or less of the equity interests of that business and do not serve as
an executive officer of the business.
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 2%
of the gross revenues of the business.
o Fixed retirement benefits paid or payable to a director either
currently or on retirement.
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 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 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 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
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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 2003, the Board of Directors maintained an Audit Committee, a
Nominating Committee and a Compensation Committee. Until May 8, 2003, the
Nominating Committee and the Executive Committee operated as a single committee,
after which time the committees were separated. After May 8, 2003, only
independent directors served on these committees.
Audit Committee
Mr. Consi serves as Chair of the Audit Committee. Other members of the
committee are Messrs. Stine, Mulcahy and Smith. The Audit Committee met nine
times during 2003.
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 is
attached hereto as Appendix A and can also 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 Stine. 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. This 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 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." The Nominating
Committee did not meet during 2003; however, the jointly operated Executive and
Nominating Committee met three times prior to their separation.
Compensation Committee
Peapack-Gladstone's Compensation Committee consists of Messrs. Meyercord
(Chair), Stine, Merton and Consi. 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. This 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 committee the responsibility to recommend Board compensation.
During 2003, the Compensation Committee met three times.
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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 any other bank that serves
the same market area as Peapack-Gladstone and may only serve on the
Board of three other publicly-traded companies.
o If there is an opening, 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 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 nor 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 significant
stake in the Company. 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 1% 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
2005, we must receive this notice on or after November 28, 2004, and on or
before December 28, 2004. 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 the Company'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 Financial Corporation director; and
o meets the additional criteria set forth in the Company's Corporate
Governance Principles.
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You can obtain a copy of the full text of our policy regarding shareholder
nominations by writing to Antoinette Rosell, Secretary, 158 Route 206 North,
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
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. Frank A. Kissel, Robert M.
Rogers and Craig C. Spengeman, as full-time employees, were not compensated for
services rendered as directors.
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 Plans
provide that grants are made based upon recommendations from the Compensation
Committee to the Board and a vote from the full Board. No stock options were
awarded under the Plans in 2003.
Under each of the Outside Director 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. The stock options
vest during a period of up to five years after the date of grant. All options
granted under these plans are exercisable in cumulative installments of 20% for
each year after the date of grant such that 100% of such options will be
exercisable after five years.
Effective March 31, 2001, Peapack-Gladstone established 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.
Effective March 31, 2001, Peapack-Gladstone established 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. 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 0.80% as of February
29, 2004. 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.
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BENEFICIAL OWNERSHIP OF COMMON STOCK
Certain Beneficial Owners
The following table sets forth as of February 29, 2004 certain information
as to beneficial ownership of each person known to Peapack-Gladstone to own
beneficially more than 5% 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 728,578 9.81%
Stock Ownership of Directors and Executive Officers
The following table sets forth as of February 29, 2004 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 39,967(3) *
Garrett P. Bromley 41,902(4) *
Anthony J. Consi, II 54,569(5) *
Pamela Hill 71,621(6) *
T. Leonard Hill 141,217(7) 1.90%
Frank A. Kissel 133,562(8) 1.78%
John D. Kissel 53,084(9) *
James R. Lamb 29,556(10) *
Edward A. Merton 32,277(11) *
F. Duffield Meyercord 27,750(11) *
John R. Mulcahy 33,044(12) *
Robert M. Rogers 53,194(13) *
Philip W. Smith, III 35,741(14) *
Craig C. Spengeman 55,424(15) *
Jack D. Stine 36,032(16) *
All directors and executive officers
as a group (15 persons) 838,940 10.74%
8
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, 2004, and 384,279 shares purchasable
pursuant to options exercisable within 60 days of February 29, 2004.
(3) This total includes 2,299 shares allocated to Mr. Birmingham under
Peapack-Gladstone's Profit Sharing Plan and 33,191 shares
purchasable pursuant to options exercisable within 60 days of
February 29, 2004.
(4) This total includes 1,957 shares allocated to Mr. Bromley under
Peapack-Gladstone's Profit Sharing Plan and 37,875 shares
purchasable pursuant to options exercisable within 60 days of
February 29, 2004.
(5) This total includes 5,477 shares purchasable pursuant to options
exercisable within 60 days of February 29, 2004.
(6) This total includes 17,292 shares purchasable pursuant to options
exercisable within 60 days of February 29, 2004.
(7) This total includes 104,178 shares owned by the Hill Family Trusts
and 2,904 shares purchasable pursuant to options exercisable within
60 days of February 29, 2004.
(8) This total includes 3,044 shares owned by Mr. Frank A. Kissel's
wife, 2,552 shares owned by Mr. Kissel's child, 6,972 shares
allocated to Mr. Kissel under Peapack-Gladstone's Profit Sharing
Plan and 80,059 shares purchasable pursuant to options exercisable
within 60 days of February 29, 2004.
(9) This total includes 1,463 shares owned by Mr. John D. Kissel's wife,
5,052 shares owned by Mr. Kissel's children and 14,021 shares
purchasable pursuant to options exercisable within 60 days of
February 29, 2004.
(10) This total includes 2,939 shares owned by Mr. Lamb's wife, 1,095
shares owned by Mr. Lamb's child and 13,205 shares purchasable
pursuant to options exercisable within 60 days of February 29, 2004.
(11) This total includes 23,827 shares purchasable pursuant to options
exercisable within 60 days of February 29, 2004.
(12) This total includes 1,063 shares owned by Mr. Mulcahy's wife and
7,707 shares purchasable pursuant to options exercisable within 60
days of February 29, 2004.
(13) This total includes 3,992 shares allocated to Mr. Rogers under
Peapack-Gladstone's Profit Sharing Plan and 45,242 shares
purchasable pursuant to options exercisable within 60 days of
February 29, 2004.
(14) This total includes 5,909 shares owned by Mr. Smith's wife, 1,145
shares owned by Mr. Smith's children and 13,041 shares purchasable
pursuant to options exercisable within 60 days of February 29, 2004.
(15) This total includes 740 shares owned by Mr. Spengeman's wife, 4,535
shares allocated to Mr. Spengeman under Peapack-Gladstone's Profit
Sharing Plan and 45,726 shares purchasable pursuant to options
exercisable within 60 days of February 29, 2004.
(16) This total includes 20,885 shares purchasable pursuant to options
exercisable within 60 days of February 29, 2004.
9
EXECUTIVE COMPENSATION
General
Executive compensation is described below in the tabular format mandated
by the SEC. All share amounts have been restated to give effect to stock
dividends and splits.
Summary Compensation Table
The following table summarizes all compensation earned in the past three
years for services performed in all capacities for Peapack-Gladstone and its
subsidiaries with respect to the named executive officers.
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards
--------------------------- ---------------------------------
Securities
Restricted Under- All Other
Name and Stock Awards Lying Options/ Compensation
Principal Position Year Salary ($) Bonus ($) ($) SARs(#) ($) (1)
--------------------------------- ---------- ------------ ----------------- --------------- ---------------- ----------------
Frank A. Kissel,
Chairman of the Board and 2003 283,250 127,463 -- -- 10,791
CEO of Peapack-Gladstone and 2002 275,778 137,500 -- -- 12,313
the Bank 2001 239,615 110,000 -- 4,840 10,087
Craig C. Spengeman,
President of PGB Trust and
Investments and Executive 2003 206,000 82,400 -- -- 10,791
Vice President of 2002 200,904 80,000 -- -- 12,201
Peapack-Gladstone 2001 151,381 35,000 -- 6,050 8,973
Robert M. Rogers,
President and COO of 2003 180,250 72,100 -- -- 9,750
Peapack-Gladstone and the 2002 175,856 70,000 -- -- 10,689
Bank 2001 124,765 25,000 -- 6,050 7,394
Arthur F. Birmingham,
Executive Vice President and 2003 155,200 61,800 -- -- 8,430
CFO of Peapack-Gladstone and 2002 149,675 60,000 -- -- 9,204
the Bank 2001 109,615 35,000 -- 3,630 6,504
Garrett P. Bromley, 2003 134,423 54,000 -- -- 7,335
Executive Vice President of 2002 123,899 26,400 -- -- 7,464
the Bank 2001 109,958 22,000 -- 3,630 6,515
---------------------------------
NOTES:
(1) For 2003, consists of contributions made to Peapack-Gladstone's Savings
and Profit Sharing Plan.
10
Stock Option Grants in 2003
No stock options were granted in 2003 with respect to the named executive
officers.
Aggregated Option Exercises in 2003 and Year-End Option Value
The following table shows options exercised, if any, during 2003, and the
value of unexercised options held at year-end 2003, by the named executive
officers. Peapack-Gladstone did not use SARs as compensation in 2003.
AGGREGATED OPTION/SAR EXERCISES IN THE
LAST FISCAL YEAR AND FY-END OPTION VALUES
Number of Securities Value of Unexercised In-
Underlying Unexercised the-Money Options/SARs
Options/SARs at Fiscal at Fiscal Year-End ($) (1)
--------------------------- ---------------------------
Shares Acquired
Name On Exercise (#) Value Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
--------------------- -------------------- ------------------- --------------------------- ---------------------------
Frank A. Kissel 3,000 77,490 55,059/0 820,282/0
Craig C. Spengeman 2,327 47,098 25,726/0 427,173/0
Robert M. Rogers 0 0 25,242/0 426,481/0
Arthur F. Birmingham 1,680 30,643 15,691/0 221,902/0
Garrett P. Bromley 1,477 24,799 20,375/0 314,395/0
(1) Calculated on the basis of the closing price of Peapack-Gladstone common
stock at December 31, 2003 of $31.00 per share, less the per share exercise
price.
Savings and Profit Sharing Plans
Peapack-Gladstone has established a qualified defined contribution plan
under Section 401(k) (the "401(K) Plan") of the Internal Revenue Code of 1986,
as amended (the "Code"), covering substantially all salaried employees over the
age of twenty-one with at least twelve months' 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 fifteen percent of their pay to their
elective account via payroll withholding. Peapack-Gladstone adds a matching
contribution equal to fifty percent up to a maximum of $250 of the employee
contribution. In addition, the Board may elect to make a discretionary
contribution to the profit sharing part of the 401(k) Plan. The profit sharing
portion is non-contributory and funds are invested in Peapack-Gladstone's common
stock.
Pension Plan
Peapack-Gladstone sponsors a non-contributory defined benefit pension plan
that covers substantially all of Peapack-Gladstone's salaried employees. The
benefits are based on an employee's compensation, age at retirement and years of
service. It is the policy of Peapack-Gladstone to fund not less than the minimum
funding amount required by the Employee Retirement Income Security Act.
11
The following table sets forth the estimated annual benefits that an
eligible employee would receive under Peapack-Gladstone's qualified defined
benefit pension plan, assuming retirement at age 65 in 2003 and a straight life
annuity benefit, for the remuneration levels (subject to an annual compensation
limit of $200,000) and years of service shown.
Years of Credited Service
--------------------------------------------------------------------------------------------------------
Remuneration 10 15 20 25 30 35
------------------------ ------------- -------------- -------------- ------------- -------------- -----------
$50,000 $ 11,319 $ 16,978 $ 22,482 $ 27,986 $ 30,579 $ 32,991
100,000 25,504 38,255 51,459 64,663 69,514 74,676
150,000 39,689 59,533 80,437 101,341 108,449 116,361
200,000 and higher 53,874 80,811 109,415 138,019 147,384 158,046
Messrs. Kissel, Spengeman, Rogers, Birmingham and Bromley have
approximately 15, 19, 17, 7 and 6 years of credited service, respectively, under
the pension plan as of January 1, 2003, and at age 65, would have 29, 38, 39, 22
and 14 years of credited service, respectively.
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 and Arthur F. Birmingham as of January 1, 2002 for a period of
three years to expire on December 31, 2004. Peapack-Gladstone and the Bank also
entered into an employment agreement (the "Employment Agreement") with Garrett
P. Bromley as of January 1, 2003 for a period of three years to expire on
December 31, 2005.
The Employment Agreements provide, among other things, for (I) an annual
base salary, (II) annual increases to base salary, and (III) bonus payments with
respect to each calendar year based on budgeted goals. If the Executive's
employment is terminated without cause, Peapack-Gladstone shall pay the
Executive's base salary for a period equal to the longer of (A) the remainder of
the term, or (B) one year from the effective date of such termination. The
Employment Agreements also include certain non-compete and non-solicitation
provisions, which extend for two years following the executive's termination of
employment.
Change-In-Control Arrangements
Peapack-Gladstone and the Bank entered into Amended and Restated
Change-in-Control Agreements with Frank A. Kissel, Craig C. Spengeman, Robert M.
Rogers, Arthur F. Birmingham, and Garret P. Bromley as of December 11, 2003,
each of which provides for termination benefits in the event of a change in
control of Peapack-Gladstone (as defined in the agreements). Pursuant to the
agreements, under certain circumstances, Peapack-Gladstone and the Bank 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 benefits. 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 Code, the payments would be increased in an amount sufficient to pay
the excise taxes and other income and payroll taxes necessary to allow Messrs.
Kissel, Spengeman, Rogers, Birmingham, and Bromley to retain the same net
amount, after such taxes, as each was otherwise entitled to receive. Section
280G limits payments generally to three times the last five-year average W-2
compensation.
In addition to providing a term life insurance benefit to each of the
named executive officers, Peapack-Gladstone also purchased bank owned life
insurance ("BOLI") and entered into a Split-Dollar Plan, dated September 7,
2001, with the 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 permanently
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 65, 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.
Except if the benefit vests because of a change in control, the
12
participant's vested benefit may be forfeited if the participant solicits
Peapack-Gladstone's employees or divulges certain confidential information.
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
2003 were satisfied on a timely basis or within the timeframe of an applicable
SEC waiver.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors established a Compensation Committee, which has
been charged with overseeing executive compensation practices at
Peapack-Gladstone. Members of the Compensation Committee are Messrs. Meyercord
(Chair), Stine, Merton and Consi. Decisions on compensation of executive
officers have been made by the full Board of Directors based upon the
recommendations of the Compensation Committee.
During 2003, Peapack-Gladstone Bank paid for legal services to the law
firm of James R. Lamb, P.C., whose principal is James R. Lamb, a director and
shareholder of Peapack-Gladstone.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Bank intends to purchase an undetermined amount of mortgage loans from
Weichert Mortgage Company ("Weichert Mortgage") during 2004. Weichert Mortgage
is wholly-owned by James M. Weichert, who beneficially owns 9.81% of
Peapack-Gladstone's outstanding common stock. Anthony J. Consi is not a
shareholder, officer, or director of Weichert Mortgage. 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. As of the date of this proxy statement, the Bank
has not made any purchases from Weichert Mortgage and there are no guaranties
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, 2003, 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.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following report was prepared by the Compensation Committee of
Peapack-Gladstone regarding executive compensation policy and its relation to
Peapack-Gladstone's performance.
Compensation Review 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 officers named in the compensation tables shown above and other
executive officers of Peapack-Gladstone.
In establishing compensation for executive officers, the Committee
considers many factors including, but not limited to, Corporation performance,
individual performance and peer group compensation practices. In considering
Corporation performance, the Compensation Committee reviews the actual
performance of Peapack-Gladstone in light of its annual budget, which includes
expense items, deposit levels, loan growth, fee income and trust department
management. Annual performance reviews of each officer together with salary
studies prepared by the New Jersey Community Bankers Association are some of the
sources of compensation information, which are utilized in determining executive
compensation. Base salaries approximate the average base salaries paid by
similar financial institutions for similar positions.
13
During 2003, Mr. Frank A. Kissel served as Chairman and Chief Executive
Officer of the Bank and Chairman and Chief Executive Officer of
Peapack-Gladstone. Mr. Kissel's base salary for 2003 of $283,250 was set by the
Board based on his performance in executing his responsibilities in those
positions in 2002 and the performance anticipated from him in 2003 and future
years. The Board also considered the objectives set by the Committee for 2003,
the overall performance of Peapack-Gladstone and Mr. Kissel's ability to develop
and motivate employees to meet Peapack-Gladstone's short and long-term
objectives. Mr. Kissel's 2003 bonus of $127,463 was based on the completion of
specified corporate projects for 2003 within a specified time and budget, the
achievement of specified minimum financial ratios and the achievement of
specified goals with respect to the Bank's financial performance and growth. Mr.
Kissel was not awarded stock options in 2003.
With respect to 2003 compensation for executive officers, the Compensation
Committee based its recommendations, and the full Board based its actions, on
the duties and responsibilities of the officer in question, the performance of
Peapack-Gladstone and of the particular officer in 2002, and the performance
anticipated from the officer in 2003 and future years. Bonuses for each
executive officer were set based on goals set for the executive officer and for
Peapack-Gladstone as a whole. The Chief Executive Officer set goals for each
executive officer. During 2003, other named executive officers did not receive
qualified incentive stock options.
Based upon current levels of compensation, Peapack-Gladstone is not
affected by the provisions of Section 162(m) of the Internal Revenue Code, which
limits the deductibility of compensation above $1 million for each of the five
highest paid officers of the Company. Certain forms of compensation are exempt
from this deductibility limit, primarily performance based compensation, which
has been approved by shareholders. Compensation under the 1998 Stock Incentive
Plan and the 2002 Stock Incentive Plan (but not restricted stock awards) is
expected to be exempt.
Detailed information relating to the named executive officers is shown in
the compensation tables above.
F. DUFFIELD MEYERCORD, CHAIRMAN
ANTHONY J. CONSI, II
EDWARD A. MERTON
JACK D. STINE
14
The following graph compares the cumulative total return on a hypothetical
$100 investment made on January 1, 1999 in: (a) Peapack-Gladstone's common
stock: (b) the Standard and Poor's (`S&P') 500 Stock Index; (c) the Russell 3000
Stock Index, and (d) the Keefe, Bruyette & Woods KBW 50 Index. The graph is
calculated assuming that all dividends are reinvested during the relevant
periods. The graph shows how a $100 investment would increase or decrease in
value over time, based on dividends (stock or cash) and increases or decreases
in the market price of the stock.
This year, Peapack-Gladstone is switching from the S&P Index to the
Russell 3000 Index because we believe that the Russell 3000 Index provides a
better comparison for Peapack-Gladstone stock because our stock is part of the
Russell 3000 Index. The S&P data is included only to comply with applicable SEC
regulations.
[THE FOLLOWING GRAPH WAS DEPICTED AS A LINE GRAPH IN THE PRINTED MATERIAL.]
Period Ending
-----------------------------------------------------------------
Index 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
---------------------------------------------------------------------------------------------------------------
Peapack-Gladstone Financial Corp. 100.00 87.53 91.58 85.34 160.53 161.81
S&P 500 100.00 121.11 110.34 97.32 75.75 97.51
Russell 3000 100.00 120.90 111.88 99.06 77.72 101.86
KBW 50 100.00 96.53 115.89 111.12 103.29 138.38
15
REPORT OF THE AUDIT COMMITTEE
To the Board of Directors of Peapack-Gladstone Financial Corporation:
We have reviewed and discussed with management the Company's audited
financial statements as of and for the year ended December 31, 2003.
We have discussed with the independent auditors 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 auditors 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 financial statements referred to above be
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2003.
THE AUDIT COMMITTEE
ANTHONY J. CONSI, II, CHAIRMAN
JOHN R. MULCAHY
PHILIP W. SMITH, III
JACK D. STINE
February 24, 2004
RECOMMENDATION AND VOTE REQUIRED ON PROPOSAL 1
Directors will be elected by a plurality of the votes cast at the Annual
Meeting, whether in person or by proxy. THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE 'FOR' THE NOMINATED SLATE OF DIRECTORS INCLUDED IN PROPOSAL 1.
INDEPENDENT PUBLIC AUDITORS
The Audit Committee of the Board of Directors appointed KPMG LLP as
independent auditors to examine the Company's consolidated financial statements
for the fiscal year ending December 31, 2003 and to render other professional
services as required.
Aggregate fees billed by the Company's principal auditors, KPMG LLP, for
audit services related to the most recent two fiscal years, and for other
professional services billed in the most recent two fiscal years, were as
follows:
Type of Service 2003 2002
--------------- ---- ----
Audit Fees (1) $130,500 $107,200
Audit-Related Fees (2) 18,000 14,750
Tax Fees (3) 38,000 43,050
All Other Fees -- --
--------------------------
Total $186,500 $165,000
--------------------------
(1) Comprised of the audit of the Company's annual financial statements and
reviews of the Company's quarterly financial statements, as well as
statutory audits of Company subsidiaries, attest services, and consents to
SEC filings.
(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.
16
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
auditor to the Company. The policy requires that all services to be performed by
KPMG LLP, the Company's independent auditor, 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 auditor 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 accountant, and management may present
additional services for approval. All services rendered by KPMG LLP are
permissible under applicable laws and regulations. Since the May 6, 2003
effective date of the new SEC rule applicable to services being provided by the
independent auditor, each new engagement of KPMG LLP 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 2005 proxy material must be received by
the Secretary of Peapack-Gladstone no later than November 26, 2004.
If Peapack-Gladstone changes its 2005 Annual Meeting date to a date more
than 30 days from the date of its 2004 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 2005 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 26, 2004
PEAPACK-GLADSTONE'S ANNUAL REPORT FOR THE YEAR-ENDED DECEMBER 31, 2003 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.
17
APPENDIX A
PEAPACK-GLADSTONE FINANCIAL CORPORATION
AUDIT COMMITTEE CHARTER
I. AUDIT COMMITTEE PURPOSE
The Audit Committee is appointed by the Board of Directors of Peapack-Gladstone
Financial Corporation (the "Company") to assist the Board in fulfilling its
oversight responsibilities. The primary duties of the Committee are as follows:
o Monitor the integrity of the Company's financial reporting process
and systems of internal controls regarding finance, accounting, and
legal compliance
o Monitor the independence and performance of the Company's
independent auditors and internal auditor
o Provide an avenue of communication among the independent auditors,
management, the internal auditor, and the Board of Directors
o Authorize or conduct investigations appropriate to matters within
the Committee's scope of responsibilities
II. AUDIT COMMITTEE COMPOSITION AND MEETINGS
The Audit Committee shall be comprised of no fewer than four directors, each of
whom shall meet the independence and experience requirements of the American
Stock Exchange and of the Sarbanes-Oxley Act of 2002, contained in Section
10A(n) of the Securities Exchange Act of 1934. At least one member shall be
designated as an audit committee financial expert in accordance with SEC
regulations and at least one member shall be financially sophisticated in
accordance with AMEX standards. All other members of the Committee shall have a
basic understanding of finance and accounting, and be able to comprehend basic
financial statements.
The Audit Committee shall meet on at least a quarterly basis, and each time the
Company proposes to issue a press release with its quarterly or annual
information. The Committee may meet more frequently if dictated by
circumstances. A report shall be prepared by the internal auditor and
distributed to Committee members in advance of each meeting. The Committee shall
meet annually in executive session with management, the independent auditors,
and the internal auditor to discuss any matters the Committee or these groups
believe to be necessary. The Committee may, when appropriate, delegate authority
to one or more of its members or to one or more subcommittees of its members.
III. AUDIT COMMITTEE RESPONSIBILITIES AND DUTIES
Review Procedures
1. The Committee shall review and update this charter annually. The
charter shall be submitted to the Board of Directors for approval
and made publicly available in accordance with SEC regulations.
2. The Committee shall review the Company's interim financial reports,
annual audited financial statements, and related footnotes, and
discuss significant issues with management and the independent
auditors.
3. The Committee shall discuss significant risks and exposures with
management, the independent auditors, and internal audit, as well as
management's steps to mitigate these risks.
4. As necessary, the Committee shall review with the Company's counsel
any legal matters that could have a significant impact on the
Company's financial statements, as well as compliance with
applicable laws and regulations, and inquiries received from
regulators or governmental agencies. The Committee shall be
authorized to hire outside counsel or other consultants as
necessary.
5. The Company shall provide for appropriate funding, as determined by
the Committee, for payment of compensation to the independent
auditor for the purpose of rendering or issuing an audit report and
to any advisors or consultants employed by
A-1
the Committee and to fund its ordinary administrative expenses
necessary and appropriate to carry out its duties.
6. The Committee shall review with management the policies and
procedures with respect to officers' expense accounts and
perquisites, including their use of corporate assets, and review the
results of procedures performed in these areas by the internal
auditor or the independent auditors. The Committee shall also review
the Company's Code of Business Conduct and Ethics.
7. The Committee shall oversee the receipt and resolution of all
complaints received by the Company regarding accounting and internal
controls, and shall establish procedures for the confidential,
anonymous submission by employees of the Company and its
subsidiaries of concerns regarding questionable accounting or
auditing matters.
8. The Committee shall review its effectiveness.
Independent Auditors
1. The independent auditors are ultimately accountable to the Audit
Committee and shall report directly to the Committee. The Committee
shall be directly responsible for and have the sole authority to
appoint or replace independent auditors. The Committee shall
pre-approve all fees paid to the auditors, and pre-approve any
non-audit services to be provided by the independent auditors. The
Committee shall consult with management but shall not delegate its
responsibilities hereunder.
2. On an annual basis, the Committee shall review and discuss with the
independent auditors all significant relationships they have with
the Company that could impair the auditors' independence. The
Committee shall receive from the independent auditors a formal
written statement delineating all relationships between the auditor
and the Company, consistent with Independence Standards Board
Standard 1. The Committee shall ensure that the lead or concurring
partner serves in that capacity for no more than five fiscal years
of the Company, and that any partner other than the lead or
concurring partner serves no more than seven years at the partner
level on the Company's audit.
3. The Committee shall review the independent auditors' plan, which
would include scope, and staffing, as well as reliance upon
management and internal audit.
4. Prior to the release of the year-end earnings, the Committee shall
discuss the results of the audit with the independent auditors, in
accordance with AICPA SAS 61. Matters to be discussed include the
auditor's responsibility under Generally Accepted Auditing Standards
(GAAS), significant accounting policies, management judgments,
accounting estimates, and significant audit adjustments, as well as
other information in documents containing audited financial
statements, differences of opinion with management, and consultation
with other accountants by management.
5. The Committee shall consider the independent auditors' judgments
regarding the quality and appropriateness of the Company's
accounting principles as applied in its financial reporting, as well
as the adequacy of the Company's internal controls.
6. The Committee shall review all written communication between the
independent auditors and management.
7. The Committee shall receive from the independent auditors, reports
on critical accounting policies and practices, alternative
treatments and material communications with management as required
by Section 10A(k) of the Securities Exchange Act of 1934.
8. The Committee shall obtain and review a report from the independent
auditors at least annually regarding:
(a) the independent auditors' internal quality-control
procedures,
(b) any material issues raised by the most recent internal
quality-control review, or peer review, of the independent
auditors, or by any inquiry or investigation by governmental
or professional authorities within the preceding five years
respecting one or more independent audits carried out by the
independent auditors, and
(c) any steps taken to deal with any such issues.
A-2
After reviewing such report, the Committee will evaluate the
qualifications, performance and independence of the
independent auditors, including considering whether the
auditors' quality controls are adequate and the provision of
permitted non-audit services is compatible with maintaining
the auditors' independence, taking into account the opinions
of management and the internal auditors. The Committee shall
present its conclusions with respect to the independent
auditors to the Board.
9. The Committee shall review with the independent auditors any
problems, disagreements or difficulties the independent auditor may
have encountered with management and any communication from the
auditor to management relating thereto, including the Company's
response. Such review should include:
(a) Restrictions on or changes in the scope of its audit
activities or access to required information.
(b) Resolution of all problems, disagreements or difficulties,
if any, between management and the independent auditors.
Internal Audit
1. The Committee shall review at least annually the appointment,
performance, and replacement of the internal auditor.
2. The Committee shall meet with the internal auditor on a regular
basis to review reports prepared by the audit department, together
with management's responses. The Committee will also review the
internal audit program, scope, organizational structure, and
qualifications of the department, as well as any difficulties
encountered during the course of audits performed.
Other Responsibilities
1. The Committee shall annually prepare the "Audit Committee Report" as
required by the Securities and Exchange Commission to be included in
the Company's annual proxy statement, indicating that the members
have reviewed and discussed the audited financial statements and the
quality of earnings with management, discussed with the independent
auditors the matters required by SAS 61, and received from the
independent auditors the written disclosures and letter required by
Independence Standards Board Standard No. 1.
2. The Committee shall review disclosures made to the Committee by the
Company's CEO and CFO during their certification process for the
Form 10-K and Form 10-Q about any significant deficiencies in the
design or operation of internal controls or material weaknesses
therein and any fraud involving management or other employees who
have a significant role in the Company's internal controls.
3. The Committee shall record minutes of all meetings and report
significant issues to the Board of Directors.
4. The Committee shall perform any other activity consistent with this
charter, the Company's by-laws, and governing law, as deemed
appropriate by the Committee or the Board of Directors.
A-3
REVOCABLE PROXY
Peapack-Gladstone Financial Corporation
PLEASE MARK VOTES
AS IN THIS EXAMPLE
This Proxy is solicited on behalf of
the board of directors
The undersigned hereby appoints John D. Kissel, James R. Lamb and Jack D. Stine,
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 27, 2004 at 2:00 p.m. or any
adjournment thereof. The undersigned hereby revokes any and all proxies
heretofore given with respect to the meeting.
1. Election of THIRteen (13) Directors
Anthony J. Consi, II Pamela Hill T. Leonard Hill Frank A. Kissel
John D. Kissel James R. Lamb Edward A. Merton Robert M. Rogers
F. Duffield Meyercord John R. Mulcahy
Philip W. Smith, III Craig C. Spengeman Jack D. Stine
With- For
hold All
For Authority Except
[_] [_] [_]
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 thirteen 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 this Proxy in the box below.
-----------------------------
Date
-----------------------------
Stockholder 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.