1ST
CONSTITUTION BANCORP
P.O.
Box 634
2650
Route 130 North
Cranbury,
New Jersey 08512
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
TO
BE HELD THURSDAY, MAY 21, 2009
To Our
Shareholders:
The 2009
Annual Meeting of Shareholders of 1st Constitution Bancorp will be held on
Thursday, May 21, 2009 at 3:00 p.m. Eastern Time at the Forsgate Country Club,
375 Forsgate Drive, Monroe Township, New Jersey.
At the
Annual Meeting, shareholders will be asked to consider and vote upon the
following matters:
1.
|
The
election of two directors to the Company’s Board of
Directors;
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2.
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The
ratification of the selection of Beard Miller Company LLP as the Company’s
independent registered public accounting firm for the 2009 fiscal
year;
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3.
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The
advisory vote on the compensation of the Company’s named executive
officers as determined by the Compensation Committee;
and
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4.
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The
conduct of other business if properly
raised.
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Shareholders
of record at the close of business on March 23, 2009 are entitled to notice of,
and to vote at, the Annual Meeting. Whether or not you contemplate
attending the Annual Meeting, we suggest that you promptly execute the enclosed
proxy and return it to the Company. You may revoke your proxy at any time prior
to the exercise of the proxy by delivering to the Company a later proxy or by
delivering a written notice of revocation to the Company.
The Board
of Directors of the Company believes that the election of the nominees and the
proposals being submitted to the shareholders are in the best interest of the
Company and its shareholders and urges you to vote in favor of the nominees and
the proposals.
Important notice regarding the
availability of proxy materials for the 2009 Annual Meeting of
Shareholders: The Proxy Statement for the 2009 Annual Meeting of
Shareholders and 2008 Annual Report to Shareholders are available at:
http://www.cfpproxy.com/4584.
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By
Order of the Board of Directors
|
|
|
|
|
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ROBERT
F. MANGANO
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|
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President
and Chief Executive Officer
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Cranbury,
New Jersey
April 13,
2009
To
assure your representation at the Annual Meeting, please vote your proxy
as promptly as possible, whether or not you plan to attend the Annual
Meeting. The prompt return of proxies will save the Company the
expense of further requests for proxies to insure a quorum at the Annual
Meeting. A stamped self-addressed envelope is enclosed for your
convenience.
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1ST
CONSTITUTION BANCORP
P.O.
Box 634
2650
Route 130 North
Cranbury,
New Jersey 08512
PROXY
STATEMENT FOR ANNUAL MEETING
OF
SHAREHOLDERS TO BE HELD ON MAY 21, 2009
GENERAL
PROXY STATEMENT INFORMATION
This
proxy statement is furnished in connection with the solicitation of proxies by
the Board of Directors (the “Board of Directors” or the “Board”) of 1st
Constitution Bancorp (the “Company”), for use at the 2009 annual meeting of
shareholders (the “Annual Meeting”) to be held on May 21, 2009, at 3:00 p.m.
Eastern Time, at the Forsgate Country Club, 375 Forsgate Drive, Monroe Township,
New Jersey and at any postponement or adjournment of the Annual
Meeting.
The first
date on which this proxy statement and the enclosed form of proxy are being sent
to the shareholders of the Company is on or about April 13, 2009.
The
Company’s principal executive office is P.O. Box 634, 2650 Route 130 North,
Cranbury, New Jersey 08512. 1st Constitution Bank is a subsidiary of
the Company and is sometimes referred to as the “Bank.”
Outstanding
Securities and Voting Rights and Procedures
The Board
of Directors fixed the close of business of the Company (5:00 p.m. Eastern Time)
on March 23, 2009 as the record date and time for determining shareholders
entitled to notice of, and to vote at, the Annual Meeting. Only
shareholders of record as of that date and hour will be entitled to notice of,
and to vote at, the Annual Meeting.
On the
record date, there were 4,226,943 shares of common stock of the Company
outstanding and eligible to be voted at the Annual Meeting. Each share is
entitled to one vote on each matter properly brought before the Annual
Meeting. Other than Company common stock, there are no other
outstanding securities of the Company entitled to vote at the Annual
Meeting.
If the enclosed proxy card is properly
signed by a shareholder and is not revoked, the shares represented thereby will
be voted at the Annual Meeting in the manner specified on the proxy. However, if
a proxy solicited by the Board of Directors does not specify how it is to be
voted, it will be voted as the Board recommends, that is, (a) “FOR” the election
of two nominees for director named in this proxy statement; (b) “FOR” the
ratification of the selection of Beard Miller Company LLP as the Company’s
independent registered public accounting firm for the 2009 fiscal year; (c)
“FOR” the advisory vote on the compensation of the Company’s named executive
officers and (d) in connection with the conduct of other business, if properly
raised, in accordance with the judgment of the person or persons voting the
proxy. If, for any reason, either nominee for director is unable or unavailable
to serve or for good cause will not serve, an event that we do not anticipate,
the shares represented by the accompanying proxy will be voted for a substitute
nominee designated by the Board or the size of the Board may be
reduced.
If any
other matters are properly presented at the Annual Meeting for consideration,
such as consideration of a motion to adjourn the Annual Meeting to another time
or place, the persons named as proxies will have discretion to vote on those
matters according to their best judgment to the same extent as the person
delivering the proxy would be entitled to vote, unless the shareholder otherwise
specifies in the proxy. At the date of this proxy statement, we do
not anticipate that any other matters will be raised at the Annual
Meeting.
Required
Vote
The
presence, in person or by proxy, of the holders of a majority of the shares
entitled to vote generally is necessary to constitute a quorum at the Annual
Meeting. Abstentions and broker “non-votes” are counted as present and entitled
to vote for purposes of determining a quorum. A broker “non-vote” occurs when a
nominee holding shares for a beneficial owner does not vote on a particular
proposal because the nominee does not have discretionary power with respect to
that item and has not received instructions from the beneficial
owner.
Certain
proposals, such as the election of directors and the ratification of the
appointment of auditors, are considered “routine” matters and brokers generally
may vote on behalf of beneficial owners who have not furnished voting
instructions. For “non-routine” proposals, such as the approval of equity
compensation plans and amendments, brokers may not vote on the proposals unless
they have received voting instructions from the beneficial owner.
The
affirmative vote of a plurality of the votes cast at the Annual Meeting is
required to elect a director, the affirmative vote of a majority of the votes
cast at the Annual Meeting is required to ratify the selection of Beard Miller
Company LLP as the Company’s independent registered public accounting firm for
the 2009 fiscal year and the affirmative vote of the majority of votes cast at
the Annual Meeting is required to approve the advisory proposal on the
compensation of the Company’s named executive officers as determined by the
Compensation Committee. Thus, an abstention or a broker non-vote will
have no effect on the outcome of the vote on the election of a director or the
ratification of the appointment of the Company’s independent registered public
accounting firm at the Annual Meeting or the advisory proposal on the
compensation of the Company’s named executive officers as determined by the
Compensation Committee.
Election
inspectors appointed for the Annual Meeting will tabulate the votes cast by
proxy or in person at the meeting. The election inspectors will determine
whether or not a quorum is present. Votes will NOT be considered cast if the
shares are not voted for any reason, including an abstention indicated as such
on a written proxy or ballot, if directions are given in a written proxy to
withhold votes, or if the votes are withheld by a broker.
Revocability
of Proxies
Any
shareholder giving a proxy has the right to attend and vote at the Annual
Meeting in person. If your shares are held in the name of a bank, broker, or
other holder of record, you must obtain a proxy executed in your favor from the
holder of record to be able to vote at the Annual Meeting. If you submit a proxy
and then wish to change your vote or vote in person at the Annual Meeting, you
will need to revoke the proxy that you have submitted. You can revoke your proxy
at any time before it is exercised by delivery of a properly executed,
later-dated proxy or a written revocation of your proxy. A later-dated proxy or
written revocation must be received before the meeting by the Corporate
Secretary of the Company, at P.O. Box 634, 2650 Route 130 North, Cranbury, New
Jersey 08512, or it must be delivered to the Corporate Secretary at the Annual
Meeting before proxies are voted.
Multiple
Copies of Annual Report and Proxy Statement
When more
than one holder of Company common stock shares the same address, we may deliver
only one annual report and one proxy statement to that address unless we have
received contrary instructions from one or more of those
shareholders. Similarly, brokers and other intermediaries holding
shares of Company common stock in “street name” for more than one beneficial
owner with the same address may deliver only one annual report and one proxy
statement to that address if they have received consent from the beneficial
owners of the stock.
We will
deliver promptly, upon written or oral request, a separate copy of the annual
report and proxy statement to any shareholder, including a beneficial owner of
stock held in “street name,” at a shared address to which a single copy of
either of those documents was delivered. You may make such a request
in writing to Joseph M. Reardon, Senior Vice President and Treasurer, 1st
Constitution Bancorp, at P.O. Box 634, 2650 Route 130 North, Cranbury, New
Jersey 08512, or by calling Mr. Reardon at (609) 655-4500. This proxy statement
and the annual report are available at:
http://www.cfpproxy.com/4584.
You may
also contact Mr. Reardon at the address or telephone number above if you are a
shareholder of record of the Company and you wish to receive a separate annual
report and proxy statement in the future, or if you are currently receiving
multiple copies of our annual report and proxy statement and want to request
delivery of a single copy in the future. If your shares are held in “street
name” and you want to increase or decrease the number of copies of our annual
report and proxy statement delivered to your household in the future, you should
contact the broker or other intermediary who holds the shares on your
behalf.
Solicitation
of Proxies
This
proxy solicitation is being made by the Board. The cost of the solicitation will
be borne by the Company. In addition to the use of the mails, proxies
may be solicited personally or by telephone, facsimile, email, or other
electronic means by officers, directors and employees of the
Company. We will not specially compensate those persons for such
solicitation activities. We may retain a proxy-soliciting firm to
assist us in soliciting proxies. If so, we would pay the
proxy-soliciting firm a fee and reimburse it for certain out-of-pocket
expenses. Arrangements may be made with brokerage houses and other
custodians, nominees and fiduciaries for forwarding solicitation materials to
the beneficial owners of common stock held of record by such persons, and we
will reimburse such persons for their reasonable expenses incurred in forwarding
the materials.
Smaller
Reporting Company
The
Company has elected to prepare this proxy statement and other annual and
periodic reports as a “smaller reporting company” consistent with rules of the
Securities and Exchange Commission (the “SEC”) effective February 4,
2008.
ITEM
1 - ELECTION OF DIRECTORS
The
Company’s Board of Directors is divided into three separate classes of
directors, designated as Class I, Class II, and Class III. Directors
in Class I are serving a three-year term which expires in 2009; directors in
Class II are serving a three-year term which expires in 2010; and the director
in Class III is serving a three-year term which expires in 2011, and in each
case until their successors are duly elected and qualified. At each
annual meeting, one class of directors will be elected for terms of three years
to succeed those directors in the class whose terms then expire.
The
Company’s certificate of incorporation requires each class of directors to
consist as nearly as possible of one-third of the authorized number of
directors. In the event that a nominee stands for election as a
director at an annual meeting as a result of an increase by the Board of
Directors of the authorized number of directors and such nominee is to serve in
a class of directors whose term is not expiring at such annual meeting, the
nominee, if elected, may stand for an initial term expiring concurrent with the
expiration of the term of the directors in the class to which such nominee is
elected as a director.
The
director nominees for election at the Annual Meeting are the two nominees for
election as Class I directors, Charles S. Crow, III and David C. Reed, who, if
elected, will serve a three-year term expiring in 2012 and until their
successors are duly elected and qualified.
The
number of nominees was determined by the Board of Directors pursuant to the
Company’s by-laws. If, for any reason, either nominee for director is
unable or unavailable to serve or for good cause will not serve, the shares
represented by the accompanying proxy will be voted for a substitute nominee
designated by the Board or the size of the Board may be reduced. The
Board believes that the named nominees are available, and, if elected, will be
able to serve. The Board of Directors recommends that shareholders
vote for such nominees for directors.
DIRECTORS
AND EXECUTIVE OFFICERS
The
following tables set forth (i) the name, age and class of the nominees for
election to director, the names, ages and classes of the directors whose terms
extend beyond 2009 and the name and age of the executive officer of the Company
who does not also serve as director of the Company, (ii) the other positions and
offices presently held by such persons with the Company, if any, (iii) the
period during which such persons have served on the Board of Directors, if
applicable, (iv) the expiration of each director’s term as director and (v) the
principal occupations and employment of such persons during the past five years.
Additional biographical information for each person follows the
tables.
NOMINEE
FOR ELECTION AT 2009 ANNUAL MEETING
Name
and Position with
the
Company, if any
|
Age
|
Class
|
Director
Since
|
Expiration
of Term
|
Principal
Occupation
|
|
|
|
|
|
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Charles
S. Crow, III, Chairman of the Board |
59
|
I
|
1999
|
2009
|
Attorney,
Crow & Associates, Princeton, New Jersey
|
|
|
|
|
|
|
David
C. Reed, Director
|
58
|
I
|
2004
|
2009
|
CEO,
Mapleton Nurseries/ Kingston, New Jersey and Managing Director, Reed &
Company/Princeton, New
Jersey
|
DIRECTORS
WHOSE TERMS EXTEND BEYOND THE 2009 ANNUAL MEETING
Name
and Position with
the
Company, if any
|
Age
|
Class
|
Director
Since
|
Expiration
of Term
|
Principal
Occupation
|
|
|
|
|
|
|
William
M. Rue, Director and
Corporate
Secretary
|
61
|
II
|
1999
|
2010
|
President,
Rue Insurance/Trenton, New Jersey and President, Rue Financial Services,
Inc./Trenton, New Jersey
|
|
|
|
|
|
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Frank
E. Walsh, III, Director
|
42
|
II
|
1999
|
2010
|
Vice
President, Jupiter Capital Management/Morristown, New
Jersey
|
|
|
|
|
|
|
Robert
F. Mangano, Director,
President
and Chief
Executive
Officer
|
63
|
III
|
1999
|
2011
|
President
and Chief Executive
Officer,
1st Constitution
Bank/Cranbury,
New Jersey
|
EXECUTIVE
OFFICER WHO IS NOT A DIRECTOR
Name
and Position with
the
Company
|
Age
|
Principal
Occupation
|
|
|
|
Joseph
M. Reardon,
Senior
Vice President and Treasurer
|
56
|
Senior
Vice President and Treasurer
1st
Constitution Bank/Cranbury, New
Jersey
|
Directors
Set forth
below are the names of, and certain biographical information regarding, the
directors of the Company.
Robert F. Mangano is the
President and Chief Executive Officer of the Company and of the Bank. Prior to
joining the Bank in 1996, Mr. Mangano was President and Chief Executive Officer
of Urban National Bank, a community bank in the northern part of New Jersey for
a period of three years and a Senior Vice President of another bank for one
year. Prior to such time, Mr. Mangano held a senior position with Midlantic
Corporation for 21 years. Mr. Mangano is a director of the Englewood Hospital
Medical Center and serves as Vice Chairman of the Board of Englewood Hospital
Medical Center.
Charles S. Crow, III has
served as the Chairman of the Board of the Company and of the Bank since March
2005. Mr. Crow is a partner in the law firm of Crow & Associates
in Princeton, New Jersey. From January 1, 1992 to November 30, 1998, Mr. Crow
was a partner in the law firm of Crow & Tartanella in Somerset, New
Jersey. Mr. Crow serves as a director of each of Robeco-Sage
Triton Fund, L.L.C. and Robeco-Sage Multi-Strategy Fund, L.L.C., each of which
is a closed-end, non-diversified, management investment company that is
registered under the Investment Company Act of 1940, as amended.
David C. Reed is a Certified
Public Accountant with senior executive experience. Mr. Reed has been the Chief
Executive Officer, principal owner, and co-founder of Mapleton Nurseries, a
wholesale nursery specializing in container-grown native and ornamental trees
and shrubs in Kingston, New Jersey since 1998, and has served as Managing
Director of Reed & Company, a privately held wealth management and
consulting firm in Princeton, New Jersey since 1995. Mr. Reed has extensive
experience with policy development and implementation, establishment and
management of international operations, financial and tax planning, risk
management, and systems analysis and development. Mr. Reed serves as
director and chair of the audit committee of Robeco-Sage Triton Fund, L.L.C. and
Robeco-Sage Multi-Strategy Fund, L.L.C., each of which is a closed-end,
non-diversified, management investment company that is registered under the
Investment Company Act of 1940, as amended.
William M. Rue is President
of Rue Insurance, an insurance agency, and Rue Financial Services, Inc., a
financial services provider, each of which has its principal office in Trenton,
New Jersey. Mr. Rue is also a director of Selective Insurance Group,
Inc. Mr. Rue has been a Chartered Property Casualty Underwriter since 1972 and
an Associate in Risk Management since 1994. Mr. Rue also serves as a trustee of
Rider University and a director of the Robert Wood Johnson University Hospital
at Hamilton.
Frank E. Walsh, III has been
a Vice President of Jupiter Capital Management based in Morristown, New Jersey,
since 1991. Jupiter and its affiliated entities make investments across numerous
asset classes for their clients. Prior to joining Jupiter, Mr. Walsh was an
analyst for Kidder Peabody, Inc., in New York City. Mr. Walsh serves as a
director for several other charitable and for-profit boards.
No
director of the Company other than Messrs. Crow, Reed and Rue is also currently
a director of any other company with a class of securities registered pursuant
to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), or any company registered as an investment company under the Investment
Company Act of 1940.
All of
the above directors of the Company also serve as directors of the
Bank.
Executive
Officer
Set forth
below is the name of, and certain biographical information regarding, an
executive officer of the Company who does not serve as a director of the
Company.
Joseph M. Reardon is the
Senior Vice President and Treasurer of the Company and the Bank. Prior to
joining the Bank in May 2000, Mr. Reardon held financial executive positions
with a number of firms including, most recently, 13 years with B.M.J. Financial
Corp., a bank holding company until April 1997. Mr. Reardon briefly
retired from April 1997 to April 1998. Mr. Reardon came out of retirement to
serve as chief financial officer of the New Jersey State Aquarium at Camden, a
position held by Mr. Reardon until April 2000.
Recommendation
and Vote Required
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” EACH OF THE DIRECTOR
NOMINEES.
A
director will be elected by a plurality of the votes cast at the Annual Meeting,
whether in person or by proxy.
ITEM
2 - RATIFICATION OF INDEPENDENT
REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit
Committee of the Board of Directors has selected Beard Miller Company LLP
(“Beard Miller”) as the Company’s independent auditors for the 2009 fiscal
year. Beard Miller has served as the Company’s independent registered
public accounting firm since April 22, 2008.
Grant
Thornton LLP (“Grant Thornton”) served as the Company’s independent registered
public accounting firm for fiscal year ended December 31, 2007. On April 17, 2008, the
Audit Committee of the Board of Directors determined to dismiss Grant Thornton
LLP (“Grant Thornton”) as the Company’s independent registered public accounting
firm and engaged Beard Miller as the Company’s independent registered public
accounting firm for the 2008 fiscal year. Grant Thornton was advised
of such determination on April 21, 2008. The audit reports of Grant Thornton on
the Company’s consolidated financial statements as of and for the year ended
December 31, 2007 did not contain an adverse opinion or a disclaimer of opinion,
and were not qualified or modified as to uncertainty, audit scope or accounting
principles.
During the years ended December 31,
2007 and 2006 and through April 21, 2008, there were (1) no disagreements with
Grant Thornton on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, that if not resolved to
the satisfaction of Grant Thornton, would have caused them to make reference to
such disagreements in its report on the Company’s financial statements for such
periods, and (2) no reportable events (as defined in Item 304(a)(1)(v) of
Regulation S-K), except that in 2007, the Audit Committee discussed with Grant
Thornton the existence of a material weakness in the Company’s internal control
over financial reporting, as more fully described in Item 9A of the Company’s
Annual Report on Form 10-K for the year ended December 31, 2007, as filed with
the Securities and Exchange Commission on April 15, 2008.
In addition to selecting Beard Miller
as the Company’s independent registered public accounting firm for the Company’s
2009 fiscal year, the Audit Committee has directed that management submit the
selection of independent registered public accounting firm for ratification by
the Company’s shareholders at the Annual Meeting. One or more representatives of
Beard Miller are expected to be present at the Annual Meeting. The
representatives will have the opportunity to make a statement if they desire to
do so and are expected to be available to respond to appropriate
questions.
Shareholder
ratification of the selection of Beard Miller as the Company’s independent
registered public accounting firm is not required by the Company’s by-laws or
otherwise. However, the Board is submitting the selection of Beard Miller to
shareholders for ratification as a matter of good corporate practice. If the
shareholders fail to ratify the selection, the Audit Committee will reconsider
whether or not to retain that firm. Unless contrary instructions are
given, the shares of common stock represented by the proxies being solicited
will be voted “FOR” the ratification of the selection of Beard Miller as the
Company’s independent registered public accounting firm for the Company’s 2009
fiscal year.
Independent
Registered Public Accounting Firm Fees
The
Sarbanes-Oxley Act of 2002 and the SEC auditor independence rules require all
public accounting firms that audit issuers to obtain pre-approval from their
respective audit committees in order to provide professional services without
impairing independence.
The fees
billed by the Company’s independent registered public accounting firm relating
to the 2008 and 2007 fiscal years were as follows:
Type
of Service
|
|
2008(1)
|
|
|
2007(2)
|
|
Audit
Fees
|
|
$ |
114,587 |
(3) |
|
|
321,444 |
(4) |
Audit-Related
Fees (5)
|
|
|
-- |
|
|
|
5,940 |
|
Tax
Fees (6)
|
|
|
20,000 |
|
|
|
21,848 |
|
All
Other Fees (7)
|
|
|
2,510 |
|
|
|
-- |
|
Total
|
|
$ |
137,097 |
|
|
|
349,232 |
|
|
|
|
|
|
|
|
|
|
(1)
|
Consists
of fees billed by Beard Miller for the year ended December 31,
2008.
|
(2)
|
Consists
of fees billed by Grant Thornton for the year ended December 31,
2007
|
(3)
|
Includes
fees for professional services rendered by Beard Miller for the audit of
the Company’s annual financial statements and review of financial
statements included in Forms 10-Q, including out-of-pocket
expenses.
|
(4)
|
Includes
fees for professional services by Grant Thornton rendered for the audit of
the Company’s annual financial statements, including: (i) fees
attributable to the restatement of the Company’s audited financial
statements for the fiscal year ended December 31, 2006 and the interim
financial statements included in the Company’s Quarterly Reports on Form
10-Q for the three-month periods ended March 31, 2007 and March 31, 2006,
the three- and six-month periods ended June 30, 2007 and June 30, 2006,
and the three- and nine-month periods ended September 30, 2007 and
September 30, 2006, (ii) review of financial statements included in Forms
10-Q; and (iii) review and consent procedures associated with a Form S-8
filing and other SEC filings by the
Company.
|
(5)
|
Comprised
of fees associated with consulting on financial reporting
issues.
|
(6)
|
Comprised
of services for tax advice.
|
(7)
|
In
accordance with the Sarbanes-Oxley Act of 2002, the Audit Committee
established policies and procedures under which all audit and non-audit
services performed by the Company’s principal accountants must be approved
in advance by the Audit Committee. As provided in the
Sarbanes-Oxley Act, all audit and non-audit services to be provided after
May 6, 2003 must be pre-approved by the Audit Committee in accordance with
these policies and procedures. The de minimus exception (as
defined in Rule 202 of the Sarbanes-Oxley Act of 2002) was applied to 2%
of the 2008 total fees. These fees are located in the “All
Other Fees” category.
|
Except as
noted in footnote 7 above, all services described above were approved in
accordance with the Audit Committee’s Pre-Approval policy described directly
below.
Audit
Committee Pre-Approval Procedures
The Audit
Committee has adopted a formal policy concerning the pre-approval of audit and
non-audit services to be provided by the Company’s independent registered public
accounting firm. The policy requires that all services to be
performed by the Company’s independent registered public accounting firm,
including audit services, audit-related services and permitted non-audit
services, be pre-approved by the Audit Committee. The policy permits
the Audit Committee to delegate pre-approval authority to one or more members,
provided that any pre-approval decisions are reported to the Audit Committee at
its next meeting. Specific services being provided by the independent
registered public accounting firm are regularly reviewed in accordance with the
pre-approval policy. At subsequent Audit Committee meetings, the
Audit Committee receives updates on services being provided by the independent
registered public accounting firm, and management may present additional
services for approval. Since the May 6, 2003 effective date of the
SEC rules applicable to services being provided by the independent accountants,
each new engagement of the Company’s independent registered public accounting
firm has been approved in advance by the Audit Committee.
Recommendation
and Vote Required
THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE SELECTION OF BEARD MILLER
COMPANY LLP AS
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE COMPANY’S 2009 FISCAL
YEAR.
The
affirmative vote of the majority of votes cast is required to ratify the Board’s
selection of the Company’s independent registered public accounting
firm.
ITEM
3
ADVISORY
VOTE ON COMPENSATION OF NAMED EXECUTIVE OFFICERS
The Board of Directors of the Company
believes that the Company’ s compensation policies and procedures are
competitive, are focused on pay- for performance principles and are strongly
aligned with the long-term interests of our shareholders. The Board also
believes that both the Company and its shareholders benefit from responsive
corporate governance policies and constructive and consistent
dialogue. The proposal described below, commonly known as a “Say on
Pay” proposal, gives you as a shareholder the opportunity to endorse or not
endorse the compensation for the Company’s named executive officers by voting to
approve or not approve such compensation as described in this proxy
statement.
On February 17, 2009, President Obama
signed the American Recovery and Reinvestment Act of 2009 (“ARRA”) into law.
ARRA requires, among other things, every participant in the Troubled Asset
Relief Program to permit a non-binding shareholder vote to approve the
compensation of the participant’s executives. Accordingly, you are asked to
approve the compensation of the named executive officers as described under
“Executive Compensation” and the tabular disclosure regarding named executive
officer compensation (together with the accompanying narrative disclosure) in
this proxy statement.
Under ARRA, your vote is advisory and
will not be binding upon the Board of Directors of the Company. However, the
Compensation Committee will take into account the outcome of the vote when
considering future executive compensation arrangements.
Recommendation
and Vote Required
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE NON-BINDING APPROVAL
OF THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS DETERMINED BY THE
COMPENSATION COMMITTEE.
The
affirmative vote of the majority of votes cast will constitute approval of this
advisory proposal.
CORPORATE
GOVERNANCE
General
The
Company is committed to establishing sound principles of corporate governance
which promote honest, responsible and ethical business practices. The
Company’s corporate governance practices are actively reviewed and evaluated by
the Board of Directors and the Nominating and Corporate Governance
Committee. This review includes comparing the Board’s current
governance policies and practices with those suggested by authorities active in
corporate governance as well as the practices of other public
companies. Based upon this evaluation, the Board has adopted those
policies and practices that it believes are the most appropriate corporate
governance policies and practices for the Company.
Board
Composition and Committee Memberships
The Board
is composed of Charles S. Crow, III (Chairman), Robert F. Mangano, David C.
Reed, William M. Rue and Frank E. Walsh, III. There are three
standing committees of the Board of Directors: the Audit Committee; the
Nominating and Corporate Governance Committee; and the Compensation
Committee. The table below provides current membership for each of
the Board committees.
Name
|
Audit
Committee
|
Compensation
Committee
|
Nominating
and
Corporate
Governance
Committee
|
Charles
S. Crow, III
|
X
|
X
|
X
|
David
C. Reed
|
X*
|
X
|
X
|
William
M. Rue
|
X
|
X
|
X*
|
Frank
E. Walsh, III
|
X
|
X*
|
X
|
X =
Committee member; * = Chairperson
|
|
|
Director
Independence
The Board
of Directors has determined that a majority of the directors and all current
members of the Audit Committee, Nominating and Corporate Governance Committee
and Compensation Committee are “independent” within the meaning of the Nasdaq
independence standards, that the members of the Audit Committee are also
“independent” for purposes of Section 10A(m)(3) of the Exchange Act and that
each member of the Compensation Committee is an “outside director” pursuant to
the criteria established by the Internal Revenue Service (“IRS”) and is
a “non-employee director” pursuant to criteria established by the
SEC.
The Board
has affirmatively determined that each of Messrs. Crow, Reed, Rue and Walsh has
no material relationship with the Company affecting his independence as a
director and that each is “independent” within the meaning of the independence
standards established by Nasdaq. In making each of these independence
determinations, the Board considered and broadly assessed, from the standpoint
of materiality and independence, all of the information provided by each
director in response to detailed inquiries concerning his independence and any
direct or indirect business, family, employment, transactional or other
relationship or affiliation of such director with the Company and considered the
deposit and other banking relationships with each director. In making
the independence determinations with respect to the directors, the Board also
considered the following relationships: (i) with respect to Mr. Rue, the Board
considered the fact that Rue Insurance, which is owned and controlled by Mr.
Rue, acts as the Company’s insurance broker and that Mr. Rue owns 25% of a real
estate partnership which owns property that is subject to a mortgage in favor of
the Bank; and (ii) with respect to Mr. Crow, the board considered the fact that
Mr. Crow has a home equity loan with the Bank.
Audit
Committee
The
Audit Committee is comprised of Messrs. David C. Reed (Chairman), Charles S.
Crow, III, William M. Rue and Frank E. Walsh, III. The Audit
Committee serves as a communication point among non-Audit Committee directors,
internal auditors, the independent accountants and Company management as their
respective duties relate to financial accounting, financial reporting and
internal controls. The Audit Committee assists the Board of Directors in
fulfilling its responsibilities with respect to accounting policies, internal
controls, financial and operating controls, standards of corporate conduct and
performance, financial reporting practices and sufficiency of
auditing.
The
principal functions of the Audit Committee include:
·
|
assisting
the Board in the oversight of the integrity of the Company’s financial
statements and its financial reporting processes and systems of internal
controls;
|
|
overseeing
the Company’s accounting and financial reporting processes and the audits
of the Company’s financial statements;
and
|
|
appointing
and retaining, compensating and overseeing the work of any registered
public accounting firm engaged for the purpose of preparing or issuing an
audit report or performing other audit, review or attest services for the
Company.
|
The Board
has determined that all Audit Committee members are able to read and understand
financial statements and at least one member has accounting or related financial
management expertise in accordance with the applicable Nasdaq rules. The Board
has also determined that David C. Reed qualifies as an “audit committee
financial expert” and he serves as the Company’s “audit committee financial
expert.” No member of the Audit Committee received any compensation
from the Company during fiscal 2008 other than compensation for services as a
director.
The Audit
Committee Charter is not available to security holders on the Company’s
website. The Audit Committee charter was included as Appendix A to the
proxy statement for the Company’s 2007 annual meeting, filed with the SEC on
April 24, 2007.
Report
of the Audit Committee of the Board of Directors
The Audit
Committee of the Board of Directors of the Company is comprised of four
independent directors appointed by the Board of Directors (each of whom is
independent for purposes of audit committee membership under applicable Nasdaq
and SEC rules). The Audit Committee operates under the Audit
Committee Charter, which was adopted in March 2004. The Audit
Committee Charter provides that the Audit Committee shall have the sole
authority to appoint or replace the Company’s independent
accountants.
Management
is responsible for the preparation, presentation and integrity of the Company’s
financial statements, accounting and financial reporting principles, internal
controls, and procedures designed to ensure compliance with accounting standards
and applicable laws and regulations. The Company’s independent
accountants perform an annual independent audit of the financial statements and
express an opinion on the conformity of those financial statements with
generally accepted accounting principles in the United States of
America. The Audit Committee’s responsibility is to monitor and
oversee these processes and report its findings to the full
Board. The Audit Committee assists the Board in
monitoring:
|
the
integrity of the financial statements of the
Company;
|
|
the
independent accountants’ qualifications and
independence;
|
|
the
performance of the Company’s internal audit function and independent
accountants; and
|
|
the
compliance by the Company with legal and regulatory
requirements.
|
The Audit Committee reviews the results
of the Company’s audit, of its interim quarterly reviews, the overall quality of
the Company’s accounting policies and other required communications, including
those described in Statement on Auditing Standards No. 61, as amended,
“Communications with Audit Committees”. The Company’s independent
accountants assist management, as necessary, in updating the Audit Committee
concerning new accounting developments and their potential impact on the
Company’s financial reporting. The Audit Committee also meets five
times a year with the Company’s independent accountants without management
present.
The Audit Committee reviews and
discusses with management the Company’s annual audited financial statements and
quarterly financial statements, including the Company’s disclosures under
Management’s Discussion and Analysis of Financial Condition and Results of
Operations. The Audit Committee also meets with Company management,
without the Company’s independent accountants present, to discuss management’s
evaluation of the performance of the independent accountants.
With
respect to fiscal 2008, the Audit Committee:
|
met
with management and Beard Miller to review and discuss the Company’s
audited financial statements and to discuss significant accounting
issues;
|
|
periodically
met with management to review and discuss quarterly financial
results;
|
|
discussed
with Beard Miller the scope of its services, including its audit
plan;
|
|
reviewed
the Company’s internal control processes and
procedures;
|
|
discussed
with Beard Miller the matters required to be discussed by Statement on
Auditing Standards No. 61, Communication with Audit
Committees, as amended;
|
|
received
and reviewed the written disclosures and letter from Beard Miller required
by applicable requirements
of the Public Company Accounting Oversight Board regarding the independent
accountant’s communications with the audit committee concerning
independence, and discussed with Beard Miller their independence
from management and the Company;
|
|
implemented
various changes and actions in response to the requirements of the
Sarbanes-Oxley Act, SEC regulations, and Nasdaq corporate governance
standards, as they impact the Audit Committee, the financial reporting
process and internal controls procedures;
and
|
|
reviewed
and approved all audit and non-audit services provided by Beard Miller
during fiscal 2008.
|
Based on
the foregoing review and discussions, the Audit Committee recommended to the
Board of Directors that the audited financial statements be included in the
Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008
for filing with the SEC.
|
Members
of the Audit Committee
|
|
|
|
|
|
DAVID
C. REED (Chair)
|
|
|
CHARLES
S. CROW, III
|
|
|
WILLIAM
M. RUE
|
|
|
FRANK
E. WALSH, III
|
|
Compensation
Committee
The
Compensation Committee is comprised of Messrs. Frank E. Walsh, III (Chairman),
Charles S. Crow, III, David C. Reed and William M. Rue, each of whom
has been determined by the Board to be “independent” within the meaning of the
Nasdaq independence standards, and each of whom is an “outside director”
pursuant to the criteria established by the IRS and is a “non-employee director”
pursuant to criteria established by the SEC.
The
Compensation Committee reviews and approves the compensation arrangements for
the Company’s executives and outside directors. The Compensation
Committee administers the Company’s equity incentive plans and makes awards
pursuant to those plans.
No
Compensation Committee member participates in any of the Company’s employee
compensation programs. The Board has determined that none of the
current Compensation Committee members has any material business relationships
with the Company.
The
Compensation Committee charter is not available to security holders on the
Company’s website. The Compensation Committee charter was included as
Appendix B to
the proxy statement for the Company’s 2007 Annual Meeting, filed with the SEC on
April 24, 2007.
Role of the Compensation
Committee
The
Compensation Committee is appointed by the Board of
Directors. Subject to the final review and approval by the Board, the
Compensation Committee evaluates, determines and approves the compensation of
the Company’s Chief Executive Officer, executive officer and outside
directors. The Compensation Committee administers the Company’s
equity plans. The Compensation Committee also has overall
responsibility for monitoring, on an ongoing basis, the executive compensation
policies, plans and programs of the Company. The Compensation
Committee may delegate its authority relating to non-employee director
compensation to a subcommittee consisting of one or more members when
appropriate.
Compensation
Committee Process and Role of Management
The
Compensation Committee generally holds two regularly scheduled in-person
meetings a year and additional meetings as appropriate either in person or by
telephone. Generally, the Compensation Committee chair works with
management in establishing the agenda for Compensation Committee
meetings. Management also prepares and submits information during the
course of the year for the consideration of the Compensation Committee, such as
management’s proposed recommendations to the Compensation Committee for
performance measures and proposed financial targets, management’s proposed
recommendations to the Compensation Committee for salary increases, management’s
performance evaluations of executive officers, and other data and information,
if requested by the Compensation Committee.
Although
many of the compensation decisions are made during the Compensation Committee’s
annual review process, the compensation planning process spans throughout the
year. Subject to the final review and approval by the Board, the
Compensation Committee reviews and approves the Company’s goals and objectives
relevant to the Chief Executive Officer’s compensation, evaluates the Chief
Executive Officer’s performance in light of those goals and objectives at least
once per year and determines the Chief Executive Officer’s compensation level
based on this evaluation. The Chief Executive Officer is not present
during voting or deliberations with respect to his compensation. On
an annual basis, the Compensation Committee also reviews and approves base
salary, annual incentive compensation and long-term equity-based compensation of
the other executive officer of the Company.
Compensation
Committee Advisors
The
Compensation Committee charter grants the Compensation Committee full authority
to engage compensation consultants and other advisors to assist it in the
performance of its responsibilities. The compensation consultant
retained by the Committee reports directly to the Compensation
Committee. The Compensation Committee did not engage a compensation
consultant for 2008 but instead informally confirmed for 2008 the market
benchmarking of our executive compensation program furnished by I.F.M. Group,
Inc. in 2005.
Director
Compensation Process
A
discussion of the Company’s determination of director compensation is included
in the “Director Compensation” section of this proxy statement.
COMPENSATION
COMMITTEE CERTIFICATION
The
Compensation Committee certifies that it has reviewed with senior risk officers
the senior executive officer incentive compensation arrangements and has made
reasonable efforts to ensure that such arrangements do not encourage senior
executive officers to take unnecessary and excessive risks that threaten the
value of the Company.
|
CHARLES
S. CROW, III
|
|
|
DAVID
C. REED |
|
|
WILLIAM
M. RUE
|
|
|
FRANK
E. WALSH, III
|
|
Nominating
and Corporate Governance Committee
The Nominating and Corporate Governance
Committee is currently comprised of Messrs. William M. Rue (Chairman), Frank E.
Walsh, III, Charles S. Crow, III and David C. Reed. The Nominating
and Corporate Governance Committee is responsible for recommending for
consideration by the Board candidates to serve as directors of the Company as
well as the re-election of current directors. The committee also
reviews recommendations from shareholders regarding corporate governance and
director candidates. The procedure for submitting recommendations of
director candidates is set forth below under the caption “Selection of Director
Candidates.”
In
accordance with the marketplace rules of the Nasdaq Global Market, the
Nominating and Corporate Governance Committee is currently composed entirely of
independent, non-management members of the Board of Directors. In
2008, the Nominating and Corporate Governance Committee was also composed
entirely of independent, non-management members of the Board of
Directors.
The
Nominating and Corporate Governance Committee charter is not available to
security holders on the Company’s website. The Nominating and
Corporate Governance Committee charter was included as Appendix C to the
proxy statement for the Company’s 2007 Annual Meeting, filed with the SEC on
April 24, 2007.
Selection
of Director Candidates
The
Nominating and Corporate Governance Committee has established a policy regarding
the consideration of director candidates, including those recommended by
shareholders. The Nominating and Corporate Governance Committee,
together with the President and other Board members, will from time to time as
appropriate identify the need for new Board members. Particular
proposed director candidates who satisfy the criteria set forth below and
otherwise qualify for membership on the Board will be identified by the
Nominating and Corporate Governance Committee. In identifying
candidates, the Nominating and Corporate Governance Committee will seek input
and participation from the President, other Board members, and other appropriate
sources, to ensure that all points of view can be considered and the best
possible candidates can be identified. The Nominating and Corporate
Governance Committee may also, as appropriate, engage a search firm to assist it
in identifying potential candidates. Members of the Nominating and Corporate
Governance Committee, the President and other Board members, as appropriate, may
personally interview selected director candidates and provide input to the
Nominating and Corporate Governance Committee. The Nominating and
Corporate Governance Committee will determine which candidate(s) are to be
recommended to the Board for approval.
Shareholders
wishing to submit a director candidate for consideration by the Nominating and
Corporate Governance Committee must submit the recommendation to the Nominating
and Corporate Governance Committee, c/o President and Chief Executive Officer,
1st Constitution Bancorp, P.O. Box 634, 2650 Route 130 North, Cranbury, New
Jersey 08512 in writing, not less than 90 days prior to the first anniversary
date of the preceding year’s annual meeting. The request must be
accompanied by the same information concerning the director candidate and the
recommending shareholder as described in Article I, Section 9 of the Company’s
by-laws for shareholder nominations for director. The Nominating and Corporate
Governance Committee may also request any additional background or other
information from any director candidate or the recommending shareholder as it
may deem appropriate. Nothing above shall limit a shareholder’s right to propose
a nominee for director at an annual meeting in accordance with the procedures
set forth in the Company’s by-laws.
All
directors play a critical role in guiding the Company’s long-term business
strategy and in overseeing the management of the Company. Board candidates are
considered based on various criteria which may change over time and as the
composition of the Board changes. The following factors, at a minimum, are
considered by the Nominating and Corporate Governance Committee as part of its
review of all director candidates and in recommending potential director
candidates to the Board:
·
|
appropriate
mix of educational background, professional background and business
experience to make a significant contribution to the overall composition
of the Board;
|
|
global
business and social perspective;
|
|
if
the Committee deems it applicable, whether the candidate would be
considered a financial expert or financially literate as described in SEC
or Nasdaq rules or an audit committee financial expert as defined by the
Sarbanes-Oxley Act of 2002;
|
|
if
the Committee deems it applicable, whether the candidate would be
considered independent under Nasdaq rules and the Board’s additional
independence guidelines set forth in the Company’s Corporate Governance
Guidelines;
|
|
demonstrated
character and reputation, both personal and professional, consistent with
the image and reputation of the
Company;
|
|
willingness
to apply sound and independent business
judgment;
|
|
ability
to work productively with the other members of the Board;
and
|
|
availability
for the substantial duties and responsibilities of a director of the
Company.
|
Attendance
at Board Meetings, Committee Meetings, and Annual Meetings
In fiscal
2008, the Board of Directors held nine meetings (seven of which included a
meeting of the Board of Directors of the Bank), the Audit Committee held five
meetings, the Compensation Committee held one meeting and the Nominating and
Corporate Governance Committee did not hold any meetings. Each
director, other than Mr. Walsh, attended at least 75% of the aggregate meetings
of the Board of Directors and the committees of which such director was a
member.
Our
current director attendance policy provides that unless there are mitigating
circumstances, such as medical, family or business emergencies, Board members
are expected to participate in all Board meetings and all committee meetings of
which the director is a member and to attend the Annual Meeting. All
Board members, except Mr. Walsh, attended last year’s annual meeting of
shareholders.
Our
Corporate Governance Guidelines adopted in March of 2004 require non-management
directors to meet in executive sessions at least two times per
year. At each executive session, the non-management directors will
select a director to preside at the meeting. Six executive sessions
of non-management directors were held in 2008.
Shareholder
Communications Process
The Board
of Directors provides a process for security holders to send communications to
the Board. Information regarding the Company’s process for
shareholders to communicate with the Board of Directors and the manner in which
such communications are forwarded is available on the Company’s website located
at www.1stconstitution.com,
under “About Us.”
Code
of Business Conduct and Ethics and Corporate Governance Guidelines
The
Company has adopted a Code of Business Conduct and Ethics (the “Code of
Conduct”) which applies to the Company’s Chief Executive Officer and principal
financial and accounting officer and to all other Company directors, officers
and employees. The Company filed its Code of Conduct as an exhibit to
its 2003 Annual Report on Form 10-K filed with the SEC on March 25,
2004. The Company will disclose any substantive amendments to, or
waivers from, provisions of the Code of Conduct made with respect to the chief
executive officer or principal financial and accounting officer in a Current
Report on Form 8-K filed with the SEC.
The
Company has also adopted Corporate Governance Guidelines which are intended to
provide guidelines for the governance of the Company by the Board and its
committees.
STOCK
OWNERSHIP OF MANAGEMENT
AND
PRINCIPAL SHAREHOLDERS
The
following table sets forth information concerning the beneficial ownership of
the Company common stock as of March 23, 2009 by each director/nominee, by the
Company’s named executive officers, by all directors and executive officers as a
group, and by any individual or group owning 5% or more of Company common
stock. Except as noted below, the Company knows of no person or group
that beneficially owns 5% or more of Company common stock. Unless
otherwise specified, all persons listed below have sole voting and investment
power with respect to their shares of Company common stock.
Name
of Beneficial Owner(1)
|
Amount
and nature of
beneficial
ownership (2)
|
Percent
of
Class
|
Charles
S. Crow, III
|
33,939
(3)
|
*
|
Robert
F. Mangano
|
225,360
(4)
|
5.33%
|
William
M. Rue
|
153,093
(5)
|
3.61%
|
Frank
E. Walsh, III
|
190,281
(6)
|
4.50%
|
David
C. Reed
|
9,573
(7)
|
*
|
Joseph
M. Reardon
|
37,485
(8)
|
*
|
All
Directors and Executives Officers of the
Company as a Group (6 Persons)
|
649,731
(9)
|
15.23%
|
___________________
* Less
than 1%
(1)
|
All
correspondence to beneficial owners listed in this table is sent care of
the Company to its principal executive office at P.O. Box 634, 2650 Route
130 North, Cranbury, New Jersey
08512.
|
(2)
|
The
securities “beneficially owned” by an individual are determined in
accordance with the definition of “beneficial interest” set forth in SEC
regulations and, accordingly, may include securities owned by or for,
among others, the wife and/or minor children of the individual and any
other relative who has the same home as the individual, as well as other
securities as to which the individual has or shares voting or investment
power. Beneficial ownership may be disclaimed as to some of the shares. A
person is also deemed to beneficially own shares of Company common stock
which such person does not own but has a right to acquire presently or
within sixty days after March 23, 2009. As of March 23, 2009,
there were 4,226,943 shares of Company common stock
outstanding.
|
(3)
|
Includes
5,883 shares owned directly by Mr. Crow, options to purchase 8,131 shares
of Company common stock, all of which are currently exercisable, 16,451
shares of Company common stock held by Crow & Associates Profit
Sharing Plan and 3,474 shares of Company common stock held by Crow Family
Associates, LLC.
|
(4)
|
Includes
206,600 shares owned directly by Mr. Mangano, options to purchase 4,285
shares of Company common stock all of which are currently exercisable, and
14,475 shares of restricted stock issued to Mr. Mangano under the
Company’s 2005 Equity Incentive Plan, which may be voted immediately upon
grant, but does not include grants of 1,549 shares of restricted stock,
which have not been issued, do not vote, and are subject to vesting based
on continued service.
|
(5)
|
Includes
80,801 shares owned directly by Mr. Rue, 32,755 shares owned jointly with
Mr. Rue’s wife, 28,678 shares held by Mr. Rue’s wife, 2,728 shares held by
Charles E. Rue & Sons, Inc., and options to purchase 8,131 shares of
Company common stock, all of which are currently
exercisable.
|
(6)
|
Includes
12,000 shares owned directly by Mr. Walsh and 178,281 shares of Company
common stock owned by Mulligan Holdings, L.P., over which Mr. Walsh may be
deemed to have beneficial
ownership.
|
(7)
|
Includes
7,097 shares owned jointly with Mr. Reed’s wife and options to purchase
2,476 shares that are currently
exercisable.
|
(8)
|
Mr.
Reardon owns 13,866 shares directly. The amount in the table also includes
options to purchase 17,201 shares of Company common stock, all of which
are currently exercisable and 6,418 shares of restricted stock issued to
Mr. Reardon under the Company’s 2005 Equity Incentive Plan, which may be
voted immediately upon grant, but does not include grants of 620 shares of
restricted stock, which have not been issued, do not vote, and are subject
to vesting based on continued
service.
|
(9)
|
Includes
options to purchase 40,224 shares of Company common stock, all of which
are currently exercisable, and 20,893 shares of restricted stock which may
be voted immediately upon grant, but does not include 2,169 unvested
awards of restricted stock, which have not been issued, do not vote, and
are subject to vesting based on continued
service.
|
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act of 1934 requires the Company’s executive officers and
directors, and persons who own more than 10% of a registered class of the
Company’s equity securities, to file reports of ownership and changes in
ownership with the SEC. Based on a review of the copies of reports
furnished to the Company, the Company believes that during the year ended
December 31, 2008, all filing requirements applicable to its officers, directors
and 10% beneficial owners were met.
DIRECTOR
COMPENSATION
The
following table details the compensation paid to our non-employee directors for
the year ended December 31, 2008.
NON-EMPLOYEE
DIRECTOR COMPENSATION
Name
|
Fees
Earned
or
Paid
in
Cash
($)
|
Stock
Awards
($)
(1)
|
Option
Awards
($)
(2)
|
All
Other
Compensation
($)
(3)
|
Total
($)
|
|
|
|
|
|
|
Charles
S.
Crow,
III
|
14,500
|
7,656
|
---
|
313
|
22,469
|
|
|
|
|
|
|
David
C.
Reed
|
11,000
|
5,104
|
---
|
290
|
16,394
|
|
|
|
|
|
|
William
M.
Rue
|
8,000
|
1,276
|
---
|
373
|
9,649
|
|
|
|
|
|
|
Frank
E.
Walsh,
III
|
8,000
|
1,276
|
---
|
90
|
9,366
|
____________________
(1)
|
The
amounts listed in this column reflect the dollar amount recognized for
financial statement reporting purposes, calculated in accordance with FAS
123R. A discussion of the assumptions used in calculating these
values may be found in Note 1 to our audited financial statements in the
Form 10-K for fiscal 2008.
No
stock awards were outstanding for our directors at the end of fiscal
2008.
|
(2)
|
At
the end of fiscal 2008, the aggregate number of option awards outstanding
for our directors were as follows: Mr. Crow, 8,131 options; Mr. Reed,
3,095 options; and
Mr. Rue, 8,131
options. Mr. Walsh did not have any options outstanding
at the end of fiscal 2008.
|
(3)
|
The
amounts listed in this column reflect the imputed income for our directors
under the Directors’ Insurance Plan described in the narrative
below.
|
Processes,
Procedures and Rationale
The
Compensation Committee periodically reviews the appropriateness and
competitiveness of the compensation of non-employee
directors. Subject to approval by the Board of Directors, the
Compensation Committee is responsible for establishing policies that govern
non-employee director compensation and for implementing, administering and
interpreting non-employee director compensation plans, programs and
policies. The Compensation Committee may delegate its authority
relating to non-employee director compensation to a subcommittee consisting of
one or more members when appropriate.
As part
of this process, the Compensation Committee regularly reviews the structure,
composition and operation of the Board and its committees and annually asks for
comments from all directors concerning the Board’s performance. The
Board also considers the significant amount of time spent by the directors in
their duties for the Company. The Board, in consultation with the
Compensation Committee, then determines the form and amount of non-employee
directors’ compensation.
Compensation
Paid to Board Members
Non-employee
directors receive a combination of cash and equity compensation. Mr.
Mangano, currently the only management director on the Board, does not receive
any separate compensation for his services as a director.
Cash
Compensation
During
2008, non-employee directors of the Company and non-employee directors of the
Bank were compensated for services rendered in such capacities at the rate of
$500 per Board meeting and $500 per Board committee meeting
attended. Directors serving on the Board of the Company who also
serve on the Board of the Bank do not receive additional compensation for
attending a Bank Board meeting that is held on a date upon which the director
attends a Company Board meeting.
Non-employee
directors of the Company are also eligible to participate in the Directors’
Insurance Plan and Messrs. Charles S. Crow, III, William M. Rue, Frank E. Walsh,
III and David C. Reed currently participate in the plan. See
“Directors’ Insurance Plan” below. No cost of this benefit is
allocable to any individual director.
Stock
Grants
The
Company maintains the 1st
Constitution Bancorp 2006 Directors Stock Plan, an equity plan for its
non-employee directors (which is discussed on page 29 of this proxy statement)
(the “2006 Directors Plan”). In 2008, each non-employee director
received a grant of 100 shares of common stock under the 2006 Directors
Plan. Mr. Crow received a grant of an additional 500 shares of common
stock for his service as Chairman of the Board. Mr. Reed received a grant of an
additional 300 shares of common stock for his service as Chairman of the Audit
Committee. Unless the Board determines otherwise at the time of grant, all
shares granted under the 2006 Directors Plan vest immediately upon
grant.
Directors’
Insurance Plan
The
Company adopted the 1st Constitution Bancorp Directors’ Insurance Plan (the
“Directors’ Insurance Plan”), which was effective as of October 1, 2002 and
amended as of February 19, 2004 and June 16, 2005. The Directors’ Insurance Plan
covers all individuals who were members of the Board of Directors of the Company
or of the Bank (who were not also employees of the Company or the Bank) on the
effective date. Thereafter, members of the Board of Directors of the Company or
of the Bank shall become participants in the Directors’ Insurance Plan after
completion of ten years of service as a member of the applicable Board of
Directors (provided that they are not then employed by the Company or the Bank)
or at such earlier time as determined by the Board of Directors of the
Company.
Under the
Directors’ Insurance Plan, a covered individual is provided with term insurance
coverage in the amount of one hundred thousand dollars. Coverage will remain in
effect even if the individual’s service as a member of the Board of Directors
ceases.
The
premiums for the Directors’ Insurance Plan and the Company’s Executive Life
Insurance Program (which is discussed on page 25 of this proxy statement) were
paid by the Company in October 2002 and supplemented in October
2005. The Company has all ownership rights to the policies and all
cash values thereunder.
The
Directors’ Insurance Plan may be amended, suspended or terminated at any time,
except that (i) any amendment, suspension or termination of the Directors’
Insurance Plan with respect to a particular director that is not applicable to
all other participants does not require the approval of the particular director,
and no such amendment, suspension or termination with respect to a particular
director shall become effective with respect to the particular director without
his or her approval unless “Cause” (as defined in the Directors’ Insurance Plan)
exists with respect to a particular director, and (ii) termination may not occur
without the consent of an affected director following a “Change of Control” (as
defined in the Directors’ Insurance Plan). The Directors’ Insurance Plan may be
terminated or suspended (in whole or in part) nevertheless at any time if
failure to terminate or suspend the Plan would subject the Company, its officers
or its directors to sanctions by a regulatory agency.
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The table
below summarizes the total compensation paid or earned by each of the Company’s
named executive officers for the fiscal years ended December 31, 2008 and
2007.
SUMMARY
COMPENSATION TABLE
Name
and
Principal
Position
|
Year
|
Salary
(1)
|
Bonus
|
Stock
Awards
(2)
|
Option
Awards
(2)
|
All
Other
Compensation
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
|
|
|
|
|
|
|
|
Robert
F. Mangano
President
and CEO
|
2008
|
$435,000
|
$75,000
|
$58,986
|
$6,365
|
$80,640(3)(A)
|
$655,991
|
|
2007
|
$400,000
|
$150,000
|
$85,283
|
$7,865
|
$77,624
(3)(B)
|
$720,772
|
|
|
|
|
|
|
|
|
Joseph
M. Reardon
Senior
Vice President and
|
2008
|
$152,500
|
$22,500
|
$26,266
|
$12,981
|
$8,782
(4)(A)
|
$223,029
|
Treasurer
|
2007
|
$142,500
|
$45,000
|
$31,302
|
$17,678
|
$8,452
(4)(B)
|
$244,932
|
___________________
(1)
|
In
fiscal 2008, our named executive officers deferred the following amounts
into the Company’s 401(k) Plan: Mr. Mangano - $20,500; Mr. Reardon -
$10,459.64. In fiscal 2007, our named executive officers
deferred the following amounts into the Company’s 401(k) Plan: Mr. Mangano
- $20,500; Mr. Reardon - $9,921.
|
(2)
|
Amounts
shown in these columns reflect the compensation cost recognized in fiscal
2008 for financial statement reporting purposes for restricted stock
awards and option awards, as determined in accordance with FAS 123R.
Pursuant to SEC rules, the amounts shown exclude the impact of estimated
forfeitures related to service-based vesting conditions. Additional
information concerning our accounting for restricted stock and options
granted in 2008 is included in Note 1 of the Notes to Consolidated
Financial Statements in our 2008 Annual Report on Form
10-K.
|
(3)
|
(A)
Include: (i) $6,201.92, which represents the value of the Company’s match
of employee contributions under our 401(k) Plan; (ii) $3,569.89, which
represents his imputed income for our executive life insurance program;
(iii) $8,500, which represents the cost to the Company of providing
additional long term disability coverage for Mr. Mangano; (iv) $10,823,
which represents the annual cost to the Company of providing Mr. Mangano
with a country club membership; and (v) $51,545, which represents the
value of the Company provided car.
(B)
Include: (i) $6,304, which represents the value of the Company’s match of
employee contributions under our 401(k) Plan; (ii) $3,071, which
represents his imputed income for our executive life insurance program;
(iii) $8,500, which represents the cost to the Company of providing
additional long term disability coverage for Mr. Mangano; (iv) $10,823,
which represents the annual cost to the Company of providing Mr. Mangano
with a country club membership; and (v) $48,926, which represents the
value of the Company provided car.
The
Company calculates the aggregate incremental cost to the Company for the
provision to Mr. Mangano of a Company car as the sum of the total cost of
the car attributable to the fiscal year plus maintenance costs, insurance
and gas paid by the Company. This amount has not been reduced to reflect
the costs attributable to business use. Mr. Mangano is taxed on the
imputed income attributable to personal use of the Company car and does
not receive tax assistance from the Company with respect to these
amounts.
|
(4)
|
(A)
Include: (i) $4,482.64 which represents the value of the Company’s match
of employee contributions under our 401(k) Plan; (ii) $699.04 which
represents his imputed income for our executive life insurance program;
and (iii) $3,600, which represents the value of a car reimbursement
allowance.
(B)
Include: (i) $4,252 which represents the value of the Company’s match of
employee contributions under our 401(k) Plan; (ii) $600 which represents
his imputed income for our executive life insurance program; and (iii)
$3,600, which represents the value of a car reimbursement
allowance.
|
Employment
Agreement
On
February 22, 2005, the Company, upon the authorization of the Compensation
Committee of its Board of Directors, entered into a three-year employment
agreement with Robert F. Mangano (the “Employment Agreement”), effective as of
January 1, 2005, which replaced Mr. Mangano’s prior employment agreement
with the Company, dated as of April 22, 1999. Pursuant to the terms
of the Employment Agreement, Mr. Mangano continues to serve as the
President and Chief Executive Officer, and as a director, of each of the Company
and the Bank, and
|
will
receive an annual base salary for 2009 of at least $470,000, plus a cash
bonus not to exceed 50% of his base
salary;
|
|
will
participate in the Company’s stock equity plans on at least an annual
basis;
|
|
is
entitled to participate in the employee benefit plans maintained by the
Company and the Bank, including the 401(k) program, the medical insurance
and reimbursement program, the group term life insurance program, the
group disability program, and the Company’s 2005 Supplemental Executive
Retirement Plan; and
|
|
is
entitled to reimbursement for reasonable out-of-pocket business expenses,
the use of an automobile, a country club membership and reimbursement for
reasonable moving costs associated with his relocation to the market area
of the Bank.
|
The
Employment Agreement is subject to automatic one year extensions but may not be
extended beyond October 21, 2010.
Under the
Employment Agreement, Mr. Mangano is also entitled to receive the severance and
other termination benefits described under the heading “Termination of
Employment and Change in Control Arrangements” in this proxy
statement.
Mr. Mangano
will be subject to a restrictive covenant upon termination. Pursuant
to the restrictive covenant, Mr. Mangano may not, for one year following
the termination or discontinuation of his employment or during the remaining
term of the Employment Agreement, serve as an officer, director or employee of
any community bank, savings association or mortgage company with principal
offices in Middlesex County, New Jersey, and which offers products and/or
services from offices in Middlesex County, New Jersey that compete with those
offered by the Bank.
Executive
Life Insurance Program
The
Company entered into a life insurance arrangement with several executives,
including our named executive officers, in 2002. Under the terms of
the individual life insurance agreements, the covered employees obtain current
life insurance protection while employed, and cash value accumulates under the
underlying policies. In the event that a covered employee terminates
employment with the Company, then coverage and all rights of the employee under
the agreement and the policies cease, unless the employee had both attained age
60 and completed 10 years of service with the Company (including years of
service prior to implementation of the agreements) at the time of termination of
employment, in which case coverage will remain in effect until
death. In the event of a change of control (as defined in the
agreements) prior to termination of employment, coverage will remain in effect
until death. Coverage will cease in the event of termination of
employment for cause (as defined in the agreements). The Company pays
all premiums with respect to the policies.
The
Company owns the policies and all cash values thereunder. Upon the
death of the covered employee, if the agreement is still in effect, the death
proceeds will be used by the Company to pay to the insured’s beneficiary an
amount equal to three times the covered employee’s base annual salary (not
including bonus or other forms of compensation) in effect at the time of his or
her death or retirement, minus amounts payable by reason of any other group term
insurance coverage provided by the Company. The Company is entitled
to all other amounts payable under the policies. During 2008, Messrs.
Mangano and Reardon were parties to these agreements. At December 31, 2008, the
death benefit under Mr. Mangano’s policy was $1,255,000 and the death benefit
payable under Mr. Reardon’s policy was $407,500.
Perquisites
and Other Personal Benefits
Our named
executive officers receive certain personal benefits in connection with their
employment with the Company. In 2008, to facilitate the
business-related travel of our chief executive officer, the Company provided Mr.
Mangano with a late-model automobile and paid for its operation and maintenance,
which was valued at the cost to us. Mr. Reardon receives an
automobile reimbursement allowance. Mr. Mangano also was reimbursed
for a golf club membership and a social membership at a country club located
near the Company’s main office. Mr. Mangano uses these facilities for
business meetings.
Requirements
of Recently Enacted Legislation
We participated in the Troubled Asset
Relief Program Capital Purchase Program (referred to in this section as the
“TARP Program”) established under the Emergency Economic Stabilization Act of
2008 (the “EESA”) pursuant to which, on December 23, 2008, the U.S. Department
of the Treasury (“Treasury”) invested approximately $12 million in our preferred
stock.
Participation in the TARP Program
requires that we implement certain restrictions and limitations on executive
compensation, in particular severance pay, requires a review of our incentive
compensation programs to ensure that they do not encourage our senior executive
officers to take unnecessary and excessive risks, and limits our ability to
receive tax deductions related to senior executive pay. Specifically,
the provisions agreed to were as follows:
• NO GOLDEN PARACHUTE PAYMENTS. A “Golden parachute payment”
under the TARP Program means a severance payment resulting from involuntary
termination of employment, or from bankruptcy of the employer, that exceeds
three times the terminated employee’s average annual base salary over the five
years prior to termination. Our named executive officers have agreed to forego
all golden parachute payments for as long as two conditions remain true: They
remain “senior executive officers” and the Treasury continues to hold our equity
or debt securities we issued to it under the TARP Program (the period during
which the Treasury holds those securities is the “Covered
Period”).
•
RECOVERY OF BONUS, RETENTION AWARDS AND INCENTIVE COMPENSATION IF BASED ON
CERTAIN MATERIAL INACCURACIES. Our named executive officers have also agreed to
a “clawback provision,” which means that we can recover any bonus, retention
award or incentive compensation paid during the Covered Period that is later
found to have been based on materially inaccurate financial statements or other
materially inaccurate measurements of performance.
• NO
COMPENSATION ARRANGEMENTS THAT ENCOURAGE EXCESSIVE RISKS. During the Covered
Period, we are not allowed to enter into compensation arrangements
that encourage named executive officers to take “unnecessary and excessive risks
that threaten the value” of our company. To make sure this does not happen, the
Compensation Committee is required to meet at least once a year with our senior
risk officers to review our executive compensation arrangements in the light of
our risk management policies and practices. Our named executive officers’
written agreements include their obligation to execute whatever documents we may
require in order to make any changes in compensation arrangements resulting from
the Compensation Committee’s review.
• LIMIT
ON FEDERAL INCOME TAX DEDUCTIONS. During the Covered Period, we are not allowed
to take federal income tax deductions for compensation paid to senior executive
officers in excess of $500,000 per year, with certain exceptions that do not
apply to our named executive officers. This represents a 50% reduction in the
income tax deductibility limit and the elimination of the exemption for
performance-based compensation.
Additionally, on February 17, 2009,
President Obama signed into law the American Recovery and Reinvestment Act of
2009 (“ARRA”), which amends the EESA by, among other things, directing Treasury
to issue regulations implementing strict limitations on compensation paid or
accrued by financial institutions, like us, participating in the TARP Program.
The compensation-related limitations applicable to us added or modified by ARRA
which are subject to standards to be established by the Secretary of the
Treasury are as follows:
• NO
SEVERANCE PAYMENTS. Under ARRA, “golden parachutes” were redefined as any
severance payment resulting from involuntary termination of employment, or from
bankruptcy of the employer, except for payments for services performed or
benefits accrued. Consequently under ARRA, we are prohibited from making any
severance payment during the Covered Period to our “senior executive officers”
(defined in ARRA as the five highest paid named executive officers) and our next
five most highly compensated employees.
•
RECOVERY OF BONUS, RETENTION AWARDS AND INCENTIVE COMPENSATION IF BASED ON
CERTAIN MATERIAL INACCURACIES. ARRA also contains the “clawback provision”
discussed above but extends its application to any bonus, retention award or
awards and incentive compensation paid to any of our senior executive officers
or our next 20 most highly compensated employees during the Covered Period that
is later found to have been based on materially inaccurate financial statements
or other materially inaccurate measurements of performance.
• NO
COMPENSATION ARRANGEMENTS THAT ENCOURAGE EARNINGS MANIPULATION. Under ARRA,
during the Covered Period, we are not allowed to enter into compensation
arrangements that encourage manipulation of our reported earnings to enhance the
compensation of any of our employees.
• LIMIT
ON INCENTIVE COMPENSATION. ARRA contains a provision that prohibits the payment
or accrual during the Covered Period of any bonus, retention award or incentive
compensation to our most highly compensated employee other than awards of
long-term restricted stock that (i) do not fully vest during the Covered Period,
(ii) have a value not greater than one-third of the total annual compensation of
the award recipient and (iii) are subject to such other restrictions as may be
determined by the Secretary of the Treasury. We do not know whether awards of
stock options are covered by this prohibition. The prohibition on bonus,
incentive compensation and retention awards does not preclude payments required
under written employment contracts entered into on or prior to February 11,
2009.
•
COMPENSATION COMMITTEE FUNCTIONS. ARRA requires that our Compensation Committee
be comprised solely of independent directors and that it meet at least
semiannually to discuss and evaluate our employee compensation plans in light of
an assessment of any risk posed to us from such compensation
plans. See “Director Independence” above for a discussion of the
independence of our Compensation Committee.
•
COMPLIANCE CERTIFICATIONS. ARRA also requires a written certification by our
Chief Executive Officer and Chief Financial Officer of our compliance with the
provisions of ARRA. This requirement will be implemented in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2009.
•
TREASURY REVIEW OF BONUSES PREVIOUSLY PAID. ARRA directs the Secretary of the
Treasury to review all compensation paid to our senior executive officers and
our next 20 most highly compensated employees to determine whether any such
payments were inconsistent with the purposes of ARRA or were otherwise contrary
to the public interest. If the Secretary of the Treasury makes such a finding,
the Secretary of the Treasury is directed to negotiate with the TARP Program
recipient and the subject employee for appropriate reimbursements to the federal
government with respect to compensation and bonuses found to be
excessive.
• SAY ON
PAY. Under the ARRA, the SEC is required to promulgate rules requiring an
advisory, non-binding say on pay vote by the shareholders on executive
compensation at the annual meeting during the Covered Period. The Company will
comply with the provisions of the ARRA and its implementing regulations in all
respect, which includes the submission of “Item 3: Advisory Vote on Compensation
of Named Executive Officers” set forth in this proxy statement.
As noted, the ARRA directs the Treasury
to issue regulations implementing the foregoing. There are numerous questions
regarding the scope of the limitations and the requirements of the ARRA. None of
the regulations mandated by the law have been issued to date. Pending the
issuance of regulations, the Board, Compensation Committee and management are
reviewing the requirements of the ARRA, its impact on current and going forward
compensation, and the effect of the law’s requirements on the Company’s
competitive position. Actions required by the ARRA and consideration of
competitive factors may include changes to the form and amount of compensation
paid to our executive officers, including adjustments to base salaries, the
reduction or elimination of bonus compensation, issuance of long-term restricted
stock awards and modifications to existing plans and agreements.
OUTSTANDING
EQUITY AWARDS AT 2008 FISCAL YEAR-END
|
Option
Awards(1)
|
Stock
Awards(2)
|
Name
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of
Shares
or Units
of
Stock That
Have
Not Vested
(#)
|
Market
Value of
Shares
or Units of
Stock
That Have
Not
Vested
($)
|
Robert
F.
Mangano
|
1,980
|
496
|
$16.74
|
12/15/15
|
|
|
|
1,415
|
944
|
$16.10
|
12/21/16
|
|
|
|
890
|
1,336
|
$13.06
|
12/20/17
|
|
|
|
630
|
2,520
|
$10.00
|
1/02/19
|
|
|
|
|
|
|
|
620
(2.A)
|
$5,964
|
|
|
|
|
|
929
(2.B)
|
$8.937
|
|
|
|
|
|
1,181
(2.C)
|
$11,361
|
|
|
|
|
|
1,770
(2.D)
|
$17,027
|
|
|
|
|
|
1,670
(2.E)
|
$16,065
|
|
|
|
|
|
2,504
(2.F)
|
$24,088
|
Joseph
M.
Reardon
|
1,573
|
0
|
$3.33
|
12/06/10
|
|
|
|
1,499
|
0
|
$7.20
|
12/20/11
|
|
|
|
1,430
|
0
|
$6.91
|
07/18/12
|
|
|
|
2,864
|
0
|
$9.67
|
12/19/12
|
|
|
|
2,728
|
0
|
$10.76
|
12/19/13
|
|
|
|
2,600
|
0
|
$13.99
|
12/16/14
|
|
|
|
1,980
|
496
|
$16.74
|
12/15/15
|
|
|
|
1,415
|
944
|
$16.10
|
12/21/16
|
|
|
|
445
|
668
|
$14.37
|
08/08/17
|
|
|
|
667
|
1,002
|
$13.05
|
12/20/17
|
|
|
|
525
|
2,100
|
$10.00
|
01/02/19
|
|
|
|
|
|
|
|
620
(2.G)
|
$5,964
|
|
|
|
|
|
1,181(2.H)
|
$11,361
|
|
|
|
|
|
2,087
(2.I)
|
$20,077
|
___________________
(1)
|
All
option awards reflected in these columns either vested or will vest in 20%
annual increments, with the first 20% vesting on the date of grant and the
remaining options vesting in equal annual installments on the anniversary
date of grant over the next four years of the ten year option
term.
|
(2)
|
All
stock awards reflected in these columns represent restricted stock grants,
which either vested or will vest in 25% annual increments, with the first
25% vesting one year from the date of grant and the remaining restricted
stock vesting in equal annual installments on the anniversary date of
grant over the next three years. The following table provides the grant
date for each restricted stock award reflected
above.
|
Footnote
Reference
|
Grant
Date
|
2.A
|
06/16/05
|
2.B
|
12/15/05
|
2.C
|
07/13/06
|
2.D
|
12/21/06
|
2.E
|
08/08/07
|
2.F
|
12/20/07
|
2.G
|
06/16/05
|
2.H
|
07/13/06
|
2.I
|
08/08/07
|
Stock
Option Plans
2006 Directors Stock
Plan
The
1st
Constitution Bancorp 2006 Directors Stock Plan (the “2006 Directors Plan”) was
adopted by the Board of Directors of the Company on March 23, 2006 and was
approved by the shareholders on May 18, 2006. The 2006 Directors Plan
is administered by the Compensation Committee of the Board, which determines the
terms of each grant under the plan.
Under the
2006 Directors Plan, the Company may grant participants stock options or shares
of restricted stock relating to an aggregate maximum of 58,989 shares of the
Company’s common stock. Awards may be granted under the 2006
Directors Plan only to non-employee directors of the Company or directors of any
of the Company’s subsidiaries or affiliates.
The
exercise price of options granted under the 2006 Directors Plan must equal at
least the fair market value of the Company common stock at the time of grant.
The number of shares of Company common stock covered by the 2006 Directors Plan,
and the amount and grant price for each award, shall be proportionally adjusted
for any increase or decrease in the number of issued shares of Company common
stock resulting from the subdivision or consolidation of shares or the payment
of a stock dividend or any other increase or decrease in the number of shares
effected without receipt of consideration by the Company.
Except as
otherwise determined by the Board, upon termination of service as a director
during the applicable restriction period, restricted stock that is at that time
subject to restrictions will be forfeited and reacquired by the Company, except
that the Board may, in its sole determination, waive the restrictions or
forfeiture conditions relating to restricted stock.
As of the
date of this proxy statement, there were no options for shares and 3,562 grants
of restricted shares (as adjusted for all stock dividends) outstanding under the
2006 Directors Plan.
2005 Equity Incentive
Plan
The 1st
Constitution Bancorp 2005 Equity Incentive Plan (the “2005 Plan”) was adopted by
the Board of Directors of the Company on February 17, 2005 and was approved by
the shareholders on May 19, 2005.
The 2005
Plan is administered by the Compensation Committee of the Board, which
determines the terms of each grant under the plan. Under the 2005
Plan, the Company may grant participants stock options, restricted stock, or
other awards determined by the Compensation Committee relating to an aggregate
maximum of 371,631 shares of the Company’s common stock, subject to future
adjustment. Participants are limited in any year to awards under the Plan
relating to no more than 21,200 shares per type of award (that is, options,
restricted stock, and other awards), plus the amount of the participant’s unused
annual limit relating to the same type of award as of the close of the previous
year, subject to future adjustment.
Awards
may be granted under the 2005 Plan to employees of the Company or any subsidiary
or affiliate, including any executive officer or employee director of the
Company, a consultant or other person who provides substantial services to the
Company or a subsidiary or affiliate, and any person who has been offered
employment by the Company or a subsidiary or affiliate, provided that such
prospective employee may not receive any payment or exercise any right relating
to an award until such person has commenced employment with the Company or a
subsidiary or affiliate. Non-employee directors are not eligible to participate
in the 2005 Plan.
The
exercise price of options granted under the 2005 Plan must equal the fair market
value of the Company common stock at the time of grant, and the term of any
option cannot exceed 10 years after the date of the grant. The number of shares
of Company common stock covered by the 2005 Plan, and the amount and grant price
for each award, shall be proportionally adjusted for any increase or decrease in
the number of issued shares of Company common stock resulting from the
subdivision or consolidation of shares or the payment of a stock dividend or any
other increase or decrease in the number of shares effected without receipt of
consideration by the Company.
As of the
date of this proxy statement, there were 36,061 options for shares and 39,122
grants of restricted shares (as adjusted for all stock dividends) outstanding
under the 2005 Plan.
2000 Employee Stock Option
and Restricted Stock Plan
The 2000
Employee Stock Option and Restricted Stock Plan (the “2000 Plan”) was adopted by
the Board of Directors of the Company and approved by the shareholders of the
Company in April 2000. Under the 2000 Plan, the Company may issue stock options
for up to 596,610 shares of its common stock to eligible employees, independent
contractors, agents and consultants of the Company and its subsidiaries, but
excluding non-employee directors of the Company, to aid in attracting and
retaining employees, independent contractors, agents and consultants, and to
closely align their interests with those of shareholders. The Company may also
issue shares of Company restricted common stock under the 2000 Plan as a bonus
to any employee for such consideration as determined by the committee in
accordance with applicable laws.
The 2000
Plan is administered by the Compensation Committee of the Board, which
determines the terms of each grant under the 2000 Plan. Under the 2000 Plan, the
option price must equal the fair market value of the Company common stock at the
time of grant, and the term of any option cannot exceed 10 years after the date
of the grant. The number of shares of Company common stock covered by the 2000
Plan, and the amount and option price for each outstanding option, shall be
proportionally adjusted for any increase or decrease in the number of issued
shares of Company common stock resulting from the subdivision or consolidation
of shares or the payment of a stock dividend or any other increase or decrease
in the number of shares effected without receipt of consideration by the
Company.
As of the
date of this proxy statement, options for 62,018 shares (as adjusted for all
stock dividends) were outstanding under the 2000 Plan and 64,917 shares of
restricted stock, subject to vesting based on continued service, have been
granted under the 2000 Plan. No grants were made under the 2000
Plan during 2008.
Directors
Plan
The Board
of Directors of the Company adopted a Directors Stock Option and Restricted
Stock Plan for non-employee directors (the “Directors Plan”). The Directors Plan
provides for options to purchase a total of not more than 140,708 shares of
Company common stock by non-employee directors of the Company and its
subsidiaries, including the Bank. As of the date of this proxy statement,
options for 65,962 shares (as adjusted for all stock dividends) were outstanding
under the Directors Plan.
The
Directors Plan is administered by the Compensation Committee of the Board, which
determines the terms of each grant under such Directors Plan. Under the
Directors Plan, the option price must equal the fair market value of the Company
common stock at the time of grant, and the term of any option cannot exceed 10
years from the date of the grant. The number of shares of Company common stock
covered by the Directors Plan, and the amount and option price for each
outstanding option shall be proportionally adjusted for any increase or decrease
in the number of issued shares of Company common stock resulting from the
subdivision or consolidation of shares or the payment of a stock dividend or any
other increase or decrease in the number of shares effected without receipt of
consideration by the Company.
Upon the
approval by the shareholders of the Company’s 2006 Directors Stock Plan at the
2006 annual meeting of shareholders, the Directors Plan was discontinued and, as
of such time, no further awards may be made under the Directors
Plan.
TERMINATION
OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS
Supplemental
Executive Retirement Plans
The
Company maintains two Supplemental Executive Retirement Plans. The
1st Constitution Bancorp Supplemental Executive Retirement Plan was established
on October 1, 2002 (“Old SERP”), and the 1st Constitution Bancorp 2005
Supplemental Executive Retirement Plan was established as of January 1, 2005
(the “New SERP” and, collectively with the Old SERP, the
“SERPS”). The SERPS provide nonqualified pension benefits to certain
executives who have been appointed by the Compensation Committee.
Under the
SERPS, a participant vests in his benefits at a rate of 10% for each full year
of service with the Company. Upon completing 10 years of service, a
participant is 100% vested in his benefits under the
SERPS. Notwithstanding the foregoing, a participant will become 100%
vested in his benefits upon his normal retirement date, death or disability
while he is employed with the Company, or upon a change in
control. If a participant is terminated for cause, all of his
benefits under the SERPS will be forfeited. The Board, in its sole
discretion, has the ability to accelerate the vesting of the pension benefit
payable to any participant of the New SERP. In the case of Mr.
Mangano, the Board has fully vested his benefit under the New SERP.
On
December 21, 2006, our Board approved an amendment that had the effect of
freezing the Old SERP effective as of December 31, 2004. The Company
concurrently adopted the New SERP, effective as of January 1, 2005, which is
administered by our Compensation Committee. All unvested benefit
liabilities were transferred to the New SERP. Executives employed by
the Company and/or the Bank who are designated by the Compensation Committee as
participants are eligible to participate in the New SERP. At the time
that the Old SERP was frozen, Mr. Mangano and Mr. Reardon were
participants. Mr. Mangano is fully vested in his benefit under the
SERPS. Mr. Reardon is not fully vested in his benefits under the
SERPS. In connection with the SERPS for 2007, the Company incurred
expenses of $266,305 for Mr. Mangano and $30,009 for Mr. Reardon, which amounts
are not reflected in the Summary Compensation Table above. In connection with
the SERPS for 2008, the Company incurred expenses of $396,603 for Mr. Mangano
and $44,869 for Mr. Reardon, which amounts are not reflected in the Summary
Compensation Table above. Future participants could be added to
the New SERP by future action of the Compensation Committee.
The
Company’s primary rationale for freezing the Old SERP and adopting the New SERP
was to make our supplemental executive retirement plan fully compliant with the
requirements of Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”). Failure to comply with Section 409A would have resulted
in adverse tax consequences for the plan’s participants.
The New
SERP also increased the annual nonqualified pension benefit that certain current
participants will be entitled to receive following termination of
employment. The New SERP benefit is generally equal to the
participant’s final base compensation, multiplied by a multiplier percentage
selected for such participant by the Committee.
A
participant’s benefits under the SERPS as of his normal retirement date (65th
birthday) is equal to the percentage multiplier established by the Committee for
each participant times the participant’s final base compensation. The
percentage multiplier used to calculate benefits under the old SERP is 50% and
25% for Mr. Mangano and Mr. Reardon, respectively. The percentage multiplier
used to calculate benefits under the New SERP is 55% and 30% for Mr. Mangano and
Mr. Reardon, respectively. Final base compensation means a participant’s highest
annual rate of base compensation in effect for the twelve month period prior to
his termination from employment. Bonuses, overtime pay, commissions,
other extraordinary payments, reimbursements or other expense allowances, equity
compensation, fringe benefits (cash and non-cash), moving expenses, deferred
compensation, and welfare benefits are excluded, and amounts contributed to the
Company’s 401(k) plan and cafeteria plan are included in the determination of
final base compensation. Notwithstanding the foregoing, if a
participant dies while employed by the Company before age 65 and before a change
in control, final base compensation will be determined as of the date of death,
as adjusted by 4% annual increases until age 65.
Mr.
Reardon, who is age 56, has not reached his normal retirement
date. If a participant terminates employment with the Company before
his normal retirement date (for reasons other than death, death disability or a
change in control), his normal retirement benefits under the SERPS will be
reduced by 5% for each full and partial year that his termination date precedes
his normal retirement date. Upon a change in control, the
participant’s benefit under the SERPS will be reduced by 5% for each year (or a
portion thereof) by which the payment commencement date precedes his 65th
birthday.
Generally,
a participant elects a form of payment at the time they become eligible to
participate in the SERPS. In the event that a participant commences
payment of his benefit under the SERPS at or following age 65 (or following a
change of control), the participant will be entitled to a lifetime annuity with
a 15-year minimum guaranteed payout period, or a lump sum that is the actuarial
equivalent thereof. For payments commencing prior to age 65 (assuming
no change of control), the participant will be entitled to a 15-year guarantee
payout (but without a life annuity), or a lump sum that is the actuarial
equivalent thereof.
If a
participant terminates employment as a result of becoming disabled, he will be
entitled to an unreduced benefit commencing on his normal retirement
date. The benefit under the SERPS will be paid as a lifetime annuity
with a 15-year minimum guaranteed payout period.
If a
participant dies before payment of his benefits under the SERPS commence and
while employed with the Company or after separating from service with the
Company as a result of disability, his beneficiary will receive a lump sum
payment equal to the actuarial equivalent of the benefits payable at the
participant’s normal retirement date. If a participant dies after
payment of his benefits under the SERPS have commenced, his beneficiary will
receive a lump sum payment equal to the actuarial equivalent of the remaining
benefits.
Lump sum
payments are equal to the amount of the monthly annuity multiplied by a factor
derived from the actuarial equivalent factors (mortality table and interest
rate). These factors are determined by the Committee and are based
upon market conditions. Currently, the mortality table being used is
the RP-2000 Annuity Mortality Table and the interest rate is 6%.
Payments
from the New SERP may be delayed upon a participant’s termination of employment,
in accordance with Section 409A of the Internal Revenue Code. The
obligation to make payments under the SERPs may be affected by the terms of the
Company’s participation in the TARP Program. See “Requirements of
Recently Enacted Legislation” above.
Change
in Control Payments and Benefits
As
discussed in more detail in the narrative following the Summary Compensation
Table of this proxy statement, the Company has entered into an employment
agreement with Mr. Mangano which contains change in control
provisions. Additionally, we have a written change of control
agreement with Mr. Reardon. Under these agreements, these executives
are entitled to certain payments and benefits upon the occurrence of certain
triggering events that result in the executive’s termination.
Mr.
Mangano’s employment agreement provides for a lump-sum payment and other
benefits to Mr. Mangano if he is terminated within 12 months after a change in
control for reasons other than for cause, death, disability or termination by
Mr. Mangano for any reason. Mr. Mangano’s employment agreement also
provides for the payment of lump-sum or monthly payments and other benefits to
Mr. Mangano if he is terminated other than for cause or quits for “good
reason.”
Mr.
Reardon’s change of control agreement provides for the continued payment of his
base salary for a period of 18 months if he is terminated within 18 months after
a change in control for reasons other than for cause, death, disability,
retirement or termination by Mr. Reardon for good reason. In
addition, the vesting schedule of Mr. Reardon’s benefits under the New SERP will
accelerate to provide immediate and full vesting upon a change in
control. Mr. Mangano’s New SERP benefit is currently fully
vested.
Also,
under the terms of the 2005 Plan, occurrence of a change in control (as defined
in the 2005 Plan) results in immediate acceleration of vesting and
exercisability of unvested stock options, and accelerated vesting of restricted
stock awards, even if termination of employment has not occurred. This “single
trigger” acceleration assures the named executive officers that we cannot claim
that the option or restricted stock award expired on termination of
employment.
Our named
executive officers are not generally entitled to receive any incremental
payments or benefits if the officer voluntarily initiates the termination of
employment with the Company.
We have
these agreements with our named executive officers because we want to retain
their services in case a change in control becomes a possibility. Often when
this happens, executives become distracted by personal concerns about how they
will be affected by the change. Our agreements provide financial security in the
face of a possible major event requiring our named executive officers’
concentrated efforts.
With this
in mind, we have structured the occurrence of a change in control in Mr.
Mangano’s employment agreement, Mr. Reardon’s change of control agreement and
Mr. Reardon’s New SERP using a very broad definition of that term. The events
defined in the agreement as changes of control are as follows:
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Outsider stock
accumulation. Under Mr. Mangano’s employment agreement, a change in
control is generally deemed to occur if a person or business entity
acquires 35% or more of our common stock. Under Mr. Reardon’s
New SERP, a change in control is generally deemed to occur if a person or
business entity acquires 50% or more of our common
stock.
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Outsider
tender/exchange offer. Under Mr. Mangano’s employment agreement, a
change in control is generally deemed to occur upon the first purchase of
our common stock made under a tender offer or exchange offer by a person
or entity that is not our “affiliate.” This does not apply to
Mr. Reardon’s change of control agreement or his New
SERP.
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Business combination
transaction. Under Mr. Mangano’s employment agreement, a change in
control is generally deemed to occur if we complete a merger or
consolidation with another company, other than a merger or consolidation
where the Company is the surviving entity, and the merger or consolidation
does not result in the reclassification of shares or the alteration of the
composition of the Board, other than the addition of three additional
directors. Under Mr. Reardon’s change of control agreement, a
change in control is generally deemed to occur if we complete a merger or
consolidation, or a binding share exchange involving the Company’s
securities, other than any transaction where the Company’s securities
would represent at least 66 2/3% of the voting securities of the surviving
entity. Under Mr. Reardon’s New SERP, a change in control is
generally deemed to occur if we complete a merger or consolidation, or a
binding share exchange involving the Company’s securities, other than any
transaction where the Company’s securities would represent at least 50% of
the voting securities of the surviving
entity.
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Asset sale. A
change in control is generally deemed to occur if we sell or otherwise
dispose of all or substantially all of our assets, or those of our banking
subsidiary.
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Dissolution/Liquidation.
A change in control is generally deemed to occur if we adopt a plan of
dissolution or liquidation.
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Board turnover.
A change in control is generally deemed to occur if we experience a
substantial and rapid turnover in the membership of our Board of
Directors. This means that changes in Board membership occurring within
any period of 2 consecutive years result in, under Mr. Mangano’s
employment agreement, two-thirds (2/3) of our Board members not being
“continuing directors,” and under Mr. Reardon’s change of control
agreement and his New SERP, a majority of our Board members not being
continuing directors. A “continuing director” is a Board member
who was serving as such at the beginning of the 2-year period, or one who
was nominated or elected by the vote of at least 2/3 of the “continuing
directors” who were serving at the time of his/her nomination or
election.
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Controlling
influence. A change in control is generally deemed to
occur if under Mr. Mangano’s employment agreement, any person or group
within the meaning of Sections 13(d)(3) or 14(d)(2) of the Exchange Act
exercises a controlling influence over the management or policies of the
Company. This does not apply to Mr. Reardon’s change of control
agreement or his New SERP.
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Control of
election. A change in control is generally deemed to
occur if under Mr. Mangano’s employment agreement, any person acquires
either directly or indirectly control over the election of a majority of
the Company’s directors. This does not apply to Mr. Reardon’s
change of control agreement or his New
SERP.
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“Cause”
for our termination of a named executive officer’s employment means his or her
failure to perform employment duties, misconduct in office, a criminal
conviction, drug or alcohol abuse or excessive absence.
For Mr.
Mangano, “good reason” means any of the following actions by us:
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We
require Mr. Mangano to move his personal residence out of the Bank’s
geographic area;
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We
assign Mr. Mangano duties and responsibilities substantially inconsistent
with those normally associated with his
position;
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We
materially reduce Mr. Mangano’s responsibilities or
authority;
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We
materially reduce Mr. Mangano’s base salary or benefits;
or
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We
materially breach Mr. Mangano’s employment agreement with the Company and
that breach is not cured within 30 days after he notifies the Company of
the breach.
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For Mr.
Reardon, “good reason” means any of the following actions by us:
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We
significantly reduce Mr. Reardon’s authority or
responsibility;
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We
assign Mr. Reardon duties that are materially different or require a
significant increase in travel;
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We
reduce Mr. Reardon’s base salary or fail to grant reasonable increases in
base salary;
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We
relocate the Company’s principal offices to a location outside the State
of New Jersey; or
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A
successor to the Company fails to assume the
agreement.
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The
benefit to which Mr. Mangano becomes entitled if he is terminated without cause,
or quits for any reason, within 12 months after a change in control, is a lump
sum amount equal to three times the aggregate of his then base salary plus a
projected annual cash bonus, to be paid within 10 days after
termination.
The
benefit to which Mr. Mangano becomes entitled if he is terminated without cause,
or quits for good reason, other than in the 12-month period following a change
in control, is double the aggregate of his base salary plus any appropriate cash
bonus on an annual basis at the rate then in effect. This amount is
payable in equal consecutive monthly payments, or in one lump sum within 10 days
after the termination, at the discretion of the Company. In the event
that any severance payments would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties are incurred by Mr.
Mangano as a result of such excise tax, Mr. Mangano will be entitled to receive
a gross-up to offset any such amounts. This is an additional payment
by us to the named executive officer to offset the excise tax the named
executive officer has to pay, as well as any tax on the “gross-up” payment
itself.
The
benefit to which Mr. Reardon becomes entitled if he is terminated without cause,
or quits for good reason, within 18 months after a change in control, is 18
monthly payments equal to one-twelfth of his highest base salary that he
received in the 12 months prior to such termination. If payments
under Mr. Reardon’s change of control agreement would not be deductible in whole
or in part under Section 280G or 162(m) of the Internal Revenue Code, or any
combination thereof, such payments will be reduced until the payments are either
fully deductible or are reduced to zero.
Mr.
Reardon’s benefits under the New SERP will immediately and fully vest, to the
extent they have not already vested, upon a change in control. Under
the terms of the New SERP, Mr. Reardon earns the right to an annual nonqualified
pension benefit to be paid following termination of employment, subject to a
vesting schedule. Mr. Reardon’s New SERP benefit is generally equal to his final
base compensation, multiplied by a multiplier of 30%. Final base compensation is
generally equal to Mr. Reardon’s highest annual rate of base compensation in
effect during the twelve month period prior to termination of employment. In the
event that Mr. Reardon, who is currently age 56, terminates employment prior to
age 65 (for reasons other than disability, death or change in control, then the
New SERP benefit is reduced by 5% for each full or partial year by which the Mr.
Reardon’s termination date precedes his attainment of age 65.
Our
obligation to make payments under these agreements is affected by the terms of
our participation in the TARP Program. See “Requirements of Recently
Enacted Legislation” above. Under the ARRA, no severance payments are
permitted to be made to our named executive officers and our five next most
highly paid employees during the Covered Period.
CERTAIN
TRANSACTIONS WITH MANAGEMENT
Transactions
with Related Persons
The
Company, through its subsidiary, the Bank, has made loans to its directors and
executive officers and their associates and, assuming continued compliance with
generally applicable credit standards, it expects to continue to make such
loans. All of these loans (i) were made in the ordinary course of business, (ii)
were made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons, and (iii) did not involve more than the normal risk of
collectibility or present other unfavorable features. As of December 31, 2008,
the Bank had total loans and loan commitments outstanding to directors and
executive officers and their affiliates of $685,183, or approximately 1.2% of
total shareholder’s equity at that date. As of December 31, 2008, no
director or executive officer of the Company was in default under any loan
transaction with the Company or the Bank.
The Board
has determined that other than the transactions described in the preceding
paragraph, no transactions occurred since the beginning of 2007 involving any
director, director nominee or executive officer of the Company, any known 5%
shareholder of the Company or any immediate family member of any of the
foregoing persons (together “related persons”) that would require disclosure as
a “related person transaction”.
SHAREHOLDER
PROPOSALS
New
Jersey corporate law requires that the notice of shareholders’ meeting (for
either a regular or special meeting) specify the purpose or purposes of the
meeting. Thus any substantive proposal, including shareholder proposals, must be
referred to in the Company’s notice of shareholders’ meeting for the proposal to
be properly considered at a shareholders’ meeting.
Proposals
of shareholders which are eligible under the rules of the Securities and
Exchange Commission to be included in the Company’s 2010 proxy materials must be
received by the Corporate Secretary of the Company no later than December 14,
2009.
If the
Company changes the date of its 2010 annual meeting of shareholders to a date
more than 30 days from the anniversary of the date of its Annual Meeting, then
the deadline for submission of shareholder proposals will be changed to a
reasonable time before the Company begins to print and mail its proxy materials.
If the Company changes the date of its annual meeting in a manner that alters
the deadline, the Company will so state under Part II, Item 5 of the first
quarterly report on Form 10-Q it files with the SEC after the date change, or
will notify its shareholders by another reasonable method.
Under our
bylaws, written notice of shareholder nominations to the Board of Directors must
be delivered to the Company’s Secretary not less than 90 days prior to the first
anniversary of the preceding year’s annual meeting of shareholders. Accordingly,
any shareholder who wishes to have a nomination considered at the 2010 annual
meeting of shareholders must deliver a written notice (containing the
information specified in our bylaws regarding the shareholder and the proposed
action) to the Company’s Secretary by February 20, 2010.
OTHER
MATTERS
As of the
date of this proxy statement, the Board is not aware of any other matters that
may come before the Annual Meeting. However, in the event such other matters
come before the meeting, the persons named on the white proxy card will have the
discretion to vote on those matters using their best judgment.
Shareholders
are urged to sign the enclosed proxy, which is solicited on behalf of the Board,
and return it in the enclosed envelope.
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By
Order of the Board of Directors
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ROBERT
F. MANGANO
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President
and Chief Executive Officer
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A
copy of the annual report to shareholders for the fiscal year ended December 31,
2008 accompanies this proxy statement. The annual report is a
combined report with the Company’s Annual Report on Form 10-K (without exhibits)
for the year ended December 31, 2008 filed with the Securities and Exchange
Commission. The Company will provide copies of the exhibits to the
Form 10-K upon payment of a reasonable fee, upon receipt of a request addressed
to the Corporate Secretary, 1st Constitution Bancorp, 2650 Route 130 North,
Cranbury, New Jersey 08512.
Proxy
Solicited on Behalf of the Board of Directors
for
the Annual Meeting of Shareholders on May 21, 2009
The
undersigned hereby appoints Robert F. Mangano and Joseph M. Reardon and each of
them, with full power of substitution, as attorneys and proxies for the
undersigned, to attend the 2009 Annual Meeting of Shareholders of 1st
Constitution Bancorp (the “Company”), to be held at the Forsgate Country Club,
375 Forsgate Drive, Monroe Township, New Jersey, on May 21, 2009, at 3:00 p.m.
Eastern Time, or any adjournment thereof, and to vote the number of shares of
common stock of the Company that the undersigned would be entitled to vote, and
with all the power the undersigned would possess, if personally present, as
follows:
1.
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To
vote for the following nominee for election as director
of
the Company:
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For
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Withhold
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To
vote for the following nominee for election as director
of
the Company:
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For
o
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Withhold
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2.
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Ratify
selection of Beard Miller
Company LLP as
independent
registered public accounting firm of the
Company.
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For
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Against
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Abstain
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3.
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To
approve on a non-binding basis, the compensation of
the
Company’s named executive officers as determined
by
the Compensation Committee.
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For
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Against
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Abstain
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4.
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In
their discretion, on the conduct of other business if properly
raised.
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If
this proxy is properly signed and is not revoked, the proxies will vote as
specified herein or, if a choice is not specified, they will vote “FOR” the
nominees listed in Item 1, “FOR” the proposal set forth in Item 2,
“FOR” the non-binding approval of the compensation of the Company’s named
executive officers listed in Item 3, and in their discretion on the conduct
of other business if properly raised.
This
proxy is solicited by the Board of Directors of the Company.
Please
sign exactly as your names appear hereon, indicating, where proper, official
position or representative capacity.
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Date:
, 2009
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(Signatures)
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