SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. ___)
Filed
by
the Registrant
Filed
by
a Party other than the Registrant
Check
the
appropriate box:
x |
Preliminary
Proxy Statement
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o |
Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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o |
Definitive
Proxy Statement
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o |
Definitive
Additional Materials
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o |
Soliciting
Material pursuant to §240.14a-12
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SANDY
SPRING BANCORP, INC.
(Name
of
Registrant as Specified in Its Charter)
(Name
of
Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
x No
fee
required.
o Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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1. |
Title
of each class of securities to which transaction applies:
N/A
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2.
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Aggregate
number of securities to which transaction applies:
N/A
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3.
|
Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is
calculated and state how it was determined):
N/A
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4. |
Proposed
maximum aggregate value of transaction:
N/A
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x |
Fee
paid previously with preliminary materials:
|
o |
Check
box if any part of the fee is offset as provided by Exchange Act
Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid
previously. Identify the previous filing by registration statement
number,
or the Form or Schedule and the date of its
filing.
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1. |
Amount
Previously Paid:
N/A
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2. |
Form,
Schedule or Registration Statement No.:
N/A
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17801
Georgia Avenue, Olney, Maryland 20832
NOTICE
OF 2008 ANNUAL MEETING
OF SHAREHOLDERS
Date: Wednesday,
April 23, 2008
Time: 3:00
p.m., EDT
Place: Ten
Oaks
Ballroom
5000 Signal Bell Lane
Clarksville, MD 21029
The
2008
annual meeting of shareholders of Sandy Spring Bancorp, Inc. (Bancorp) will
be
held as indicated above for the purposes of considering:
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(1) |
The
election of four (4) director nominees to serve as Class II directors
with
terms expiring at the 2011 annual meeting, in each case until their
successors are duly elected and
qualified;
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(2) |
The
amendment of Bancorp's articles of incorporation to eliminate the
provision classifying the terms of its board of directors;
and
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(3) |
The
ratification of the appointment of McGladrey & Pullen, LLP as the
independent registered public accounting firm for the year 2008;
and
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(4) |
Such
other business as may properly come before the annual
meeting.
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Enclosed
is a proxy card, the proxy statement and 2007 Annual Report on Form 10-K. Only
holders of record of Bancorp's common stock as of the close of business on
February 27, 2008 will be entitled to notice of, and to vote at, the annual
meeting, or any adjournment thereof. Please complete the proxy card and mail
it
in the enclosed envelope. You may also choose to vote your shares using the
Internet, as explained on the proxy card. If you attend the meeting, you may
withdraw your proxy and vote in person.
By
order
of the board of directors,
Ronald
E.
Kuykendall
General
Counsel & Secretary
Olney,
Maryland
March
18,
2008
WHETHER
YOU OWN A FEW SHARES OR MANY, YOUR VOTE IS VERY IMPORTANT. PLEASE VOTE YOUR
SHARES BY COMPLETING AND RETURNING THE ENCLOSED PROXY CARD OR VOTING YOUR SHARES
ELECTRONICALLY, WHETHER OR NOT YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL
MEETING.
Table
of Contents
General
Information
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1
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Who
Can Vote
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Executing
Your Right to Vote
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Costs
of Proxy Solicitation
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Internet
Voting
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Changing
Your Vote
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Delivery
of Proxy Materials
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PROPOSAL
I: Election of Directors
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2
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Corporate
Governance and Other Matters
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4
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Corporate
Governance Policy and Code of Business Conduct
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Director
Independence
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Board
Committees
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Director
Attendance at Meetings
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Director
Compensation
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Stock
Ownership of Directors and Executive Officers
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8
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Owners
of More Than 5% of Bancorp's Common Stock
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9
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Transactions
and Relationships with Management
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9
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Shareholder
Proposals and Communications
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9
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Section
16(a) Beneficial Ownership Reporting Compliance
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10
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PROPOSAL
II: Amendment of Bancorp's Articles of Incorporation to
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Eliminate
the Provisions Classifying the Terms of the Board of
Directors…
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11
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Compensation
Discussion and Analysis
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12
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Overview
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Overall
Compensation Philosophy and Guiding Principles
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Compensation
Decision Process
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Role
of Human Resources and Compensation Committee, Management and Compensation
Consultants in the Executive Compensation Process
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Compensation
Structure and Elements
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Inputs
for Compensation Determinations
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Employment
and Other Significant Agreements with Named Executive
Officers
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Impact
of Accounting and Tax on the Form of Compensation
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Equity-Based
Award Practices
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Ownership
Guidelines
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Human
Resources and Compensation Committee Report
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20
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Executive
Compensation Tables
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21
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PROPOSAL
III: The Ratification of the Appointment of McGladrey & Pullen, LLP
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as
the Independent Registered Public Accounting Firm for the Year
2008
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28
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Audit
and Non-Audit Fees
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28
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Audit
Committee's Pre-Approval Policies and Procedures for
Services
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29
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Report
of the Audit Committee
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29
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Appendix
A
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30
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SANDY
SPRING BANCORP, INC.
PROXY
STATEMENT
General
Information
This
proxy statement is furnished in connection with the solicitation of proxies
by
the board of directors of Sandy Spring Bancorp, Inc. (Bancorp) to be used at
the
2008 annual meeting of shareholders on Wednesday, April 23, 2008, at 3:00 p.m.
EDT at Ten Oaks Ballroom, 5000 Signal Bell Lane, Clarksville, Maryland. The
notice of annual meeting, the proxy card, and this proxy statement are being
first mailed on or about March 18, 2008, to shareholders of record as of the
close of business on February 27, 2008.
Who
Can Vote
You
can
vote if you owned shares of Bancorp common stock, par value $1.00 per share,
as
of the close of business on the date of record, February 27, 2008 (Record Date).
Each share of common stock is entitled to one vote. The number of shares
outstanding on February 27, 2008 was approximately xx,xxx,xxx.
When
you give Bancorp your proxy, you authorize Bancorp to vote your shares per
your
instructions whether or not you attend the annual meeting. The presence, in
person or by proxy, of at least a majority of the total number of outstanding
shares of common stock is necessary to constitute a quorum at the annual
meeting.
Executing
Your Right to Vote
By
completing and returning the enclosed proxy card in time to be voted at the
annual meeting, the shares represented by it will be voted in accordance with
the instructions marked on the card. Executed but unmarked proxies will be
voted
on all business matters as recommended by the board of directors. Proxies marked
as abstentions and proxies for shares held in the name of a bank, broker, or
other nominee marked as not voted will be counted only for purposes of
determining a quorum at the annual meeting.
The
board
of directors does not know of any other matters that are to come before the
annual meeting except for incidental, procedural matters. If any other matters
are properly brought before the annual meeting, the persons named in the
accompanying proxy card will vote the shares represented by each proxy on such
matters as determined by a majority of the board of directors.
Costs
of Proxy Solicitation
The
cost
of soliciting proxies will be borne by Bancorp. In addition to the solicitation
of proxies by mail, Bancorp also may solicit proxies through its directors,
officers, and employees. Bancorp also will request persons, firms, and
corporations holding shares in their names or in the name of nominees that
are
beneficially owned by others to send proxy materials to and obtain proxies
from
those beneficial owners and will reimburse the holders for their reasonable
expenses in doing so.
Internet
Voting
Bancorp
is pleased to offer its shareholders the convenience of voting online via the
Internet. Please check your proxy card for instructions. Please be aware that
if
you vote your shares over the Internet, you may incur costs or charges from
your
Internet access provider for which you are responsible.
Changing
Your Vote
Your
presence at the annual meeting will not automatically revoke your proxy.
However, you may revoke a proxy at any time prior to its exercise by 1) filing
a
written notice of revocation with Ronald E. Kuykendall, General Counsel and
Secretary; or 2) delivering to Bancorp a duly executed proxy bearing a later
date; or 3) attending the annual meeting and casting a ballot in
person.
Delivery
of Proxy Materials
Bancorp
plans to take advantage of the householding rules of the Securities and Exchange
Commission (SEC) that permit the delivery of one set of the proxy materials
to
shareholders who have the same address to achieve the benefit of reduced
printing and mailing costs. Shareholders residing at a shared address will
continue to receive separate proxy cards. If you wish to receive a separate
set
of materials, please write or call as specified below, and we will promptly
mail
them to you at no charge. If a bank, broker or other nominee holds your shares,
please contact your bank, broker or nominee directly.
A
copy of the Annual Report on Form 10-K for the year ended December 31, 2007,
as
filed with the SEC, but excluding exhibits, is provided with this proxy
statement. Shareholders may obtain a copy of the exhibits to the Annual Report
on Form 10-K by writing Ronald E. Kuykendall, General Counsel and Secretary,
at
Sandy Spring Bancorp, Inc., 17801 Georgia Avenue, Olney, Maryland 20832.
Shareholders also may access a copy of the Form 10-K including exhibits on
the
SEC Web site at www.sec.gov or through Bancorp's investor relations Web site
maintained at www.sandyspringbank.com.
PROPOSAL
I:
Election of Directors
In
accordance with Bancorp's articles of incorporation and bylaws, the board of
directors has set the total number of directors at thirteen. Currently, the
articles of incorporation divide the directors into three classes, as nearly
equal in number as possible. In general, the term of office of only one class
of
directors expires in each year, and their successors are elected for terms
of
three years or until their successors are elected and qualified. In Proposal
II
of this proxy statement, you are asked to consider the elimination of the
aforementioned classification. Please refer to Proposal II for the Board's
recommendation and an explanation of how the elimination of classification,
if
approved, will be implemented.
At
the
annual meeting a total of four director-nominees are before you for election,
all of whom are incumbent Bancorp directors. With respect to the election of
directors, a plurality of all the votes cast at the annual meeting will be
sufficient to elect a nominee as a director.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES NAMED BELOW
AS A
DIRECTOR OF BANCORP.
Information
as to Nominees and Incumbent Directors
The
following information sets forth the names of the four nominees for election.
Each has given his or her consent to be nominated and has agreed to serve if
elected. If any person nominated by the board of directors is unable to accept
election, the proxies will be voted for the election of such other person or
persons as the present board of directors may designate.
Also
provided is information on the remaining incumbent directors. Unless described
otherwise, each director has held his or her current occupation for at least
five years, and the ages listed are as of March 18, 2008. Bancorp's Corporate
Governance Policy and Bylaws require a director to retire immediately following
the annual meeting following the date on which he or she attains 70 years of
age. Therefore, Chairman W. Drew Stabler and Director John Chirtea will be
retiring from service at the close of the annual meeting.
All
directors of Bancorp and its principal subsidiary Sandy Spring Bank (the Bank)
are composed of the same persons. Throughout this proxy statement, the singular
use of "board of directors" or "board" shall be intended to refer to both boards
unless otherwise indicated.
Incumbent
Class II Directors - Nominees for Terms to Expire at the 2011 Annual
Meeting:
Name
and Position(s) Held with Bancorp
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Age
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Principal
Occupation and Employer
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Member
of
Board Since(1)
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Current
Term Expires(2)
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Mark
E. Friis
Director
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52
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President
and CEO and senior principal of Rodgers Consulting, Inc., a land
planning
and engineering firm in Frederick, Maryland.
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2005
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2008
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Hunter
R. Hollar
President,
Chief Executive Officer and Director
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59
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President
and CEO of Sandy Spring Bancorp, Inc. and Sandy Spring
Bank
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1990
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2008
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Pamela
A. Little
Director
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54
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CFO
of ATS a provider of IT services to the federal government in McLean,
Virginia (2007); former CFO of Athena Innovative Solutions, Inc.
(2005-2007); former CFO of ZKD, Inc. (2004-2005); former CFO of DAI
(2000-2003). All of these firms are government
contractors.
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2005
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2008
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Craig
A. Ruppert
Director
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54
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President
and owner of The Ruppert Companies, comprised of nursery and landscaping,
business and investment management, and commercial real estate development
and management businesses.
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2002
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2008
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Incumbent
Class I Directors - Continuing
Susan
D. Goff
Director
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62
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Retired.
Former executive of Mid-Atlantic Medical Services, Inc., a health
maintenance organization.
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1994
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2009
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Marshall
H. Groom
Director
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69
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Retired.
Former director and founding chairman of Potomac Bank of
Virginia.
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1990
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2009
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Robert
L. Orndorff, Jr.
Director
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51
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President
of RLO Contractors, Inc., an excavating contractor in Dayton,
Maryland.
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1991
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2009
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David
E. Rippeon
Director
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59
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President
and CEO of Gaithersburg Equipment Co. and Frederick Equipment Co.,
tractor
and equipment dealerships.
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1997
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2009
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Incumbent
Class III Directors - Continuing
Solomon
Graham
Director
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65
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President
and CEO of Quality Biological, Inc., a biotechnology firm providing
reagents for medical research.
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1994
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2010
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Gilbert
L. Hardesty
Director
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67
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Retired.
Former President of Crestar Bank-Annapolis from 1994 to 1997 and
former
President of Annapolis Federal Savings Bank from 1986 to
1994
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1997
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2010
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Charles
F. Mess
Director
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69
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Physician
with Potomac Valley Orthopaedic Associates Chtd.
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1987
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2010
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Lewis
R. Schumann
Director
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64
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Attorney.
Partner in Miller, Miller and Canby, Chtd in Rockville,
Maryland
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1994
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2010
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(1) |
The
length of service in office includes time as a director of the Bank
prior
to the formation of Bancorp as the Bank's holding company in January
1988.
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(2) |
If
Proposal II receives the required approval, the terms of the directors
will no longer be classified and all directors would stand for election
at
the 2009 annual meeting. See Proposal II for a detailed description
of
de-classification and annual election
proposal.
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Corporate
Governance and Other Matters
Corporate
Governance Policy and Code of Business Conduct
Bancorp's
business affairs and strategic direction are overseen by its board of directors.
The board remains committed to setting a tone of the highest ethical standards
and performance for Bancorp's management, officers, and company as a whole.
The
board believes that strong corporate governance practices are a critical element
of doing business today. To that end, the Corporate Governance Policy is
reviewed periodically to ensure it reflects the best interests of Bancorp and
its shareholders.
In
addition, Bancorp's board of directors has adopted a Code of Business Conduct
applicable to all directors, officers, and employees of Bancorp and its
subsidiaries. It sets forth the legal and ethical standards that govern the
conduct of business performed by Bancorp and its subsidiaries. The Code of
Business Conduct includes a Code of Ethics established pursuant to Section
406
of the Sarbanes-Oxley Act of 2002, related SEC regulations, and the listing
standards of the Nasdaq Stock Market, Inc.
More
information about corporate governance, including the Corporate Governance
Policy and the Code of Ethics, and board committee charters may be found on
Bancorp's Investor Relations Web site at www.sandyspringbank.com
under
Investor Relations, Corporate Governance.
Director
Independence
The
board
of directors has affirmatively determined that all directors other than Mr.
Hollar are independent under Nasdaq's listing standards. Those independent
directors are: John Chirtea, Mark E. Friis, Susan D. Goff, Solomon Graham,
Marshall H. Groom, Gilbert L. Hardesty, Pamela A. Little, Charles F. Mess,
Robert L. Orndorff, Jr., David E. Rippeon, Craig A. Ruppert, Lewis R. Schumann,
and W. Drew Stabler.
The
board
of directors complies with or exceeds the independence requirements for the
board and board committees established by the Nasdaq stock market and federal
securities and banking laws and the additional standards included in Bancorp's
Corporate Governance Policy.
In
accordance with the Corporate Governance Policy, no more than two inside
directors may be on the board at any one time. All other directors must be
independent. An inside director is defined as a director that is employed or
was
employed within the last three years as either an officer of Bancorp or the
Bank
and serves as a member of the board of directors. In making its determination
of
independence, the board of directors did not consider any transactions,
relationship, or arrangements that are not included in the section of this
proxy
statement entitled "Transactions and Relationships with
Management."
Board
Committees
Bancorp's
board of directors has the following standing committees: Audit, Executive
and
Corporate Governance, Human Resources and Compensation, and Nominating. Each
committee has a written charter which may be found on Bancorp's Investor
Relations Web site at www.sandyspringbank.com.
The
functions, composition, and number of meetings for these committees in 2007
were
as follows:
Audit
Committee
- The
Audit Committee is appointed by the board to assist in monitoring the integrity
of the financial statements and of financial reporting, including the proper
operation of internal and disclosure controls and procedures in accordance
with
the Sarbanes-Oxley Act of 2002, compliance with legal and regulatory
requirements and the independence and performance of internal and external
auditors. The Audit Committee reviews the Forms 10-K and 10-Q prior to filing.
All members of the committee are independent as defined in applicable law,
regulations of the SEC, Nasdaq's listing standards, and the Federal Deposit
Insurance Act and related regulations (the FDIA). Members of the committee
also
meet all other applicable requirements of the SEC, FDIA, and Nasdaq's listing
standards for financial, accounting or related expertise. The board of directors
has determined that Ms. Pamela A. Little qualifies as an audit committee
financial expert under the Nasdaq listing standards and applicable securities
regulations. During 2007, the Audit Committee held five meetings.
Executive
and Corporate Governance Committee
- This
committee conducts board business between regular monthly meetings and provides
oversight and guidance to the board of directors to ensure that the structure,
policies, and processes of the board and its committees facilitate the effective
exercise of the board's role in the governance of Bancorp. The committee reviews
and evaluates the policies and practices with respect to the size, composition,
independence and functioning of the board and its committees as stated in the
Corporate Governance Policy. During 2007, the Executive and Corporate Governance
Committee held sixteen meetings.
Human
Resources and Compensation Committee -
Members
of this committee are independent directors within the meaning of the Nasdaq
listing standards. The Human Resources and Compensation Committee recommends
salaries and other compensation for executive officers, conducts an annual
review of the salary budget, considers other compensation and benefit plans
and
makes recommendations to the board, deals with matters of personnel policy
and
administers the 2005 Omnibus Stock Plan. During 2007, the Human Resources and
Compensation Committee held four meetings.
Nominating
Committee
-
Members of this committee are independent directors within the meaning of the
Nasdaq listing standards. The Nominating Committee makes recommendations to
the
board of directors with respect to nominees for election as directors. In
exercising its responsibilities, the Nominating Committee considers general,
minimum criteria and particular goals and needs of Bancorp for additional
competencies or characteristics. Each director of Bancorp is expected to exhibit
the highest standards in exercising his or her duty of loyalty, care and
commitment to all shareholders and to protect the values and legacy of the
organization. Additionally, directors must manage themselves well in their
personal deportment and display the ability to challenge the thinking of others
and to influence them with constructive approaches. Directors must be able
to
read and act upon complex financial statements and analyses. Finally, directors
need to be able to apply informed judgment and long-term, conceptual and
systemic thinking to all decisions. The board gathers input from all directors
prior to the recruitment of a new director in order to form a collective picture
of the competencies needed. The board also values diversity and seeks to include
women and members of minority groups as well as to maintain a range of thinking
and personality styles. The Nominating Committee encourages suggestions for
qualified candidates to the board from the Chief Executive Officer, the Chairman
of the Board, other directors, and from shareholders, and is responsible for
the
evaluation of such suggestions. Shareholders may submit suggestions for
qualified director candidates by writing to Ronald E. Kuykendall, General
Counsel and Secretary, at Sandy Spring Bancorp, Inc., 17801 Georgia Avenue,
Olney, Maryland 20832. Submissions should include information regarding a
candidate's background, qualifications, experience and willingness to serve
as a
director. In addition, the Nominating Committee may consider candidates
submitted by a third party search firm hired for the purpose of identifying
director candidates. The Nominating Committee uses the same process for
evaluating all nominees, including those recommended by shareholders, using
the
board membership criteria described above. Please see "Shareholder Proposals
and
Communications." During 2007, no meetings of the Nominating Committee were
held.
2007
Board Committees
Name
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Executive
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Audit
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Human
Resources
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Nominating
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John
Chirtea
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X
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X
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Mark
E. Friis
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X
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Susan
D. Goff
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X
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Chairman
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Solomon
Graham
|
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|
|
|
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Chairman
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Marshall
H. Groom
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X
|
|
|
|
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X
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Gilbert
L. Hardesty
|
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X
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|
|
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X
|
Hunter
R. Hollar
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X
|
|
|
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Pamela
A. Little
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Chairman
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Charles
F. Mess, Sr.
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X
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X
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Robert
L. Orndorff, Jr.
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Chairman
|
|
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X
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David
E. Rippeon
|
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X
|
|
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X
|
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X
|
Craig
A. Ruppert
|
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X
|
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X
|
Lewis
R. Schumann
|
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X
|
|
|
|
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W.
Drew Stabler
|
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X
|
|
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X
|
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X
|
Director
Attendance at Meetings
During
2007, the board of directors held twelve regular joint meetings with attendance
averaging 98%. All incumbent directors attended well over 75% of the aggregate
of (a) the total number of meetings of the board of directors and (b) the total
number of meetings held by all committees on which they served.
Director
Compensation
Meeting
Fees
-
Non-employee directors of Sandy Spring Bank received an annual retainer of
$14,000 ($35,000 for the Chairman). The Chairman of the Audit Committee received
an additional retainer of $7,500 and all other committee chairmen received
an
additional retainer of $5,000. Non-employee directors received $1,100 for
attendance at each meeting of the board of directors and also $1,000 for
attendance at each committee meeting. Bancorp directors do not receive any
additional compensation (beyond compensation received for service as Bank
directors); however, non-employee directors would receive a fee of $1,100 for
attendance at a meeting of Bancorp's board of directors not held in conjunction
with a meeting of the Bank's board of directors.
In
consideration for the strategic objective to reduce cost within the Bank and
in
view of the reduction of certain benefit plans (described in the Compensation
Discussion and Analysis), the board of directors voluntarily elected to take
a
20% reduction in fees effective January 1, 2008.
Directors
of the Bank are eligible to defer all or a portion of their fees under Director
Fee Deferral Agreements between the Bank and individual directors. The amounts
deferred accrue interest at the prime rate. Except in the case of death or
financial emergency, deferred fees and accrued interest are payable only
following termination of a director's service on the board. The Director Fee
Deferral Agreements also provide for benefits that may exceed deferred fees
and
accrued interest in the event a party dies while a director of the Bank, but
only to the extent the Bank owns an insurance policy in effect on the director's
life at the time of death that pays a greater amount than the total of deferred
fees and accrued interest.
Non-Cash
Compensation -
Bancorp
directors are also eligible to receive non-incentive stock options and
restricted shares under Bancorp's 2005 Omnibus Stock Plan. These options have
a
maximum term of 7 years and an exercise price that may not be less than 100%
of
the closing price of the common stock on the date of grant. Due to the decision
to change the general timing of equity grants from the fourth quarter to the
first quarter, no options were granted in 2007 to directors. Under the
Director's Stock Purchase Plan, directors may elect to apply from 50% to 100%
of
their annual retainers to purchase newly issued Bancorp common stock at market
value.
2007
Non-Employee Director Compensation
Name
|
|
Fees
Earned or Paid in Cash
(1)
|
|
Stock
Awards
(2)
|
|
Option
Awards
(3)
|
|
Change
in Pension Value and Nonqualified Deferred Compensation
Earnings
(4)
|
|
Total
|
|
John
Chirtea
|
|
$
|
35,200
|
|
$
|
2,012
|
|
$
|
8,652
|
|
$
|
16,875
|
|
$
|
62,739
|
|
Mark
E. Friis
|
|
|
32,400
|
|
|
2,012
|
|
|
5,162
|
|
|
-
|
|
|
39,574
|
|
Susan
D. Goff
|
|
|
47,000
|
|
|
2,012
|
|
|
6,713
|
|
|
66,152
|
|
|
121,877
|
|
Solomon
Graham
|
|
|
31,100
|
|
|
2,012
|
|
|
8,058
|
|
|
39,072
|
|
|
80,242
|
|
Marshall
H. Groom(5)
|
|
|
36,100
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
36,100
|
|
Gilbert
L. Hardesty
|
|
|
44,000
|
|
|
2,012
|
|
|
8,247
|
|
|
-
|
|
|
54,259
|
|
Pamela
A. Little
|
|
|
38,700
|
|
|
2,012
|
|
|
5,162
|
|
|
19,426
|
|
|
65,300
|
|
Charles
F. Mess, Sr.
|
|
|
35,200
|
|
|
2,012
|
|
|
7,171
|
|
|
16,532
|
|
|
60,915
|
|
Robert
L. Mitchell (6)
|
|
|
7,200
|
|
|
2,012
|
|
|
8,463
|
|
|
-
|
|
|
17,675
|
|
Robert
L. Orndorff, Jr.
|
|
|
51,200
|
|
|
2,012
|
|
|
9,001
|
|
|
78,787
|
|
|
141,000
|
|
David
E. Rippeon
|
|
|
40,200
|
|
|
2,012
|
|
|
7,629
|
|
|
-
|
|
|
49,841
|
|
Craig
A. Ruppert
|
|
|
31,200
|
|
|
2,012
|
|
|
7,413
|
|
|
-
|
|
|
40,625
|
|
Lewis
R. Schumann
|
|
|
40,200
|
|
|
2,012
|
|
|
7,842
|
|
|
65,306
|
|
|
115,360
|
|
W.
Drew Stabler
|
|
|
68,200
|
|
|
2,012
|
|
|
11,250
|
|
|
-
|
|
|
81,462
|
|
(1)
|
All
or a portion of the reported cash compensation may be deferred under
the
Director Fee Deferral Agreements between the Bank and individual
directors. Please see the description of the director's fees
above.
|
(2)
|
At
year end 2006, the directors noted above were granted 269 shares
of
restricted stock. The value reported represents the compensation
expense
recognized for financial statement reporting purposes in accordance
with
FAS 123(R) for outstanding restricted stock awards for each director.
At
December 31, 2007, each non-employee director, except for Mr. Groom,
had
215 unvested shares of restricted stock.
|
(3)
|
There
were no new stock options granted in 2007. The value reported represents
the compensation expense recognized for financial statement reporting
purposes in accordance with FAS 123(R) for outstanding stock option
awards
for each director. As of February 12, 2008 directors held total
outstanding options for the following number of shares: Chirtea-8,344;
Friis-2.039; Goff-6,461; Graham-5,699; Groom-5,160; Hardesty-11,267;
Little-2,039; Mess-7,812; Orndorff-10,420; Rippeon-7,501; Ruppert-5,955;
Schumann-10,054; Stabler-10,878.
|
(4)
|
Changes
in values under Bancorp's Director Fee Deferral Agreement, described
above.
|
(5)
|
Mr.
Groom was appointed to the board on February 16, 2007. Reported
compensation reflects amounts earned or accrued from February 16,
2007
through year end.
|
(6)
|
Mr.
Mitchell retired from the board on April 18, 2007. Reported compensation
reflects amounts earned or accrued from January 1, 2007 through April
18,
2007.
|
Stock
Ownership of Directors and Executive Officers
The
following table sets forth information as of February 12, 2008, with respect
to
the shares of common stock beneficially owned by each director continuing in
office and nominee for director of Bancorp, by all directors and executive
officers of Bancorp as a group, and by the following executive officers of
Bancorp and Bank: Hunter R. Hollar, Frank H. Small, R. Louis Caceres, Daniel
J.
Schrider and Philip J. Mantua (Named Executive Officers). Directors qualifying
shares are included in shares owned.
Name
|
|
Number
of Shares Owned
(excluding
options and restricted stock)
(1)
(2)
|
|
Shares
of Restricted Stock
|
|
Number
of Shares That May Be Acquired Within 60 Days by Exercising
Options
(3)
|
|
Total
|
|
Percentage
of Common Stock Outstanding
(*Less
than 1%)
|
|
John
Chirtea
|
|
|
41,435
|
|
|
215
|
|
|
7,510
|
|
|
49,160
|
|
|
*
|
|
Mark
E. Friis
|
|
|
5,186
|
|
|
215
|
|
|
1,205
|
|
|
6,606
|
|
|
*
|
|
Susan
D. Goff
|
|
|
4,914
|
|
|
215
|
|
|
5,627
|
|
|
10,756
|
|
|
*
|
|
Solomon
Graham
|
|
|
11,576
|
|
|
215
|
|
|
4,865
|
|
|
16,656
|
|
|
*
|
|
Marshall
H. Groom
|
|
|
8,321
|
|
|
-
|
|
|
5,160
|
|
|
13,696
|
|
|
*
|
|
Gilbert
L. Hardesty
|
|
|
6,691(4
|
)
|
|
215
|
|
|
10,433
|
|
|
17,339
|
|
|
*
|
|
Hunter
R. Hollar
|
|
|
41,120(5
|
)
|
|
2,000
|
|
|
119,835
|
|
|
161,863
|
|
|
*
|
|
Pamela
A. Little
|
|
|
2,103
|
|
|
215
|
|
|
1,205
|
|
|
3,523
|
|
|
*
|
|
Charles
F. Mess, Sr.
|
|
|
14,869
|
|
|
215
|
|
|
6,978
|
|
|
22,062
|
|
|
*
|
|
Robert
L. Orndorff, Jr.
|
|
|
153,672
|
|
|
215
|
|
|
9,586
|
|
|
163,473
|
|
|
1.0
|
%
|
David
E. Rippeon
|
|
|
9,686
|
|
|
215
|
|
|
6,667
|
|
|
16,568
|
|
|
*
|
|
Craig
A. Ruppert
|
|
|
33,325
|
|
|
215
|
|
|
5,121
|
|
|
38,661
|
|
|
*
|
|
Lewis
R. Schumann
|
|
|
14,243
|
|
|
215
|
|
|
9,220
|
|
|
23,678
|
|
|
*
|
|
W.
Drew Stabler
|
|
|
49,860
|
|
|
215
|
|
|
10,044
|
|
|
60,119
|
|
|
*
|
|
Frank
H. Small
|
|
|
15,598(6
|
)
|
|
1,200
|
|
|
59,660
|
|
|
75,258
|
|
|
*
|
|
R.
Louis Caceres
|
|
|
1,776(7
|
)
|
|
800
|
|
|
28,893
|
|
|
30,669
|
|
|
*
|
|
Daniel
J. Schrider
|
|
|
2,320(8
|
)
|
|
800
|
|
|
29,686
|
|
|
33,139
|
|
|
*
|
|
Philip
J. Mantua
|
|
|
4,118(9
|
)
|
|
800
|
|
|
21,537
|
|
|
25,655
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
directors and executive officers as a group (21 persons)
|
|
|
437,494
|
|
|
9,945
|
|
|
401,672
|
|
|
841,961
|
|
|
5.14
|
%
|
(1) |
Under
the rules of the SEC, an individual is considered to "beneficially
own"
any share of common stock which he or she, directly or indirectly,
through
any contract, arrangement, understanding, relationship, or otherwise,
has
or shares: (a) voting power, which includes the power to vote, or
to
direct the voting of, such security; and/or (b) investment power,
which
includes the power to dispose, or to direct the disposition, of such
security.
|
(2) |
Only
whole shares appear in the table. Fractional shares that may arise
from
participation in the dividend reinvestment plan are not
shown.
|
(3) |
Includes
stock options excercisable on the Record Date and within 60 days
thereafter.
|
(4) |
Mr.
Hardesty has 1,000 shares pledged as
security.
|
(5) |
Mr.
Hollar's shares include 908 shares held through employee benefit
plans.
|
(6) |
Mr.
Small's shares include 5,548 shares held through employee benefit
plans.
|
(7) |
Mr.
Caceres' shares include 1,204 shares held through employee benefit
plans.
|
(8) |
Mr.
Schrider's shares include 2,320 shares held through employee benefit
plans.
|
(9) |
Mr.
Mantua's shares include 3,918 shares held through employee benefit
plans.
|
Owners
of More Than 5% of Bancorp's Common Stock
Beneficial
owners of more than 5% of the common stock are required to file certain
ownership reports under the federal securities laws. The following table shows
the common stock beneficially owned by the person who has filed a report
reporting beneficial ownership that exceeds 5% of Bancorp's outstanding common
stock at December 31, 2007.
Name
|
|
Amount
and Nature of Beneficial Ownership(1)
|
|
Percentage
of Shares Outstanding(2)
|
|
T.
Rowe Price Associates, Inc.
100
East Pratt Street, Baltimore, MD 21202
|
|
|
1,123,230
|
|
|
6.8
|
%
|
(1)
|
Beneficial
ownership is defined by rules of the SEC, and includes shares that
the
person has or shares voting or investment power over.
|
(2)
|
Calculated
by Bancorp based upon shares reported as beneficially owned by the
listed
persons and shares of Bancorp common stock outstanding at February
27, 2008.
|
Transactions
and Relationships with Management
Bancorp
and the Bank have had in the past, and expect to have in the future, banking
transactions with directors and executive officers in the ordinary course of
business on substantially the same terms, including interest rates and
collateral on loans, as those prevailing at the same time for comparable
transactions with other persons. In the opinion of management, these
transactions do not and will not involve more than the normal risk of
collectability or present other unfavorable features.
Bancorp's
written Code of Ethics requires that all related party transactions involving
executive officers or directors, as defined in Item 404 of SEC Regulation S-K,
must be reviewed and approved by the Audit Committee, another independent
committee of directors, or the independent directors on the board. As required
by federal regulations, extensions of credit by the Bank to directors and
executive officers are subject to the procedural and financial requirements
of
Regulation O of the Board of Governors of the Federal Reserve System, which
generally require advance approval of such transactions by uninterested
directors. Other related party transactions as defined in Item 404
(generally,
any
financial transactions, arrangements, or relationships, regardless of dollar
amount, other than extensions of credit and bank deposits) are reviewed by
the
independent directors with the affected director not present or voting.
Director
Lewis R. Schumann is a partner in the Rockville, Maryland law firm of Miller,
Miller and Canby, Chtd. which Bancorp and the Bank have retained during 2007
and
expect to retain during the current year as legal counsel. The law firm provides
legal services on matters of real estate, and trust and estate administration.
Shareholder
Proposals and Communications
From
time
to time, individual shareholders may wish to submit proposals that they believe
should be voted upon by the shareholders. The SEC has adopted regulations that
govern the inclusion of such proposals in Bancorp's annual proxy materials.
Shareholder proposals intended to be presented at the 2009 annual meeting of
shareholders may be eligible for inclusion in Bancorp's proxy materials for
that
annual meeting if received by Bancorp at its executive offices not later than
November 19, 2008 unless the date of the 2009 annual meeting is more than 30
days from April 23, 2009, in which case the deadline is a reasonable time before
Bancorp begins to print and mail proxy materials. Any such proposals shall
be
subject to the requirements of the proxy rules adopted under the Securities
Exchange Act of 1934.
In
addition, Bancorp's bylaws require that to be properly brought before an annual
meeting, shareholder proposals for new business must be delivered to or mailed
and received by Bancorp not less than thirty nor more than ninety days prior
to
the date of the meeting; provided, however, that if less than forty-five days
notice of the date of the meeting is given to shareholders, such notice by
a
shareholder must be received not later than the fifteenth day following the
date
on which notice of the date of the meeting was mailed to shareholders or two
days before the date of the meeting, whichever is earlier. Each such notice
given by a shareholder must set forth certain information specified in the
bylaws concerning the shareholder and the business proposed to be brought before
the meeting.
Shareholders
also may nominate candidates for election as a director, provided that such
nominations are made in writing and received by Bancorp at its executive offices
not later than December 17, 2008. The nomination should be sent to the attention
of Ronald E. Kuykendall, General Counsel and Secretary, at Sandy Spring Bancorp,
Inc., 17801 Georgia Avenue, Olney, Maryland 20832, and must include, concerning
the director nominee, the following information: full name, age, date of birth,
educational background and business experience, including positions held for
at
least the preceding five years, home and office addresses and telephone numbers,
and a signed representation to timely provide all information requested by
Bancorp for preparation of its disclosures regarding the solicitation of proxies
for election of directors. The name of each such candidate for director must
be
placed in nomination at the annual meeting by a shareholder present in person.
The nominee must also be present in person at the annual meeting. A vote for
a
person who has not been duly nominated pursuant to these requirements will
be
deemed to be void.
Bancorp's
shareholders may communicate with the board of directors or any individual
director by addressing correspondence to the board or such director in care
of
the Secretary at Bancorp's main office by mail, courier, or facsimile or by
e-mail through the Company's "contact us" feature of the Investor Relations
area
of its Web site at www.sandyspringbank.com.
The
board
of directors believes it is important for all directors to attend the annual
meeting of shareholders in order to show their support for Bancorp and to
provide an opportunity for shareholders to express any concerns to them. Bancorp
has adopted a policy that all directors should attend each annual meeting of
shareholders unless they are unable to attend by reason of personal or family
illness or pressing matters. All directors were present at the 2007 annual
meeting.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934 requires Bancorp's executive
officers and directors, and any persons who own more than ten percent of a
registered class of Bancorp's equity securities, to file reports of ownership
and changes in ownership on Forms 3, 4, and 5 with the SEC. Executive officers,
directors and greater than ten percent shareholders are required by applicable
regulations to furnish Bancorp with copies of all Forms 3, 4, and 5 they
file.
Based
solely on the review of the copies of such forms it has received, all of
Bancorp's executive officers and directors have complied with filing
requirements applicable to them with respect to transactions during 2007, with
the single exception of a late filing for Joseph J. O'Brien, Jr.'s award of
stock options in December 2007.
PROPOSAL
II:
Amendment to Bancorp's Articles of Incorporation to Eliminate the Provisions
Classifying the Terms of the Board of Directors
Pursuant
to Maryland General Corporation Law, Bancorp's articles of incorporation include
a provision which divides the directors into classes and specifies the term
of
office for each class. Currently, the articles of incorporation provide that
Bancorp's board of directors is divided into three classes, with each class
to
be as nearly equal in number as the total number of directors will permit,
and
with directors in each class serving staggered three-year terms. As a result,
at
each annual meeting of shareholders, only one class of directors are chosen
by
the shareholders for a term of three years to succeed those directors whose
term
expires at that meeting.
Also,
as
permitted by Maryland law, Bancorp's articles of incorporation provide that
the
affirmative vote of at least 80% of the outstanding shares of common stock
entitled to vote in the election of directors, voting together as a single
class, is required to amend or repeal the provision creating the classified
board.
The
board
of directors, with the assistance of the Executive and Corporate Governance
Committee, evaluated whether Bancorp's classified board structure continues
to
be in the best interests of Bancorp and its shareholders. In its evaluation,
the
board considered that general purpose of board classification was to promote
stability and continuity in leadership on the board and to provide the board
with a greater opportunity to protect the interests of shareholders from
"abusive" takeover tactics in the event of an unsolicited takeover offer. The
board also considered that some corporate governance public commentators and
some commentators writing on behalf of institutional shareholders believe that
a
classified board reduces accountability to shareholders because it prevents
shareholders from evaluating all directors on an annual basis. Finally, the
board recognized that declassification of a board continues to evolve as a
"best
practice" in corporate governance. After careful review, the board determined
that it would be in the best interests of Bancorp and its shareholders to take
steps to eliminate the classified board.
Article
IX of Bancorp's articles of incorporation, as it is proposed to be amended,
is
attached to this proxy statement as Appendix
A.
It is incorporated herein by reference. You are encouraged to read
Appendix
A in
its entirety.
If
this
proposal is adopted, Bancorp would amend its articles of incorporation as
provided in Appendix
A to
eliminate the provisions requiring a classified board of directors with
staggered terms. Under the proposed amendments in Appendix
A,
all
directors would be elected for one year terms. If adopted at the annual meeting,
Bancorp's directors would stand for election annually, beginning at Bancorp's
2009 annual meeting of shareholders. If approved, this amendment would become
effective upon the filing of articles of amendment to Bancorp's articles of
incorporation with the Maryland Department of Assessments and Taxation. Bancorp
would make this filing promptly following the annual meeting. The board will
also adopt conforming amendments to Bancorp's bylaws regarding classifying
the
board and providing for one-year terms.
Under
Maryland law, all directors, including those directors elected at the 2008
annual meeting, would continue to serve the remainder of their terms. However,
the terms of Class I directors expire at the 2009 annual meeting of
shareholders, and in order to facilitate the immediate transition from
classified terms to annual terms, the directors in Classes II and III are
expected to tender their resignations and be reappointed by the board prior
to
the 2009
annual
meeting of shareholders, so that all directors will be elected for a one-year
term at that meeting.
Approval
of Proposal II to amend the articles of incorporation to declassify the board
requires the affirmative vote of at least 80% of
the
outstanding shares of Bancorp common stock entitled to vote at the annual
meeting. Abstentions and votes not cast will have the same effect as votes
against this proposal. Therefore, your vote is important and we urge you to
vote
"FOR" this proposal. If this proposal does not receive the required number
of
votes in favor, Bancorp's articles of incorporation will not be amended and
the
directors will continue to be classified and serve three-year terms as the
articles of incorporation currently provide.
THE
BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL TO AMEND THE ARTICLES
OF INCORPORATION.
Compensation
Discussion and Analysis
Overview
This
Compensation Discussion and Analysis describes Bancorp's compensation
philosophy, objectives, and processes, including the methodology for determining
executive compensation for Bancorp's Principal Executive Officer, Principal
Financial Officer, and three most highly compensated other executive officers
for Bancorp and the Bank for 2007 (the Named Executive Officers). Please also
refer to the more detailed compensation disclosures beginning on page
21 of
this
proxy statement.
Overall
Compensation Philosophy
& Guiding Principles
Bancorp
recognizes and values the critical role that our executive leadership plays
in
its performance. The executive compensation philosophy is intended to attract,
motivate, and retain top executive talent, to link executive rewards with
shareholder returns, to achieve strategic business objectives, to reward both
short and long-term performance, and to provide incentives for achieving high
performance.
The
philosophy is to pay competitive base salaries based on company and individual
experience, performance, and contributions. Short-term incentives, generally
payable in cash, and long-term incentives, generally provided through
equity-based awards, are targeted to be competitive and depend more heavily
upon
company performance. The compensation programs are externally benchmarked
against the compensation paid by comparable companies. Total compensation and
accountability are intended to increase with position and
responsibility.
Compensation
Decision Process
The
Human
Resources and Compensation Committee is appointed by the board of directors
of
Bancorp and Bank to assist it in recommending, managing, and monitoring
compensation and benefit plans for the Chief Executive Officer and other Named
Executive Officers. The process by which the committee makes specific decisions
relating to executive compensation includes consideration of the following
factors:
· |
The
compensation philosophy;
|
· |
Bancorp's
performance relative to peers and industry
standards;
|
· |
Success
in attaining annual and long-term goals and
objectives;
|
· |
Alignment
of executive interests with shareholder interests through equity-based
awards vesting over a period of
years;
|
· |
Management
of compensation expense, and emphasis on performance-based
compensation;
|
· |
Individual
performance, experience, and
contributions;
|
· |
Executive
officer potential;
|
· |
Total
compensation and the mix of compensation elements for each named
executive
officer;
|
· |
The
competitiveness of executive compensation relative to Bancorp's peers
and
conditions in our labor markets;
|
· |
The
relative appropriateness of each Named Executive Officer's compensation
as
compared to compensation of other executive officers;
and
|
· |
Retention
considerations.
|
Role
of the Human Resources and Compensation Committee, Management and the
Compensation Consultants in the Executive Compensation
Process
Role
of the Human Resources and Compensation Committee
It
is the
role of the committee to review compensation policies applicable to executive
officers; to consider the relationship of corporate performance to that
compensation; to recommend salary and bonus levels and equity-based awards
for
executive officers for consideration by the board of directors of Bancorp and
the Bank or its committees, as appropriate; and to monitor the adequacy and
effectiveness of various compensation and benefit plans and executive succession
planning of Bancorp and the Bank. The committee meets throughout the year (four
times in 2007) and also takes action by written consent. The chairman of the
committee reports committee actions to the board of directors.
The
committee reviews all compensation components for the Named Executive Officers.
Compensation includes base salary; short-term incentives; long-term incentives
including equity-based awards; benefit plans; and perquisites. The committee
determines the appropriate mix of compensation components for each Named
Executive Officer.
The
committee reviews the Chief Executive Officer's performance and makes
recommendations regarding his compensation with the advice of independent
consultants (see "Role of Compensation Consultant"). Decisions regarding
compensation for the Named Executive Officers are made by the committee with
consideration give to recommendations from the Chief Executive Officer, Chief
Operating Officer, the Senior Vice President of Human Resources, and independent
consultants. Decisions by the committee with respect to the compensation of
executive officers are approved by the full board of directors.
The
committee has the authority to obtain advice and assistance from internal or
external legal, human resources, accounting or other experts, advisors, or
consultants as it deems desirable or appropriate. The committee has sole
authority to retain and terminate any compensation consultants and to approve
the fee and the terms of engagement. Details on the committee's functions are
described in its charter, which has been approved by the board of directors.
Role
of the Compensation Consultant
The
committee is advised by independent compensation consultants and advisors.
In
general, the consultants provide compensation benchmarking and analytical data
and render advice to the committee regarding all aspects of the committee's
compensation decisions, including the Chief Executive Officer's performance
review process. The committee has direct access to the consultants and control
over their engagement. The committee was advised by two compensation consulting
firms during 2007. The firm of Furr Resources, Inc. was engaged to assist in
connection with the annual performance evaluation process for the Chief
Executive Officer. The firm of Pearl Meyer & Partners (PM&P) was engaged
during 2007 to conduct a review and competitive assessment of total compensation
and benefits for the Named Executive Officers, and to provide a comprehensive
assessment of the competitiveness and effectiveness of the total executive
compensation programs. In that capacity, PM&P also developed peer groups and
provided other market data used by Bancorp for benchmarking and has provided
advice regarding levels and components of compensation for each named executive
officer. In addition, the committee has the resources of independent counsel
available should the need arise.
Role
of Bancorp's Management
Below
is
a summary of the role of Bancorp's management in assessing or recommending
executive compensation:
· |
The
Chief Executive Officer is responsible for the development of Bancorp's
strategic plan and annual business plan, which are reviewed and approved
by the board of directors.
|
· |
The
Chief Executive Officer conducts a self-assessment, which is reviewed
annually by the board of directors.
|
· |
The
Chief Executive Officer presents executive performance ratings to
the
Executive and Corporate Governance Committee and makes recommendations
relating to executive compensation, taking into consideration the
advice
from the external compensation
consultant.
|
· |
The
Chief Executive Officer and the Senior Vice President of Human Resources
in collaboration with the external compensation consultants, develop
proposals relating to potential changes in compensation programs
for
review and approval by the Human Resources and Compensation
committee.
|
· |
The
Chief Executive Officer, Senior Vice President of Human Resources,
and the
external compensation consultants, provide the committee with Company
data
necessary to evaluate and implement compensation proposals and
programs.
|
· |
The
Senior Vice President of Human Resources works with outside consultants
to
provide data and information related to the committee's needs and
objectives.
|
The
committee occasionally requests one or more members of executive management
or
the Senior Vice President of Human Resources to be present at committee meetings
where executive compensation and Company or individual performance is discussed
and evaluated. Executives are free to provide insight, suggestions, or
recommendations regarding executive compensation. However, only independent
committee members are allowed to vote on decisions regarding executive
compensation.
Each
director completes a performance evaluation form, separately and anonymously,
for the Chief Executive Officer and submits it to Furr Resources, Inc. for
compilation. The Executive and Corporate Governance Committee and the Human
Resources and Compensation Committee review the results, and then the Executive
and Corporate Governance Committee meets with the Chief Executive Office to
discuss his performance. The Human Resources and Compensation Committee makes
recommendations and the board of directors reviews and approves decisions
regarding the Chief Executive Officer's compensation package taking into
consideration this performance review as well as advice from the compensation
consultants, as requested. Recommendations for compensation packages for other
executives are made by the Human Resources and Compensation Committee,
considering recommendations from the Chief Executive Officer, as well as input
from the compensation consultant as requested. These recommendations are
ultimately approved by the full board of directors.
Compensation
Structure and Elements
Bancorp's
total compensation program consists of four main components of compensation:
Base Salary, Annual Incentive, Long-term Incentive/Equity Awards, and Executive
Benefits/Perquisites. Following is a summary of the role of each component,
a
description of how decisions regarding the components are made and the resulting
2007 decisions as they relate to the Named Executive Officers.
Base
Salary
Base
pay
is a critical element of executive compensation because it provides executives
with a base level of monthly income. In determining base salaries, we consider
the executive's qualifications and experience, scope of responsibilities, the
goals and objectives established for the executive, the executive's past
performance, as well as competitive salary practices at financial institutions
in the peer group benchmarking (see "Pay Levels and Benchmarking").
In
2007,
executive salaries were reviewed and the following adjustments
made:
|
|
|
|
Base
Salary
|
|
Increase
|
|
Name
|
|
Title
|
|
2006
|
|
2007
|
|
Amount
|
|
Percentage
|
|
H.
Hollar
|
|
|
Chief
Executive Officer
|
|
$
|
445,000
|
|
$
|
462,800
|
|
$
|
17,800
|
|
|
4.00
|
%
|
P.
Mantua
|
|
|
Chief
Financial Officer
|
|
|
215,000
|
|
|
223,600
|
|
|
8,600
|
|
|
4.00
|
%
|
F.
Small
|
|
|
Chief
Operating Officer
|
|
|
300,000
|
|
|
306,000
|
|
|
6,000
|
|
|
2.00
|
%
|
D.
Schrider
|
|
|
Chief
Credit Officer
|
|
|
235,000
|
|
|
244,400
|
|
|
9,400
|
|
|
4.00
|
%
|
L.
Caceres
|
|
|
Executive
Vice President
|
|
|
235,000
|
|
|
244,400
|
|
|
9,400
|
|
|
4.00
|
%
|
These
adjustments are consistent with the goal of paying competitive base salaries
at
or above the 50th
percentile based primarily on a selected peer group of comparably sized banks.
Due to the lack of a comparable benefit among peer banks, a decision was made
to
eliminate the Executive Officer Health Reimbursement Plan, and $6,500 was added
to each executive officer's base salary beginning January 1, 2008 to offset
the
loss of this benefit (see "Benefits and Perquisites").
Annual
Incentives
During
2007, each of the Named Executive Officers participated in a short-term
incentive plan using the principles of Incentive Compensation for Stakeholders
™, or Stakeholders. This plan was designed to pay a cash award as a percentage
of annual earnings based on company performance compared to pre-established
performance indicators and defined award levels. It also had a minimum net
income requirement to be met in order for rewards to be paid. The
performance indicators in 2007 were:
· |
Growth,
as measured by total loans, non-interest bearing accounts, and
interest-bearing deposits and repurchase
agreements.
|
· |
Pricing/Profitability,
as measured through the net interest margin, fee and service charge
income.
|
· |
Quality,
as measured through client satisfaction, non-performing assets, and
net
charge offs.
|
· |
Productivity,
as measured through the efficiency
ratio.
|
As
part
of its annual compensation review, the committee received recommendations
regarding the target payout of short-term incentives from an independent
compensation consultant. The committee determined that the interests of
management, employees, and shareholders are most effectively aligned if the
executive's annual incentive is tied to the company performance indicators.
Therefore, incentive targets were calculated based on budget and business plan
goals as measured by the performance indicators in the incentive plan. These
target amounts were approved by the committee. In 2007, however, the Company
failed to meet the net income trigger, and an award payment was not
made.
For
2008,
the board approved a recommendation from the committee to revise the short-term
incentive plan for executive officers and selected management positions to
focus
on the balance between growth, financial performance and expense control. This
plan, named the Sandy Spring Leadership Incentive Plan is based on the following
criteria and weightings: Earning per Share Growth - 40%, Efficiency Ratio -
30%,
Return on Equity - 20%, Balance Sheet Growth - 10%. The Sandy Spring Leadership
Incentive Plan replaces the former incentive plan.
Long-Term
Incentive Compensation/Equity-Based Awards
Bancorp
believes that equity-based compensation is among the most effective means of
creating a long-term link between the interests of our shareholders and the
performance of our organization and our executive team. Vesting schedules for
equity-based awards also encourage officer retention.
Executives
are eligible to receive annual equity awards in the form of stock options,
restricted stock, and stock appreciation rights under Bancorp's 2005 Omnibus
Stock plan. The value of equity awards granted is based on competitive market
practice, company performance, and individual performance. The committee
recommends, in its discretion, the form, number, and terms of equity-based
awards, and the board of directors approves the awards.
In
December of 2007, the committee recommended and the board of directors approved
the movement of the timing of equity grants to the first quarter of 2008. This
change will allow for the closing of the 2007 financials and will also coincide
with the timing of annual merit increases. Further, the board will be able
to
take this information into consideration as part of a "total rewards review"
incorporating base pay, short-term incentives, long-term incentives and
perquisites thus ensuring alignment with the overall compensation philosophy
and
guiding principles.
Benefits
and Perquisites
The
purpose of executive benefits and perquisites is to provide economic value
to
the executive in order to attract, retain, and motivate key executives.
Bancorp's policy on executive benefits has been to provide benefits consistent
with market practice. The committee periodically reviews perquisite to ensure
alignment with our desired philosophy.
Currently,
the Named Executive Officers are eligible to participate in benefit plans
available to all employees including the Sandy Spring Bancorp, Inc. Cash and
Deferred Profit Plan (401(k) Plan) and the Employee Stock Purchase Plan (ESPP).
Other benefits and perquisites may be provided at the discretion of the
committee. In 2007, perquisites for the Named Executive Officers included a
$6,500 fund for out-of-pocket medical expenses, payment of a supplemental
long-term disability, and a long-term care policy. In addition, Mr. Hollar
received a company-paid automobile and was reimbursed for his health club dues.
As previously indicated, the board voted to discontinue the $6,500 fund for
out-of-pocket medical expenses for 2008 and has instead added $6,500 to the
executive officers' base pay beginning January 1, 2008.
Total
Compensation Mix
The
committee believes that the elements described above provide a well proportioned
mix of security-oriented compensation, at-risk/performance-based compensation,
and retention-based compensation that produces short-term and long-term
incentives and rewards. By following a portfolio approach to compensation and
benefits, the executive is provided a measure of security as to the minimum
levels of compensation he or she is eligible to receive, while motivating the
executive to focus on the business measures that will produce a high level
of
performance for Bancorp and long-term wealth creation for the executive, as
well
as reducing the risk of recruitment of top executive talent by competitors.
The
mix of annual incentives and the equity-based awards likewise provides an
appropriate balance between short-term financial performance and long-term
financial and stock performance; between reward and retention.
For
the
Named Executive Officers, the mix of compensation is weighted heavily toward
at-risk, performance pay, as delivered through the annual incentive plan and
equity based award program. This mix strategy results in a pay-for-performance
orientation that aligns with our philosophy to pay median pay for median
performance and above market pay for superior performance.
Inputs
for Compensation Determinations
Bancorp
Goal Setting for Compensation Purposes
On
an
annual basis, the board of directors approves the annual profit plan including
a
detailed business plan and financial plan. These goals are designed to support
the multi-year strategic plan by setting annual targets for achievement. The
committee uses this information to set goals for the Chief Executive Officer
against which to measure individual performance. In addition, the Company's
goals along with competitive information assist in determining the incentive
award targets for the Named Executive Officers.
The
Chief
Executive Officer and Chief Financial Officer report on the performance of
Bancorp to the board of directors at each regularly scheduled meeting. At the
end of the year, the Chief Executive Officer reviews the actual performance
compared to the profit plan and specific incentive targets. This information
is
used in assessing individual performance of all executive officers.
Pay
Levels and Benchmarking
Pay
levels for executives are determined based on a number of factors, including
the
individual's role and responsibilities within the company; the individual's
experience and expertise; the pay levels of peers within the company; pay levels
in the competitive market for similar positions; performance and contribution
of
the individual; and performance of Bancorp as a whole. Each of these factors
are
analyzed and reviewed as part of the compensation review process, with an
emphasis placed on market and competitive information.
The
committee assesses competitive market compensation using a number of data
sources reflecting industry practices of other banking organizations including
information publicly disclosed by a selected peer group of publicly traded
banking organizations. The peer group for 2007 was recommended by the
independent compensation consultant, and reviewed by the Chief Executive Officer
and the committee. It includes banking organizations of similar asset size
in
region (two factors that influence executive compensation in financial
institutions). The peer group is reviewed and updated annually for
appropriateness and compatibility. The committee believes a group of
approximately 20 comparative banks provides a market perspective for executive
compensation.
The
specific elements of compensation reviewed as part of this comparable company
analysis include base salaries, annual performance bonuses, and long-term
incentives relative to the peer group. Matches to proxy compensation data are
made based on comparison of the role of the executive, rather than rank to
ensure a better comparison. The following list of 19 peer banking institutions
was used by Bancorp for 2007. These banks are between $1.39 and $6.0 billion
in
total assets, with an average median total assets size of approximately $3.14
billon, consistent with Bancorp's asset size. All banks are within a defined
Mid-Atlantic region, and are listed largest to smallest by asset size: First
Commonwealth Financial (PA), F.N.B. Corporation (PA), National Penn Bancshares
(PA), NBT Bancorp Inc. (NY), Community Bank System, Inc. (NY), S&T Bancorp,
Inc. (PA), Harleysville National Corp. (PA), Sun Bancorp, Inc. (NJ), Dime
Community Bancshares (NY), Sterling Financial Corporation (PA), WSFS Financial
Corporation (DE), Yardville National Bancorp (NJ), Flushing Financial
Corporation (NY), PennFed Financial Services (NJ), Lakeland Bancorp, Inc.,
(NJ),
First Community Bancshares (VA), Omega Financial Corporation (PA), Univest
Corporation of Penn. (PA), First Mariner Bancorp (MD)
The
committee generally intends that the base salary for each executive will be
competitive, and that above-target performance by Bancorp will be rewarded
by
above-market incentive awards for the individual. The board is willing to make
awards commensurate with the achievement of high performance goals and
objectives. These performance goals are created as part of a robust strategic
planning and business review process. Once the business and financial plans
are
approved by the board of directors, the performance goals for the short-term
incentive plans (Stakeholders™ in 2007 and the Sandy Spring Leadership Incentive
Plan in 2008) are derived directly from the stated target financial
results.
For
2008,
Bancorp will use the same peer group for both financial performance benchmarking
and compensation analysis and review. This simplified approach will identify
competitive companies within the $2 to $7 billion asset range in Bancorp's
contiguous marketplace (DE, MD, NC, NJ, OH, PA, VA and WV) and will effectively
align compensation strategies with overall performance targets. Please note:
There are no banks within this asset size in Washington, D.C. For 2008, this
peer group will consist of the following banks: Park National Corporation,
Provident Bankshares Corporation, F.N.B. Corporation, National Penn Bancshares,
Inc., First Commonwealth Financial Corporation, First Charter Corporation,
WesBanco, Inc., Harleysville National Corporation, S&T Bancorp Inc., First
Financial Bancorp, Sun Bancorp, Inc., Carter Bank & Trust, City Holding
Company, TowneBank, Lakeland Bancorp, Inc. First Bancorp, Inc., First Bancorp,
Virginia Commerce Bancorp, Inc., Union Bankshares Corporation, First Community
Bancshares, Inc., NewBridge Bancorp, and Pennsylvania Commerce Bancorp, Inc.
Committee
Discretion and Final Compensation Decisions
The
committee retains the discretion to decrease all forms of incentive payouts
based on significant individual or Bancorp performance shortfalls. Likewise,
the
committee retains the discretion to increase awards or consider special awards
for significant performance, or due to subjective factors described above.
The
committee believes that the compensation package for each of the Named Executive
Officers is appropriately within the range of the peer data and reasonable
given
Bancorp and individual performance.
Employment
and Other Significant Agreements with Named Executive
Officers
Employment
Agreements
Each
of
the Named Executive Officers has an employment agreement with Bancorp and the
Bank. The committee and the board of directors believe that the agreements
assure fair treatment of the executive in relation to his career with Bancorp
by
assuring him of some financial security. The agreements also protect the
shareholders by encouraging the executive to continue to apply attention to
his
or her duties without distraction in a potential merger or takeover circumstance
and by helping to maintain the executive's objectivity in considering any
proposals to acquire Bancorp.
These
employment agreements have an initial term of three years for Mr. Hollar and
two
years for the other Named Executive Officers, and are automatically renewed
for
an additional one year upon each anniversary unless written notice not to renew
has been given by the executive or Bancorp. They provide minimum base salaries,
subject to annual review, and the right to participate in incentive compensation
and benefit plans.
Upon
termination of the executive without just cause by Bancorp, or with good reason
by the executive, the executive is entitled to salary and bonuses for the
remaining term of the agreement, payable in a lump sum based upon prior year's
compensation levels. The executive is prohibited from conflicts of interest,
and
is required to maintain the confidentiality of nonpublic information regarding
Bancorp and its clients. The executive also is bound by a covenant not to
compete and not to interfere with other employees if the executive's employment
is terminated for just cause, disability, or retirement or he or she resigns
without good reason.
In
the
event of a voluntary resignation, the executive officer will receive only the
compensation, vested rights, and employee benefits up to the date of
termination. In the event of retirement, the executive officer would receive
no
additional compensation under the agreement.
The
agreements provide for additional benefits in the event of a change in control
of Bancorp or the Bank and either a termination of the officer's employment
without just cause or a resignation by the officer with good reason, as defined
in the agreements. In those circumstances, the officer is entitled to a lump
sum
cash payment equal to 2.99 times the sum of the executive's annual salary at
the
highest rate in effect during the preceding twelve months and other compensation
for the preceding calendar year. The executive also would be entitled to
continued participation for a three-year period in Bancorp-sponsored health
and
welfare plans. The agreement requires Bancorp and the Bank to hold the executive
harmless from the federal excise tax assessable if payments and benefits exceed
the amount allowable as a deduction under Section 280G of the Internal Revenue
Code.
Supplemental
Executive Retirement Agreements
The
Bank,
upon the recommendation of the committee, has entered into individual
Supplemental Executive Retirement Agreements (SERPs) with certain executives,
including the Named Executive Officers. These agreements are designed to provide
a post-retirement benefit that achieves a targeted level of covered retirement
income and to provide a certain pre-retirement death and disability benefit
should the executive die or become disabled prior to retirement age. The annual
post-retirement deferred compensation benefit is designed to replace between
65%
and 70% of the executive's projected final average pay at normal retirement
date
in conjunction with the Sandy Spring Bancorp, Inc.'s Retirement Income Plan
(Pension Plan), 401(k) Plan, Social Security retirement benefits, and any
benefits payable to the executive under a prior employer's pension plan. Normal
retirement benefits under the SERPs are payable in equal monthly payments over
15 years or until the death of the executive, whichever is longer. There
are
also provisions in this plan in the event of early retirement, death,
disability, or in
the
event of a change in control of Bancorp and either a termination of the
officer's employment without just cause or a resignation by the officer with
good reason.
In
2008,
the SERPs will be replaced by a Supplemental Executive Incentive Retirement
Plan. This plan is a defined contribution plan where contributions will be
made
to the executive participants' retirement accounts based on company performance
as defined by return on average equity compared to peer bank performance. There
is a floor of 2% contribution in this plan and a cap of 9%. The beginning
balance for this plan is the accrued SERP balances as of December 31, 2007.
The
implementation of this approach will better align the interests of executive
management with the performance of Bancorp and the interests of shareholders.
Change
in Control Benefit Triggers
The
right
to change in control benefits under the employment agreements and SERPs is
dependent on a "double trigger," that is, there must be both a change in control
and a termination of employment without just cause or with good reason. However,
the employment agreements allow each executive officer to terminate "with good
reason" for any reason within the sixty day period that begins six months after
the closing date of a definite agreement that results in the change in control.
The committee believes these trigger provisions are reasonable and in the best
interests of shareholders and should help (a) to retain executives useful for
the transition of a change in control for at least six months after the closing;
(b) to reduce potential disincentives for executives in the period in which
a
change in control is being evaluated and negotiated; and (c) to avoid the
potential double payment of executives who continue their employment after
a
change in control that could result from a single change in control
trigger.
Impact
of Accounting and Tax on the Form of Compensation
The
committee and Bancorp consider the accounting and tax (individual and corporate)
consequences of the compensation plans prior to making any changes to the plans.
The
committee has considered the impact of the Statement of Financial Accounting
Standard No. 123 (R), "Share-Based Payment," which Bancorp adopted on January
1,
2006, on Bancorp's use of equity-based awards. This consideration factored
heavily in our decision to move to a mix of restricted stock and stock options
beginning in 2006.
The
committee also considers the limits on deductibility of compensation imposed
by
Section 162(m) of the Internal Revenue Code (the Code) with respect to annual
compensation exceeding $1 million and Section 280(g) of the Code with respect
to
change in control payments exceeding specified limits.
Equity-Based
Award Practices
Equity-based
awards historically have been granted in December of each year. The committee's
compensation consultants provide information and advice to the committee in
connection with its recommendation for awards, including advice regarding the
types, terms, and value of equity-based awards to grant. In 2007, the committee
recommended and the board approved moving the timing of equity grants to the
first quarter in the following year. This allows the committee to consider
the
prior year's results, and will coincide with the annual salary review process.
There were no equity-based awards were granted in 2007 for the Named Executive
Officers.
Stock
Ownership Guidelines
Bancorp
does not currently have a formal stock ownership requirement for executives,
but
all of the current executive officers own Bancorp common stock. We encourage
stock ownership by executives on a voluntary basis. Bancorp retains the
discretion to implement a minimum ownership requirement of mandatory holding
period for shares received under our equity compensation plan.
Human
Resources and Compensation Committee Report
We
have
reviewed and discussed the foregoing Compensation Discussion and Analysis with
management. Based on this review and discussion, we have recommended to the
board of directors that the Compensation Discussion and Analysis be included
in
this proxy statement and in Bancorp's Annual Report on Form 10-K for the year
ended December 31, 2007.
February
21, 2008
Susan
D.
Goff, Chairman
John
Chirtea
Susan
D.
Goff
Charles
F. Mess
Robert
L.
Orndorff, Jr.
David
E.
Rippeon
W.
Drew
Stabler
Executive
Compensation
Summary
of Compensation Table
The
following table summarizes compensation earned by or awarded to Bancorp's
Principal Executive Officer, Principal Financial Officer, and the three most
highly compensated other executive officers for 2007 (the Named Executive
Officers).
Name
and Principal Position
|
|
Year
|
|
Salary
(1)
|
|
Stock
Awards
(2)
|
|
Option
Awards
(3)
|
|
Non-Equity
Incentive Plan Compensation
(4)
|
|
Change
in Pension Value & Nonqualified Deferred Compensation
Earnings
(5)
|
|
All
Other Compensation
(6)
|
|
Total
|
|
Hunter
R. Hollar
President
& Chief Executive Officer
|
|
|
2007
2006
|
|
$
|
458,008 437,677
|
|
$
|
18,700
-
|
|
$
|
84,425
54,525
|
|
|
-
$200,302
|
|
$
|
312,226
403,036
|
|
$
|
28,334
26,894
|
|
$
|
798,568
1,067,909
|
|
Philip
J. Mantua
Executive
Vice President & Chief Financial Officer
|
|
|
2007
2006
|
|
|
221,285
206,446
|
|
|
7,480
-
|
|
|
32,810
17,693
|
|
|
-
52,739
|
|
|
116,849
79,196
|
|
|
8,910
8,793
|
|
|
347,044
347,174
|
|
Frank
H. Small
Executive
Vice President & Chief Operating Officer
|
|
|
2007
2006
|
|
|
304,385
298,892
|
|
|
11,220
-
|
|
|
54,018
32,854
|
|
|
-
112,033
|
|
|
188,751
413,724
|
|
|
16,018
17,991
|
|
|
581,003
842,640
|
|
Daniel
J. Schrider
Executive
Vice President & Chief Credit Officer
|
|
|
2007
2006
|
|
|
241,869
229,892
|
|
|
7,480
-
|
|
|
32,810
17,693
|
|
|
-
77,639
|
|
|
63,748
51,382
|
|
|
12,565
9,478
|
|
|
317,516
368,391
|
|
R.
Louis Caceres
Executive
Vice President
|
|
|
2007
2006
|
|
|
241,869
229,892
|
|
|
7,480
-
|
|
|
32,810
17,693
|
|
|
-
77,639
|
|
|
71,139
59,827
|
|
|
11,899
10,516
|
|
|
333,106
377,874
|
|
(1) |
See
the description of the principal terms of the employment between
Bancorp
and each of the named executives on page
18.
|
(2) |
Represents
the compensation expense recognized for financial statement reporting
purposes in accordance with FAS 123(R) for outstanding restricted
stock
awards.
|
(3) |
Represents
the compensation expense recognized for financial statement reporting
purposes in accordance with FAS 123(R) for outstanding stock option
awards. See the discussion of the assumptions used for these values
in
Note 13 to the Consolidated Financial Statements contained in Bancorp's
2007 Annual Report on Form 10-K.
|
(4) |
Represents
incentive payments made as described under the heading "Annual Incentives"
on page 15.
|
(5) |
This
represents the total change with respect to Bancorp's Pension Plan
and the
SERPs with the executives. See the table of Pension Benefits on page
24
and the description of the SERPs on page
19.
|
(6) |
Consists
of the value of perquisites and personal benefits including educational
benefits, supplemental executive plans with respect to reimbursement
of
health costs not covered by Bancorp's health plans, supplemental
long term
care and disability insurance, life insurance benefits, and, with
respect
to Mr. Hollar, automobile usage. None of the values of individual
perquisites and benefits exceeded
$25,000.
|
Outstanding
Equity Awards at Fiscal Year End(1)
This
table shows outstanding equity awards to the Named Executive Officers at
December 31, 2007.
|
|
Option
Awards
|
|
Stock
Awards
|
|
Name
|
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
(1)
|
|
Number
of Securities Underlying Unexercised Options (#) Unexercisable
(2)
|
|
Option
Exercise Price
($)
|
|
Option
Expiration Date
|
|
Number
of Shares or Units of Stock That Have Not Vested (#)
(3)
|
|
Market
Value of Shares or Units of Stock That Have Not Vested ($)
(4)
|
|
Hunter
R. Hollar
|
|
|
4,500
|
|
|
-
|
|
$
|
20.33
|
|
|
12/16/2008
|
|
|
-
|
|
|
-
|
|
|
|
|
10,520
|
|
|
-
|
|
|
17.21
|
|
|
12/15/2009
|
|
|
-
|
|
|
-
|
|
|
|
|
7,481
|
|
|
-
|
|
|
14.54
|
|
|
12/13/2010
|
|
|
-
|
|
|
-
|
|
|
|
|
18,400
|
|
|
-
|
|
|
32.25
|
|
|
12/21/2011
|
|
|
-
|
|
|
-
|
|
|
|
|
17,000
|
|
|
-
|
|
|
31.25
|
|
|
12/11/2012
|
|
|
-
|
|
|
-
|
|
|
|
|
16,950
|
|
|
-
|
|
|
38.91
|
|
|
12/17/2013
|
|
|
-
|
|
|
-
|
|
|
|
|
18,650
|
|
|
-
|
|
|
38.00
|
|
|
12/15/2014
|
|
|
-
|
|
|
-
|
|
|
|
|
22,500
|
|
|
-
|
|
|
38.13
|
|
|
12/14/2012
|
|
|
-
|
|
|
-
|
|
|
|
|
3,834
|
|
|
7,666
|
|
|
37.40
|
|
|
12/13/2013
|
|
|
2,000
|
|
$
|
55,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philip
J. Mantua
|
|
|
175
|
|
|
-
|
|
$
|
17.21
|
|
|
12/15/2009
|
|
|
-
|
|
|
-
|
|
|
|
|
1,800
|
|
|
-
|
|
|
14.54
|
|
|
12/13/2010
|
|
|
-
|
|
|
-
|
|
|
|
|
1,500
|
|
|
-
|
|
|
32.25
|
|
|
12/21/2011
|
|
|
-
|
|
|
-
|
|
|
|
|
1,750
|
|
|
-
|
|
|
31.25
|
|
|
12/11/2012
|
|
|
-
|
|
|
-
|
|
|
|
|
2,200
|
|
|
-
|
|
|
38.91
|
|
|
12/17/2013
|
|
|
-
|
|
|
-
|
|
|
|
|
6,050
|
|
|
-
|
|
|
38.00
|
|
|
12/15/2014
|
|
|
-
|
|
|
-
|
|
|
|
|
6,395
|
|
|
-
|
|
|
38.13
|
|
|
12/14/2012
|
|
|
-
|
|
|
-
|
|
|
|
|
1,667
|
|
|
3,333
|
|
|
37.40
|
|
|
12/13/2013
|
|
|
800
|
|
$
|
22,256
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank
H. Small
|
|
|
2,250
|
|
|
-
|
|
$
|
20.33
|
|
|
12/16/2008
|
|
|
-
|
|
|
-
|
|
|
|
|
6,750
|
|
|
-
|
|
|
17.21
|
|
|
12/15/2009
|
|
|
-
|
|
|
-
|
|
|
|
|
12,001
|
|
|
-
|
|
|
14.54
|
|
|
12/13/2010
|
|
|
-
|
|
|
-
|
|
|
|
|
6,400
|
|
|
-
|
|
|
32.25
|
|
|
12/21/2011
|
|
|
-
|
|
|
-
|
|
|
|
|
8,350
|
|
|
-
|
|
|
31.25
|
|
|
12/11/2012
|
|
|
-
|
|
|
-
|
|
|
|
|
10,325
|
|
|
-
|
|
|
38.91
|
|
|
12/17/2013
|
|
|
-
|
|
|
-
|
|
|
|
|
11,250
|
|
|
-
|
|
|
38.00
|
|
|
12/15/2014
|
|
|
-
|
|
|
-
|
|
|
|
|
11,875
|
|
|
-
|
|
|
38.13
|
|
|
12/14/2012
|
|
|
-
|
|
|
-
|
|
|
|
|
2,334
|
|
|
4,666
|
|
|
37.40
|
|
|
12/13/2013
|
|
|
1,200
|
|
$
|
33,384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel
J. Schrider
|
|
|
800
|
|
|
-
|
|
|
17.21
|
|
|
12/15/2009
|
|
|
-
|
|
|
-
|
|
|
|
|
2,499
|
|
|
-
|
|
|
14.54
|
|
|
12/13/2010
|
|
|
-
|
|
|
-
|
|
|
|
|
2,000
|
|
|
-
|
|
|
32.25
|
|
|
12/21/2011
|
|
|
-
|
|
|
-
|
|
|
|
|
4,700
|
|
|
-
|
|
|
31.25
|
|
|
12/11/2012
|
|
|
-
|
|
|
-
|
|
|
|
|
5,000
|
|
|
-
|
|
|
38.91
|
|
|
12/17/2013
|
|
|
-
|
|
|
-
|
|
|
|
|
6,625
|
|
|
-
|
|
|
38.00
|
|
|
12/15/2014
|
|
|
-
|
|
|
-
|
|
|
|
|
6,395
|
|
|
-
|
|
|
38.13
|
|
|
12/14/2012
|
|
|
-
|
|
|
-
|
|
|
|
|
1,667
|
|
|
3,333
|
|
|
37.40
|
|
|
12/13/2013
|
|
|
800
|
|
$
|
22,256
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
Awards
|
|
Stock
Awards
|
|
Name
|
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
(1)
|
|
Number
of Securities Underlying Unexercised Options (#) Unexercisable
(2)
|
|
Option
Exercise Price
($)
|
|
Option
Expiration Date
|
|
Number
of Shares or Units of Stock That Have Not Vested (#)
(3)
|
|
Market
Value of Shares or Units of Stock That Have Not Vested ($)
(4)
|
R.
Louis Caceres
|
|
|
2,081
|
|
|
-
|
|
$
|
17.21
|
|
|
12/15/2009
|
|
|
-
|
|
|
-
|
|
|
|
|
3,000
|
|
|
-
|
|
|
32.25
|
|
|
12/21/2011
|
|
|
-
|
|
|
-
|
|
|
|
|
4,700
|
|
|
-
|
|
|
31.25
|
|
|
12/11/2012
|
|
|
-
|
|
|
-
|
|
|
|
|
5,000
|
|
|
-
|
|
|
38.91
|
|
|
12/17/2013
|
|
|
-
|
|
|
-
|
|
|
|
|
6,050
|
|
|
-
|
|
|
38.00
|
|
|
12/15/2014
|
|
|
-
|
|
|
-
|
|
|
|
|
6,395
|
|
|
-
|
|
|
38.13
|
|
|
12/14/2012
|
|
|
-
|
|
|
-
|
|
|
|
|
1,667
|
|
|
3,333
|
|
|
37.40
|
|
|
12/13/2013
|
|
|
800
|
|
|
22,256
|
|
(1) |
All
outstanding equity awards were issued under Bancorp’s 1992 Stock Option
Plan, Bancorp's 1999 Stock
|
(2) |
Option
Plan, or Bancorp’s 2005 Omnibus Stock
Plan.
|
(3) |
Unexercisable
options expiring in 2013 vest in equal amounts on December 13, 2008,
and
2009.
|
(4) |
Shares
that are not vested vest in equal amounts each on December 13, 2008,
2009,
2010, and 2011.
|
(5) |
Aggregate
market values are based upon the closing price of $27.82 on December
31,
2007, the last business day of the
year.
|
Grants
of Plan-Based Awards
The
following table sets forth for the Named Executive Officers information on
the
estimated potential awards that were possible for 2007 upon satisfaction of
the
conditions set for in the non-equity incentive plan described under "Annual
Incentives" on page 15. As previously noted, there were no equity-based grants
to Named Executive Officers in 2007.
Name
|
|
Date
|
|
Estimated
Possible Annual Payouts Under Non-Equity Incentive Plan Awards
(1)
|
|
Exercise
or Base Price of Option Awards ($/share)
|
|
Grant
Date Fair Value of Stock and Option Awards
|
|
|
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
|
|
|
|
Hunter
R. Hollar
|
|
|
2007
|
|
$
|
3,000
|
|
$
|
24,000
|
|
|
Unlimited
|
|
$
|
0.00
|
|
$
|
0.00
|
|
Philip
J. Mantua
|
|
|
2007
|
|
|
1,000
|
|
|
7,700
|
|
|
Unlimited
|
|
|
0.00
|
|
|
0.00
|
|
Frank
H. Small
|
|
|
2007
|
|
|
1,500
|
|
|
12,300
|
|
|
Unlimited
|
|
|
0.00
|
|
|
0.00
|
|
Daniel
J. Schrider
|
|
|
2007
|
|
|
1,000
|
|
|
8,400
|
|
|
Unlimited
|
|
|
0.00
|
|
|
0.00
|
|
R.
Louis Caceres
|
|
|
2007
|
|
|
1,000
|
|
|
8,400
|
|
|
Unlimited
|
|
|
0.00
|
|
|
0.00
|
|
Option
Exercises and Stock Vested
The
following table shows exercises of stock options by the Named Executive Officers
during 2007 and the value realized by them upon exercise.
|
|
Option
Awards
|
|
Stock
Awards
|
|
Name
|
|
Number
of Shares Acquired on Exercise
(#)
|
|
Value
Realized Upon Exercise
($)
|
|
Number
of Shares Acquired on Vesting
(#)
|
|
Value
Realized Upon Vesting
($)
|
|
Hunter
R. Hollar
|
|
|
9,000
|
|
$
|
114,660
|
|
|
500
|
|
$
|
14,845
|
|
Philip
J. Mantua
|
|
|
-
|
|
|
-
|
|
|
200
|
|
|
5,938
|
|
Frank
H. Small
|
|
|
4,500
|
|
|
52,104
|
|
|
300
|
|
|
8,907
|
|
Daniel
J. Schrider
|
|
|
-
|
|
|
-
|
|
|
200
|
|
|
5,938
|
|
R.
Louis Caceres
|
|
|
-
|
|
|
-
|
|
|
200
|
|
|
5,938
|
|
Pension
Benefits
The
following table shows the present value of the accumulated benefit under the
Sandy Spring Bancorp, Inc. Retirement Income Plan (Pension Plan) and the SERPs
for each Named Executive Officer.
Name
|
|
Plan
Name
|
|
Years
of Credited Service
|
|
Present
Value of Accumulated Benefit
(1)
|
Hunter
R. Hollar
|
|
Pension
Plan
|
|
17
|
|
$249,679
|
|
|
Supplemental
Executive Retirement Agreement
|
|
17
|
|
$1,584,204
|
Philip
J. Mantua
|
|
Pension
Plan
|
|
9
|
|
42,580
|
|
|
Supplemental
Executive Retirement Agreement
|
|
8
|
|
208,640
|
Frank
H. Small
|
|
Pension
Plan
|
|
17
|
|
284,256
|
|
|
Supplemental
Executive Retirement Agreement
|
|
17
|
|
1,231,583
|
Daniel
J. Schrider
|
|
Pension
Plan
|
|
19
|
|
55,423
|
|
|
Supplemental
Executive Retirement Agreement
|
|
18
|
|
130,002
|
R.
Louis Caceres
|
|
Pension
Plan
|
|
9
|
|
47,640
|
|
|
Supplemental
Executive Retirement Agreement
|
|
8
|
|
162,565
|
(1)
|
These
plans and related valuation methods and assumptions are included
in Note
14 to the Consolidated Financial Statements in the 2007 Annual Report
on
Form 10-K. See the description of the Supplemental Executive Retirement
Agreements on page 19.
|
Bancorp's
defined benefit, tax-qualified Pension Plan was generally available to employees
through December 31, 2007. Benefits under the Pension Plan are provided on
a
10-year certain and life basis and are not subject to deduction for Social
Security or other offset amounts. Earnings covered by the Pension Plan are
total
wages, including elective pre-tax contributions under Section 401(k) of the
Internal Revenue Code, overtime pay, bonuses, and other cash compensation,
which
for the Named Executive Officers correspond, in general, to the total of the
amounts in the "Salary" and "Non-Equity Incentive Plan Compensation" columns
in
the Summary Compensation Table, up to a total of $225,000. The Pension Plan
benefit equals the sum of three parts: (a) the benefit accrued as of December
31, 2000, based on the formula of 1.5% of highest five-year average salary
as of
that date times years of service as of that date, plus (b) 1.75% of each year's
earnings after December 31, 2000 (1.75% of career average earnings) though
December 31, 2005, and (c) 1.0% of each year's earnings thereafter. In addition,
if the participant's age plus years of service as of January 1, 2001 equal
at
least 60, and the participant had at least 15 years of service at that date,
he
or she will receive an additional benefit of 1% of year 2000 earnings for each
of the first 10 years of service completed after December 31, 2000. The Pension
Plan permits early retirement at age 55 after at least 10 years of service
completed after December 31, 2000. The Pension Plan was frozen as of December
31, 2007.
Nonqualified
Deferred Compensation
The
following table summarizes the contributions and earnings for the Named
Executive Officers under the nonqualified deferred compensation
plan.
Name
|
|
Executive
Contributions in Last Fiscal Year
|
|
Registrant
Contributions in Last Fiscal Year
|
|
Aggregate
Earnings in Last Fiscal Year
|
|
Aggregate
Withdrawals/
Distributions
|
|
Aggregate
Balance at Last Fiscal Year End
(1)
|
|
Hunter
R. Hollar
|
|
|
-
|
|
|
-
|
|
$
|
17,943
|
|
|
-
|
|
$
|
227,335
|
|
Philip
J. Mantua
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Frank
H. Small
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Daniel
J. Schrider
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
R.
Louis Caceres
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
(1)
|
Mr.
Hollar participates in a nonqualified, unfunded, deferred compensation
plan, under which he last deferred earnings in 2007. Annual earnings
accrue at the prime rate in effect on December 31st of the prior
year, or
7.25% for 2007. Earnings include $2,258 in preferential interest.
Aggregate earnings have been included in compensation in the summary
compensation tables in this report and in previous years.
|
Potential
Payments upon Termination
The
following table summarizes the payments to which Named Executive Officers are
entitled upon a termination of employment in different, specified circumstances
under their employment agreements, the Supplemental Executive Retirement
Agreements, the Option Plans, and the 2005 Omnibus Stock Plan. Benefits payable
under the Pension Plan or 401(k) Plan are not included.
POTENTIAL
PAYMENTS UPON TERMINATION
|
|
|
|
ASSUMING
TERMINATION ON THE LAST DAY OF 2007
|
|
|
|
|
|
Hunter
R.
|
|
Philip
J.
|
|
Frank
H.
|
|
R.
Louis
|
|
Daniel
J.
|
|
|
|
Hollar
|
|
Mantua
|
|
Small
|
|
Caceres
|
|
Schrider
|
|
Termination
without a Change in Control:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement:
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employment
agreements
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
Supplemental
executive retirement agreements (2)
|
|
$
|
1,584,204
|
|
$
|
93,888
|
|
$
|
1,159,734
|
|
$
|
71,564
|
|
$
|
130,002
|
|
Equity
awards
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Total
|
|
$
|
1
,584,204
|
|
$
|
93,888
|
|
$
|
1,159,734
|
|
$
|
71,564
|
|
$
|
130,002
|
|
Death:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employment
agreements (3)
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
Supplemental
executive retirement agreements (4)
|
|
$
|
1,584,204
|
|
$
|
208,640
|
|
$
|
1
,159,734
|
|
$
|
159,032
|
|
$
|
130,002
|
|
Equity
awards (5)
|
|
$
|
55,640
|
|
$
|
22,256
|
|
$
|
33,384
|
|
$
|
22,256
|
|
$
|
22,256
|
|
Total
|
|
$
|
1
,639,844
|
|
$
|
230,896
|
|
$
|
1,193,118
|
|
$
|
181,288
|
|
$
|
152,258
|
|
Disability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employment
agreements (6)
|
|
$
|
571,957
|
|
$
|
194,819
|
|
$
|
474,377
|
|
$
|
234,096
|
|
$
|
248,066
|
|
Supplemental
executive retirement agreements (7)
|
|
$
|
1,042,965
|
|
$
|
137,359
|
|
$
|
763,514
|
|
$
|
104,699
|
|
$
|
85,587
|
|
Equity
awards (5)
|
|
$
|
55,640
|
|
$
|
22,256
|
|
$
|
33,384
|
|
$
|
22,256
|
|
$
|
22,256
|
|
Total
|
|
$
|
1,670,562
|
|
$
|
354,433
|
|
$
|
1,271,275
|
|
$
|
361,052
|
|
$
|
355,909
|
|
Voluntary
termination by executive officer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employment
agreements
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
Supplemental
executive retirement agreements (8)
|
|
$
|
1,584,204
|
|
$
|
93,888
|
|
$
|
1,159,734
|
|
$
|
71,564
|
|
$
|
130,002
|
|
Equity
awards
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Total
|
|
$
|
1,584,204
|
|
$
|
93,888
|
|
$
|
1,159,734
|
|
$
|
71,564
|
|
$
|
130,002
|
|
Termination
by Bancorp with just cause
|
|
|
None
|
|
|
None
|
|
|
None
|
|
|
None
|
|
|
None
|
|
Termination
by Bancorp without just cause or by executive with Good
Reason:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employment
agreements (9)
|
|
$
|
1,516,224
|
|
$
|
309,229
|
|
$
|
460,625
|
|
$
|
213,876
|
|
$
|
153,892
|
|
Supplemental
executive retirement agreements (10)
|
|
$
|
1,584,204
|
|
$
|
93,888
|
|
$
|
1,159,734
|
|
$
|
71,564
|
|
$
|
130,002
|
|
Equity
awards
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Total
|
|
$
|
3
,100,428
|
|
$
|
403,117
|
|
$
|
1,620,359
|
|
$
|
285,440
|
|
$
|
283,894
|
|
Termination
in connection with a Change in Control:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employment
agreements-compensation and benefits (11)
|
|
$
|
3,172,469
|
|
$
|
1,015,967
|
|
$
|
2,564,092
|
|
$
|
1,185,581
|
|
$
|
1,257,503
|
|
Employment
agreements-tax gross up (12)
|
|
$
|
1,146,779
|
|
$
|
591,567
|
|
$
|
1,236,893
|
|
$
|
648,370
|
|
$
|
609,409
|
|
Supplemental
executive retirement agreements (13)
|
|
$
|
1,584,204
|
|
$
|
208,640
|
|
$
|
1,159,734
|
|
$
|
159,032
|
|
$
|
130,002
|
|
Equity
awards (5)
|
|
$
|
55,640
|
|
$
|
22,256
|
|
$
|
33,384
|
|
$
|
22,256
|
|
$
|
22,256
|
|
Total
|
|
$
|
5,959,093
|
|
$
|
1,838,429
|
|
$
|
4,994,103
|
|
$
|
2,015,239
|
|
$
|
2,019,170
|
|
(1)
|
Does
not include benefits payable under Bancorp's pension plan.
|
|
|
|
|
|
|
|
|
|
|
(2)
|
All
executives are under age 65 and are not yet eligible for regular
retirement under these agreements. Mr. Small is eligible for early
retirement. Amounts shown are the vested accrued benefit accounts.
See
"Supplemental Executive Retirement Agreements" on page
19.
|
|
|
(3)
|
Base
salary is paid through the last day of the month of death.
|
|
|
|
|
|
|
|
|
|
|
(4)
|
Bancorp
acquired insurance policies on the lives of the executives who have
entered these agreements. If such a policy is in effect at the date
of
death, Bancorp receives the insurance benefit and the executive's
beneficiaries are entitled to the greater of (a) the retirement benefits
calculated as if the executive retired on the date of death, or (b)
the
benefits under a fifteen-year annuity that may be purchased for three
times the executives final average pay. If the policy is not in effect,
the executive's beneficiaries are entitled to the accrued benefit
at the
date of death payable in 180 monthly installments. See "Supplemental
Executive Retirement Agreement" on page 19.
|
|
|
(5)
|
Includes
(a) the market value of restricted stock for which vesting is accelerated
and (b) the market value of shares issuable upon the exercise of
options
for which vesting is accelerated less the option exercise price.
|
|
|
(6)
|
The
employment agreements provide for continuation of salary, net of
payments
under Bancorp's disability policies, plus benefits for the remaining
term
of the agreements. Amounts shown are not discounted.
|
|
|
(7)
|
The
disability benefits under the agreements are the accrued benefits
payable
in 180 monthly installments. The amounts shown are the present values
of
those payments discounted at an annual rate of 6.5%.
|
|
|
(8)
|
The
benefits in the event of a voluntary termination before early retirement
age (age 60) and after ten years of service are the payments under
a
15-year annuity that may be purchased with the vested accrued benefit.
Full vesting occurs at 15 years of service. See "Supplemental Executive
Retirement Agreement" on page 19.
|
|
|
(9)
|
The
executive is entitled to salary and bonus for the remaining term
of the
agreement in the event of termination by Bancorp without just cause
or by
the executive with Good Reason.
|
|
|
(10)
|
Benefits
are the same as those payable in the event of voluntary termination
by the
executive.
|
|
|
|
|
|
|
(11)
|
Consist
of 2.99 times salary and other compensation in a lump sum and the
value of
three calendar years of health and welfare benefits to which the
executives are entitled in the event of termination by Bancorp without
just cause or by the executive with Good Reason within the period
beginning six months before and ending two years after a change in
control. An executive also is entitled to these benefits in the event
he
terminates his employment for any reason within the sixty-day period
that
begins six months after the closing of an agreement that triggered
the
change in control. See "Employment Agreements" on page
18.
|
|
|
(12)
|
The
executive is entitled to a payment to offset the federal excise tax
on
excess parachute payments. This tax is payable if the value of change
in
control related payments exceeds three times the executive's five-year
average compensation. The amount subject to the tax is the excess
of the
value of the change in control payments in excess of the average
compensation.
|
|
|
(13)
|
The
amounts shown are the accrued benefits. The agreements provide change
in
control benefits if the executive's employment is terminated without
just
cause, or the executive terminates employment with good reason, in
the
period beginning six months before and ending two years after a change
in
control. The benefits provided are retirement benefits calculated
as if
the termination was the retirement date. If the change in control
was
approved in advance by a majority of the continuing directors, the
payments begin at age 65 (or 60 if early retirement is elected).
If the
change in control was not so approved, the payments begin in the
month
following termination of employment. See "Supplemental Executive
Retirement Agreement" on page 19.
|
PROPOSAL
III:
The
Ratification of the Appointment of
McGladrey
& Pullen, LLP as the Independent Registered Public Accounting Firm for the
Year 2008
In
accordance with established policy, the board is submitting this proposal to
the
vote of the shareholders for ratification. In the event the appointment is
not
ratified by a majority of the shareholders it is anticipated that no change
in
auditors will be made for the current year because of the difficulty and expense
of making a change so long after the beginning of the year, but the vote will
be
considered in connection with the auditor appointment for 2009.
The
affirmative vote of a majority of the shares of common stock present in person
or represented by proxy and entitled to vote at the annual meeting is required
to ratify the appointment of McGladrey & Pullen, LLP as Bancorp's
independent registered public accounting firm for 2008. Therefore, abstentions
effectively count as votes against this proposal.
Representatives
of the independent registered public account firm will be present at the annual
meeting and will be given the opportunity to make a statement, if they desire,
and be available to respond to appropriate questions.
THE
BOARD RECOMMENDS A VOTE "FOR" THE RATIFICATION OF MCGLADREY & PULLEN, LLP AS
THE BANCORP'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR
2008.
Audit
and Non-Audit Fees
The
following table presents fees for professional audit services rendered by
McGladrey & Pullen, LLP for the audit of the annual financial statements of
Sandy Spring Bancorp, Inc., and subsidiaries for the year ended December 31,
2007 and December 31, 2006, and fees billed for other services rendered by
McGladrey & Pullen, LLP and RSM McGladrey, Inc. (an affiliate of McGladrey
& Pullen, LLP).
|
|
2007
|
|
2006
|
|
Audit
Fees(1)
|
|
$
|
392,134
|
|
$
|
322,250
|
|
Audit-Related
Fees(2)
|
|
|
56,550
|
|
|
48,346
|
|
Tax
Services(3)
|
|
|
26,082
|
|
|
163,508
|
|
(1) |
Audit
fees consist of fees for professional services rendered for the audit
of
Bancorp's consolidated financial statements and review of financial
statements included in Bancorp's quarterly reports on Form 10-Q and
services normally provided by the independent registered public accounting
firm in connection with statutory and regulatory filings or
engagements.
|
(2) |
Audit
related fees were for services related to employee benefit plan audits,
due diligence related to mergers and acquisitions, and consultation
concerning financial accounting and reporting
standards.
|
(3) |
Tax
services fees for a merger related tax opinion, due diligence related
to
mergers and for compliance tax services including tax planning and
advice
and preparation of tax returns.
|
Audit
Committee's Preapproval Policies and Procedures for
Services
The
Audit
Committee is required to preapprove all auditing services and permitted
non-audit services provided by Bancorp's independent registered public
accounting firm. There is an exception for preapproval of non-audit services
if
the aggregate amount of all such non-audit services provided to Bancorp
constitutes not more than 5% of the total amount of revenues paid by it to
its
independent registered public accounting firms during the fiscal year in which
the non-audit services are provided; such services were not recognized by
Bancorp at the time of the engagement to be non-audit services; and the
non-audit services are promptly brought to the attention of the committee and
approved prior to the completion of the audit by the committee or by one or
more
members of the committee to whom authority to grant such approval has been
delegated by the committee. All audit services and permitted non-audit services
to be performed by Bancorp's independent registered public accounting firm
have
been preapproved by the Audit Committee as required by SEC regulations and
the
Audit Committee's charter without exception.
Report
of the Audit Committee
Bancorp's
Audit Committee is appointed by the board of directors to assist the Board
in
monitoring the integrity of the financial statements, compliance with legal
and
regulatory requirements, and the independence and performance of internal and
external auditors. The committee (1) has reviewed and discussed the audited
financial statements included in Bancorp's 2007 Annual Report on Form 10-K
with
management; (2) has discussed with the Bancorp's independent registered public
accounting firm the matters required to be discussed by Statement of Auditing
Standards 61 (Communication with Audit Committees); and (3) has received the
written disclosures and the letter from the Bancorp's independent registered
public accounting firm required by Independence Standards Board Standard No.
1
(Independence Discussions with Audit Committees) and discussed independence
with
the Bancorp's independent registered public accounting firm. Based upon this
review, discussion, disclosures, and materials described in (1) through (3),
the
committee recommended to the board of directors that the audited financial
statements be included in the 2007 Annual Report on Form 10-K. The committee
also has considered whether the amount and nature of non-audit services rendered
by the Bancorp's independent registered public accounting firm are consistent
with its independence.
February
27, 2008 Pamela
A.
Little, Chairman
John
Chirtea
Mark
E.
Friis
Charles
F. Mess
Craig
A.
Ruppert
By
order
of the board of directors,
Ronald
E.
Kuykendall
General
Counsel & Secretary
Olney,
Maryland
March
18,
2008
Appendix
A
Proposed
Amendments to Bancorp's Articles of Incorporation Regarding Eliminating the
Provisions Classifying the Terms of Directors
ARTICLE
IX
Directors
A.
Number.
The
initial number of directors of the Corporation shall be eleven (11), which
number may be increased or decreased from time to time by vote the Board of
Directors pursuant to the Corporation's Bylaws, but shall never be less than
the
minimum number permitted by the General Laws of the State of Maryland now or
hereafter in force or greater than fifteen (15) (exclusive of directors, if
any,
to be elected by holders of preferred stock of the Corporation, voting
separately as a class).
B.
Classified
Board. The
Board of Directors of the Corporation shall be divided into three classes as
nearly equal in number as the then total number of directors constituting the
entire Board of Directors shall penn it, which classes shall be designated
Class
1,
Class
11
and
Class III. At each annual meeting of shareholders beginning in 1992, successors
to the class of directors whose term expires at such annual meeting shall be
elected for a term of three years.
(1)
The
following directors shall be assigned to Class I and shall serve until the
1994
annual meeting of shareholders:
Andrew
N. Adams, Jr.
Robert
L. Mitchell
Robert
L. Orndorff, Jr.
(2)
The
following directors shall be assigned to Class 11
and
shall serve until the 1993 annual meeting of shareholders:
William
M. Canby
John
Chirtea
Willard
H. Derrick
Hunter
R. Hollar
(3)
The
following directors shall be assigned to Class III and shall serve until the
1992 annual
meeting of shareholders.
Charles
F. Mess
Louisa
W. Riggs
Francis
Snowden
W.
Drew Stabler
Notwithstanding
the foregoing, a B.
Term. At each annual meeting, the shareholders shall elect directors to hold
office until the next annual meeting.
A
director whose term shall expire at any annual meeting shall continue to serve
until such time as his successor shall have been duly elected and shall have
qualified unless his position on the Board of Directors shall have been
abolished by action taken to reduce the size of the Board of Directors prior
to
said meeting.
Should
the number of directors of the Corporation be reduced, the directorship(s)
eliminated shall be allocated among classes as appropriate so that the number
of
directors in each class is as nearly equal as possible. The Board of Directors
shall designate, by the name of the incumbent(s), the position(s) to be
abolished. Notwithstanding the foregoing, no decrease in the number of directors
shall have the effect of shortening the term of any incumbent director. Should
the number of directors of the Corporation be increased, the additional
directorships shall be allocated among classes as appropriate so that the number
of directors in each class is as nearly equal as possible.
Whenever
the holders of anyone or more series of preferred stock of the Corporation
shall
have the right, voting separately as a class, to elect one or more directors
of
the Corporation, the Board of Directors shall consist of said directors so
elected in addition to the number of directors fixed as provided above in this
Article IX.
Notwithstanding
the foregoing, and except as otherwise may be required by applicable law,
whenever the holders of anyone or more series of preferred stock of the
Corporation shall have the right, voting separately as a class, to elect one
or
more directors of the Corporation, the terms of the director or directors
elected by such holders shall expire at the next succeeding annual meeting
of
shareholders.
REVOCABLE
PROXY
SANDY
SPRING BANCORP, INC.
ANNUAL
MEETING OF SHAREHOLDERS
APRIL
23, 2008
The
undersigned hereby constitutes and appoints Solomon Graham and David E.
Rippeon and each of them the proxies of the undersigned, with full power of
substitution, to attend the annual meeting of shareholders (the “Annual
Meeting”) of Sandy Spring Bancorp, Inc. (“Bancorp”) to be held at the Ten Oaks
Ballroom, 5000 Signal Bell Lane, Clarksville, MD. on Wednesday, April 23,
2008
at 3:00 p.m. Eastern Time, or at any adjournment thereof, and to vote all
the
shares of stock of Bancorp that the undersigned may be entitled to vote,
upon
the following matters:
(Continued
and to be signed on the reverse side)
ANNUAL
MEETING OF SHAREHOLDERS
SANDY
SPRING BANCORP, INC.
APRIL
23,
2008
Please
date, sign and mail
your
proxy card in the
envelope
provided as soon
as
possible.
Please
detach along perforated line and mail in the envelope provided.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF ALL DIRECTOR
NOMINEES AS SHOWN IN ITEM I AND “FOR” ITEMS 2 AND 3. PLEASE SIGN,
DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK
YOUR VOTE
IN BLUE OR BLACK INK AS SHOWN HERE x
|
1. |
The
election as directors of all nominees listed below:
|
|
|
|
|
NOMINEES
|
|
|
o
|
|
FOR
ALL NOMINEES
|
|
O
|
|
Mark
E. Friis
|
o
|
|
WITHHOLD
AUTHORITY
|
|
O
|
|
Hunter
R. Hollar
|
|
|
FOR
ALL NOMINEES
|
|
O
|
|
Pamela
A. Little
|
o
|
|
FOR
ALL EXCEPT
|
|
O
|
|
Craig
A. Ruppert
|
|
|
(See
instructions below)
|
|
|
|
|
|
|
|
|
|
|
|
INSTRUCTION: |
To
withhold authority to vote for any individual nominee(s), mark
“FOR ALL EXCEPT” and fill in the circle next to each
nominee you wish to withhold, as shown here: l
|
2. |
The
amendment of Bancorp’s
articles of
incorporation to eliminate the provision classifying its board
of
directors.
|
FOR
|
|
AGAINST
|
|
ABSTAIN
|
o
|
|
o
|
|
o
|
3. |
The
ratification of appointment of McGladrey & Pullen, LLP, as the
independent registered public accounting firm for 2008.
|
FOR
|
|
AGAINST
|
|
ABSTAIN
|
o
|
|
o
|
|
o
|
4. |
The
transaction of such other business as may properly come before
the Annual
Meeting or adjournment thereof.
|
THIS
PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS MARKED HEREIN. IF
NO
INSTRUCTIONS TO THE CONTRARY ARE MARKED HEREIN, THIS PROXY WILL BE VOTED
FOR THE
ELECTION OF DIRECTORS, FOR THE AMENDMENT OF THE ARTICLES OF
INCORPORATION, FOR THE RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM, AND AS DETERMINED BY A MAJORITY OF THE
BOARD
OF DIRECTORS AS TO OTHER MATTERS.
THIS
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
The
undersigned shareholder hereby acknowledges receipt of a copy of the
accompanying Notice of Annual Meeting of Shareholders and Proxy Statement
and
hereby revokes any proxy or proxies previously given. This proxy may be revoked
at any time prior to its exercise.
PLEASE
COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
To
change
the address on your account, please check the box at right and indicate your
new
address in the address space above. Please note that changes to the registered
name(s) on the account may not be submitted via this method. o
Signature
of Shareholder
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Date:
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Signature
of Shareholder
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Date:
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Note: |
Please
sign exactly as your name or names appear on this Proxy. When shares
are
held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full
title as
such. If the signer is a corporation, please sign full corporate
name by
duly authorized officer, giving full title as such. If signer is
a
partnership, please sign in partnership name by authorized person.
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