PEAPACK-GLADSTONE
FINANCIAL CORPORATION
158
ROUTE 206 NORTH
GLADSTONE, NEW JERSEY
07934
TO
BE HELD ON TUESDAY, APRIL 28, 2009
To
Our Shareholders:
NOTICE IS
HEREBY GIVEN that the Annual Meeting of Shareholders of Peapack-Gladstone
Financial Corporation will be held at Bridgewater Manor, 1251 Route 202/206,
Bridgewater, New Jersey, on Tuesday, April 28, 2009, at 2:00 p.m. local time for
the purpose of considering and voting upon the following matters:
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1.
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Election
of eleven directors to serve until the expiration of their terms and
thereafter until their successors shall have been duly elected and
qualified.
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2.
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To
approve, on a non-binding basis, the compensation of the Corporation’s
named executive officers as determined by the Compensation
Committee.
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3.
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The
ratification of the appointment of Crowe Horwath LLP as the Corporation’s
independent registered public accounting firm for the year ending December
31, 2009.
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4.
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Such
other business as may properly come before the meeting or any adjournment
thereof.
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Only
shareholders of record at the close of business on March 16, 2009, are entitled
to receive notice of, and to vote at, the meeting.
You are
urged to read carefully the attached proxy statement relating to the
meeting.
Shareholders
are cordially invited to attend the meeting in person. Whether or not you expect
to attend the meeting, we urge you to date and sign the enclosed proxy form and
return it in the enclosed envelope as promptly as possible. You may revoke your
proxy by filing a later-dated proxy or a written revocation of the proxy with
the Corporate Secretary of Peapack-Gladstone prior to the meeting. If you attend
the meeting, you may revoke your proxy by filing a later-dated proxy or written
revocation of the proxy with the Corporate Secretary of the meeting prior to the
voting of such proxy.
By
Order of the Board of Directors
ANTOINETTE
ROSELL,
CORPORATE
SECRETARY
Gladstone,
New Jersey
March 27,
2009
YOUR
VOTE IS IMPORTANT. PLEASE SIGN AND RETURN THE
ENCLOSED
PROXY IN THE ENVELOPE PROVIDED.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE
SHAREHOLDER MEETING TO BE HELD ON APRIL 28, 2009
This
Proxy Statement and our Annual Report are available at
http://phx.corporate-ir.net/phoenix.zhtml?c=100168&p=irol-proxy
PEAPACK-GLADSTONE
FINANCIAL CORPORATION
158
ROUTE 206 NORTH
GLADSTONE,
NEW JERSEY 07934
DATED
MARCH 27, 2009
GENERAL
PROXY STATEMENT INFORMATION
This
proxy statement is furnished to the shareholders of Peapack-Gladstone Financial
Corporation (“Peapack-Gladstone”) in connection with the solicitation by the
Board of Directors of Peapack-Gladstone of proxies for use at the Annual Meeting
of Shareholders to be held at Bridgewater Manor, 1251 Route 202/206,
Bridgewater, New Jersey on Tuesday, April 28, 2009 at 2:00 p.m. local time. This
proxy statement is first being mailed to shareholders on approximately March 27,
2009.
VOTING
INFORMATION
Outstanding
Securities and Voting Rights
The
record date for determining shareholders entitled to notice of, and to vote at,
the meeting is March 16, 2009. Only shareholders of record as of the record date
will be entitled to notice of, and to vote at, the meeting.
On the
record date 8,299,249 shares of Peapack-Gladstone's common stock, no par value,
were outstanding and eligible to be voted at the meeting. Each share of
Peapack-Gladstone's common stock is entitled to one vote.
Required
Vote
The
election of directors requires the affirmative vote of a plurality of
Peapack-Gladstone's common stock voted at the meeting, whether voted in person
or by proxy. At the meeting, inspectors of election will tabulate both ballots
cast by shareholders present and voting in person, and votes cast by proxy.
Under applicable New Jersey law and Peapack-Gladstone's certificate of
incorporation and by-laws, abstentions and broker non-votes are counted for
purpose of establishing a quorum but have no impact on the election of
directors.
The
approval, on a non-binding basis, of the compensation of the Corporation’s named
executive officers as determined by the Compensation Committee requires the
affirmative vote of a majority of the votes cast at the meeting, whether voted
in person or by proxy. Abstentions and broker non-votes will have no
impact on the approval of this advisory proposal.
The
ratification of the appointment of Crowe Horwath LLP requires the affirmative
vote of a majority of the votes cast at the meeting, whether voted in person or
by proxy. Abstentions and broker non-votes will have no impact on the
ratification of Crowe Horwath LLP.
All
shares represented by valid proxies received pursuant to this solicitation will
be voted FOR the election of the 11 nominees for director who are named in this
proxy statement, FOR the approval, on a non-binding basis, of the compensation
of the Corporation’s named executive officers as determined by the Compensation
Committee, and FOR ratification of the appointment of Crowe Horwath LLP as the
Corporation’s independent registered public accounting firm for the year ending
December 31, 2009, unless the shareholder specifies a different choice by means
of the proxy or revokes the proxy prior to the time it is exercised. Should any
other matter properly come before the meeting, the persons named as proxies will
vote upon such matters according to their discretion.
Revocability
of Proxy
Any
shareholder giving a proxy has the right to attend and to vote at the meeting in
person. A proxy may be revoked prior to the meeting by filing a later-dated
proxy or a written revocation if it is sent to the Corporate Secretary of
Peapack-Gladstone, Antoinette Rosell, at 158 Route 206 North, Gladstone, New
Jersey, 07934, and is received by Peapack-Gladstone in advance of the meeting. A
proxy may be revoked at the meeting by filing a later-dated proxy or a written
revocation with the Secretary of the meeting prior to the voting of such
proxy.
Solicitation
of Proxies
This
proxy solicitation is being made by the Board of Peapack-Gladstone and its agent
Laurel Hill Advisory Group, LLC, and the costs of the solicitation will be borne
by Peapack-Gladstone. In addition to the use of the mails, proxies
may be solicited personally or by telephone, e-mail or facsimile transmission by
directors, officers and employees of Peapack-Gladstone and its subsidiaries or
Laurel Hill who, with the exception of Laurel Hill, will not be specially
compensated for such solicitation activities. The amount Peapack-Gladstone will
pay Laurel Hill for its proxy solicitation services is $6,500 plus certain out
of pocket costs. Peapack-Gladstone will also make arrangements with
brokers, dealers, nominees, custodians and fiduciaries to forward proxy
soliciting materials to the beneficial owners of shares held of record by such
persons, and Peapack-Gladstone may reimburse them for their reasonable expenses
incurred in forwarding the materials.
DIRECTOR
INFORMATION
Peapack-Gladstone's
certificate of incorporation and by-laws authorize a minimum of 5 and a maximum
of 25 directors, but leave the exact number to be fixed by resolution of
Peapack-Gladstone's Board of Directors. The Board has currently fixed
the number of directors at 11 and the Board is presently comprised of 11
members. Directors are elected annually by the shareholders for
one-year terms. Peapack-Gladstone's Nominating Committee has
recommended to the Board the 11 current directors for reelection to serve for
one-year terms expiring at Peapack-Gladstone’s 2009 Annual Meeting of
Shareholders or until their successors shall have been duly elected and
qualified. If, for any reason, any of the nominees become unavailable
for election, the proxy solicited by the Board will be voted for a substitute
nominee selected by the Board. The Board has no reason to believe
that any of the named nominees is not available or will not serve if
elected.
Unless a
shareholder indicates otherwise on the proxy, the proxy will be voted for the
persons named in the table below to serve until the expiration of their terms,
and thereafter until their successors have been duly elected and
qualified.
The
following table sets forth the names and ages of the Board's nominees for
election, the nominees' position with Peapack-Gladstone (if any), the principal
occupation or employment of each nominee for the past five years and the period
during which each nominee has served as a director of Peapack-Gladstone. The
nominee's prior service as a director includes prior service as a director of
Peapack-Gladstone Bank (the “Bank”) prior to the formation of the holding
company.
NOMINEES
FOR ELECTION AS DIRECTORS
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Name
and Position
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Director
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Principal
Occupation or Employment for the Past Five Years;
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With
Peapack-Gladstone
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Age
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Since
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Other
Company Directorships
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Anthony
J. Consi, II
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63
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2000
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Retired;
previously Senior Vice President of Finance and
Operations,
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Weichert
Realtors
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Pamela
Hill
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71
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1991
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President
of Ferris Corp., a real estate management company;
previously
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Vice
President of Ferris Corp.
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Frank
A. Kissel
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58
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1989
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Chairman
and CEO of Peapack-Gladstone and the Bank
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Chairman
and CEO
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John
D. Kissel
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56
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1987
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Real
Estate Broker, Turpin Real Estate, Inc.
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James
R. Lamb
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66
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1993
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Principal
of James R. Lamb, P.C., Attorney at Law.
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Edward
A. Merton
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68
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1981
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President
of Merton Excavating and Paving Co.
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F.
Duffield Meyercord
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62
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1991
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Partner
of Carl Marks Advisory Group, LLC; President, Meyercord
Advisors,
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Inc.;
Director of Wayside Technology Group (formerly
Programmer’s
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Paradise,
Inc.); Director of Headway Corporation
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John
R. Mulcahy
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70
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1981
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Retired;
previously President of Mulcahy Realty and
Construction.
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Robert
M. Rogers,
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50
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2002
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President
and COO of Peapack-Gladstone and the Bank
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President
and COO
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Philip
W. Smith, III
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53
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1995
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President,
Phillary Management, Inc., a real estate management
company.
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Craig
C. Spengeman,
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53
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2002
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President,
PGB Trust and Investments, a division of the Bank and
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President,
PGB Trust and
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Executive
Vice President of Peapack-Gladstone
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Investments
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RECOMMENDATION
AND VOTE REQUIRED ON PROPOSAL 1
THE BOARD
OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE ‘FOR’ THE NOMINATED SLATE OF
DIRECTORS INCLUDED IN PROPOSAL 1. Directors will be elected by a
plurality of the votes cast at the meeting. Abstentions and broker
non votes will have no impact on the election of directors.
CORPORATE
GOVERNANCE
General
The
business and affairs of Peapack-Gladstone are managed under the direction of the
Board of Directors. Members of the Board are kept informed of
Peapack-Gladstone's business through discussions with the Chairman and
Peapack-Gladstone’s other officers, by reviewing materials provided to them and
by participating in meetings of the Board and its committees. All
members of the Board also served as directors of Peapack-Gladstone's subsidiary
bank, Peapack-Gladstone Bank, during 2008. The Board of Directors of
Peapack-Gladstone and Peapack-Gladstone Bank held twelve meetings during
2008. During 2008, all directors of Peapack-Gladstone attended no
fewer than 75% of the total number of meetings of Peapack-Gladstone’s Board and
meetings of committees on which such director served. It is
Peapack-Gladstone’s policy to encourage director attendance at the Annual
Meeting absent a compelling reason such as illness. Last year, all
but two directors attended the Annual Meeting.
Our Board
of Directors believes that the purpose of corporate governance is to maximize
shareholder value in a manner consistent with legal requirements. The Board has
adopted corporate governance principles, which the Board and senior management
believe promote this purpose. We periodically review these governance
principles, the rules and listing standards of the National Association of Securities
Dealers Automated Quotations (NASDAQ) and Securities and Exchange Commission
(the “SEC”) regulations.
Director
Independence
The Board
has determined that a majority of the directors and all current members of the
Nominating, Compensation, and Audit Committees are “independent” for purposes of
Section 121 of the NASDAQ Company Guide, and that the members of the Audit
Committee are also “independent” for purposes of Section 10A-3 of the Securities
Exchange Act of 1934 and Section 803 of the NASDAQ Company Guide. The
Board based these determinations primarily on a review of the responses of the
directors and executive officers to questions regarding employment and
transaction history, affiliations and family and other relationships and on
discussions with the directors. The independent directors are Anthony
J. Consi, II, Pamela Hill, James R. Lamb, Edward A. Merton, F. Duffield
Meyercord, John R. Mulcahy, and Philip W. Smith, III.
To assist
it in making determinations of independence, the Board has concluded that the
following relationships are immaterial and that a director whose only
relationships with Peapack-Gladstone fall within these categories is
independent:
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A
loan made by the Bank to a director, his or her immediate family member or
an entity affiliated with a director or his or her immediate family
member, or a loan personally guaranteed by such persons if such loan (i)
complies with state and federal regulations on insider loans, where
applicable; and (ii) is not classified by the Bank’s credit committee or
by any bank regulatory agency which supervised the Bank as substandard,
doubtful or loss.
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A
deposit, trust, insurance brokerage, securities brokerage or similar
customer relationship between Peapack-Gladstone or its subsidiaries and a
director, his or her immediate family member or an affiliate of his or her
immediate family member if such relationship is on customary and usual
market terms and conditions.
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The
employment by Peapack-Gladstone or its subsidiaries of any immediate
family member of the director if the employee serves below the level of a
senior vice president.
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Annual
contributions by Peapack-Gladstone or its subsidiaries to any charity or
non-profit corporation with which a director is affiliated if the
contributions do not exceed an aggregate of $20,000 in any calendar year
and the contribution is made in the name of
Peapack-Gladstone.
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Purchases
of goods or services by Peapack-Gladstone or any of its subsidiaries from
a business in which a director or his or her immediate family member is a
partner, shareholder or officer, if the director or his or her immediate
family member owns five percent or less of the equity interests of that
business and does not serve as an executive officer of the
business.
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Purchases
of goods or services by Peapack-Gladstone, or any of its subsidiaries,
from a director or a business in which the director or his or her
immediate family member is a partner, shareholder or officer if the annual
aggregate purchases of goods or services from the director, his or her
immediate family member or such business in the last calendar year does
not exceed the greater of $60,000 or two percent of the gross revenues of
the business.
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Fixed
retirement benefits paid or payable to a director either currently or on
retirement.
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The
following categories or types of transactions, relationships or
arrangements were considered by the Board in determining that each listed
director is independent in accordance with the NASDAQ listing standards
and Peapack-Gladstone’s Corporate Governance
Principles.
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Independent
Director
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Category or
Type
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Mr.
Consi
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Deposits
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Ms.
Hill
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Deposits,
Trust
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Mr.
Lamb
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Loans,
Deposits, Trust
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Mr.
Merton
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Loans,
Deposits, Trust
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Mr.
Meyercord
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Loans,
Deposits, Trust
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Mr.
Mulcahy
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Loans,
Deposits, Trust
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Mr.
Smith
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Loans,
Deposits, Trust, Employment of Immediate Family Member
below
level of Senior Vice
President
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Executive
Sessions of Non-Management Directors
Our
Corporate Governance Principles require the Board to provide for at least
semi-annual executive sessions to include non-management
directors. At least once a year, the Board holds an executive session
including only independent directors. Peapack-Gladstone’s Board has chosen to
rotate the presiding director for each meeting among the Chairperson of the
Audit, Compensation, and Nominating Committees.
Shareholder
Communication with Directors
The Board
of Directors has established the following procedures for shareholder
communications with the Board of Directors:
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Shareholders
wishing to communicate with the Board of Directors should send any
communication to the Board of Directors, Peapack-Gladstone Financial
Corporation, c/o Corporate Secretary of Peapack-Gladstone, Antoinette
Rosell, at 158 Route 206 North, Gladstone, New Jersey,
07934. Any such communication should state the number of shares
owned by the shareholder.
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The
Corporate Secretary will forward such communication to the Board of
Directors or as appropriate to the particular Committee Chairman, unless
the communication is a personal or similar grievance, a shareholder
proposal or related communication, an abusive or inappropriate
communication, or a communication not related to the duties or
responsibilities of the Board of Directors, in which case the Corporate
Secretary has the authority to disregard the communication. All
such communications will be kept confidential to the extent
possible.
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The
Corporate Secretary will maintain a log of, and copies of, all
communications, for inspection and review by any Board member, and shall
regularly review all such communications with the Board or the appropriate
Committee Chairman.
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The Board
of Directors has also established the following procedures for shareholder
communications with the rotating chairman of the executive sessions of the
non-management directors of the Board:
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Shareholders
wishing to communicate with the presiding director of executive sessions
should send any communication to the Presiding Director of Executive
Sessions, Peapack-Gladstone Financial Corporation, c/o Corporate Secretary
of Peapack-Gladstone, Antoinette Rosell, at 158 Route 206 North, P.O. Box
178, Gladstone, New Jersey, 07934. Any such communication
should state the number of shares owned by the
shareholder.
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The
Corporate Secretary will forward such communication to the then presiding
director, unless the communication is a personal or similar grievance, a
shareholder proposal or related communication, an abusive or inappropriate
communication, or a communication not related to the duties or
responsibilities of the non-management directors, in which case the
Corporate Secretary has the authority to disregard the
communication. All such communications will be kept
confidential to the extent
possible.
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The
Corporate Secretary will maintain a log of, and copies of, all
communications, for inspection and review by the presiding director of
executive sessions, and shall regularly review all such communications
with the presiding director at the next
meeting.
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Committees
of the Board of Directors
In 2008,
the Board of Directors maintained an Audit Committee, a Nominating Committee and
a Compensation Committee.
Audit
Committee
Mr. Consi
serves as Chair of the Audit Committee. Other members of the Audit
Committee are Messrs. Mulcahy, Smith and Ms. Hill. The Audit
Committee met nine times during 2008.
The Board
of Directors has determined that at least one member of the Audit Committee
meets the NASDAQ standard of being financially sophisticated. The
Board of Directors has also determined that Mr. Consi meets the SEC criteria of
an “audit committee financial expert.”
The Audit
Committee operates pursuant to a charter. The charter can be viewed
at the Investor Relations link on our website www.pgbank.com. The charter gives the Audit
Committee the authority and responsibility for the appointment, retention,
compensation and oversight of our independent auditors, including pre-approval
of all audit and non-audit services to be performed by our independent
auditors. Other responsibilities of the Audit Committee pursuant to
the charter include: reviewing the scope and results of the audit with our
independent auditors; reviewing with management and our independent auditors
Peapack-Gladstone’s interim and year-end operating results including press
releases; considering the appropriateness of the internal accounting and
auditing procedures of Peapack-Gladstone; considering our outside auditors’
independence; reviewing examination reports by bank regulatory agencies;
reviewing audit reports prepared by the Internal Audit Department of
Peapack-Gladstone, reviewing audit reports prepared by any outside firm which
may conduct some internal audit functions for Peapack-Gladstone; and reviewing
the response of management to those reports. The Audit Committee
reports to the full Board concerning pertinent matters coming before
it.
Compensation
Committee
Peapack-Gladstone’s
Compensation Committee consists of Messrs. Meyercord (Chair), Merton and
Consi. During 2008, the Compensation Committee met two
times.
The
Compensation Committee operates under a written charter setting out the
functions and responsibilities of this committee. The charter can be viewed at
the Investor Relations link on our website www.pgbank.com. The
Compensation Committee determines CEO compensation, sets general compensation
levels for all officers and employees and sets specific compensation for
executive officers. It also administers our stock option plans and makes awards
under those plans. The Board has approved
its charter, which delegates to the Compensation Committee the responsibility to
recommend Board compensation.
The Compensation Committee annually
reviews, considers, and approves all compensation and awards to executive
officers, including the CEO, the President, Executive Vice Presidents, Senior
Vice Presidents and First Vice Presidents. Included in this process
is a thorough analysis and consideration of overall Bank performance, individual
job performance, the overall need of the Bank to attract, retain and incent
executive talent, and the total cost of the compensation programs.
Nominating
Committee
Peapack-Gladstone’s
Nominating Committee consists of Messrs. Smith (Chair), Consi, Lamb, Merton,
Meyercord, Mulcahy and Ms. Hill. The Nominating
Committee met two times during 2008.
The
Nominating Committee operates under a written charter setting out the functions
and responsibilities of this committee. The charter can be viewed at the
Investor Relations link on our website www.pgbank.com. The Nominating Committee
reviews qualifications of and recommends to the Board candidates for election as
director of Peapack-Gladstone and the Bank, considers the composition of the
Board, recommends committee assignments, and discusses management succession for
the Chairman and the CEO positions. The Nominating Committee develops
corporate governance principles which include director qualifications and
standards; director responsibilities; director orientation and continuing
education; limitations concerning service on other boards; director access to
management and records, criteria for annual self-assessment of the Board, its
committees, management and the effectiveness of their
functioning. The committee is also charged with reviewing the Board’s
adherence to the Corporate Governance Principles and the Code of Business
Conduct and Ethics. The Nominating Committee reviews recommendations
from shareholders regarding corporate governance and director
candidates. The procedure for submitting recommendations of director
candidates is set forth below under the caption “Nomination of
Directors.”
Nomination
of Directors
Nominations
for director may be made only by the Board of Directors or a committee of the
Board or by a shareholder of record entitled to vote. The Board of
Directors has established minimum criteria for members of the
Board.
These
include:
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Directors
are encouraged to live and/or work in the communities served by
Peapack-Gladstone’s subsidiary
bank.
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Directors
shall beneficially own or agree to acquire at least $25,000 (market value)
of Peapack-Gladstone stock.
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Directors
shall be experienced in business, shall be financially literate and shall
be respected members of their
communities.
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Directors
shall be of high ethical and moral standards and have sound personal
finances.
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A
Director may not serve on the board of directors of any other bank that
serves the same market area as Peapack-Gladstone and may only serve on the
boards of three other publicly-traded
companies.
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If
there is a vacancy, the Nominating Committee shall evaluate the
qualifications of persons who may be recommended to it as potential
candidates based on information the Committee may deem
relevant.
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The
Nominating Committee has adopted a policy regarding consideration of director
candidates recommended by shareholders. The Nominating Committee will
consider nominations made by shareholders. In order for a shareholder
to make a nomination, the shareholder must provide a notice along with the
additional information and supporting materials to our Corporate Secretary not
less than 120 days or more than 150 days prior to the first anniversary of the
date of the preceding year’s annual meeting. The shareholder wishing
to propose a candidate for consideration by the Nominating Committee must have a
significant stake in Peapack-Gladstone. To qualify for consideration
by the Nominating Committee, the shareholder submitting the candidate must
demonstrate that he or she has been the beneficial owner of at least one percent
of Peapack-Gladstone’s outstanding shares for a minimum of one year prior to the
submission of the request. In addition, the Nominating Committee has
the right to require any additional background or other information from any
director candidate or the recommending shareholder, as it may deem
appropriate. For our annual meeting in the year 2010, we must receive
this notice on or after November 29, 2009, and on or before December 29, 2009.
The following factors, at a minimum, are considered by the Nominating Committee
as part of its review of all director candidates and in recommending potential
director candidates to the Board:
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appropriate
mix of educational background, professional background and business
experience to make a significant contribution to the overall composition
of the Board;
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if
the Committee deems it applicable, whether the candidate would be able to
read and understand fundamental financial statements and considered to be
financially sophisticated as described in the NASDAQ rules, or considered
to be an audit committee financial expert as defined pursuant to the
Sarbanes-Oxley Act of 2002;
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if
the Committee deems it applicable, whether the candidate would be
considered independent under the NASDAQ rules and the Board’s additional
independence guidelines set forth in Peapack-Gladstone’s Corporate
Governance Principles;
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demonstrated
character and reputation, both personal and professional, consistent with
that required for a bank director;
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willingness
to apply sound and independent business
judgment;
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ability
to work productively with the other members of the
Board;
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availability
for the substantial duties and responsibilities of a Peapack-Gladstone
director; and
|
|
·
|
meets
the additional criteria set forth in the Peapack-Gladstone’s Corporate
Governance Principles.
|
You can
obtain a copy of the full text of our policy regarding shareholder nominations
by writing to Antoinette Rosell, Corporate Secretary, Peapack-Gladstone
Financial Corporation, 158 Route 206 North, P.O. Box 178, Gladstone, New Jersey
07934.
Code
of Business Conduct and Ethics and Corporate Governance Principles
Peapack-Gladstone
has adopted a Code of Business Conduct and Ethics, which applies to
Peapack-Gladstone’s chief executive officer, principal financial officer,
principal accounting officer and to all other Peapack-Gladstone directors,
officers and employees. The Code of Business Conduct and Ethics is
available in the Investor Relations section of Peapack-Gladstone’s website
located at www.pgbank.com. The Code of Business Conduct and Ethics is
also available in print to any shareholder who requests it from Antoinette
Rosell, Corporate Secretary, Peapack-Gladstone Financial Corporation, 158 Route
206 North, P.O. Box 178, Gladstone, New Jersey,
07934. Peapack-Gladstone will disclose any substantive amendments to
or waiver from provisions of the Code of Business Conduct and Ethics made with
respect to a director or executive officer on our website and to the extent
required by NASDAQ and SEC rules, in a Current Report on Form 8-K.
We have
also adopted Corporate Governance Principles, which are intended to provide
guidelines for the governance of Peapack-Gladstone by the Board and its
committees. The Corporate Governance Principles are available at the Investor
Relations section of Peapack-Gladstone’s website located at www.pgbank.com.
The following table summarizes the
compensation of the non-employee directors of Peapack-Gladstone in
2008.
Name
(4)
|
Fees
Earned or Paid
in
Cash (1)
|
Option
Awards
(2)
|
Change
in Pension Value and
Nonqualified
Deferred Compensation
Earnings
(3) (5)
|
Total
|
(a)
|
(b)
|
|
(c)
|
(d)
|
Anthony
J. Consi, II
|
$
36,600
|
$
9,249
|
$
5,000
|
$ 50,849
|
Pamela
Hill
|
26,900
|
9,249
|
8,000
|
44,149
|
John
D. Kissel
|
34,100
|
9,249
|
2,000
|
45,349
|
James
R. Lamb, Esq.
|
19,700
|
9,249
|
7,000
|
35,949
|
Edward
A. Merton
|
17,500
|
9,249
|
8,000
|
34,749
|
F.
Duffield Meyercord
|
25,500
|
9,249
|
5,000
|
39,749
|
John
R. Mulcahy
|
54,200
|
9,249
|
15,000
|
78,449
|
Philip
W. Smith, III
|
40,100
|
9,249
|
2,000
|
51,349
|
(1)
|
Peapack-Gladstone
pays its directors an $8,000 annual retainer for service on the Board,
$500 for each regular Bank Board meeting they attend and $400 for each
committee meeting they attend. Committee Chairs and Audit
Committee members receive an additional $2,000 annual
retainer. The Audit Committee Chair receives an additional
$16,000 annual retainer. The Compensation Committee Chair receives an
additional $10,000 annual retainer and the Compensation Committee members
receive an additional $1,000 annual retainer. Frank A. Kissel,
Robert M. Rogers and Craig C. Spengeman, as full-time employees, were not
compensated for services rendered as
directors.
|
(2)
|
Includes
amortization of stock option grants in accordance with SFAS No. 123R, see
Note 12 – Stock Option Plans of Peapack-Gladstone’s Annual Report on Form
10-K for the year ended December 31, 2008 for additional information on
SFAS No. 123R valuation methodology. The 1998 and 2002 Stock
Option Plans for Outside Directors provide for the award of non-qualified
stock options to each non-employee director. The 2006 Long-Term Stock
Incentive Plan provides for the award of non-qualified stock options,
stock appreciation rights or restricted stock to each non-employee
director. The plans provide that grants are made based upon
recommendations from the Compensation Committee to the Board and a vote
from the full Board.
|
|
|
Under
each of the plans, the exercise price for the option shares may not be
less than the fair market value of the common stock on the date of grant
of the option. The options granted under these plans are, in general,
exercisable not earlier than one year after the date of grant, at a price
equal to the fair market value of the common stock on the date of grant,
and expire not more than ten years after the date of
grant.
|
The
following table represents the shares awarded during 2008, the grant date fair
market value of the underlying stock and the aggregate number of options
outstanding at December 31, 2008, for each of the following
participants:
Name
|
Number
of
Shares
Awarded
1/2/2008
|
Grant
Date Fair
Market
Value of
Options
Awarded
|
Aggregate
Number of Stock
Awards
Outstanding at
12/31/2008
|
Anthony
J. Consi, II
|
2,200
|
$
54,054
|
23,902
|
Pamela
Hill
|
2,200
|
54,054
|
24,941
|
John
D. Kissel
|
2,200
|
54,054
|
19,280
|
James
R. Lamb, Esq.
|
2,200
|
54,054
|
19,279
|
Edward
A. Merton
|
2,200
|
54,054
|
19,280
|
F.
Duffield Meyercord
|
2,200
|
54,054
|
19,280
|
John
R. Mulcahy
|
2,200
|
54,054
|
15,400
|
Philip
W. Smith, III
|
2,200
|
54,054
|
16,672
|
(3)
|
Peapack-Gladstone
has a retirement plan for eligible non-employee directors of
Peapack-Gladstone and/or its Subsidiaries. The plan provides 5 years of
annual benefits to directors with 10 or more years of service, which
commence after a director has retired from the Board. The annual benefit
is equal to 25 percent of the director's final compensation and increases
by 5 percent for each year of service in excess of 10. The
maximum benefit is limited to 50 percent of final compensation. No
director was credited with more than 10 years of service when the plan
became effective, regardless of how long the person had served as director
as of the effective date. If a director with 10 years of service ceases to
be a director as a result of death or disability, or a director with 5
years of service ceases to be a director following a change in control,
the director will be credited with a total of 15 years of service for plan
purposes. In the event that the director dies prior to receipt of all
benefits, the payments continue to the director's beneficiary or
estate.
|
(4)
|
Peapack-Gladstone
has a nonqualified deferred compensation plan for non-employee directors
covering retainer fees and the aggregate of all fees for service and
attendance at Board and committee meetings. Participation is optional. As
of January 1, 2005, the plan is frozen and no further contributions may be
made. Interest is paid on the deferred fees equal to that which
would have been credited if such deferred fees were invested in the
Peapack-Gladstone Money Market Account, which yields 1.00 percent as of
February 28, 2009. The provisions of the deferred compensation plan are
designed to comply with certain rulings of the Internal Revenue Service
under which the deferred amounts are not taxed until received. Under the
deferred compensation plan, the directors who elect to defer their fees
receive the fees either (i) in a lump sum on the first day of the calendar
quarter following termination of service as director, or on the first day
of a calendar quarter that is at least 5 years following the date of the
original deferral election, or (ii) in substantially equal annual
installments over a period of between 2 to 10 years, commencing in January
of the calendar year following the calendar year during which the director
ceases serving as director. In the event the director dies, within a
reasonable period of time following his or her death, the amount credited
to the director's deferred compensation account shall be paid in a lump
sum to the director's beneficiary or
estate.
|
(5)
|
The
amount in this column represents the change in pension
value. There were no above-market, nonqualified deferred
compensation earnings.
|
BENEFICIAL
OWNERSHIP OF COMMON STOCK
Certain
Beneficial Owners
The
following table sets forth as of February 28, 2009 certain information as to
beneficial ownership of each person known to Peapack-Gladstone to own
beneficially more than 5 percent of the outstanding common stock of
Peapack-Gladstone.
Name
and Address
of
Beneficial Owner
|
Amount
and Nature
of
Beneficial Ownership
|
Percent
of Class
|
James
M. Weichert (1)
1625
State Highway 10
Morris
Plains, NJ 07950
|
801,435
|
9.66%
|
|
|
|
Royce
& Associates, LLC (2)
1414
Avenue of the Americas
New
York, NY 10019
|
455,891
|
5.50%
|
|
(1)
|
Based
on a Schedule 13-D filed with the SEC on March 9, 2007 by James M.
Weichert. The filing discloses that as of March 9, 2007, James
M. Weichert has sole voting and dispositive power with respect to 801,435
shares of our common stock.
|
|
(2)
|
Based
on a Schedule 13-G/A filed with the SEC on January 27, 2009 by Royce &
Associates, LLC. The filing discloses that as of January 27,
2009, Royce & Associates, LLC has sole voting and dispositive power
with respect to 455,891 shares of our common
stock.
|
The
following table sets forth as of February 28, 2009 the number of shares of
Peapack-Gladstone's common stock beneficially owned by each of the
directors/nominees, the executive officers of Peapack-Gladstone for whom
individual information is required to be set forth in this proxy statement (the
“named executive officers”) pursuant to the regulations of the SEC, and by all
directors and executive officers as a group.
Name
of Beneficial Owner
|
Amount
and Nature of Beneficial Ownership (1)
|
Percent
of Class (2)
|
Arthur
F. Birmingham
|
37,344
|
(3)
|
*
|
Garrett
P. Bromley
|
36,035
|
(4)
|
*
|
Anthony
J. Consi, II
|
79,823
|
(5)
|
*
|
Pamela
Hill
|
116,497
|
(6)
|
1.36%
|
Frank
A. Kissel
|
122,919
|
(7)
|
1.43%
|
John
D. Kissel
|
59,145
|
(8)
|
*
|
James
R. Lamb
|
46,607
|
(9)
|
*
|
Edward
A. Merton
|
43,715
|
(10)
|
*
|
F.
Duffield Meyercord
|
44,993
|
(11)
|
*
|
John
R. Mulcahy
|
33,315
|
(12)
|
*
|
Robert
M. Rogers
|
48,690
|
(13)
|
*
|
Philip
W. Smith, III
|
49,223
|
(14)
|
*
|
Craig
C. Spengeman
|
50,726
|
(15)
|
*
|
All
directors and executive officers
as
a group (13 persons)
|
769,032
|
|
8.95%
|
NOTES:
|
(1)
|
Beneficially
owned shares include shares over which the named person exercises either
sole or shared voting power or sole or shared investment
power. It also includes shares owned (i) by a spouse, minor
children or by relatives sharing the same home, (ii) by entities owned or
controlled by the named person and (iii) by other persons if the named
person has the right to acquire such shares within 60 days by the exercise
of any right or option. Unless otherwise noted, all shares are
owned of record or beneficially by the named person.
|
|
|
|
|
(2)
|
The
number of shares of common stock used in calculating the percentage of the
class owned includes shares of common stock outstanding as of February 28,
2009, and 291,106 shares purchasable pursuant to options exercisable
within 60 days of February 28, 2009.
|
|
|
|
|
(3)
|
This
total includes 236 shares owned by Mr. Birmingham’s wife, 3,421 shares
allocated to Mr. Birmingham under Peapack-Gladstone's Profit Sharing Plan
and 25,342 shares purchasable pursuant to options exercisable within 60
days of February 28, 2009.
|
|
|
|
|
(4)
|
This
total includes 1,505 shares allocated to Mr. Bromley under
Peapack-Gladstone's Profit Sharing Plan and 25,342 shares purchasable
pursuant to options exercisable within 60 days of February 28,
2009.
|
|
|
|
|
(5)
|
This
total includes 20,822 shares purchasable pursuant to options exercisable
within 60 days of February 28, 2009.
|
|
|
|
|
(6)
|
This
total includes 21,861 shares purchasable pursuant to options exercisable
within 60 days of February 28, 2009 and 24,945 shares held in a
partnership for which Ms. Hill is an owner.
|
|
|
|
|
(7)
|
This
total includes 3,348 shares owned by Mr. Frank A. Kissel's wife, 9,411
shares allocated to Mr. Kissel under Peapack-Gladstone's Profit Sharing
Plan and 35,823 shares purchasable pursuant to options exercisable within
60 days of February 28, 2009.
|
|
|
|
|
(8)
|
This
total includes 1,609 shares owned by Mr. John D. Kissel's wife, 5,547
shares owned by Mr. Kissel's children and 16,200 shares purchasable
pursuant to options exercisable within 60 days of February 28,
2009.
|
|
|
|
|
(9)
|
This
total includes 2,557 shares owned by Mr. Lamb's wife and 23,901 shares
purchasable pursuant to options exercisable within 60 days of February 28,
2009.
|
|
|
|
|
(10)
|
This
total includes 16,200 shares purchasable pursuant to options exercisable
within 60 days of February 28, 2009.
|
|
|
|
|
(11)
|
This
total includes 16,200 shares purchasable pursuant to options exercisable
within 60 days of February 28, 2009 and of this total, 19,705 shares were
pledged as security to a loan with Peapack-Gladstone
Bank.
|
|
|
|
|
(12)
|
This
total includes 2,359 shares owned by Mr. Mulcahy's wife and 12,320 shares
purchasable pursuant to options exercisable within 60 days of February 28,
2009.
|
|
|
|
|
(13)
|
This
total includes 5,491 shares allocated to Mr. Rogers under
Peapack-Gladstone's Profit Sharing Plan and 31,053 shares purchasable
pursuant to options exercisable within 60 days of February 28,
2009.
|
|
|
|
|
(14)
|
This
total includes 6,974 shares owned by Mr. Smith's wife, 1,383 shares owned
by Mr. Smith's children and 13,592 shares purchasable pursuant to options
exercisable within 60 days of February 28, 2009 and of this total, 15,052
shares were pledged as security to a loan with Peapack-Gladstone
Bank.
|
|
|
|
|
(15)
|
This
total includes 6,406 shares allocated to Mr. Spengeman under
Peapack-Gladstone's Profit Sharing Plan and 32,450 shares purchasable
pursuant to options exercisable within 60 days of February 28,
2009.
|
PROPOSAL
2 - ADVISORY VOTE ON COMPENSATION OF NAMED EXECUTIVE OFFICERS
We
believe that our 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. We also believe that both we
and our 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 our 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 (the “Stimulus Act”) into law. The Stimulus Act 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, we are asking you to approve the
compensation of Peapack-Gladstone’s named executive officers as described under
“Compensation Discussion and Analysis” and the tabular disclosure regarding
named executive officer compensation (together with the accompanying narrative
disclosure) in this proxy statement. Under the Stimulus Act, your
vote is advisory and will not be binding upon the Board. However, the
Compensation Committee will take into account the outcome of the vote when
considering future executive compensation arrangements.
RECOMMENDATION
AND VOTE REQUIRED ON PROPOSAL 2
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. Approval of this advisory proposal requires the favorable
vote of a majority of the votes cast. Abstentions and broker
non-votes will have no impact on the approval of this advisory
proposal.
COMPENSATION
DISCUSSION AND ANALYSIS
The
fundamental objective of Peapack-Gladstone’s named executive officer
compensation program is to fairly compensate our named executive officers in a
way that best advances the interests of the
shareholders. Peapack-Gladstone feels that shareholder interests are
best advanced through the retention of superior executive talent and the
alignment of shareholder and executive interests.
Peapack-Gladstone
compensates our named executive officers with a mix of base salary, bonus and
equity compensation designed to be competitive with comparable employers and to
align management’s incentives with the interests of our
shareholders.
The base
salary we pay our named executives is determined by a combination of factors,
including but not limited to an analysis of market comparables, skill set, level
of responsibility, individual performance and Peapack-Gladstone’s overall
performance.
We design
the incentive compensation (bonus and equity compensation) to align the
interests of our named executive officers with the short and long-term interests
of shareholders. We align named executive officer and shareholder
short-term interests by linking bonus awards to individual performance and
Peapack-Gladstone’s overall performance over the prior year. We align
named executive officer and shareholder long-term interests by awarding equity
compensation to our named executive officers. Both bonus and equity
compensation are awarded on a discretionary basis.
Peapack-Gladstone
feels that our salary, bonus and equity compensation is both fair and reflective
of market conditions within our business and geography.
The
Decision Process
The
Compensation Committee of the Board of Directors is responsible for establishing
and overseeing policies governing annual and long-term compensation programs for
the named executive officers, and for making recommendations to the Board of
Directors on actual named executive officer compensation levels. The
Chief Executive Officer provides advice to the Compensation Committee relative
the compensation of the four other named executive officers. The
Compensation Committee makes all of its determinations based on
discretion.
After the
Compensation Committee makes its recommendations to the Board of Directors, the
Board of Directors (without the presence of the named executive officers) makes
the final determination of compensation paid to Peapack-Gladstone’s named
executive officers.
Elements
of Compensation
Peapack-Gladstone’s
direct compensation consists of base salary, an annual cash award (our bonus),
and equity compensation. Our base salaries are linked to individual
performance, level of responsibility, the competitive market and
Peapack-Gladstone’s overall performance.
We design
our base salaries in significant part to attract and retain talented executives
who can help drive long-term shareholder value. Because the markets
in which we operate present current and potential executives with many
high-paying alternatives, we believe we must keep our base salaries competitive
or risk losing executive talent.
Our cash
bonuses are linked to individual performance, level of responsibility, and
Peapack-Gladstone’s overall performance. The assessment of these
factors is subjective and is made by the Compensation Committee. On
the basis of this assessment, the Compensation Committee uses its discretion to
determine the amount of the cash bonus. We feel that linking cash
bonuses to individual performance and Peapack-Gladstone’s overall performance
places a portion of individual compensation at risk—thereby motivating
individual performance while at the same time correlating Peapack-Gladstone’s
overall compensation to Peapack-Gladstone’s overall performance.
Our equity compensation is linked to
the degree to which the executive is in a position to influence
Peapack-Gladstone’s long-term performance. We feel the rationale
behind equity compensation is straightforward: by allowing our executives to
participate in the long-term appreciation of our shares, these executives will
work and make decisions to maximize Peapack-Gladstone’s long-term
performance. The Compensation Committee in its discretion determines
the amount, type and timing of our equity compensation. In the past
our equity compensation has consisted of stock options. In 2006, the
Committee decided to make smaller stock option grants every year, as opposed to
the prior practice of making larger stock option grants once every two or three
years.
Compensation
Review
We
commissioned a compensation review by Pearl Meyer & Partners in 2005
(hereinafter referred to as the Pearl Meyer review). The Pearl Meyer
review established a market composite based upon the average of two surveys: the
proxy peer group and the 2004/2005 Watson Wyatt Financial Institutions Benchmark
Survey for institutions with assets of $500 million to $1.9
billion. The proxy peer group included data from the following 20
publicly traded institutions: Bryn Mawr Bank Corporation, Center Bancorp, Inc.,
Chemung Financial Corporation, Columbia Bancorp, First Chester County
Corporation, First United Corporation, Greater Community Bancorp, Hudson Valley
Holding Corp., Interchange Financial Services Corporation, Intervest Bancshares
Corporation, Lakeland Bancorp, Incorporated, OceanFirst Financial Corp., PennFed
Financial Services, Inc., Royal Bancshares of Pennsylvania, Inc., Sandy Spring
Bancorp, Inc., Shore Bancshares, Inc., Sterling Financial Corporation, Tompkins
Trustco., Inc. Univest Corporation of Pennsylvania and Washington Trust Bancorp,
Inc. In 2008, we commissioned a follow-up review by Pearl Meyer
regarding our executive compensation, including salary, bonus and equity
compensation.
For 2005
base salaries, the Pearl Meyer review found that the 50th
percentile of the competitive composite was $355,000 for Mr. Frank A. Kissel,
$232,000 for Mr. Robert M. Rogers, $218,000 for Mr. Craig C. Spengeman, $176,000
for Mr. Arthur F. Birmingham and $160,000 for Mr. Garrett P.
Bromley. When subject to cost-of-living adjustments in 2006 (3.3%),
2007 (2.3%) and 2008 (5.8%), these benchmark salaries increase to $397,000 for
Mr. Kissel, $259,000 for Mr. Rogers, $244,000 for Mr. Spengeman, $197,000 for
Mr. Birmingham and $179,000 for Mr. Bromley. As to bonuses, the Pearl
Meyer review found that the 50th
percentile of the market composite translated to a bonus equal to 41% of Mr.
Kissel’s base salary, 40% of Mr. Roger’s base salary, 28% of Mr. Spengeman’s
base salary, 27% of Mr. Birmingham’s base salary and 30% of Mr. Bromley’s base
salary. The Pearl Meyer review also included data on change in
control agreement terms found within the proxy peer group, and specifically
found that typical change in control arrangements within our competitive market
included termination benefits equal to three times salary and bonus for the
Chief Executive Officer and two times salary and bonus for other named executive
officers. The Pearl Meyer review did not include data on the economic
value of stock options issued or the terms of benefit plans or employment
contracts provided within the competitive market.
2008
Compensation—Facts and Analysis
In
establishing compensation for named executive officers, the Compensation
Committee considers many factors including but not limited to
Peapack-Gladstone’s overall performance, the individual’s performance, the Pearl
Meyer review and annual pay raise survey data.
Mr.
Kissel's base salary for 2008 of $350,000 was $47,000 below the 50th
percentile of the competitive composite, including cost-of-living adjustments,
and was set by the Compensation Committee, in its discretion, based on the Pearl
Meyer review, including cost-of-living adjustments, his performance in executing
his responsibilities in 2007 and his anticipated performance in 2008 and
future
years. The
Committee also considered Mr. Kissel's ability to develop and motivate employees
to meet Peapack-Gladstone’s short and long-term objectives, as well as
Peapack-Gladstone’s overall performance. Finally, the Committee
considered annual pay raise survey data from Mercer Consulting, America’s
Community Bankers, SHRM, World at Work, Hewitt Associates, LR Webber Associates,
BLR Northeast and the NJ Bankers (hereinafter referred to as the annual pay
raise survey), which found an average planned increase in executive salaries,
from 2007 to 2008, of 3.8%. Mr. Kissel’s 2008 salary of $350,000
represented an 8.73% increase over his 2007 salary of $321,903.
Mr.
Kissel was paid no bonus in 2008 in reflection of the charge Peapack-Gladstone
took with respect to its trust preferred pooled securities.
To
further align Mr. Kissel’s and the shareholders’ long-term interests, the
Committee awarded Mr. Kissel 5,000 stock options in 2008, valued at $53,950
using the Black-Scholes option-pricing model and representing 15% of Mr.
Kissel’s base salary. The Committee determined the size of the award,
in its discretion, through consideration of the ability of Mr. Kissel to
positively influence the long-term performance of Peapack-Gladstone and
Peapack-Gladstone’s actual performance. The Pearl Meyer review did
not include data on the economic value of stock options issued within the
competitive market.
Mr.
Roger's 2008 base salary of $225,000 was $34,000 below the 50th percentile of
the competitive composite, including cost-of-living adjustments. Mr.
Roger’s 2008 salary represented a 9.84% increase over his 2007 salary of
$204,847. Mr. Spengeman’s 2008 base salary of $250,008 was $6,000
above the 50th percentile of the competitive composite, including cost-of-living
adjustments. Mr. Spengeman’s 2008 salary represented a 6.79% increase
over his 2007 salary of $234,112. Mr. Birmingham’s 2008 base salary
of $185,012 was $12,000 below the 50th percentile of the competitive composite,
including cost-of-living adjustments. Mr. Birmingham’s 2008 salary
represented a 5.37% increase over his 2007 salary of $175,583. Mr.
Bromley’s 2008 base salary of $170,000 was $ 9,000 below the 50th percentile of
the competitive composite, including cost-of-living adjustments. Mr.
Bromley’s 2008 salary represented an 8.59 increase over his 2007 salary of
$161,000.
None of
Messrs. Rogers, Spengeman, Birmingham and Bromley was paid a bonus in 2008 in
reflection of the charge Peapack-Gladstone took with respect to its trust
preferred pooled securities
To
further align their and the shareholders’ long-term interests, the Committee
awarded 4,000 stock options to each of Mr. Rogers and Mr. Spengeman and 3,500
stock options to each of Mr. Birmingham and Mr. Bromley. Based
upon the Black-Scholes option-pricing model these stock options were valued at
$43,160 for each of Mr. Rogers and Mr. Spengeman and $37,765 for each of Mr.
Birmingham and Mr. Bromley and represented 19%, 17%, 20% and 22%, respectively,
of Mr. Rogers’, Mr. Spengeman’s, Mr. Birmingham’s and Mr. Bromley’s 2008 base
salary. The Committee determined the size of the awards, in its
discretion, through consideration of the ability of each individual to
positively influence the long-term performance of Peapack-Gladstone and
Peapack-Gladstone’s actual performance. The Pearl Meyer review did
not include data on the economic value of stock options issued within the
competitive market.
Peapack-Gladstone
Benefit Plans—Facts and Analysis
Peapack-Gladstone
provides bank-sponsored insurance and retirement benefit plans to our named
executive officers. The benefit packages are designed to assist named
executive officers in providing for their own financial security in a way that
recognizes individual needs and preferences.
The basic
insurance package includes health, dental, vision, disability and basic group
life insurance. The Committee believes that these basic benefits are
currently sought after by able employees, and that to attract and retain able
employees Peapack-Gladstone must offer these benefits to its employees,
including its named executive officers.
In
addition to providing a term life insurance benefit to each of the named
executive officers, Peapack-Gladstone has also purchased bank owned life
insurance and entered into a split-dollar plan with the named executive officers
and certain other employees to provide current and post-employment life
insurance in an amount which ranges from a minimum benefit of $25,000 to 2.5
times the executive’s annual base salary. A life insurance benefit of 2.5
times a participant’s annual base salary vests if prior to the termination of
employment there is a change in control or the participant becomes
disabled. A benefit of 2.5 times the participant’s salary is paid if the
participant dies while employed by Peapack-Gladstone. The
participant also is entitled to a vested post-employment life insurance
benefit based on years of service and the participant’s age as of the date of
termination of employment. This vested benefit ranges from a minimum of
1.0 times base annual salary at age 50 to a maximum of 2.5 times annual base
salary at age 60, in each case after completion of 15 years of
service. There is a minimum benefit of $25,000 if the participant
does not reach the vesting levels. Bank owned life insurance assists
Peapack-Gladstone in offsetting the rising costs of employee benefits by
providing Peapack-Gladstone with current income prior to the death of an
insured, and a lump-sum payment upon the death of an
insured. Peapack-Gladstone owns the cash surrender value of the
policies and records the increases in the cash surrender value as
income. Further, and more importantly,
upon the
death of an insured Peapack-Gladstone will receive cash equal to the cash
surrender value of the policy and excess life insurance over the amount paid to
the insured’s beneficiary. The Committee feels that bank owned life
insurance is primarily a good investment for Peapack-Gladstone, and secondarily
a supplementary life insurance benefit for many of our officers, including our
named executive officers.
Peapack-Gladstone
provides retirement benefits to named executive officers through a combination
of plans that qualify under the Internal Revenue Code. The
Corporation had a defined benefit pension plan covering substantially all of its
salaried employees which was discontinued on May 12, 2008. The Plan
was settled and substantially all benefits were paid to employees during
September 2008. The Corporation amended its existing 401(K)
profit-sharing and investment plan to enhance the contributions to its salaried
employees starting in May 2008.
Peapack-Gladstone
has established a qualified defined contribution plan under Section 401(K) of
the Internal Revenue Code of 1986, as amended, covering substantially all
salaried employees over the age of twenty-one with at least twelve months of
service and whose participation is not prohibited by the 401(K)
plan. Under the savings portion of the 401(K) plan, employees may
contribute up to 15 percent of their pay (up to a maximum of $15,500 in 2008) to
their elective account via payroll withholding. Annually, Peapack-Gladstone
makes a matching contribution equal to 50% of the first 6% of an employee’s
salary an additional 3% employer contribution for eligible employees and an
additional Age and Service contribution for eligible
employees. In addition, the Committee may recommend a
discretionary contribution to the profit sharing portion of the 401(K)
plan. The profit sharing portion is based on base salary with a cap
($230,000 in 2008) and is non-contributory. Contributions to the
profit sharing portion are invested in Peapack-Gladstone's common
stock. The Committee believes that able employees demand 401(K)
plans, and that to attract and retain able employees Peapack-Gladstone must
offer these benefits to its employees, including its named executive
officers.
Change
in Control Agreements—Facts and Analysis
We have
entered into change in control agreements that give the named executive officers
certain benefits in the event of a change in control. Each of these
agreements require Peapack-Gladstone or its successor to pay certain termination
benefits if (a) there is a change in control and (b) a named executive officer
either resigns for good reason or is terminated without cause. Under
these circumstances Peapack-Gladstone or its successor would be required to pay
aggregate amounts equal to three times the highest annual salary and bonuses
paid during any calendar year during the three years prior to the change in
control plus continue certain health and other benefits. This
compares to three times salary and bonus for the Chief Executive Officer and two
times salary and bonus for other named executive officers typically found within
the proxy peer group as reported by the Pearl Meyer review. In the
event that the severance payments and benefits under the agreements, together
with any other parachute payments, would constitute an excess parachute payment
under Section 280G of the Internal Revenue Code, the payments would be increased
in an amount sufficient to pay the excise taxes and other income and payroll
taxes necessary to allow the named executive officers to retain the same net
amount, after such taxes, as each was otherwise entitled to
receive. The Pearl Meyer review found that 57% of other firms within
the proxy peer group that offer change in control agreements likewise gross up
change in control payments to cover taxes. The Committee feels these
agreements are necessary to encourage our named executive officers to approach
an advantageous merger or acquisition transaction without regard to immediate
loss of salary and benefits. The Committee also feels that, given the
high degree of consolidation within the banking business, these agreements are
necessary to attract and retain talented named executive officers.
Employment
Contracts—Facts and Analysis
We are a
party to employment agreements that give the named executive officers certain
benefits. These agreements, each with a term of two years, provide
among other things for (i) participation during the employment term in all
compensation and employee benefits plans for which any salaried employees of
Peapack-Gladstone are eligible, (ii) an annual base salary and (iii)
discretionary bonus payments with respect to each calendar
year. Under these agreements, if a named executive officer’s
employment is terminated without cause, Peapack-Gladstone shall pay the
executive’s base salary for a period equal to two years from the effective date
of such termination. In the event that Peapack-Gladstone terminates a
named executive officer’s employment for cause or pursuant to retirement,
permanent disability or death, Peapack-Gladstone shall pay the named executive
officer any earned but unpaid base salary as of the date of termination of
employment. The employment agreements also include certain
non-compete and non-solicitation provisions. The Committee feels
Peapack-Gladstone would be unable to attract and retain talented senior
executives without employment agreements, which are customary in the competitive
market.
Effect
of Current Financial Crisis
In
January 2009 we entered into a Securities Purchase Agreement with the United
States Treasury that provides for our participation in the Capital Purchase
Program (“CPP”) under the Treasury’s Troubled Assets Relief Program
(“TARP”). CPP participants are subject to several
compensation-related limitations associated with the Program. Each of
our named executive officers agreed in writing to be subject to the
compensation-related limitations in existence at that time which served to cap
or eliminate some of their contractual or legal rights. The
provisions agreed to were as follows:
|
·
|
No golden parachute
payments. Our named executive officers have agreed to
forego all golden parachute payments for as long as both (i) they remain
“senior executive officers” (defined as our CEO, Chief Financial Officer
and our next three highest-paid executive officers), and (ii) the Treasury
continues to hold our equity or debt securities we issued to it under the
CPP (we refer to the period during which the Treasury holds those
securities as the “CPP Covered Period”). “Golden parachute
payment” under the CPP is defined as any 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.
|
|
·
|
No Compensation Arrangements
That Encourage Excessive Risks. During the CPP 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. The 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 to ensure this does not
occur. Our named executive officers have agreed to execute
whatever documents may be required in order to adjust compensation
arrangements resulting from the Committee’s required
review.
|
|
·
|
Recovery of Bonus, Retention
Awards and Incentive Compensation if Based on Certain Material
Inaccuracies. Under the provisions of the CPP and as
agreed to by our named executive officers, we can recover any bonus,
retention award or incentive compensation paid during the CPP Covered
Period that is later found to have been based on materially inaccurate
financial statements or other materially inaccurate measurements of
performance.
|
|
·
|
Limit on Federal Income Tax
Deductions. During the CPP 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.
|
Effect
of the Current Financial Crisis: Additional Restrictions under the American
Recovery and Reinvestment Act of 2009
The
American Recovery and Reinvestment Act of 2009 (the “Stimulus Act”) was signed
into law on February 17, 2009. The Stimulus Act (i) modified the
compensation-related limitations contained in the CPP, (ii) created additional
compensation-related limitations and (iii) directed the Secretary of the
Treasury to establish standards for executive compensation applicable to
participants in the TARP, regardless of when participation
commenced. The newly enacted compensation-related limitations apply
to us and the provisions may be retroactive. In their January 2009
agreements our named executive officers did not waive their contractual or legal
rights with respect to these new and retroactive provisions; and additional
officers now covered for the first time by the Stimulus Act provisions were not
asked and did not agree to waive their contractual or legal
rights. The compensation-related limitations applicable to us added
or modified by the Stimulus Act, and which are subject to standards to be
established by the Secretary of the Treasury, are as follows:
|
·
|
No severance
payments. Under the Stimulus Act, “golden parachute” was
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 the
Stimulus Act, we are prohibited from making any severance payment during
the CPP Covered Period to our “senior executive officers” (defined in the
Stimulus Act as the five highest paid named executive officers) and our
next five most highly compensated
employees.
|
|
·
|
No Compensation Arrangements
That Encourage Earnings Manipulation. Under the Stimulus
Act, during the CPP 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.
|
|
·
|
Recovery of Bonus, Retention
Awards and Incentive Compensation if Based on Certain Material
Inaccuracies. The Stimulus Act 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 CPP Covered Period that is later found to have been based on
materially inaccurate financial statements or other materially inaccurate
measurements of performance.
|
|
·
|
Limit on Incentive
Compensation. The Stimulus Act contains a provision that
prohibits the payment or accrual during the CPP Covered Period of any
bonus, retention award or incentive compensation to any of our senior
executive officers or our next 5 most highly compensated employees other
than awards of long-term restricted stock that (i) do not fully vest
during the CPP 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
incentive stock options are covered by this prohibition. The
prohibition on bonus, incentive compensation and retention awards does not
preclude bonus payments required under written employment contracts
entered into on or prior to February 11,
2009.
|
|
·
|
Compensation Committee
Functions. The Stimulus Act requires that our
Compensation Committee be comprised solely of independent directors and
that it meet at least semiannually to discuss and evaluate our employee
compensation plans in light of an assessment of any risk posed to us from
such compensation plans. See “Corporate Governance – Director
Independence” above for a discussion of the independence of our
Compensation Committee.
|
|
·
|
Compliance
Certifications. The Stimulus Act also requires a written
certification by our Chief Executive Officer and Chief Financial Officer
of our compliance with the provisions of the Stimulus Act. These
certifications must be contained in the Company’s Annual Report on Form
10-K beginning next year.
|
|
·
|
Treasury Review of Bonuses
Previously Paid. The Stimulus Act 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 the
Stimulus Act 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
CPP 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 Stimulus Act, 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
CPP Covered Period. We will comply with the provisions of the
Stimulus Act and its implementing regulations in all respect, which
includes the submission of “Proposal 2: Advisory Vote on
Compensation of Named Executive Officers” set forth in this proxy
statement.
|
COMPENSATION
COMMITTEE REPORT
The
Compensation Committee of the Company has reviewed and discussed with management
the Compensation Discussion and Analysis and based on such review and
discussions the Compensation Committee has recommended to the Board that the
Compensation Discussion and Analysis be included in Peapack-Gladstone’s annual
report on Form 10-K and the Proxy Statement.
The
Compensation Committee
|
of
the Board of Directors
|
|
|
F.
Duffield Meyercord, Chairman
|
Edward
A. Merton
|
Anthony J. Consi,
II
|
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The
following table sets forth compensation information for Peapack-Gladstone’s
named executive officers.
Name
and
Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Option
Awards (1)
|
Change
in Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
(2)
($)
|
All
Other
Compensation
($)
|
Total
($)
|
(a)
|
(b)
|
(c)
|
(d)
|
|
(e)
|
(f)
|
(g)
|
Frank
A.
Kissel
Chairman
of the
Board
and CEO of
Peapack-
Gladstone
and the
Bank
|
2008
2007
2006
|
350,000
321,903
311,017
|
-
48,584
37,322
|
21,020
10,230
-
|
31,295
81,595
70,276
|
65,437
8,929
8,146
|
446,732
471,241
426,761
|
Arthur
F.
Birmingham
Executive
Vice
President
and
CFO
of Peapack-
Gladstone
and the
Bank
|
2008
2007
2006
|
185,013
175,583
169,646
|
-
26,337
20,358
|
14,714
7,161
-
|
14,285
61,077
59,961
|
31,326
4,808
4,559
|
230,624
274,966
254,524
|
Craig
C.
Spengeman
President
of PGB
Trust
and
Investments
and
Executive
Vice
President
of
Peapack-
Gladstone
|
2008
2007
2006
|
250,000
234,112
226,195
|
-
35,116
27,143
|
16,816
8,184
-
|
8,204
61,697
51,519
|
36,696
7,311
10,018
|
294,900
346,420
314,875
|
Robert
M.
Rogers
President
and
COO
of Peapack-
Gladstone
and the
Bank
|
2008
2007
2006
|
225,000
204,847
197,920
|
-
30,727
23,750
|
16,816
8,184
-
|
6,240
43,338
48,227
|
37,062
9,168
9,343
|
268,302
296,264
279,240
|
Garrett
P.
Bromley
Executive
Vice
President
|
2008
2007
2006
|
170,000
161,000
148,234
|
-
24,150
17,788
|
16,602
7,161
-
|
28,275
87,372
73,603
|
49,028
10,093
9,942
|
247,303
289,776
249,567
|
|
(1)
|
Includes
amortization of stock option grants in accordance with SFAS No. 123R, see
Note 12 – Stock Option Plans of Peapack-Gladstone’s Annual Report on Form
10-K for the year ended December 31, 2007 for additional information on
SFAS No. 123R valuation methodology. The 1998 and 2002 Stock
Option Plans provide for the award of incentive stock options to each
named executive officer. The 2006 Long-Term Stock Incentive Plan provides
for the award of non-qualified stock options, stock appreciation rights or
restricted stock to each named executive officer. The plans
provide that grants are made based upon recommendations from the
Compensation Committee to the Board and a vote from the full
Board.
|
Under
each of the plans, the exercise price for the option shares may not be less than
the fair market value of the common stock on the date of grant of the option.
The options granted under these plans are, in general, exercisable not earlier
than one year after the date of grant, at a price equal to the fair market value
of the common stock on the date of grant, and expire not more than ten years
after the date of grant.
|
(2)
|
The
Corporation had a defined benefit pension plan covering substantially all
of its salaried employees which was discontinued on May 12,
2008. The Plan was settled and substantially all benefits were
paid to employees during September 2008. There were no
nonqualified deferred compensation
earnings.
|
2008
Grants of Plan-Based Awards
The
following table represents each stock option grant awarded to a named executive
officer in 2008 and their total value calculated in accordance with FAS No.
123R. Additional details regarding these stock option grants may be
found in the Compensation Discussion and Analysis of this
proxy.
|
|
All
Other
|
|
|
|
|
Option
Awards:
|
|
Grant
Date
|
|
|
Number
of
|
Exercise
or Base
|
Fair
Value of
|
|
|
Securities
|
Price
of Option
|
Stock
and
|
|
Grant
Date
|
Underlying
Options
|
Awards
|
Option
Awards
|
Name
|
(1)
|
(#)
|
($/Share)
|
($)
|
Frank
A. Kissel
|
1/2/2008
|
5,000
|
24.57
|
53,950
|
Arthur
F. Birmingham
|
1/2/2008
|
3,500
|
24.57
|
37,765
|
Craig
C. Spengeman
|
1/2/2008
|
4,000
|
24.57
|
43,160
|
Robert
M. Rogers
|
1/2/2008
|
4,000
|
24.57
|
43,160
|
Garrett
P. Bromley
|
1/2/2008
|
3,500
|
24.57
|
37,765
|
(1)
|
The
per share grant date fair market value under SFAS No. 123R on the stock
option grant for the named executives was
$10.79.
|
|
Outstanding
Equity Awards at Fiscal
Year-End
|
The following table represents stock
options outstanding for each named executive officer as of December 31,
2008.
|
Option
Awards
|
Name
|
Number
of Securities Underlying
Unexercised
Options Exercisable
(#)
(1)
|
Number
of Securities
Underlying
Unexercised Options
Unexercisable (#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
Frank
A. Kissel
|
29,347
(2)
|
-
|
18.28
|
2/9/2009
|
|
5,324
(2)
|
-
|
16.86
|
1/11/2011
|
|
27,499
(3)
|
-
|
28.89
|
1/9/2014
|
|
5,000
(4)
|
4,000
|
28.10
|
1/3/2017
|
|
5,000
(5)
|
5,000
|
24.57
|
1/2/2018
|
Arthur
F. Birmingham
|
5,870
(2)
|
-
|
18.66
|
2/5/2009
|
|
3,993
(2)
|
-
|
16.86
|
1/11/2011
|
|
19,249
(3)
|
-
|
28.89
|
1/9/2014
|
|
3,500
(4)
|
2,800
|
28.10
|
1/3/2017
|
|
3,500
(5)
|
3,500
|
24.57
|
1/2/2018
|
Craig
C. Spengeman
|
5,870
(2)
|
-
|
18.66
|
2/5/2009
|
|
1,398
(2)
|
-
|
13.68
|
9/14/2010
|
|
3,992
(2)
|
-
|
16.86
|
1/11/2011
|
|
2,661
(2)
|
-
|
13.62
|
5/10/2011
|
|
21,999
(3)
|
-
|
28.89
|
1/9/2014
|
|
4,000
(4)
|
3,200
|
28.10
|
1/3/2017
|
|
4,000
(5)
|
4,000
|
24.57
|
1/2/2018
|
Robert
M. Rogers
|
5,870
(2)
|
-
|
18.66
|
2/5/2009
|
|
3,993
(2)
|
-
|
16.86
|
1/11/2011
|
|
2,661
(2)
|
-
|
13.62
|
5/10/2011
|
|
21,999
(3)
|
-
|
28.89
|
1/9/2014
|
|
4,000
(4)
|
3,200
|
28.10
|
1/3/2017
|
|
4,000
(5)
|
4,000
|
24.57
|
1/2/2018
|
Garrett
P. Bromley
|
5,870
(2)
|
-
|
18.66
|
2/5/2009
|
|
3,993
(2)
|
-
|
16.86
|
1/11/2011
|
|
19,249
(3)
|
-
|
28.89
|
1/9/2014
|
|
3,500
(4)
|
2,800
|
28.10
|
1/3/2017
|
|
3,500
(5)
|
3,500
|
24.57
|
1/2/2018
|
|
(1)
|
In
the event of a Change in Control, all Options outstanding on the date of
such Change in Control shall become immediately and fully
exercisable. All options expire not more than ten years after
the date of grant.
|
|
(2)
|
Stock
options were originally to vest at a rate of 20% per year for five years;
however, on December 11, 2003, the Board of Directors accelerated the
vesting of the remaining unvested options. All options granted
were exercisable at that time, at a price equal to the fair market value
of the common stock on the date of
grant.
|
|
(3)
|
Stock
options were immediately vested and all options were exercisable at that
time, at a price equal to the fair market value of the common stock on the
date of the grant.
|
|
(4)
|
Stock
options granted on January 3, 2007, vest at a rate of 20% per year for
five years and are exercisable not earlier than one year after the date of
the grant, at a price equal to the fair market value of the common stock
on the date of the grant.
|
|
(5)
|
Stock
options granted on January 2, 2008, vest at a rate of 20% per year for
five years and are exercisable not earlier than one year after the date of
the grant, at a price equal to the fair market value of the common stock
on the date of the grant.
|
Option
Exercises and Stock Vested
The named executive officers did not
exercise stock options nor were there any vesting of stock awards during
2008.
Pension
Benefits
Peapack-Gladstone
maintained a traditional defined benefit pension plan which was discontinued on
May 12, 2008. The Plan was settled and substantially all benefits
were paid to employees during September 2008. The Corporation amended
its existing 401(K) profit-sharing and investment plan to enhance the
contributions to its salaried employees starting in May 2008. The following table shows
the pension plan in which each named executive officer participated, the number
of years of credited service and the payments made during
2008.
Name
|
Plan
Name
|
Number
of
Years
Credited
Service
(#)
|
Present
Value of
Accumulated
Benefit
($)
|
Payments
During
Last
Fiscal
Year ($)
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
Frank
A. Kissel
|
Peapack-Gladstone
Bank
Employees’
Retirement Plan
|
18
|
-
|
$848,849
|
Arthur
F. Birmingham
|
Peapack-Gladstone
Bank
Employees’
Retirement Plan
|
11
|
-
|
506,143
|
Craig
C. Spengeman
|
Peapack-Gladstone
Bank
Employees’
Retirement Plan
|
22
|
-
|
602,225
|
Robert
M. Rogers
|
Peapack-Gladstone
Bank
Employees’
Retirement Plan
|
20
|
-
|
396,839
|
Garrett
P. Bromley
|
Peapack-Gladstone
Bank
Employees’
Retirement Plan
|
10
|
-
|
604,206
|
Change-In-Control
Arrangements
Peapack-Gladstone
and the Bank entered into Change-in-Control Agreements with Frank A. Kissel,
Craig C. Spengeman, Robert M. Rogers, Arthur F. Birmingham, and Garrett P.
Bromley as of December 20, 2007, each of which provides for benefits in the
event of a termination without “cause” or for “good reason” following a merger
or acquisition of Peapack-Gladstone. The Change-in-Control Agreements
also include certain non-disclosure provisions, which survive the termination of
the Executives’ employment and the expiration of the Agreements. A
more detailed description of the change in control agreements may be found in
the Compensation Discussion and Analysis section of this proxy.
Employment
Agreements
Peapack-Gladstone
and the Bank entered into employment agreements (the “Employment Agreements”)
with each of Frank A. Kissel, Craig C. Spengeman, Robert M. Rogers, Arthur F.
Birmingham and Garrett P. Bromley as of January 1, 2008 for a period of two
years to expire on December 31, 2009, specifically set forth in the Compensation
Discussion and Analysis section of this proxy. Employment agreements
with named executive officers are customary in the marketplace, and
Peapack-Gladstone feels it would be at a competitive disadvantage if it did not
enter into such agreements.
The
following table shows the potential payments under each named executive’s
change-in-control or employment agreement if he had terminated employment with
the Bank at December 31, 2008, under each of the following retirement or
termination circumstances (i) death; (ii) disability or dismissal for cause;
(iii) retirement or resignation; (iv) dismissal without cause; and (v) dismissal
without cause or resignation for good reason following a change-in-control of
Peapack-Gladstone on December 31, 2008. These payments are considered
estimates as of specific dates as they contain some assumptions regarding stock,
price, life expectancy, salary and non-incentive compensation amounts and income
tax rates and laws.
Potential
Payments upon Termination or Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dismissal
without
|
|
|
|
|
|
|
|
|
|
|
|
|
Dismissal
|
|
|
Cause
or Resignation
|
|
|
|
|
|
|
Disability
or
|
|
|
Retirement
|
|
|
Without
Cause
|
|
|
For
Good Reason
|
|
|
|
|
|
|
Dismissal
|
|
|
or
|
|
|
(no
Change in
|
|
|
(following
a Change
|
|
|
|
Death
|
|
|
For
Cause
|
|
|
Resignation
|
|
|
Control)
(1) (3)
|
|
|
In
Control) (1) (2) (3) (6)
|
|
Frank
A. Kissel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts
payable in full on indicated date of termination:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
– Salary
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
700,000 |
|
|
$ |
1,171,950 |
|
Stock
Option Acceleration (4)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3,045 |
|
Welfare
Benefits Continuation
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
17,655 |
|
SERP
Amount
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
204,053 |
|
Parachute
Penalty – Tax Gross-up (5)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
515,374 |
|
Total
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
700,000 |
|
|
$ |
1,912,077 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arthur
F. Birmingham
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts
payable in full on indicated date of termination:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
– Salary
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
370,026 |
|
|
$ |
639,243 |
|
Stock
Option Acceleration (4)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,132 |
|
Welfare
Benefits Continuation
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
11,568 |
|
SERP
Amount
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
93,858 |
|
Parachute
Penalty – Tax Gross-up (5)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
280,847 |
|
Total
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
370,026 |
|
|
$ |
1,027,647 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Craig
C. Spengeman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts
payable in full on indicated date of termination:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
– Salary
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
500,000 |
|
|
$ |
846,597 |
|
Stock
Option Acceleration (4)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,436 |
|
Welfare
Benefits Continuation
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
21,270 |
|
SERP
Amount
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
138,125 |
|
Parachute
Penalty – Tax Gross-up (5)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
377,064 |
|
Total
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
500,000 |
|
|
$ |
1,385,493 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
M. Rogers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts
payable in full on indicated date of termination:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
– Salary
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
450,000 |
|
|
$ |
745,785 |
|
Stock
Option Acceleration (4)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,436 |
|
Welfare
Benefits Continuation
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
21,270 |
|
SERP
Amount
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
136,735 |
|
Parachute
Penalty – Tax Gross-up (5)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
342,272 |
|
Total
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
450,000 |
|
|
$ |
1,248,498 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Garrett
P. Bromley
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts
payable in full on indicated date of termination:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
– Salary
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
340,000 |
|
|
$ |
558,564 |
|
Stock
Option Acceleration (4)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,132 |
|
Welfare
Benefits Continuation
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
17,655 |
|
SERP
Amount
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
57,207 |
|
Parachute
Penalty – Tax Gross-up (5)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
238,176 |
|
Total
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
340,000 |
|
|
$ |
873,734 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The
term “cause” means (i) willful and continued failure by a named executive
officer to perform the officer’s duties, (ii) willful misconduct by the
named executive officer which causes material injury to the Corporation or
its successor or (iii) the conviction of a crime, other than a traffic
violation, drunkenness, drug abuse, or excessive absenteeism other than
for illness.
|
(2)
|
The
term “good reason” means a change in job description, location,
compensation or benefits.
|
(3)
|
The
term “change in control” means (i) the acquisition of the Corporation’s
securities representing 25% or more of the voting power of all its
securities, (ii) the first purchase of the Corporation’s common stock
pursuant to a tender or exchange offer, (iii) the shareholder approval of
(a) a merger or consolidation of the Corporation into another corporation
wherein the other corporation exercises control over the Corporation, (b)
a sale or disposition of all or substantially all of the Corporation’s
assets or (c) a plan of liquidation or dissolution of the Corporation,
(iv) a change in board membership such that over a two year period the
directors constituting the Board at the beginning of such period do not
constitute two thirds of the Board of the Corporation or a successor
corporation at the end of such period, or (v) a sale of (a) the common
stock of the Corporation following which a person or entity other than the
Corporation or its affiliates owns a majority thereof or (b) all or
substantially all of the Corporation’s
assets.
|
(4)
|
Under
Peapack-Gladstone’s various stock option plans, unvested stock options
would immediately vest in the event of a change in control; however, at
December 31, 2008, the market value of Peapack-Gladstone’s stock is less
than the grant price of all unvested options Named
executive officers would have three years from the date of termination
following a change in control to exercise the vested
options.
|
(5)
|
The
excise tax gross-up was calculated using marginal tax rate of 60.94%
(40.94% income and employment taxes, plus the 20% excise
tax).
|
(6)
|
Amounts
disclosed do not reflect the impact of the compensation-related
limitations associated with the CPP and the Stimulus
Act. Please see “Effect of Current Financial Crisis” and
“Effect of Current Financial Crisis: Additional Restrictions
under the American Recovery and Reinvestment Act of 2009”
above.
|
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act requires that Peapack-Gladstone's executive officers,
directors and persons who own more than ten percent of a registered class of
Peapack-Gladstone's common stock, file reports of ownership and changes in
ownership with the SEC. Based upon copies of reports furnished by insiders, all
Section 16(a) reporting requirements applicable to insiders during 2008 were
satisfied on a timely basis.
The Board
of Directors has established a Compensation Committee, which has been charged
with overseeing executive compensation practices at Peapack-Gladstone. Members
of the Compensation Committee are Messrs. Meyercord (Chair), Merton and Consi.
All members of the Compensation Committee, or their affiliates, have engaged in
loan, deposit or trust transactions with the Bank, as discussed below, in
“Transactions with Related Persons, Promoters and Certain Control Persons” and
under “Director Independence” above. No other relationships required to be
reported under the rules promulgated by the Securities and Exchange Commission
exist with respect to members of Peapack-Gladstone’s Compensation
Committee.
TRANSACTIONS
WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS
The Bank
may purchase an undetermined amount of mortgage loans from Weichert Mortgage
Company (“Weichert Mortgage”) during 2009. Weichert Mortgage is
wholly owned by James M. Weichert, who beneficially owns 9.66 percent of
Peapack-Gladstone’s outstanding common stock. Any purchases by the
Bank from Weichert Mortgage will be on terms that are substantially the same, or
at least as favorable to, the Bank as those offered by Weichert Mortgage to
other unaffiliated entities. During 2008, the Bank did not purchase
any mortgages from Weichert Mortgage. There are no guarantees that
any purchases will be made in the future.
In
addition to the matters discussed above and discussed under the caption
“Compensation Committee Interlocks and Insider Participation,” directors and
officers and their associates were customers of and had transactions with the
Bank during the year ended December 31, 2008, and it is expected that such
persons will continue to have such transactions in the future. All deposit
accounts, loans, and commitments comprising such transactions were made in the
ordinary course of business of the Bank on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons, and, in the opinion of management of
Peapack-Gladstone, did not involve more than normal risks of collectibility or
present other unfavorable features.
REPORT
OF THE AUDIT COMMITTEE
To
the Board of Directors of Peapack-Gladstone Financial Corporation:
We have
reviewed and discussed with management Peapack-Gladstone's audited consolidated
financial statements as of and for the year ended December 31,
2008.
We have
discussed with the independent auditors the matters required to be discussed by
Statement on Auditing Standards No. 61, as amended (AICPA, Professional
Standards, Vol. 1 AU Section 380) as adopted by the Public Company Accounting
Oversight Board in Rule 3200T.
We have
received and reviewed the written disclosures and the letter from the
independent accountant required by applicable requirements of the Public Company
Accounting Oversight Board regarding the independent accountant’s communications
with the audit committee concerning independence, and has discussed with the
independent accountant.
Based on
the reviews and discussions referred to above, we recommend to the Board of
Directors that the audited financial statements referred to above be included in
Peapack-Gladstone's Annual Report on Form 10-K for the year ended December 31,
2008.
THE
AUDIT COMMITTEE
ANTHONY
J. CONSI, II, CHAIRMAN
JOHN
R. MULCAHY
PHILIP
W. SMITH, III
PAMELA
HILL
March 3,
2009
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Aggregate
fees for the fiscal years ending December 31, 2008 and December 31, 2007, billed
by the Corporation’s independent registered public accounting firms, Crowe
Horwath LLP (“Crowe”) were as follows:
|
|
|
|
|
|
|
Type
of Service
|
|
2008
|
|
|
2007
|
|
Audit
Fees (1)
|
|
$ |
174,400 |
|
|
$ |
162,500 |
|
Audit-Related
Fees (2)
|
|
|
33,000 |
|
|
|
24,000 |
|
All
Other Fees (4)
|
|
|
18,880 |
|
|
|
- |
|
Total
|
|
$ |
226,280 |
|
|
$ |
186,500 |
|
|
(1)
|
Comprised
of the audit of Peapack-Gladstone’s annual financial statements and
reviews of Peapack-Gladstone’s quarterly financial statements, as well as
statutory audits of Peapack-Gladstone’s subsidiaries, attest services, and
consents to SEC filings. Also includes the audit of
Peapack-Gladstone’s internal control over financial reporting for
2007.
|
|
(2)
|
Comprised
of fees for audit of retirement and 401(K)
plans.
|
|
(3)
|
Comprised
of services for tax compliance, tax return preparation, tax advice and tax
planning.
|
|
(4)
|
Comprised
of fees for consents and filings.
|
AUDIT
COMMITTEE PRE-APPROVAL PROCEDURES
The Audit
Committee has adopted a formal policy concerning the pre-approval of audit and
non-audit services to be provided by the independent registered public
accounting firm to Peapack-Gladstone. The policy requires that all
services to be performed by Crowe Horwath LLP, Peapack-Gladstone’s independent
registered public accounting firm, including audit services, audit-related
services and permitted non-audit services, be pre-approved by the Audit
Committee. Specific services being provided by the independent
registered public accounting firm are regularly reviewed in accordance with the
pre-approval policy. At subsequent Audit Committee meetings, the
Committee receives updates on the services actually provided by the independent
registered public accounting firm, and management may present additional
services for approval. All services rendered by Crowe Horwath LLP are
permissible under applicable laws and regulations. Each new engagement of Crowe
Horwath LLP was approved in advance by the Audit Committee.
RECOMMENDATION
AND VOTE REQUIRED ON PROPOSAL 3
THE BOARD
OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE
APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM. Approval of this proposal requires the favorable vote of a
majority of the votes cast. Abstentions and broker non-votes will
have no impact on the approval of this advisory proposal.
SHAREHOLDER
PROPOSALS
New
Jersey corporate law requires that the notice of shareholders' meeting (for
either a regular or special meeting) specify the purpose or purposes of such
meeting. Thus, any substantive proposals, including shareholder proposals, must
be referred to in Peapack-Gladstone's notice of shareholders' meeting for such
proposal to be properly considered at a meeting of
Peapack-Gladstone.
Proposals
of shareholders which are eligible under the rules of the SEC to be included in
Peapack-Gladstone's year 2010 proxy materials must be received by the Secretary
of Peapack-Gladstone no later than November 27, 2009.
If
Peapack-Gladstone changes its 2010 Annual Meeting date to a date more than 30
days from the date of its 2009 Annual Meeting, then the deadline referred to in
the preceding paragraph will be changed to a reasonable time before
Peapack-Gladstone begins to print and mail its proxy materials. If
Peapack-Gladstone changes the date of its 2010 Annual Meeting in a manner that
alters the deadline, Peapack-Gladstone will so state under Item 5 of the first
quarterly report on Form 10-Q it files with the SEC after the date change or
notify its shareholders by another reasonable means.
OTHER
MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING
The Board
of Directors knows of no business that will be presented for consideration at
the meeting other than that stated in this proxy statement. Should any other
matter properly come before the meeting or any adjournment thereof, it is
intended that proxies in the enclosed form will be voted in respect thereof in
accordance with the judgment of the person or persons voting the
proxies.
WHETHER
YOU INTEND TO BE PRESENT AT THE MEETING OR NOT, YOU ARE URGED TO RETURN YOUR
SIGNED PROXY PROMPTLY.
By
Order of the Board of Directors
FRANK
A. KISSEL,
CHAIRMAN
Gladstone,
New Jersey
March 27,
2009
PEAPACK-GLADSTONE'S
ANNUAL REPORT FOR THE YEAR-ENDED DECEMBER 31, 2008 IS BEING MAILED TO THE
SHAREHOLDERS WITH THIS PROXY STATEMENT. HOWEVER, SUCH ANNUAL REPORT IS NOT
INCORPORATED INTO THIS PROXY STATEMENT AND IS NOT DEEMED TO BE A PART OF THE
PROXY SOLICITING MATERIAL. IN ADDITION, A COPY OF OUR ANNUAL REPORT
(WITHOUT EXHIBITS) WILL BE FURNISHED TO ANY SHAREHOLDER UPON WRITTEN REQUEST
ADDRESSED TO ANTOINETTE ROSELL, CORPORATE SECRETARY, PEAPACK-GLADSTONE FINANCIAL
CORPORATION, 158 ROUTE 206 NORTH, P.O. BOX 178, GLADSTONE, NEW JERSEY 07934. OUR
ANNUAL REPORT IS ALSO AVAILABLE ON OUR WEBSITE AT WWW.PGBANK.COM.
25