PEAPACK-GLADSTONE FINANCIAL CORPORATION
158 ROUTE 206 NORTH
GLADSTONE, NEW JERSEY 07934
---------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON TUESDAY, APRIL 25, 2006
To Our Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Peapack-Gladstone Financial Corporation will be held at Fiddler's Elbow Country
Club, 811 Rattlesnake Bridge Road, Bedminster Township, New Jersey, on Tuesday,
April 25, 2006, at 2:00 p.m. local time for the purpose of considering and
voting upon the following matters:
1. Election of thirteen directors to serve until the expiration of their
terms and thereafter until their successors shall have been duly
elected and qualified.
2. The approval of the Peapack-Gladstone Financial Corporation 2006
Long-Term Stock Incentive Plan, which generally provides the Board of
Directors the authority to grant stock options, stock appreciation
rights and restricted stock for a maximum of 400,000 shares of common
stock to selected officers, key employees, independent contractors and
non-employee directors of Peapack-Gladstone and any subsidiary of
Peapack-Gladstone.
3. Such other business as may properly come before the meeting or any
adjournment thereof.
Only shareholders of record at the close of business on March 13, 2006,
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 24, 2006
YOUR VOTE IS IMPORTANT. PLEASE SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENVELOPE PROVIDED.
PEAPACK-GLADSTONE FINANCIAL CORPORATION
158 ROUTE 206 NORTH
GLADSTONE, NEW JERSEY 07934
PROXY STATEMENT
DATED MARCH 24, 2006
GENERAL PROXY STATEMENT INFORMATION
This proxy statement is furnished to the shareholders of
Peapack-Gladstone Financial Corporation ("Peapack-Gladstone") in connection with
the solicitation by the Board of Directors of Peapack-Gladstone of proxies for
use at the Annual Meeting of Shareholders to be held at Fiddler's Elbow Country
Club, 811 Rattlesnake Bridge Road, Bedminster Township, New Jersey on Tuesday,
April 25, 2006 at 2:00 p.m. local time. This proxy statement is first being
mailed to shareholders on approximately March 24, 2006.
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 13, 2006. 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, 8,271,605 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. The approval of Peapack-Gladstone Financial Corporation 2006
Long-Term Stock Incentive Plan requires the affirmative vote of a majority of
Peapack-Gladstone's common stock voted at the meeting, whether voted in person
or by proxy. At the meeting, inspectors of election will tabulate both ballots
cast by shareholders present and voting in person, and votes cast by proxy.
Under applicable New Jersey law and Peapack-Gladstone's certificate of
incorporation and by-laws, abstentions and broker non-votes are counted for
purpose of establishing a quorum but otherwise do not count.
All shares represented by valid proxies received pursuant to this
solicitation will be voted FOR the election of the 13 nominees for director who
are named in this proxy statement and FOR the approval of Peapack-Gladstone
Financial Corporation 2006 Long-Term Stock Incentive Plan, 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 Corporate Secretary of the meeting prior to the
voting of such proxy.
Solicitation of Proxies
This proxy solicitation is being made by the Board of Peapack-Gladstone
and the costs of the solicitation will be borne by Peapack-Gladstone. In
addition to the use of the mails, proxies may be solicited personally or by
telephone, e-mail or facsimile transmission by directors, officers and employees
of Peapack-Gladstone and its Subsidiaries who will not be specially compensated
for such solicitation activities. Peapack-Gladstone will also make arrangements
with brokers, dealers, nominees, custodians and fiduciaries to forward proxy
soliciting materials to the beneficial owners of shares held of record by such
persons, and Peapack-Gladstone may reimburse them for their reasonable expenses
incurred in forwarding the materials.
PROPOSAL 1 - ELECTION OF DIRECTORS
DIRECTOR INFORMATION
Peapack-Gladstone's certificate of incorporation and by-laws authorize
a minimum of 5 and a maximum of 25 directors, but leave the exact number to be
fixed by resolution of Peapack-Gladstone's Board of Directors. The Board has
currently fixed the number of directors at 13 and the Board is presently
comprised of 13 members. Directors are elected annually by the shareholders for
one-year terms. Peapack-Gladstone's Nominating Committee has recommended to the
Board the 13 current directors for reelection to serve for one-year terms
expiring at Peapack-Gladstone's 2007 Annual Meeting of Shareholders and until
their successors shall have been duly elected and qualified. If, for any reason,
any of the nominees become unavailable for election, the proxy solicited by the
Board will be voted for a substitute nominee selected by the Board. The Board
has no reason to believe that any of the named nominees is not available or will
not serve if elected.
Unless a shareholder indicates otherwise on the proxy, the proxy will
be voted for the persons named in the table below to serve until the expiration
of their terms, and thereafter until their successors have been duly elected and
qualified.
The following table sets forth the names and ages of the Board's
nominees for election, the nominees' position with Peapack-Gladstone (if any),
the principal occupation or employment of each nominee for the past five years
and the period during which each nominee has served as a director of
Peapack-Gladstone. The nominee's prior service as a director includes prior
service as a director of Peapack-Gladstone Bank (the "Bank") prior to the
formation of the holding company.
NOMINEES FOR ELECTION AS DIRECTORS
Name and Position Director Principal Occupation or
With Peapack-Gladstone Age Since Employment for Past Five Years
====================================================================================================================================
Anthony J. Consi, II 60 2000 Senior Vice President of Finance and Operations, Weichert Realtors
Pamela Hill 68 1991 President of Ferris Corp., a real estate management company
T. Leonard Hill 94 1944 Chairman Emeritus of the Board of Peapack-Gladstone and the Bank;
previously Chairman of Peapack-Gladstone and the Bank; Chairman of
Ferris Corp., a real estate management company.
Frank A. Kissel 55 1989 Chairman and CEO of Peapack-Gladstone and the Bank; previously
Chairman and CEO President and CEO of Peapack-Gladstone and the Bank.
John D. Kissel 53 1987 Real Estate Broker, Turpin Real Estate, Inc.
James R. Lamb 63 1993 Principal of James R. Lamb, P.C., Attorney at Law.
Edward A. Merton 65 1981 President of Merton Excavating and Paving Co.
F. Duffield Meyercord 59 1991 Partner of Carl Marks Advisory Group, LLC; President, Meyercord
Advisors, Inc.
John R. Mulcahy 67 1981 Retired, previously President of Mulcahy Realty and Construction.
Robert M. Rogers, 47 2002 President and COO of Peapack-Gladstone and the Bank; previously
President and COO Executive Vice President and COO of Peapack-Gladstone and the Bank
Philip W. Smith, III 50 1995 President, Phillary Management, Inc., a real estate management company.
Craig C. Spengeman, 50 2002 President, PGB Trust and Investments, a division of the Bank and
President, PGB Trust and Executive Vice President of Peapack-Gladstone; previously Executive
Investments Vice President and Senior Trust Officer of Peapack-Gladstone and the
Bank
Jack D. Stine 84 1976 Retired. Trustee, Proprietary House Association.
T. Leonard Hill is the father of Pamela Hill. Frank A. Kissel and John D. Kissel
are brothers.
2
Recommendation and Vote Required on Proposal 1
Directors will be elected by a plurality of the votes cast at the
Annual Meeting, whether in person or by proxy. THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE NOMINATED SLATE OF DIRECTORS INCLUDED IN
PROPOSAL 1.
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 2005. The Board of Directors of Peapack-Gladstone
held six meetings during 2005. During 2005, all directors of Peapack-Gladstone
attended no fewer than 75% of the total number of meetings of
Peapack-Gladstone's Board and meetings of committees on which such director
served. It is Peapack-Gladstone's policy to encourage director attendance at the
Annual Meeting absent a compelling reason such as illness. Last year, all but
one director attended the Annual Meeting.
Our Board of Directors believes that the purpose of corporate
governance is to maximize shareholder value in a manner consistent with legal
requirements. The Board has adopted corporate governance principles, which the
Board and senior management believe promote this purpose. We periodically review
these governance principles, the rules and listing standards of the American
Stock Exchange (the "AMEX") and Securities and Exchange Commission (the "SEC")
regulations.
Director Independence
The Board has determined that a majority of the directors and all
current members of the Nominating, Compensation, and Audit Committees are
"independent" for purposes of Section 121 of the American Stock Exchange Company
Guide, and that the members of the Audit Committee are also "independent" for
purposes of Section 10A(m)(3) of the Securities Exchange Act of 1934 and Section
803 of the American Stock Exchange Company Guide. The Board based these
determinations primarily on a review of the responses of the directors and
executive officers to questions regarding employment and transaction history,
affiliations and family and other relationships and on discussions with the
directors. The independent directors are Anthony J. Consi, II, James R. Lamb,
Edward A. Merton, F. Duffield Meyercord, John R. Mulcahy, Philip W. Smith, III,
and Jack D. Stine.
To assist it in making determinations of independence, the Board has
concluded that the following transactions or relationships are immaterial and
that a director whose only transactions or relationships with Peapack-Gladstone
fall within these categories is independent:
o A loan made by the Bank to a director, his or her immediate family
member or an entity affiliated with a director or his or her
immediate family member, or a loan personally guaranteed by such
persons if such loan (i) complies with state and federal regulations
on insider loans, where applicable; and (ii) is not classified by
the Bank's credit committee or by any bank regulatory agency which
supervised the Bank as substandard, doubtful or loss.
o A deposit, trust, insurance brokerage, securities brokerage or
similar customer relationship between Peapack-Gladstone or its
Subsidiaries and a director, his or her immediate family member or
an affiliate of his or her immediate family member if such
relationship is on customary and usual market terms and conditions.
o The employment by Peapack-Gladstone or its Subsidiaries of any
immediate family member of the director if the employee serves below
the level of a senior vice president.
o Annual contributions by Peapack-Gladstone or its Subsidiaries to any
charity or non-profit corporation with which a director is
affiliated if the contributions do not exceed an aggregate of
$20,000 in any calendar year and the contribution is made in the
name of Peapack-Gladstone.
3
o Purchases of goods or services by Peapack-Gladstone or any of its
Subsidiaries from a business in which a director or his or her
immediate family member is a partner, shareholder or officer, if the
director or his or her immediate family member own five percent or
less of the equity interests of that business and do not serve as an
executive officer of the business.
o Purchases of goods or services by Peapack-Gladstone, or any of its
Subsidiaries, from a director or a business in which the director or
his or her immediate family member is a partner, shareholder or
officer if the annual aggregate purchases of goods or services from
the director, his or her immediate family member or such business in
the last calendar year does not exceed the greater of $60,000 or two
percent of the gross revenues of the business.
o Fixed retirement benefits paid or payable to a director either
currently or on retirement.
Executive Sessions of Non-Management Directors
Our Corporate Governance Principles require the Board to provide for at
least semi-annual executive sessions to include non-management directors. At
least once a year, the Board holds an executive session including only
independent directors. Peapack-Gladstone's Board has chosen to rotate the
presiding director for each meeting among the Chairperson of the Audit,
Compensation, and Nominating Committees.
Shareholder Communication with Directors
The Board of Directors has established the following procedures for
shareholder communications with the Board of Directors:
o Shareholders wishing to communicate with the Board of Directors
should send any communication to Board of Directors,
Peapack-Gladstone Financial Corporation, c/o Antoinette Rosell,
Corporate Secretary, at 158 Route 206 North, Gladstone, New Jersey,
07934. Any such communication should state the number of shares
owned by the shareholder.
o The Corporate Secretary will forward such communication to the Board
of Directors or as appropriate to the particular Committee Chairman,
unless the communication is a personal or similar grievance, a
shareholder proposal or related communication, an abusive or
inappropriate communication, or a communication not related to the
duties or responsibilities of the Board of Directors, in which case
the Corporate Secretary has the authority to disregard the
communication. All such communications will be kept confidential to
the extent possible.
o The Corporate Secretary will maintain a log of, and copies of, all
communications, for inspection and review by any Board member, and
shall regularly review all such communications with the Board or the
appropriate Committee Chairman.
The Board of Directors has also established the following procedures
for shareholder communications with the rotating chairman of the executive
sessions of the non-management directors of the Board:
o Shareholders wishing to communicate with the presiding director of
executive sessions should send any communication to the presiding
director of executive sessions, Peapack-Gladstone Financial
Corporation, c/o Antoinette Rosell, Corporate Secretary, 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.
o The Corporate Secretary will forward such communication to the then
presiding director, unless the communication is a personal or
similar grievance, a shareholder proposal or related communication,
an abusive or inappropriate communication, or a communication not
related to the duties or responsibilities of the non-management
directors, in which case the Corporate Secretary has the authority
to disregard the communication. All such communications will be kept
confidential to the extent possible.
o The Corporate Secretary will maintain a log of, and copies of, all
communications, for inspection and review by the presiding director
of executive sessions, and shall regularly review all such
communications with the presiding director at the next meeting.
4
Committees of the Board of Directors
In 2005, 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. Stine, Mulcahy and Smith. The Audit Committee met
nine times during 2005.
The Board of Directors has determined that at least one member of the
Audit Committee meets the American Stock Exchange standard of being financially
sophisticated. The Board of Directors has also determined that Mr.
Consi meets the SEC criteria of an "audit committee financial expert."
The Audit Committee operates pursuant to a charter. The charter can be
viewed at the Investor Relations link on our website www.pgbank.com. The charter
gives the Audit Committee the authority and responsibility for the appointment,
retention, compensation and oversight of our independent auditors, including
pre-approval of all audit and non-audit services to be performed by our
independent auditors. Other responsibilities of the Audit Committee pursuant to
the charter include: reviewing the scope and results of the audit with our
independent auditors; reviewing with management and our independent auditors
Peapack-Gladstone's interim and year-end operating results including press
releases; considering the appropriateness of the internal accounting and
auditing procedures of Peapack-Gladstone; considering our outside auditors'
independence; reviewing examination reports by bank regulatory agencies;
reviewing audit reports prepared by the accounting firm which conducts the
internal audit functions for Peapack-Gladstone; and reviewing the response of
management to those reports. The Audit Committee reports to the full Board
concerning pertinent matters coming before it.
Nominating Committee
--------------------
Peapack-Gladstone's Nominating Committee consists of Messrs. Smith
(Chair), Consi, Lamb, Merton, Meyercord, Mulcahy and Stine. The Nominating
Committee operates under a written charter setting out the functions and
responsibilities of this committee. The charter can be viewed at the Investor
Relations link on our website www.pgbank.com. 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." The
Nominating Committee met three times during 2005.
Compensation Committee
----------------------
Peapack-Gladstone's Compensation Committee consists of Messrs.
Meyercord (Chair), Stine, Merton and Consi. The Compensation Committee operates
under a written charter setting out the functions and responsibilities of this
committee. The charter can be viewed at the Investor Relations link on our
website www.pgbank.com. 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. During 2005, the Compensation Committee met six
times.
5
Nomination of Directors
Nominations for director may be made only by the Board of Directors or
a committee of the Board or by a shareholder of record entitled to vote. The
Board of Directors has established minimum criteria for members of the Board.
These include:
o Directors are encouraged to live and/or work in the communities
served by Peapack-Gladstone's subsidiary bank.
o Directors shall beneficially own or agree to acquire at least
$25,000 (market value) of Peapack-Gladstone stock.
o Directors shall be experienced in business, shall be financially
literate and shall be respected members of their communities.
o Directors shall be of high ethical and moral standards and have
sound personal finances.
o A Director may not serve on the Board of directors of any other bank
that serves the same market area as Peapack-Gladstone and may only
serve on the boards of three other publicly-traded companies.
o If there is a vacancy, the Nominating Committee shall evaluate the
qualifications of persons who may be recommended to it as potential
candidates based on information the Committee may deem relevant.
The Nominating Committee has adopted a policy regarding consideration
of director candidates recommended by shareholders. The Nominating Committee
will consider nominations made by shareholders. In order for a shareholder to
make a nomination, the shareholder must provide a notice along with the
additional information and supporting materials to our Corporate Secretary not
less than 120 days nor more than 150 days prior to the first anniversary of the
date of the preceding year's annual meeting. The shareholder wishing to propose
a candidate for consideration by the Nominating Committee must have significant
stake in 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 2007, we must receive this notice on or after November 27, 2006, and on
or before December 27, 2006. The following factors, at a minimum, are considered
by the Nominating Committee as part of its review of all director candidates and
in recommending potential director candidates to the Board:
o appropriate mix of educational background, professional background
and business experience to make a significant contribution to the
overall composition of the Board;
o if the Committee deems it applicable, whether the candidate would be
able to read and understand fundamental financial statements and
considered to be financially sophisticated as described in the AMEX
rules, or considered to be an audit committee financial expert as
defined pursuant to the Sarbanes-Oxley Act of 2002;
o if the Committee deems it applicable, whether the candidate would be
considered independent under the AMEX rules and the Board's
additional independence guidelines set forth in Peapack-Gladstone's
Corporate Governance Principles;
o demonstrated character and reputation, both personal and
professional, consistent with that required for a bank director;
o willingness to apply sound and independent business judgment;
o ability to work productively with the other members of the Board;
o availability for the substantial duties and responsibilities of a
Peapack-Gladstone director; and
o meets the additional criteria set forth in Peapack-Gladstone's
Corporate Governance Principles.
6
You can obtain a copy of the full text of our policy regarding
shareholder nominations by writing to Antoinette Rosell, Corporate Secretary,
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 principal executive officer, principal
financial officer, principal accounting officer and to all other
Peapack-Gladstone directors, officers and employees. The Code of Business
Conduct and Ethics is available in the Investor Relations section of
Peapack-Gladstone's website located at www.pgbank.com. The Code of Business
Conduct and Ethics is also available in print to any shareholder who requests
it. Peapack-Gladstone will disclose any substantive amendments to or waiver from
provisions of the Code of Business Conduct and Ethics made with respect to a
director or executive officer on our website and to the extent required by AMEX
and SEC rules, in a Current Report on Form 8-K.
We have also adopted Corporate Governance Principles, which are
intended to provide guidelines for the governance of Peapack-Gladstone by the
Board and its committees. The Corporate Governance Principles are available at
the Investor Relations section of Peapack-Gladstone's website located at
www.pgbank.com.
DIRECTOR COMPENSATION
Peapack-Gladstone pays its directors an $8,000 annual retainer for
service on the Board, and $500 for each regular Bank Board meeting they attend
and $400 for each committee meeting they attend. Committee Chairs and Audit
Committee members receive an additional $2,000 annual retainer. The Audit
Committee Chair receives an additional $16,000 annual retainer. 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.
The 1998 and 2002 Stock Option Plans for Outside Directors provide for
the award of non-qualified stock options to each non-employee director. The
plans provide that grants are made based upon recommendations from the
Compensation Committee to the Board and a vote from the full Board. In 2005,
there were no awards to the outside directors.
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. On December 8, 2005, the Board
of Directors accelerated the vesting of 79,200 of the unvested stock options
awarded to outside directors under the Corporation's 1998 and 2002 Stock Option
Plans for Outside Directors.
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.
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 3.27 percent as of February 28, 2006. 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.
7
BENEFICIAL OWNERSHIP OF COMMON STOCK
Certain Beneficial Owners
The following table sets forth as of February 28, 2006 certain
information as to beneficial ownership of each person known to Peapack-Gladstone
to own beneficially more than 5 percent of the outstanding common stock of
Peapack-Gladstone. The beneficial owner in the table below has sole voting and
investment power as to all his shares.
Number of Shares
Name of Beneficial Owner Beneficially Owned Percent of Class
================================================================================
James M. Weichert 801,435 9.69%
Stock Ownership of Directors and Executive Officers
The following table sets forth as of February 28, 2006 the number of
shares of Peapack-Gladstone's common stock beneficially owned by each of the
directors/nominees, the executive officers of Peapack-Gladstone for whom
individual information is required to be set forth in this proxy statement (the
"named executive officers") pursuant to the regulations of the SEC, and by all
directors and executive officers as a group.
Number of Shares
Name of Beneficial Owner Beneficially Owned (1) Percent of Class (2)
Arthur F. Birmingham 44,774 (3) *
Garrett P. Bromley 45,389 (4) *
Anthony J. Consi, II 73,503 (5) *
Pamela Hill 87,455 (6) 1.05%
T. Leonard Hill 165,479 (7) 1.99%
Frank A. Kissel 143,448 (8) 1.72%
John D. Kissel 61,158 (9) *
James R. Lamb 43,423 (10) *
Edward A. Merton 47,806 (11) *
F. Duffield Meyercord 43,444 (12) *
John R. Mulcahy 41,553 (13) *
Robert M. Rogers 57,267 (14) *
Philip W. Smith, III 48,486 (15) *
Craig C. Spengeman 60,190 (16) *
Jack D. Stine 44,128 (17) *
All directors and executive officers 1,007,083 11.55%
as a group (15 persons)
8
NOTES:
* Less than one percent
(1) Beneficially owned shares include shares over which the named person
exercises either sole or shared voting power or sole or shared
investment power. It also includes shares owned (i) by a spouse,
minor children or by relatives sharing the same home, (ii) by
entities owned or controlled by the named person and (iii) by other
persons if the named person has the right to acquire such shares
within 60 days by the exercise of any right or option. Unless
otherwise noted, all shares are owned of record or beneficially by
the named person.
(2) The number of shares of common stock used in calculating the
percentage of the class owned includes shares of common stock
outstanding as of February 28, 2006, and 379,658 shares purchasable
pursuant to options exercisable within 60 days of February 28, 2006.
(3) This total includes 3,192 shares allocated to Mr. Birmingham under
Peapack-Gladstone's Profit Sharing Plan and 36,508 shares
purchasable pursuant to options exercisable within 60 days of
February 28, 2006.
(4) This total includes 2,733 shares allocated to Mr. Bromley under
Peapack-Gladstone's Profit Sharing Plan and 37,349 shares
purchasable pursuant to options exercisable within 60 days of
February 28, 2006.
(5) This total includes 19,502 shares purchasable pursuant to options
exercisable within 60 days of February 28, 2006.
(6) This total includes 20,582 shares purchasable pursuant to options
exercisable within 60 days of February 28, 2006.
(7) This total includes 114,595 shares owned by the Hill Family Trusts
and 16,323 shares purchasable pursuant to options exercisable within
60 days of February 28, 2006.
(8) This total includes 3,348 shares owned by Mr. Frank A. Kissel's
wife, 8,582 shares allocated to Mr. Kissel under Peapack-Gladstone's
Profit Sharing Plan and 80,661 shares purchasable pursuant to
options exercisable within 60 days of February 28, 2006.
(9) This total includes 1,609 shares owned by Mr. John D. Kissel's wife,
5,547 shares owned by Mr. Kissel's children and 22,582 shares
purchasable pursuant to options exercisable within 60 days of
February 28, 2006.
(10) This total includes 3,232 shares owned by Mr. Lamb's wife and 22,581
shares purchasable pursuant to options exercisable within 60 days of
February 28, 2006.
(11) This total includes 22,582 shares purchasable pursuant to options
exercisable within 60 days of February 28, 2006.
(12) This total includes 22,582 shares purchasable pursuant to options
exercisable within 60 days of February 28, 2006.
(13) This total includes 1,831 shares owned by Mr. Mulcahy's wife and
17,728 shares purchasable pursuant to options exercisable within 60
days of February 28, 2006.
(14) This total includes 5,124 shares allocated to Mr. Rogers under
Peapack-Gladstone's Profit Sharing Plan and 43,767 shares
purchasable pursuant to options exercisable within 60 days of
February 28, 2006.
(15) This total includes 6,771 shares owned by Mr. Smith's wife, 1,292
shares owned by Mr. Smith's children and 16,375 shares purchasable
pursuant to options exercisable within 60 days of February 28, 2006.
(16) This total includes 841 shares owned by Mr. Spengeman's wife, 5,822
shares allocated to Mr. Spengeman under Peapack-Gladstone's Profit
Sharing Plan and 45,164 shares purchasable pursuant to options
exercisable within 60 days of February 28, 2006.
(17) This total includes 22,582 shares purchasable pursuant to options
exercisable within 60 days of February 28, 2006.
9
EXECUTIVE COMPENSATION
General
Executive compensation is described below in the tabular format
mandated by the SEC.
Summary Compensation Table
The following table summarizes all compensation earned in the past
three years for services performed in all capacities for Peapack-Gladstone and
its Subsidiaries with respect to the named executive officers.
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation Awards
--------------------------------------- -----------------------------------
Other Restricted Securities All
Annual Stock Underlying LTIP Other
Name and Salary Bonus Compensation Awards Options/ Payouts Compensation
Principal Position Year ($) ($) ($) ($) SARs (#) ($) ($)
------------------------ ------ ---------- --------- ------------- ---------- ----------- -------- -------------
Frank A. Kissel
Chairman of the Board 2005 300,500 90,150 -- -- -- -- 5,977
and CEO of Peapack- 2004 291,748 158,337 -- -- 27,499 -- 12,316
Gladstone and the Bank 2003 283,250 127,463 -- -- -- -- 10,791
Craig C. Spengeman
President of PGB Trust 2005 218,545 63,654 -- -- -- -- 5,977
and Investments 2004 212,180 104,854 -- -- 21,999 -- 12,316
and Executive Vice 2003 206,000 82,400 -- -- -- -- 10,791
President of Peapack-
Gladstone
Robert M. Rogers
President and COO of 2005 191,227 57,368 -- -- -- -- 5,977
Peapack-Gladstone 2004 185,658 82,464 -- -- 21,999 -- 11,178
and the Bank 2003 180,250 72,100 -- -- -- -- 9,750
Arthur F. Birmingham
Executive Vice 2005 163,909 49,172 -- -- -- -- 5,954
President
and CFO of Peapack- 2004 159,135 70,684 -- -- 19,249 -- 9,617
Gladstone and the Bank 2003 155,200 61,800 -- -- -- -- 8,430
Garrett P. Bromley
Executive Vice President 2005 143,222 42,966 -- -- -- -- 5,246
2004 139,200 61,763 -- -- 19,249 -- 8,435
2003 134,423 54,000 -- -- -- -- 7,335
Stock Option Grants in 2005
No stock options were granted with respect to the named executive
officers in 2005.
10
Aggregated Option Exercises in 2005 and Year-End Option Value
The following table shows options exercised during 2005, and the value
of unexercised options held at year-end 2005, by the named executive officers.
Peapack-Gladstone did not use SARs as compensation in 2005.
AGGREGATED OPTION/SAR EXERCISES IN THE
LAST FISCAL YEAR AND FY-END OPTION VALUES
Number of Securities
Underlying Unexercised Value of Unexercised In-
Options/SARs at Fiscal the-Money Options/SARs
Year-End (#) at Fiscal Year-End ($)(1)
Shares Acquired On ------------------------- ------------------------
Name Exercise (#) Value Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
------------------------------ ------------ ------------------ ------------------------- -------------------------
Frank A. Kissel -- -- 80,661/0 637,876/0
Craig C. Spengeman 2,566 66,023 45,164/0 304,555/0
Robert M. Rogers 5,996 130,473 43,767/0 284,686/0
Arthur F. Birmingham -- -- 36,508/0 217,027/0
Garrett P. Bromley 75 1,211 37,349/0 230,525/0
(1) Calculated on the basis of the closing price of Peapack-Gladstone common
stock at December 30, 2005 of $27.90 per share, less the per share exercise
price.
Savings and Profit Sharing Plans
Peapack-Gladstone has established a qualified defined contribution plan
under Section 401(k) (the "401(k) Plan") of the Internal Revenue Code of 1986,
as amended (the "Code"), covering substantially all salaried employees over the
age of twenty-one with at least twelve months' service and whose participation
is not prohibited by the 401(k) Plan. Under the savings portion of the 401(k)
Plan, employees may contribute up to fifteen percent of their pay to their
elective account via payroll withholding. Annually, Peapack-Gladstone adds a
matching contribution equal to fifty percent up to a maximum of $250 of the
employee contribution. In addition, the Board may elect to make a discretionary
contribution to the profit sharing part of the 401(k) Plan. The profit sharing
portion is non-contributory and funds are invested in Peapack-Gladstone's common
stock.
Pension Plan
Peapack-Gladstone sponsors a non-contributory defined benefit pension
plan that covers substantially all of Peapack-Gladstone's salaried employees.
The benefits are based on an employee's compensation, age at retirement and
years of service. It is the policy of Peapack-Gladstone to fund not less than
the minimum funding amount required by the Employee Retirement Income Security
Act.
11
The following table sets forth the estimated annual benefits that an
eligible employee would receive under Peapack-Gladstone's qualified defined
benefit pension plan, assuming retirement at age 65 in 2004 and a straight life
annuity benefit, for the remuneration levels (subject to an annual compensation
limit of $210,000) and years of service shown.
Years of Credited Service
--------------------------------------------------------------
Renumeration 10 15 20 25 30 35
---------------- -------- -------- -------- -------- -------- --------
$ 50,000 $ 11,000 $ 16,500 $ 21,938 $ 27,334 $ 30,391 $ 32,575
100,000 25,144 37,716 50,603 63,699 71,120 76,421
150,000 39,353 59,029 79,377 100,173 111,957 120,375
210,000 and higher 53,561 80,341 108,151 136,647 152,795 159,541
Messrs. Kissel, Spengeman, Rogers, Birmingham and Bromley have
approximately 17, 21, 19, 10 and 9 years of credited service, respectively,
under the pension plan as of January 1, 2006, and at age 65, would have 27, 36,
37, 21 and 13 years of credited service, respectively.
Employment Agreements
Peapack-Gladstone and the Bank entered into employment agreements (the
"Employment Agreements") with each of Frank A. Kissel, Craig C. Spengeman,
Robert M. Rogers, Arthur F. Birmingham and Garrett P. Bromley as of January 1,
2006 for a period of one year to expire on December 31, 2006.
The Employment Agreements 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, (iii) annual increases to base salary, and
(iv) discretionary bonus payments with respect to each calendar year determined
by the Board of Directors.
If each executive's employment is terminated without cause,
Peapack-Gladstone and the Bank shall pay the executive's base salary for a
period equal to the longer of (A) the remainder of the term, or (B) one year
from the effective date of such termination. In the event that Peapack-Gladstone
and the Bank terminates the Executive's employment for cause or pursuant to
retirement, permanent disability or death, Peapack-Gladstone and the Bank shall
pay the Executive 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, which extend for two years
following the executive's termination of employment.
Change-In-Control Arrangements
Peapack-Gladstone and the Bank entered into Amended and Restated
Change-in-Control Agreements with Frank A. Kissel, Craig C. Spengeman, Robert M.
Rogers, Arthur F. Birmingham, and Garrett P. Bromley as of December 11, 2003,
each of which provides for termination benefits in the event of a change in
control of Peapack-Gladstone (as defined in the agreements). Pursuant to the
agreements, under certain circumstances, Peapack-Gladstone and the Bank would be
required to pay aggregate amounts equal to three times the highest annual salary
and bonuses paid during any calendar year during the three years prior to the
change in control plus continue certain health benefits. In the event that the
severance payments and benefits under the agreements, together with any other
parachute payments, would constitute an excess parachute payment under Section
280G of the Code, the payments would be increased in an amount sufficient to pay
the excise taxes and other income and payroll taxes necessary to allow Messrs.
Kissel, Spengeman, Rogers, Birmingham, and Bromley to retain the same net
amount, after such taxes, as each was otherwise entitled to receive. Section
280G limits payments generally to three times the last five-year average W-2
compensation.
12
Life Insurance
In addition to providing a term life insurance benefit to each of the
named executive officers, Peapack-Gladstone also purchased bank owned life
insurance ("BOLI") and entered into a Split-Dollar Plan, dated September 7,
2001, with the executive officers and certain other employees to provide current
and post-employment life insurance in an amount which ranges from a minimum
benefit of $25,000 to 2.5 times the executive's annual base salary. A life
insurance benefit of 2.5 times a participant's annual base salary vests if prior
to the termination of employment there is a change in control or the participant
becomes disabled. A benefit of 2.5 times the participant's salary is paid if the
participant dies while employed by Peapack-Gladstone. The participant also is
entitled to a vested post-employment life insurance benefit based on years of
service and the participant's age as of the date of termination of employment.
This vested benefit ranges from a minimum of 1.0 times base annual salary at age
50 to a maximum of 2.5 times annual base salary at age 65, in each case after
completion of 15 years of service. There is a minimum benefit of $25,000 if the
participant does not reach the vesting levels. Except if the benefit vests
because of a change in control, the participant's vested benefit may be
forfeited if the participant solicits Peapack-Gladstone's employees or divulges
certain confidential information.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires that Peapack-Gladstone's
executive officers, directors and persons who own more than ten percent of a
registered class of Peapack-Gladstone's common stock, file reports of ownership
and changes in ownership with the SEC. Based upon copies of reports furnished by
insiders, all Section 16(a) reporting requirements applicable to insiders during
2005 were satisfied on a timely basis.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors established a Compensation Committee, which has
been charged with overseeing executive compensation practices at
Peapack-Gladstone. Members of the Compensation Committee are Messrs. Meyercord
(Chair), Stine, Merton and Consi. Decisions on compensation of executive
officers have been made by the full Board of Directors based upon the
recommendations of the Compensation Committee.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Bank intends to purchase an undetermined amount of mortgage loans
from Weichert Mortgage Company ("Weichert Mortgage") during 2006. Weichert
Mortgage is wholly-owned by James M. Weichert, who beneficially owns 9.69
percent of Peapack-Gladstone's outstanding common stock. Anthony J. Consi is not
a shareholder, officer, or director of Weichert Mortgage. Any purchases by the
Bank from Weichert Mortgage will be on terms that are substantially the same, or
at least as favorable to, the Bank as those offered by Weichert Mortgage to
other unaffiliated entities. During 2005, the Bank purchased $191.8 million in
mortgage loans 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, 2005, 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.
13
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following report was prepared by the Compensation Committee of
Peapack-Gladstone regarding executive compensation policy and its relation to
Peapack-Gladstone's performance.
Compensation Review Process
The Compensation Committee of the Board of Directors is responsible for
establishing and overseeing policies governing annual and long-term compensation
programs for the officers named in the compensation tables shown above and other
executive officers of Peapack-Gladstone.
In establishing compensation for executive officers, the Compensation
Committee considers many factors including, but not limited to, the performance
of Peapack-Gladstone, individual performance and peer group compensation
practices. In considering the performance of Peapack-Gladstone, the Compensation
Committee reviews the actual performance of Peapack-Gladstone in light of its
annual budget, which includes expense items, deposit levels, loan growth, fee
income and trust department management. Annual performance reviews of each
officer together with salary studies prepared by the New Jersey Community
Bankers Association are some of the sources of compensation information, which
are utilized in determining executive compensation. Base salaries approximate
the average base salaries paid by similar financial institutions for similar
positions.
During 2005, Mr. Frank A. Kissel served as Chairman and Chief Executive
Officer of the Bank and Chairman and Chief Executive Officer of
Peapack-Gladstone. Mr. Kissel's base salary for 2005 of $300,500 was set by the
Board based on his performance in executing his responsibilities in those
positions in 2004 and the performance anticipated from him in 2005 and future
years. The Board also considered the objectives set by the Compensation
Committee for 2005, the overall performance of Peapack-Gladstone and Mr.
Kissel's ability to develop and motivate employees to meet Peapack-Gladstone's
short and long-term objectives. Mr. Kissel's 2005 bonus of $90,150 was based on
the completion of specified corporate projects for 2005 within a specified time
and budget, the achievement of specified minimum financial ratios and the
achievement of specified goals with respect to the Bank's financial performance
and growth. Mr. Kissel was awarded no stock options in 2005.
With respect to 2005 compensation for executive officers, the
Compensation Committee based its recommendations, and the full Board based its
actions, on the duties and responsibilities of the officer in question, the
performance of Peapack-Gladstone and of the particular officer in 2004, and the
performance anticipated from the officer in 2005 and future years. Bonuses for
each executive officer were set based on goals set for the executive officer and
for Peapack-Gladstone as a whole. The Chief Executive Officer set goals for each
executive officer. During 2005, the other named executive officers received no
stock option awards.
Based upon current levels of compensation, Peapack-Gladstone is not
affected by the provisions of Section 162(m) of the Internal Revenue Code, which
limits the deductibility of compensation above $1 million for each of the five
highest paid officers of Peapack-Gladstone. Certain forms of compensation are
exempt from this deductibility limit, primarily performance based compensation,
which has been approved by shareholders. Compensation under the 1998 Stock
Incentive Plan and the 2002 Stock Incentive Plan (but not restricted stock
awards) is expected to be exempt.
Detailed information relating to the named executive officers is shown
in the compensation tables above.
F. DUFFIELD MEYERCORD, CHAIRMAN
ANTHONY J. CONSI, II
EDWARD A. MERTON
JACK D. STINE
14
The following graph compares the cumulative total return on a
hypothetical $100 investment made on January 1, 2000 in: (a) Peapack-Gladstone's
common stock; (b) the Russell 3000 Stock Index, and (c) the Keefe, Bruyette &
Woods KBW 50 Index (top 50 U.S. banks). The graph is calculated assuming that
all dividends are reinvested during the relevant periods. The graph shows how a
$100 investment would increase or decrease in value over time, based on
dividends (stock or cash) and increases or decreases in the market price of the
stock.
[GRAPH OMITTED]
Period Ending
----------------------------------------------------------
Index 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04 12/31/05
----------------------------------------------------------------------------------------------
Peapack-Gladstone Financial Corp. 100.00 93.18 175.28 176.68 200.42 180.47
Russell 3000 100.00 88.54 69.47 91.04 101.92 108.16
KBW 50 100.00 95.88 89.12 119.41 131.46 131.06
15
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 financial statements as of and for the year ended December 31, 2005.
We have discussed with the independent auditors the matters required to
be discussed by Statement on Auditing Standards No. 61, Communication with Audit
Committees, as amended, by the Auditing Standards Board of the American
Institute of Certified Public Accountants.
We have received and reviewed the written disclosures and the letter
from the independent registered public accounting firm required by Independence
Standard No. 1, Independence Discussions with Audit Committee, as amended, by
the Independence Standards Board, and have discussed with the auditors the
auditors' independence.
Based on the reviews and discussions referred to above, we recommend to
the Board of Directors that the financial statements referred to above be
included in Peapack-Gladstone's Annual Report on Form 10-K for the year ended
December 31, 2005.
THE AUDIT COMMITTEE
ANTHONY J. CONSI, II, CHAIRMAN
JOHN R. MULCAHY
PHILIP W. SMITH, III
JACK D. STINE
February 28, 2006
PROPOSAL 2 - APPROVAL OF THE PEAPACK-GLADSTONE FINANCIAL CORPORATION 2006
LONG-TERM STOCK INCENTIVE PLAN
The Board of Directors has approved for submission to
Peapack-Gladstone's shareholders the Peapack-Gladstone Financial Corporation
2006 Long-Term Stock Incentive Plan (the "2006 Stock Incentive Plan"). The full
text of the 2006 Stock Incentive Plan is attached to this Proxy Statement as
Exhibit A and the following description of the 2006 Stock Incentive Plan is
---------
qualified in its entirety by reference to Exhibit A. The purposes of the 2006
---------
Stock Incentive Plan are to provide additional incentive to those officers, key
employees, and independent contractors of Peapack-Gladstone and its
Subsidiaries, and certain non-employee members of the Board of Directors of
Peapack-Gladstone whose substantial contributions are essential to the continued
growth and success of Peapack-Gladstone's business in order to strengthen their
commitment to Peapack-Gladstone and its Subsidiaries, to motivate such officers,
employees, independent contractors and non-employee directors to faithfully and
diligently perform their assigned responsibilities and to attract and retain
competent and dedicated individuals whose efforts will result in the long-term
growth and profitability of Peapack-Gladstone. To accomplish such purposes, the
Plan provides that Peapack-Gladstone may grant Incentive Stock Options,
Nonqualified Stock Options, Restricted Stock Awards and Stock Appreciation
Rights. Due to the structure of the 2006 Stock Incentive Plan, Peapack-Gladstone
is expected to exempt from the deductibility limits of Section 162(m) of the
Internal Revenue Code compensation earned from grants of stock options (but not
restricted stock) under the Plan. Section 162(m) limits the deductibility of
compensation paid in excess of $1 million per year for the five highest paid
executives.
TYPES OF OPTIONS AND AWARDS
The 2006 Stock Incentive Plan provides that a committee designated by
the Board to administer the 2006 Stock Incentive Plan (the "Committee") may
grant eligible employees incentive stock options, non-qualified stock options,
restricted stock awards and stock appreciation rights. All options and awards to
be granted under the 2006 Stock Incentive Plan are options for or awards
relating to shares of Peapack-Gladstone's common stock. "Incentive stock
options" to be granted under the 2006 Stock Incentive Plan are intended to
constitute "incentive stock options" within the meaning of Section 422 of the
Code. "Non-qualified stock options" are those options, which when granted or due
to subsequent disqualification, do not qualify as incentive stock options within
the meaning of Section 422 of the Code.
16
SHARES SUBJECT TO THE 2006 STOCK INCENTIVE PLAN
In approving the 2006 Stock Incentive Plan, the Board of Directors
provided for the issuance under the 2006 Stock Incentive Plan of 400,000 shares.
The maximum number of shares that may be issued or transferred pursuant to
options or awards for incentive stock options, non-qualified stock options and
stock appreciation rights will be 400,000.
The 2006 Stock Incentive Plan provides that the Committee will
conclusively determine the appropriate adjustments, if any, to the number of
shares available and purchase price for stock options and awards in the case of
a change in capitalization (as defined in the 2006 Stock Incentive Plan). Any
such adjustment to shares subject to outstanding incentive stock options will be
made in a manner as not to constitute a modification as defined by Section
425(h)(3) of the Code and only to the extent otherwise permitted by Sections 422
and 425 of the Code.
TERMINATION AND AMENDMENT
The 2006 Stock Incentive Plan will terminate on the day preceding the
tenth anniversary of its effective date. However, the Board of Directors has the
right to terminate the 2006 Stock Incentive Plan at any time.
The Board also has the right to amend the 2006 Stock Incentive Plan.
However, without the approval of Peapack-Gladstone's shareholders no amendment
may be made to the 2006 Stock Incentive Plan if the amendment would, except as
provided under the 2006 Stock Incentive Plan for a change in capitalization, (a)
increase the maximum number of shares as to which options or awards may be
granted under the 2006 Stock Incentive Plan, or (b) change the class of persons
eligible to participate.
The rights under any option or award granted before any amendment to
the 2006 Stock Incentive Plan may not be adversely affected by such amendment,
except with the consent of the optionee or grantee, as the case may be.
ADMINISTRATION
The 2006 Stock Incentive Plan will be administered by the Committee.
Each member of the Committee will be a non-employee director (as defined in Rule
16b-3 of the Exchange Act as it may be amended from time to time) and an
"outside director" within the meaning of Section 162(m) of the Code as it may be
amended from time to time. A majority of the Committee will constitute a quorum
and a majority of a quorum may authorize any action. No failure to be so
qualified shall invalidate any option or award or any action or inaction under
the 2006 Stock Incentive Plan.
The Committee will have the power to identify each officer, key
employee, director or independent contractor qualified to receive an option or
award (an "optionee" or "grantee," respectively) and determine the number of
shares subject to each option or award, the date of grant and the terms and
conditions governing the option or award provided, however, that all grants to
directors must be approved by the full Board of directors. The Committee (or
with respect to directors, the Board) will also be charged with the
responsibility of interpreting the 2006 Stock Incentive Plan and making all
administrative determinations.
ELIGIBILITY
All officers, key employees and directors of Peapack-Gladstone or its
Subsidiaries designated by the Committee (or with respect to directors, the
Board) will be eligible to receive options or awards under the 2006 Stock
Incentive Plan ("eligible employees"), but no person may receive any options or
awards unless he is an employee of Peapack-Gladstone or a Subsidiary or a
director or independent contractor, at the time the option or award is granted.
TERMS AND CONDITIONS OF STOCK OPTIONS
Term
All options to be granted under the 2006 Stock Incentive Plan will be
for such term as the Committee (or, with respect to directors, the Board)
determines, provided that (i) all incentive stock options will not be
exercisable after the expiration of ten years from the date granted, and (ii)
all non-qualified stock options will not be exercisable after the expiration of
ten years and one day from the date granted. The Committee may, subsequent to
the granting of any option, extend the term thereof but in no event shall the
term as so extended exceed the maximum term provided for in the preceding
sentence. The 2006 Stock Incentive Plan provides that any options which are
intended to be incentive stock options and are granted to an optionee who owns
more than 10% of Peapack-Gladstone's common stock (a "ten-percent shareholder")
must have terms of five years or less. No incentive options may be granted to a
director or independent contractor.
17
Purchase Price
The 2006 Stock Incentive Plan provides that the purchase price shall be
set forth in the grant agreement between the eligible employee and
Peapack-Gladstone. The purchase price per share under each incentive stock
option must not be less than 100% of the fair market value of a share at the
time the option is granted (110% in the case of an incentive stock option
granted to a ten-percent shareholder). The 2006 Stock Incentive Plan defines
"fair market value" on any date generally, as the last sale price reported on
the American Stock Exchange. On March 13, 2006, the last reported sale price of
Peapack-Gladstone common stock was $26.80.
The 2006 Stock Incentive Plan provides that the purchase price for
shares purchased pursuant to the exercise of any option is payable in full at
the time of exercise. The purchase price may be paid in cash, by check, or at
the discretion of the Committee (or with respect to directors, the Board) and
upon such terms and conditions as the Committee shall approve, by transferring
shares to Peapack-Gladstone.
Exercise Period
The 2006 Stock Incentive Plan provides that if a non-director
optionee's employment or service terminates by reason of death or disability,
the right of the optionee, his or her estate, beneficiary or representative to
exercise the options will terminate three years following such termination of
employment. If the termination of employment is due to the optionee's
"retirement" (as defined in the 2006 Stock Incentive Plan), such options will be
exercisable for period of 90 days, in the case of incentive stock options, and
three years, in the case of non-qualified stock options, following such
termination of employment. If an optionee's employment or service is terminated
by the optionee, or terminates by reason of dismissal for "Cause" (as defined in
the 2006 Stock Incentive Plan) the right of the optionee to exercise any
outstanding, vested options will terminate on the date of such termination of
employment. If an optionee's employment or service terminates without cause, the
option will be exercisable for a period of 90 days following termination of
employment, except that if an optionee's employment or service is terminated
without cause and within 12 months of a change in control, non-qualified options
will be exercisable for three years following the termination of employment or
service.
Upon death or termination of employment due to disability or retirement
(each as defined in the 2006 Stock Incentive Plan), all options become
immediately and fully exercisable for three years (but not beyond the term of
the option).
Upon the termination of a director's service as a member of the Board
for any reason other than disability, change in control or death, the director's
options shall be exercisable only as to those shares, which were immediately
exercisable by the director at the date of termination. In the event of the
death, retirement or disability of a director, all options held by the director
shall become immediately exercisable. Upon termination of the director's service
due to or within 12 months after a change in control, all options held by the
director shall become immediately exercisable. Options granted to a director
shall expire and no longer be exercisable upon the earlier of (i) one hundred
twenty (120) months following the date of grant, or (ii) three (3) years
following the date on which the director ceases to serve as a director (for any
reason other than cause).
Change In Control Provisions
In the event of a change in control (as defined in the 2006 Stock
Incentive Plan), all options not held by directors outstanding on the date of
such a change of control shall become immediately and fully exercisable. For
director options, following a change in control, all options shall become
immediately exercisable and shall expire on the earlier of 120 months following
the date of grant or three years following the termination of service on the
Board.
Following a change in control, the Board, in its sole discretion, shall
have the right to terminate all options and awards and pay to the optionee the
value of such options and awards.
TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS
Term
All stock appreciation rights available for issuance under the 2006
Stock Incentive Plan will be for such term as the Committee (or with respect to
directors, the Board) determines. If granted in connection with an option, such
stock appreciation right will cover the same shares covered by the option (or
such lesser number of shares as the Committee (or with respect to directors, the
Board) may determine) and, except as provided below, be subject to the same term
as the related option.
18
Exercise
The 2006 Stock Incentive Plan provides that a stock appreciation right
granted in connection with an option is exercisable only at such time or times
and to the extent that the related option is exercisable. If such stock
appreciation right is connected to an incentive stock option it will be
exercisable only if the fair market value of a share on the date of exercise
exceeds the purchase price of the related incentive stock option. The 2006 Stock
Incentive Plan provides that a stock appreciation right unrelated to an option
will contain such terms and conditions as to exercisability, vesting and
duration as the Committee (or, with respect to directors, the Board) will
determine, but in no event shall they have a term of greater than ten years.
Upon the death, disability, or retirement of a grantee, all stock appreciation
rights become immediately exercisable. Upon the retirement of a grantee, the
stock appreciation rights held by the grantee will be exercisable for a period
of 90 days following such termination of employment. Other exercise terms
generally parallel those applicable to options.
Payment
The 2006 Stock Incentive Plan provides that upon exercise of a stock
appreciation right related to an option the grantee will receive an amount
determined by multiplying (A) the excess of fair market value of a share on the
date of exercise of such stock appreciation right over the per share purchase
price under the related option, by (B) the number of shares as to which such
stock appreciation right is being exercised. Notwithstanding the foregoing, the
Committee (or, with respect to directors, the Board) may limit in any manner the
amount payable with respect to any stock appreciation right by including such a
limit in the agreement evidencing the stock appreciation right at the time it is
granted. The 2006 Stock Incentive Plan provides that upon exercise of a stock
appreciation right unrelated to an option the grantee will receive an amount
determined by multiplying (A) the excess of fair market value of a share on the
date of exercise of such stock appreciation right over the per share fair market
value of a share on the date of the grant of the stock appreciation right, by
(B) the number of shares as to which such stock appreciation right is being
exercised. The Committee (or, with respect to directors, the Board) has
discretion to make such payments either solely in shares of Peapack-Gladstone's
common stock in a number determined at their fair market value on the date of
exercise of the stock appreciation right or in cash or in a combination of cash
and shares.
Restrictions
The 2006 Stock Incentive Plan provides that no stock appreciation right
may be exercised before the date six months after the date it is granted, except
in the event of death or disability of the grantee before the expiration of the
six-month period.
Change In Control
In the event of a change in control, subject to the restrictions
immediately above, all stock appreciation rights shall become immediately and
fully exercisable.
TERMS AND CONDITIONS OF RESTRICTED STOCK
Terms And Conditions
The 2006 Stock Incentive Plan provides that upon granting a restricted
stock award an agreement between the grantee and Peapack-Gladstone will set
forth the restrictions, terms, and conditions of the award. Such agreement may
require that an appropriate legend be placed on share certificates. Upon the
grant of the restricted stock, the shares will be issued in the name of the
grantee as soon as reasonably practicable after the purchase price, if any, is
paid, and such shares will be deposited with the escrow agent pending
termination of the restrictions which apply thereto. The 2006 Stock Incentive
Plan provides that upon delivery of such shares to the escrow agent, the grantee
will have all rights of a shareholder with respect to the shares, including the
right to vote and the right to receive all dividends paid or made with respect
to the shares, unless the Committee (or, with respect to directors, the Board),
in its discretion, determines that such payment of dividends should be deferred.
In the event of any stock dividend or stock split on restricted stock,
new shares issued to the eligible employee will remain subject to the same
restrictions.
19
At the time of an award of shares of restricted stock, the Committee
(or, with respect to directors, the Board) may, in its discretion, determine
that the payment to the grantee of dividends, or a specified portion thereof,
declared or paid on shares of restricted stock by Peapack-Gladstone will be
deferred until the earlier to occur of (i) the lapsing of the restrictions
imposed upon such shares, in which case such dividends shall be paid over to the
grantee, or (ii) the forfeiture of such shares in which case such dividends
shall be forfeited to Peapack-Gladstone, and such dividends shall be held by
Peapack-Gladstone for the account of the grantee until such time. In the event
of such deferral, interest shall be credited on the amount of such dividends
held by Peapack-Gladstone for the account of the grantee from time to time at
such rate per annum as the Committee (or, with respect to directors, the Board),
in its discretion, may determine. Payment of deferred dividends, together with
interest accrued thereon as aforesaid, will be made or forfeited upon the
earlier to occur of the events specified in (i) and (ii).
Restrictions
The 2006 Stock Incentive Plan provides that the restrictions upon the
shares of restricted stock will lapse at the time or times and on the terms,
conditions and satisfaction of performance criteria as the Committee (or, with
respect to directors, the Board) determines as may be set forth in the
agreement. Such restrictions will only lapse if the grantee on the date of the
lapse is then and has continuously been an employee of Peapack-Gladstone or a
Subsidiary from the date the award was granted. In the event of a change in
control, all restrictions upon any shares of restricted stock lapse immediately
and all such shares become fully vested in the grantee. In the event of
termination of employment as a result of death, disability or retirement of a
grantee, all restrictions upon shares of restricted stock awarded to such
grantee will immediately lapse. The Committee (or, with respect to directors,
the Board) may also decide at any time in its absolute discretion and on such
terms and conditions as it deems appropriate, to remove or modify the
restrictions upon shares of restricted stock awarded. When the restrictions
lapse, Peapack-Gladstone will deliver to the grantee a certificate for the
number of shares of common stock without any legend or restrictions (except
those required by federal or state securities laws) equivalent to the number of
shares of restricted stock for which the restrictions have terminated.
FEDERAL TAX CONSEQUENCES UNDER THE 2006 STOCK INCENTIVE PLAN
The following is a summary of the federal income tax consequences of
transactions under the 2006 Stock Incentive Plan, based on federal income tax
laws in effect on January 1, 2006. This summary is not intended to be
comprehensive and does not describe state or local income tax consequences.
Pursuant to the 2006 Stock Incentive Plan, eligible employees may be
granted the following benefits: incentive stock options, non-qualified stock
options, stock appreciation rights and restricted stock awards.
Incentive Stock Options. No income is realized by an optionee upon the
grant or exercise of an incentive stock option. If shares of common stock are
transferred to an optionee upon the exercise of an incentive stock option, and
if no disqualifying disposition of such shares is made by such optionee within
two years after the date of grant of the option or within one year after the
transfer of such shares to such optionee, then (1) upon the sale or exchange of
such shares, any amount realized in excess of the option exercise price will be
taxed to such optionee as a long-term capital gain and any loss sustained will
be treated as a long-term capital loss, and (2) no deduction will be allowed to
Peapack-Gladstone for federal income tax purposes. The exercise of an incentive
stock option will give rise to an item of tax preference that may result in
alternative minimum tax liability for the optionee.
If common stock acquired upon the exercise of an incentive stock option
is disposed of prior to two years after the grant date or one year after the
exercise date, generally (1) the optionee will realize compensation (i.e.,
ordinary income) in the year of disposition in an amount equal to the excess (if
any) of the fair market value of such shares at exercise (or if less, the amount
realized on the disposition of such shares, if the shares are disposed of by
sale or exchange) over the option exercise price paid for such shares, and (2)
Peapack-Gladstone will be entitled to deduct the amount of compensation income,
which was taxed to the optionee for federal income tax purposes and if the
amount represents an ordinary and necessary business expense of
Peapack-Gladstone (the "ordinary and necessary test"). Any further gain (or
loss) realized by the optionee will be taxed as short-term or long-term capital
gain (or loss), as the case may be, and will not result in any deduction by
Peapack-Gladstone.
If an incentive stock option is exercised more than three months
following the termination of employment, the exercise of the option will
generally be taxed in the same manner as the exercise of a non-qualified stock
option, except if the termination is due to the death or disability of the
employee where the options are exercised for up to a year after termination of
employment by death or disability, the options will retain the favorable tax
treatment for incentive options.
20
Options are eligible for favorable tax treatment as incentive options
only to the extent that not more than $100,000 in fair market value at the time
of grant (generally measured by the exercise price) first becomes exercisable in
any one calendar year. For purposes of this rule, option grants are aggregated
and a series of option grants over several years may in the aggregate result in
more than $100,000 of options that first became exercisable in any one calendar
year. Moreover, options that accelerate in the event of a change-in-control may
also cause more than $100,000 of options to become exercisable in the year of
acceleration. If more than $100,000 of options first becomes exercisable in any
one year, the excess options are non-qualified options regardless of the
characterization in the grant agreement.
Non-Qualified Stock Options. Except as noted below, in the case of
non-qualified stock options: (1) no income is realized by the optionee at the
time the option is granted; (2) the optionee realizes ordinary income at
exercise in an amount equal to the difference between the option exercise price
paid for the shares and the fair market value of the shares on the date of
exercise; (3) Peapack-Gladstone is entitled to a federal income tax deduction
equal to the amount of income taxed to the optionee, subject to the ordinary and
necessary test; and (4) upon disposition of the common stock acquired by
exercise of the option, appreciation (or depreciation) occurring after the date
of exercise is treated as either short-term or long-term capital gain (or loss),
depending on the recipient's holding period of the shares.
Stock Appreciation Rights. No income will be realized by a grantee in
connection with the grant of a stock appreciation right. When the right is
exercised, the grantee generally will be required to include in gross income as
ordinary income in the year of exercise an amount equal to the amount of cash
received and the fair market value of any shares of common stock received on the
exercise. At the same time, Peapack-Gladstone will be entitled to a deduction
for federal income tax purposes equal to the amount included in the grantee's
gross income by reason of the exercise, subject to satisfaction of the reporting
requirements and the ordinary and necessary test.
Upon disposition of common stock acquired upon the exercise of a stock
appreciation right, appreciation (or depreciation) occurring after the date of
exercise will be treated as either short-term or long-term capital gain (or
loss), depending on the recipient's holding period of the shares.
Restricted Stock Awards. A recipient of restricted stock generally will
not be subject to tax at the time the restricted stock is received, but it will
be subject to tax at ordinary income rates on the excess of: 1) the fair market
value of the restricted stock when the restricted stock is first either
transferable or not subject to a substantial risk of forfeiture, over 2) the
amount (if any) paid for the stock by the recipient. However, a recipient who so
elects under Section 83(b) of the Code within 30 days of the date of transfer of
the shares will recognize taxable ordinary income in the year of receipt of the
shares equal to the excess of the fair market value of such shares of restricted
stock at the time of such transfer (determined without regard to the
restrictions) over the purchase price (if any) of such restricted stock. Upon
the subsequent sale or exchange of such stock, the recipient will recognize
capital gain or loss measured by the difference between the amount realized on
the disposition and the basis of the restricted stock, which will equal the sum
of the amount paid for the stock, plus the amount included in gross income upon
the transfer.
If the restricted shares subject to a Section 83(b) election are
forfeited before they are vested, the recipient may be entitled to a capital
loss for federal income tax purposes equal to the purchase price (if any) of the
forfeited shares, but the recipient will not be entitled to a loss with respect
to any income recognized as a result of the Section 83(b) election.
With respect to the sale of the shares after the forfeiture period has
expired, the holding period to determine whether the recipient has long-term or
short-term capital gain or loss generally begins when the restrictions expire
and the tax basis of such shares will generally be based on the fair market
value of such shares on such date. However, if the recipient timely elects to be
taxed as of the date of the transfer of shares, the holding period commences on
such date and the tax basis will be equal to the fair market value of the shares
on such date (determined without regard to the restrictions). The recipient's
employer generally will be entitled to a deduction equal to the amount that is
taxable as ordinary income to the recipient, subject to the ordinary and
necessary test.
Dividends on Restricted Stock. Dividends on restricted stock
transferred to a participant in the 2006 Stock Incentive Plan which are paid
prior to the time such stock becomes vested or transferable by the recipient
will generally be treated as compensation which is taxable as ordinary income to
the participant and will be deductible by Peapack-Gladstone, subject to
satisfaction of the reporting requirements and the ordinary and necessary test.
However, if the recipient of restricted stock makes a timely Section 83(b)
election with respect to the stock, dividends paid on such stock will be treated
as dividend income, which is taxable to the recipient at a lower tax rate than
the ordinary income tax rate, but will not be deductible by Peapack-Gladstone.
21
Stock Swaps. The 2006 Stock Incentive Plan provides that, with
Peapack-Gladstone's permission, an optionee may transfer previously owned shares
to Peapack-Gladstone to satisfy the purchase price under an option (a "stock
swap"). Generally, if an optionee utilizes previously owned shares to purchase
shares upon the exercise of an incentive stock option, the optionee will not
realize any gain upon the exchange of the old shares for the new shares and will
carry over into the same number of new shares the basis and holding period for
the old shares. If the optionee purchases more shares than the number of old
shares surrendered in the stock swap, the incremental number of shares received
in the stock swap will have a basis of zero and a holding period beginning on
the date of the exercise of the incentive stock option. If, however, shares
acquired through the exercise of an incentive stock option are used in a stock
swap prior to the end of the statutory holding period applicable to the old
shares, the stock swap will constitute a disqualifying disposition of the old
shares, resulting in the immediate recognition of ordinary income. See
"Incentive Stock Options," above.
If a stock swap is used to exercise a nonqualified stock option, the
use of old shares to pay the purchase price of an equal number of new shares
generally will be tax-free to the optionee, and the optionee will carry over
into the new shares the basis and holding period of the old shares. However, if
more shares are acquired than surrendered, the incremental shares received in
the stock swap will generally be taxed as compensation income in an amount equal
to their fair market value at the time of the stock swap. The Optionee's basis
in those additional shares will be their fair market value taken into account in
quantifying the Optionee's compensation income and the holding period for such
shares will begin on the date of the stock swap.
Ordinary Income Tax Consequences
Capital Gains. Under current law, a taxpayer's net capital gain (i.e.,
the amount by which the taxpayer's net long-term capital gains exceed his net
short-term capital losses) from a sale of shares is subject to a maximum federal
income tax rate of 15% if the shares have been held for more than 12 months.
Capital losses are currently deductible against capital gains without
limitation, but are currently deductible against ordinary income in any year
only to the extent of $3,000 ($1,500 in the case of a married individual filing
a separate return). Capital losses which are not currently deductible by reason
of the foregoing limitation may be carried forward to future years.
Ordinary Income Tax. Ordinary income earned by reason of non-qualified
stock options and restricted stock is subject to tax at rates as high as 35% and
also subject to FICA (Social Security and Medicare).
2006 STOCK INCENTIVE PLAN BENEFITS
There were approximately 94 officers and 147 other employees of
Peapack-Gladstone and its Subsidiaries as of December 31, 2005. Because the
Committee has full discretion to determine who is a key employee, there is no
way to predict how many employees may ultimately receive awards or options under
the 2006 Stock Incentive Plan or determine in advance the benefits or amounts
that will be received in the future by or allocated to specific officers or
employees, or groups thereof under the 2006 Stock Incentive Plan. No officers or
other employees have received awards or will receive awards before the date of
the shareholder meeting.
EQUITY COMPENSATION PLAN INFORMATION AT DECEMBER 31, 2005
Number of securities
Number of securities to be Weighted-average exercise remaining available for
issued upon exercise of price of outstanding options, future issuance under equity
outstanding options, warrants warrants and rights (excluding securities
Plan Category and rights (a) compensation plans (b) Reflected in column (a)) (c)
----------------------------- ------------------------------- ------------------------------ ---------------------------------
Equity compensation
plans approved by
security holders 638,893 $22.70 84,666
Equity compensation
plans not approved by
security holders 0 -- 0
------------------------------- ------------------------------ ---------------------------------
Total 638,893 $22.70 84,666
=============================== ============================== =================================
22
Recommendation and Vote Required on Proposal 2
Approval of the 2006 Stock Incentive Plan requires the affirmative vote
of a majority of the votes cast on Proposal 2, whether in person or by proxy.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" PROPOSAL 2.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors appointed KPMG LLP as
independent registered public accounting firm to examine Peapack-Gladstone's
consolidated financial statements for the fiscal year ending December 31, 2005
and to render other professional services as required.
Aggregate fees billed by Peapack-Gladstone's independent registered
public accounting firm, KPMG LLP, for audit services related to the most recent
two fiscal years, and for other professional services billed in the most recent
two fiscal years, were as follows:
Type of Service 2005 2004
--------------- ---- ----
Audit Fees (1) $190,000 $245,000
Audit-Related Fees (2) 23,000 22,000
Tax Fees (3) 4,500 36,900
All Other Fees -- --
--------------------
Total $217,500 $303,900
====================
(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.
(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.
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 KPMG 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 KPMG LLP are permissible under applicable laws and
regulations. Each new engagement of KPMG LLP was approved in advance by the
Audit Committee.
SHAREHOLDER PROPOSALS
New Jersey corporate law requires that the notice of shareholders'
meeting (for either a regular or special meeting) specify the purpose or
purposes of such meeting. Thus, any substantive proposals, including shareholder
proposals, must be referred to in Peapack-Gladstone's notice of shareholders'
meeting for such proposal to be properly considered at a meeting of
Peapack-Gladstone.
Proposals of shareholders which are eligible under the rules of the SEC
to be included in Peapack-Gladstone's year 2007 proxy materials must be received
by the Secretary of Peapack-Gladstone no later than November 25, 2006.
If Peapack-Gladstone changes its 2007 Annual Meeting date to a date
more than 30 days from the date of its 2006 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 2007 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.
23
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 24, 2006
PEAPACK-GLADSTONE'S ANNUAL REPORT FOR THE YEAR-ENDED DECEMBER 31, 2005 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.
24
EXHIBIT A
---------
PEAPACK-GLADSTONE FINANCIAL CORPORATION
2006 LONG-TERM STOCK INCENTIVE PLAN
(Adopted by Directors January 12, 2006) )
(Adopted by Shareholders April __, 2006)
1. Purpose. The purpose of the Plan is to provide additional incentive to
-------
those officers, key employees and independent contractors of the Company
and its Subsidiaries, and certain members of the Board of Directors of the
Company whose substantial contributions are essential to the continued
growth and success of the Company's business in order to strengthen their
commitment to the Company and its Subsidiaries, to motivate such officers,
employees, independent contractors and Directors to faithfully and
diligently perform their assigned responsibilities and to attract and
retain competent and dedicated individuals whose efforts will result in
the long-term growth and profitability of the Company. To accomplish such
purposes, the Plan provides that the Company may grant Incentive Stock
Options, Nonqualified Stock Options, Restricted Stock Awards and Stock
Appreciation Rights.
2. Definitions. For purposes of this Plan:
-----------
(a) "Agreement" means the written agreement between the Company and an
Optionee or Grantee evidencing the grant of an Option or Award and
setting forth the terms and conditions thereof.
(b) "Award" means a grant of Restricted Stock or Stock Appreciation
Rights, or either or both of them.
(c) "Bank" means Peapack-Gladstone Bank, a Subsidiary.
(d) "Board" means the Board of Directors of the Company.
(e) "Cause" means an intentional failure to perform stated duties,
breach of a fiduciary duty involving personal dishonesty, or willful
violation of any law, rule or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order.
Notwithstanding anything else herein to the contrary, in the event
that an employee, Director or independent contractor is terminated
or removed for Cause, or resigns at a time when Cause exists, or if,
following termination, resignation or removal it is determined that
Cause existed at the time of such termination, resignation or
removal, then any and all Options and Awards will automatically be
terminated and void as of the date that Cause arose, and no notice
to that effect is required in order to effect that result.
(f) "Change in Capitalization" means any increase, reduction, change or
exchange of Shares for a different number or kind of shares or other
securities of the Company by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, issuance of
warrants or rights, stock dividend, stock split or reverse stock
split, combination or exchange of shares, repurchase of shares,
change in corporate structure or otherwise.
(g) "Change in Control" means an event of a nature that: (1) any
"person" (as the term is used in Sections 13(d) and 14(d) of the
Exchange Act) who is not now presently but becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 25% or more
of the Company's outstanding securities except for any securities
purchased by any tax-qualified employee benefit plan of the Company;
or (2) individuals who constitute the Board on the date hereof (the
"Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director
subsequent to the date hereof whose election was approved by a vote
of at least three-quarters of the directors comprising the Incumbent
Board, or whose nomination for election by the Company's
stockholders was approved by the same Nominating Committee serving
under an Incumbent Board, shall be, for purposes of this clause (2),
considered as though he were a member of the Incumbent Board; or (3)
consummation of regulatory approval to implement a plan of
reorganization, merger, consolidation, sale of all or substantially
all the assets of the Company or similar transaction in which the
Company is not the resulting entity or such plan, merger,
consolidation, sale or similar transaction occurs; or (4) a proxy
statement soliciting proxies from shareholders of the Company shall
be distributed by someone other than the current management of the
Company, seeking stockholder approval
A-1
of a plan of reorganization, merger or consolidation of the Company
or similar transaction with one or more corporations as a result of
which the outstanding shares of the class of securities then subject
to the plan or transaction are exchanged for or converted into cash
or property or securities not issued by the Company; or (5) a tender
offer is made for 25% or more of the voting securities of the
Company.
(h) "Code" means the Internal Revenue Code of 1986, as amended.
(i) "Committee" means a committee consisting solely of two (2) or more
directors who are Non-Employee Directors (as defined in Rule 16b-3
of the Exchange Act as it may be amended from time to time) of the
Company and outside directors as defined pursuant to Section 162(m)
of the Code (as it may be amended from time to time) appointed by
the Board to administer the Plan and to perform the functions set
forth herein. Directors appointed by the Board to the Committee
shall have the authority to act notwithstanding the failure to be so
qualified.
(j) "Company" means Peapack-Gladstone Financial Corporation, a New
Jersey corporation.
(k) "Director" means a member of the Board who is not also serving as an
employee of the Company.
(l) "Disability" means the permanent and total inability by reason of
mental or physical infirmity, or both, of an employee, independent
contractor or Director to perform the work customarily assigned to
him. Additionally, a medical doctor selected or approved by the
Board must advise the Committee that it is either not possible to
determine when such Disability will terminate or that it appears
probable that such Disability will be permanent during the remainder
of the individual's lifetime.
(m) "Eligible Employee" means any officer or other key employee of the
Company or a Subsidiary designated by the Committee as eligible to
receive Options or Awards subject to the conditions set forth
herein.
(n) "Escrow Agent" means the escrow agent under the Escrow Agreement,
designated by the Committee. The Bank may be appointed as the Escrow
Agent.
(o) "Escrow Agreement" means an agreement between the Company, the
Escrow Agent and a Grantee, in the form specified by the Committee,
under which shares of Restricted Stock awarded pursuant hereto shall
be held by the Escrow Agent until either (a) the restrictions
relating to such shares expire and the shares are delivered to the
Grantee or (b) the Company reacquires the shares pursuant hereto and
the shares are delivered to the Company.
(p) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(q) "Fair Market Value" means the fair market value of the Shares as
determined by the Committee in its sole discretion; provided,
however, that (A) if the Shares are admitted to quotation on the
National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or other comparable quotation system and have been
designated as a National Market System ("NMS") security, Fair Market
Value on any date shall be the last sale price reported for the
Shares on such system on such date or on the last day preceding such
date on which a sale was reported, (B) if the Shares are admitted to
quotation on NASDAQ and have not been designated a NMS security,
Fair Market Value on any date shall be the average of the highest
bid and lowest asked prices of the Shares on such system on such
date, or (C) if the Shares are admitted to trading on a national
securities exchange, Fair Market Value on any date shall be the last
sale price reported for the Shares on such exchange on such date or
on the last date preceding such date on which a sale was reported.
(r) "Grantee" means a person to whom an Award has been granted under the
Plan.
(s) "Incentive Stock Option" means an Option within the meaning of
Section 422 of the Code.
(t) "Nonqualified Stock Option" means an Option which is not an
Incentive Stock Option.
A-2
(u) "Option" means an Incentive Stock Option, a Nonqualified Stock
Option, or either or both of them.
(v) "Optionee" means a person to whom an Option has been granted under
the Plan.
(w) "Parent" means any corporation in an unbroken chain of corporations
ending with the Company, if each of the corporations other than the
Company owns stock possessing 50% or more of the total combined
voting power of all classes of stock of one of the other
corporations in such chain.
(x) "Plan" means the Peapack-Gladstone Financial Corporation 2006
Long-Term Stock Incentive Plan as set forth in this instrument and
as it may be amended from time to time.
(y) "Restricted Stock" means Shares issued or transferred to an Eligible
Employee or Director which are subject to restrictions as provided
in Section 8 hereof.
(z) "Retirement" means the retirement from active employment of an
employee or officer, but only if such person meets all of the
following requirements: (i) he has a minimum combined total of years
of service to the Company or any Subsidiary (excluding service to
any acquired company) and age equal to eighty (80), (ii) he is age
sixty-two (62) or older, and (iii) he provides six (6) months prior
written notice to the Company of the retirement. For Directors, the
term "Retirement" shall mean the date on which the Director ceases
to be a member of the Board after both attaining age sixty (60) and
completing at least ten (10) years of service on the Board.
(aa) "Shares" means the common stock, no par value, of the Company
(including any new, additional or different stock or securities
resulting from a Change in Capitalization).
(ab) "Stock Appreciation Right" means a right to receive all or some
portion of the increase in the value of shares of Common Stock as
provided in Section 7 hereof.
(ac) "Subsidiary" means any corporation in an unbroken chain of
corporations, beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain
owns stock possessing 50% or more of the total combined voting power
of all classes of stock in one of the other corporations in such
chain.
(ad) "Successor Corporation" means a corporation, or a parent or
subsidiary thereof, which issues or assumes a stock option in a
transaction to which Section 425(a) of the Code applies.
(ae) "Ten-Percent Shareholder" means an eligible Employee, who, at the
time an Incentive Stock Option is to be granted to him, owns (within
the meaning of Section 422(b)(6) of the Code) stock possessing more
than ten percent (10%) of the total combined voting power of all
classes of stock of the Company, a Parent or a Subsidiary within the
meaning of Section 422(b)(6) of the Code.
3. Administration.
--------------
(a) The Plan shall be administered by the Committee which shall hold
meetings at such times as may be necessary for the proper
administration of the Plan. The Committee shall keep minutes of its
meetings. A majority of the Committee shall constitute a quorum and
a majority of a quorum may authorize any action. Each member of the
Committee shall be a Non-Employee Director (as defined in Rule 16b-3
of the Exchange Act as it may be amended from time to time) and an
outside director as defined pursuant to Section 162(m) of the Code
as it may be amended from time to time. No failure to be so
qualified shall invalidate any Option or Award or any action or
inaction under the Plan. No member of the Committee shall be
personally liable for any action, determination or interpretation
made in good faith with respect to the Plan, the Options or the
Awards, and all members of the Committee shall be fully indemnified
by the Company with respect to any such action, determination or
interpretation.
A-3
Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time:
(1) to determine those Eligible Employees to whom Options shall be
granted under the Plan and the number of Incentive Stock Options
and/or Nonqualified Options to be granted to each eligible Employee
and to prescribe the terms and conditions (which need not be
identical) of each Option, including the purchase price per share of
each Option;
(2) to select those Eligible Employees to whom Awards shall be granted
under the Plan and to determine the number of shares of Restricted
Stock and/or Stock Appreciation Rights to be granted pursuant to
each Award, the terms and conditions of each Award, including the
restrictions or performance criteria relating to such shares or
rights, the purchase price per share, if any, of Restricted Stock
and whether Stock Appreciation Rights will be granted alone or in
conjunction with an Option;
(3) to construe and interpret the Plan and the Options and Awards
granted thereunder and to establish, amend and revoke rules and
regulations for the administration of the Plan, including, but not
limited to, correcting any defect or supplying any omission, or
reconciling any inconsistency in the Plan or in any Agreement, in
the manner and to the extent it shall deem necessary or advisable to
make the Plan fully effective, and all decisions and determinations
by the Committee in the exercise of this power shall be final and
binding upon the Company or a Subsidiary, the Optionees and the
Grantees, as the case may be;
(4) to determine the duration and purposes for leaves of absence which
may be granted to an Optionee or Grantee without constituting a
termination of employment or service for purposes of the Plan;
(5) generally, to exercise such powers and to perform such acts as are
deemed necessary or advisable to promote the best interests of the
Company with respect to the Plan.
Subject to the terms and conditions set forth herein, the Committee may,
from time to time, recommend the grant of Options and Awards to the
Directors in such numbers and upon such terms as it deems appropriate, but
all such grants must be approved by the Company's Board of Directors.
4. Stock Subject to Plan.
---------------------
(a) The maximum number of Shares that may be issued or transferred
pursuant to all Options and Awards under this Plan is 400,000. The
maximum number of Shares that may be issued or transferred pursuant
to Options or Awards for Incentive Stock Options shall be 400,000.
Upon a Change in Capitalization after the adoption of this Plan by
the Board, the Shares shall be adjusted to the number and kind of
Shares of stock or other securities existing after such Change in
Capitalization.
(b) Whenever any outstanding Option or portion thereof expires, is
cancelled or is otherwise terminated (other than by exercise of the
Option or any related Stock Appreciation Right), the shares of
Common Stock allocable to the unexercised portion of such Option may
again be the subject of Options and Awards hereunder.
(c) Whenever any Shares subject to an Award or Option are resold to the
Company, or are forfeited for any reason pursuant to the terms of
the Plan, such Shares may again be the subject of Options and Awards
hereunder.
5. Eligibility. Subject to the provisions of the Plan, the Committee (or,
-----------
with respect to Directors, the Board) shall have full and final authority
to select those Eligible Employees and independent contractors who will
receive Options and/or Awards, but no person shall receive any Options or
Awards unless he or she is an employee of the Company or a Subsidiary, or
a Director or independent contractor, at the time the Option or Award is
granted.
6. Stock Options. The Committee (or, with respect to Directors, the Board)
-------------
may grant Options in accordance with the Plan, the terms and conditions of
which shall be set forth in an Agreement. Each Option and Option Agreement
shall be subject to the following conditions:
A-4
(a) Purchase Price. The purchase price or the manner in which the
---------------
purchase price is to be determined for Shares under each Option
shall be set forth in the Agreement, provided that the purchase
price per Share under each Incentive Stock Option shall not be less
than 100% of the Fair Market Value of a Share at the time the Option
is granted (110% in the case of an Incentive Stock Option granted to
a Ten-Percent Shareholder) and each Nonqualified Stock Option shall
not be less than 100% of the Fair Market Value of a Share at the
time the Option is granted. Incentive Stock Options cannot be
granted to Directors or independent contractors.
(b) Duration. Options granted hereunder shall be for such term as the
--------
Committee shall determine, provided that (i) no Incentive Stock
Option shall be exercisable after the expiration of ten (10) years
from the date it is granted (five (5) years in the case of an
Incentive Stock Option granted to a Ten-Percent Shareholder) and
(ii) no Nonqualified Stock Option shall be exercisable after the
expiration of ten (10) years and one (1) day from the date it is
granted.
(c) Non-Transferability. No Option granted hereunder shall be
-------------------
transferable by the Optionee to whom granted otherwise than by will
or the laws of descent and distribution, and an Option may be
exercised during the lifetime of such Optionee only by the Optionee
or his guardian or legal representative. The terms of such Option
shall be binding upon the beneficiaries, executors, administrators,
heirs and successors of the Optionee.
(d) Stock Options; Vesting. Subject to Section 6(h) hereof, each Option
-----------------------
shall be exercisable in such installments (which need not be equal)
and at such times as may be designated by the Committee or the Board
as set forth in the Option Agreement. Unless otherwise provided in
the Agreement, to the extent not exercised, installments shall
accumulate and be exercisable, in whole or in part, at any time
after becoming exercisable, but not later than the date the Option
expires. Upon the death, Disability or Retirement of an Optionee,
all Options shall become immediately exercisable. Notwithstanding
the foregoing, the Committee (or, with respect to Directors, the
Board) may accelerate the exercisability of any Option or portion
thereof at any time.
(e) Method of Exercise. The exercise of an Option shall be made only by
------------------
a written notice delivered in person or by mail to the Secretary of
the Company at the Company's principal executive office, specifying
the number of Shares to be purchased and accompanied by payment
therefore and otherwise in accordance with the Agreement pursuant to
which the Option was granted. The purchase price for any shares
purchased pursuant to the exercise of an Option shall be paid in
full upon such exercise in cash, by check, or, at the discretion of
the Committee and upon such terms and conditions as the Committee
shall approve, by transferring Shares to the Company. Any Shares
transferred to the Company as payment of the purchase price under an
Option shall be valued at their Fair Market Value on the day
preceding the date of exercise of such Option. If requested by the
Committee, the Optionee shall deliver the Agreement evidencing the
Option and the Agreement evidencing any related Stock Appreciation
Right to the Secretary of the Company who shall endorse thereon a
notation of such exercise and return such Agreement to the Optionee.
(f) Rights of Optionees. No Optionee shall be deemed for any purpose to
-------------------
be the owner of any Shares subject to any Option unless and until
(i) the Option shall have been exercised pursuant to the terms
thereof, (ii) the Company shall have issued and delivered the Shares
to the Optionee, and (iii) the Optionee's name shall have been
entered as a shareholder of record on the books of the Company.
Thereupon, the Optionee shall have full voting, dividend and other
ownership rights with respect to such Shares.
(g) Termination of Employment. In the event that an Optionee who is not
-------------------------
a Director ceases to be employed by the Company or any Subsidiary,
any outstanding Options held by such Optionee shall, unless the
Option Agreement evidencing such Option provides otherwise,
terminate as follows:
(1) If the Optionee's termination of employment is due to his
death or Disability, the Options shall become fully vested and
shall be exercisable for a period of three years following
such termination of employment, and shall thereafter
terminate;
A-5
(2) If the Optionee's termination of employment is by the Optionee
(other than due to the Optionee's Retirement), the Option
shall terminate on the date of the termination of employment;
(3) If the termination of employment is due to the Optionee's
Retirement, the Option shall become fully vested and shall be
exercisable for 90 days (three years for an Option designated
initially as a Nonqualified Stock Option); and
(4) If the Optionee's termination of employment is for any other
reason, the Option (to the extent exercisable at the time of
the Optionee's termination of employment) shall be exercisable
for a period of ninety (90) days following such termination of
employment, and shall thereafter terminate, except that with
respect to an Option initially designated as a Nonqualified
Stock Option, if the Optionee's termination of employment
occurs within 12 months of a Change in Control, the Option
shall be exercisable for three years following the termination
of employment.
Notwithstanding the foregoing, the Committee may provide, either at the
time an Option is granted or thereafter, that the Option may be exercised
after the periods provided for in this Section 6(g), but in no event
beyond the term of the Option. Notwithstanding anything to the contrary in
this Section 6(g), no Option shall be exercisable beyond the term of the
Option.
(h) Termination of Service for Directors. Upon the termination of a
--------------------------------------
Director's service as a member of the Board for any reason other
than Disability, Change in Control or death, the Director's Options
shall be exercisable only as to those Shares which were immediately
exercisable by the Director at the date of termination. In the event
of the death, Retirement or Disability of a Director, all Options
held by the Director shall become immediately exercisable. Upon
termination of the Director's service due to or within 12 months
after a Change in Control, all Options held by the Director shall
become immediately exercisable. Options granted to a Director shall
expire and no longer be exercisable upon the earlier of (i) one
hundred twenty (120) months following the date of grant, or (ii)
three (3) years following the date on which the Director ceases to
serve as a Director (for any reason other than Cause).
(i) Effect of Change in Control. In the event of a Change in Control,
----------------------------
all Options (other than Options granted to Directors) outstanding on
the date of such Change in Control shall become immediately and
fully exercisable. Notwithstanding anything else herein to the
contrary, in the event of a Change in Control, the Board in its sole
discretion has the authority to terminate any and all Options and
Awards, and to pay to the holder of the Options or Awards the value
of such Options and Awards.
7. Stock Appreciation Rights. The Committee may, in its discretion, either
--------------------------
alone or in connection with the grant of an Option, grant Stock
Appreciation Rights in accordance with the Plan, the terms and conditions
of which shall be set forth in an Agreement. If granted in connection with
an Option, a Stock Appreciation Right shall cover the same shares covered
by the Option (or such lesser number of shares as the Committee may
determine) and shall, except as provided in this Section 7, be subject to
the same terms and conditions as the related Option.
(a) Time of Grant. A Stock Appreciation Right may be granted:
-------------
(i) at any time if unrelated to an Option; or
(ii) if related to an Option, either at the time of grant, or at
any time thereafter during the term of the Option.
(b) Stock Appreciation Rights Related to an Option.
----------------------------------------------
(1) Payment. A Stock Appreciation Right granted in connection with
-------
an Option shall entitle the holder thereof, upon exercise of
the Stock Appreciation Right or any portion thereof, to
receive payment of an amount computed pursuant to Section
7(b)(3).
(2) Exercise. Subject to Section 7(f), a Stock Appreciation Right
--------
granted in connection with an Option shall be exercisable at
such time or times and only to the extent that the related
Option is exercisable, and will
A-6
not be transferable except to the extent the related Option
may be transferable. A Stock Appreciation Right granted in
connection with an Incentive Stock Option shall be exercisable
only if the Fair Market Value of a Share on the date of
exercise exceeds the purchase price specified in the related
Incentive Stock Option.
(3) Amount Payable. Except as otherwise provided in Section 7(g),
--------------
upon the exercise of a Stock Appreciation Right related to an
Option, the Grantee shall be entitled to receive an amount
determined by multiplying (A) the excess of the Fair Market
Value of a Share on the date of exercise of such Stock
Appreciation Right over the per Share purchase price under the
related Option, by (B) the number of Shares as to which such
Stock Appreciation Right is being exercised. Notwithstanding
the foregoing, the Committee may limit in any manner the
amount payable with respect to any Stock Appreciation Right by
including such a limit in the Agreement evidencing the Stock
Appreciation Right at the time it is granted.
(4) Treatment of Related Options and Stock Appreciation Rights
Upon Exercise. Except as provided in Section 7(b)(v), (A) upon
the exercise of a Stock Appreciation Right granted in
connection with an Option, the Option shall be cancelled to
the extent of the number of Shares as to which the Stock
Appreciation Right is exercised and (B) upon the exercise of
an Option granted in connection with a Stock Appreciation
Right, the Stock Appreciation Right shall be cancelled to the
extent of the number of Shares as to which the Option is
exercised.
(5) Simultaneous Exercise of Stock Appreciation Right and Option.
-------------------------------------------------------------
The Committee may provide, either at the time a Stock
Appreciation Right is granted in connection with a
Nonqualified Stock Option or thereafter during the term of the
Stock Appreciation Right, that, subject to Section 7(f), upon
exercise of such Option, the Stock Appreciation Right shall
automatically be deemed to be exercised to the extent of the
number of Shares as to which the Option is exercised. In such
event, the Grantee shall be entitled to receive the amount
described in Section 7(b)(3) or 7(g) hereof, as the case may
be (or some percentage of such amount if so provided in the
Agreement evidencing the Stock Appreciation Right), in
addition to the Shares acquired pursuant to the exercise of
the Option. If a Stock Appreciation Right Agreement contains
an automatic exercise provision described in this Section
7(b)(5) and the Option or any portion thereof to which it
relates is exercised within six (6) months from the date the
Stock Appreciation Right is granted, such automatic exercise
provision shall not be effective with respect to that exercise
of the Option. The inclusion in an Agreement evidencing a
Stock Appreciation Right of a provision described in this
Section 7(b)(5) may be in addition to and not in lieu of the
right to exercise the Stock Appreciation Right as otherwise
provided herein and in the Agreement.
(c) Stock Appreciation Rights Unrelated to an Option. The Committee may
-------------------------------------------------
grant to Eligible Employees and independent contractors (and the
Board may grant to Directors) Stock Appreciation Rights unrelated to
Options. Stock Appreciation Rights unrelated to Options shall
contain such terms and conditions as to exercisability, vesting and
duration as the Committee or the Board shall determine, but in no
event shall they have a term of greater than ten (10) years. Upon
the death, Disability or Retirement of a Grantee, all Stock
Appreciation Rights shall become immediately exercisable. Upon the
death or Disability of a Grantee, the Stock Appreciation Rights held
by that Grantee shall be exercisable for a period of one (1) year
following such termination of employment or service, and shall
thereafter terminate. Upon the Retirement of a Grantee, the Stock
Appreciation Rights held by that Grantee shall be exercisable for a
period of ninety (90) days following such Retirement, and shall
thereafter terminate. Except as otherwise provided in Section 7(g),
the amount payable upon exercise of such Stock Appreciation Rights
shall be determined in accordance with Section 7(b)(3), except that
"Fair Market Value of a Share on the date of the grant of the Stock
Appreciation Right" shall be substituted for "purchase price under
the related Option."
(d) Method of Exercise. Stock Appreciation Rights shall be exercised by
------------------
a Grantee only by a written notice delivered in person or by mail to
the Secretary of the Company at the Company's principal executive
office, specifying the number of Shares with respect to which the
Stock Appreciation Right is being exercised. If requested by the
Committee, the Grantee shall deliver the Agreement evidencing the
Stock Appreciation Right being exercised and the Agreement
evidencing any related Option to the Secretary of the Company who
shall endorse thereon a notation of such exercise and return such
Agreements to the Grantee.
A-7
(e) Form of Payment. Payment of the amount determined under Sections
---------------
7(b)(3) or 7(c), may be made solely in whole shares of Common Stock
in a number determined at their Fair Market Value on the date of
exercise of the Stock Appreciation Right or, alternatively, at the
sole discretion of the Committee, solely in cash, or in a
combination of cash and Shares as the Committee deems advisable. In
the event that a Stock Appreciation Right is exercised within the
sixty-day period following a Change in Control, any amount payable
shall be solely in cash. If the Committee decides to make full
payment in Shares, and the amount payable results in a fractional
Share, payment for the fractional Share will be made in cash.
Notwithstanding the foregoing, no payment in the form of cash may be
made upon the exercise of a Stock Appreciation Right pursuant to
Section 7(b)(3) or 7(c) to an officer of the Company or a Subsidiary
who is subject to Section 16(b) of the Exchange Act, unless the
exercise of such Stock Appreciation Right is made during the period
beginning on the third business day and ending on the twelfth
business day following the date of release for publication of the
Company's quarterly or annual statements of earnings.
(f) Restrictions. No Stock Appreciation Right may be exercised before
------------
the date six (6) months after the date it is granted, except in the
event that the death or Disability of the Grantee occurs before the
expiration of the six-month period.
(g) Effect of Change in Control. In the event of a Change in Control,
----------------------------
subject to Section 7(f), all Stock Appreciation Rights shall become
immediately and fully exercisable.
8. Restricted Stock. The Committee (or, with respect to Directors, the Board)
----------------
may grant Awards of Restricted Stock which shall be evidenced by an
Agreement between the Company and the Grantee. Each Agreement shall
contain such restrictions, terms and conditions as the Committee or Board
may require and (without limiting the generality of the foregoing) such
Agreements may require that an appropriate legend be placed on Share
certificates. Awards of Restricted Stock shall be subject to the following
terms and provisions:
(a) Rights of Grantee.
-----------------
(1) Shares of Restricted Stock granted pursuant to an Award
hereunder shall be issued in the name of the Grantee as soon
as reasonably practicable after the Award is granted and the
purchase price, if any, is paid by the Grantee; provided, that
the Grantee has executed an Agreement evidencing the Award, an
Escrow Agreement, appropriate blank stock powers and any other
documents which the Committee, in its absolute discretion, may
require as a condition to the issuance of such Shares. If a
Grantee shall fail to execute the Agreement evidencing a
Restricted Stock Award, an Escrow Agreement or appropriate
blank stock powers or shall fail to pay the purchase price, if
any, for the Restricted Stock, the Award shall be null and
void. Shares issued in connection with a Restricted Stock
Award, together with the stock powers, shall be deposited with
the Escrow Agent. Except as restricted by the terms of the
Agreement, upon the delivery of the Shares to the Escrow
Agent, the Grantee shall have all of the rights of a
shareholder with respect to such Shares, including the right
to vote the shares and to receive, subject to Section 8(d),
all dividends or other distributions paid or made with respect
to the Shares.
(2) If a Grantee receives rights or warrants with respect to any
Shares which were awarded to him as Restricted Stock, such
rights or warrants or any Shares or other securities he
acquires by the exercise of such rights or warrants may be
held, exercised, sold or otherwise disposed of by the Grantee
free and clear of the restrictions and obligations provided by
this Plan.
(b) Non-Transferability. Until any restrictions upon the Shares of
-------------------
Restricted Stock awarded to a Grantee shall have lapsed in the
manner set forth in Section 8(c), such Shares shall not be sold,
transferred or otherwise disposed of and shall not be pledged or
otherwise hypothecated, nor shall they be delivered to the Grantee.
Upon the termination of employment of the Grantee, all of such
Shares with respect to which restrictions have not lapsed shall be
resold by the Grantee to the Company at the same price paid by the
Grantee for such Shares or shall be forfeited and automatically
transferred to and reacquired by the Company at no cost to the
Company if no purchase price had been paid for such Shares. The
Committee may also impose such other restrictions and conditions on
the Shares as it deems appropriate.
A-8
(c) Lapse of Restrictions.
---------------------
(1) Restrictions upon Shares of Restricted Stock awarded hereunder
shall lapse at such time or times and on such terms,
conditions and satisfaction of performance criteria as the
Committee (or, when applicable, the Board) may determine;
provided, however, that the restrictions upon such Shares
shall lapse only if the Grantee on the date of such lapse is
then and has continuously been an employee of the Company or a
Subsidiary (or a member of the Board) from the date the Award
was granted, or unless the Committee sets a later date for the
lapse of such restrictions.
(2) In the event of a Change in Control, all restrictions upon any
Shares of Restricted Stock shall lapse immediately and all
such Shares shall become fully vested in the Grantee thereof.
(3) In the event of termination of employment (or termination of
service as a Director) as a result of death, Disability or
Retirement of a Grantee, all restrictions upon Shares of
Restricted Stock awarded to such Grantee shall thereupon
immediately lapse. The Committee or Board may also decide at
any time in its absolute discretion and on such terms and
conditions as it deems appropriate, to remove or modify the
restrictions upon Shares of Restricted Stock awarded
hereunder, unless the Committee or the Board sets a later date
for the lapse of such restrictions.
(d) Treatment of Dividends. At the time of an Award of Shares of
------------------------
Restricted Stock, the Committee may, in its discretion, determine
that the payment to the Grantee of dividends, or a specified portion
thereof, declared or paid on Shares of Restricted Stock by the
Company, shall be deferred until the earlier to occur of (i) the
lapsing of the restrictions imposed upon such Shares, in which case
such dividends shall be paid over to the Grantee, or (ii) the
forfeiture of such Shares under Section 8(b) hereof, in which case
such dividends shall be forfeited to the Company, and such dividends
shall be held by the Company for the account of the Grantee until
such time. In the event of such deferral, interest shall be credited
on the amount of such dividends held by the Company for the account
of the Grantee from time to time at such rate per annum as the
Committee, in its discretion, may determine. Payment of deferred
dividends, together with interest accrued thereon as aforesaid,
shall be made upon the earlier to occur of the events specified in
(i) and (ii) of the immediately preceding sentence, in the manner
specified therein.
(e) Delivery of Shares. When the restrictions imposed hereunder and in
------------------
the Plan expire or have been cancelled with respect to one or more
shares of Restricted Stock, the Company shall notify the Grantee and
the Escrow Agent of same. The Escrow Agent shall then return the
certificate covering the Shares of Restricted Stock to the Company
and upon receipt of such certificate the Company shall deliver to
the Grantee (or such Grantee's legal representative, beneficiary or
heir) a certificate for a number of shares of Common Stock, without
any legend or restrictions (except those required by any federal or
state securities laws), equivalent to the number of Shares of
Restricted Stock for which restrictions have been cancelled or have
expired. A new certificate covering Shares of Restricted Stock
previously awarded to the Grantee which remain restricted shall be
issued to the Grantee and held by the Escrow Agent and the
Agreement, as it relates to such shares, shall remain in effect.
9. Adjustment Upon Changes in Capitalization.
-----------------------------------------
(a) In the event of a Change in Capitalization, the Committee shall
conclusively determine the appropriate adjustments, if any, to the
maximum number and class of shares of stock with respect to which
Options or Awards may be granted under the Plan, the number and
class of shares as to which Options or Awards have been granted
under the Plan, and the purchase price therefore, if applicable.
(b) Any such adjustment in the Shares or other securities subject to
outstanding Incentive Stock Options (including any adjustments in
the purchase price) shall be made in such manner as not to
constitute a modification as defined by Section 425(h)(3) of the
Code and only to the extent otherwise permitted by Sections 422 and
425 of the Code.
A-9
(c) If, by reason of a Change in Capitalization, a Grantee of an Award
shall be entitled to new, additional or different shares of stock or
securities (other than rights or warrants to purchase securities),
such new additional or different shares shall thereupon be subject
to all of the conditions, restrictions and performance criteria
which were applicable to the Shares or units pursuant to the Award
prior to such Change in Capitalization.
10. Effect of Certain Transactions. In the event of (i) the liquidation or
-------------------------------
dissolution of the Company, (ii) a merger or consolidation in which the
Company is not the surviving corporation or (iii) the sale or disposition
of all or substantially all of the Company's assets, provision shall be
made in connection with such transaction for the assumption of the Plan
and the Options or Awards theretofore granted under the Plan, or the
substitution for such Options or Awards of new options or awards of the
Successor Corporation, with appropriate adjustment as to the number and
kind of shares and the purchase price for shares thereunder.
11. Release of Financial Information. A copy of the Company's annual report to
--------------------------------
shareholders shall be delivered to each Optionee and Grantee at the time
such report is distributed to the Company's shareholders. Upon request the
Company shall furnish to each Optionee and Grantee a copy of its most
recent annual report and each quarterly report and current report filed
under the Exchange Act, since the end of the Company's prior fiscal year.
12. Termination and Amendment of the Plan. The Plan shall terminate on the day
-------------------------------------
preceding the tenth anniversary of its effective date and no Option or
Award may be granted thereafter. The Board may sooner terminate or amend
the Plan at any time, and from time to time; provided, however, that,
except as provided in Sections 9 and 10 hereof, no amendment shall be
effective unless approved by the shareholders of the Company in accordance
with applicable law and regulations at an annual or special meeting held
within twelve months before or after the date of adoption of such
amendment, where such amendment will:
(a) increase the number of Shares as to which Options or Awards may be
granted under the Plan; or
(b) change the class of persons eligible to participate in the Plan.
Except as otherwise provided herein, rights and obligations under any
Option or Award granted before any amendment of the Plan shall not be
altered or impaired by such amendment, except with the consent of the
Optionee or Grantee, as the case may be. In addition, no amendment shall
be effective with respect to any Option or SAR to the extent that such
amendment would be treated as a material modification under Section 409A
of the Code.
13. Non-Exclusivity of the Plan. The adoption of the Plan by the Board shall
----------------------------
not be construed as amending, modifying or rescinding any previously
approved incentive arrangement or as creating any limitations on the power
of the Board to adopt such other incentive arrangements as it may deem
desirable, including, without limitation, the granting of stock options
otherwise than under the Plan, and such arrangements may be either
applicable generally or only in specific cases.
14. Limitation of Liability. As illustrative of the limitations of liability
-----------------------
of the Company, but not intended to be exhaustive thereof, nothing in the
Plan shall be construed to:
(a) give any person any right to be granted an Option or Award other
than at the sole discretion of the Committee or the Board;
(b) give any person any rights whatsoever with respect to Shares except
as specifically provided in the Plan;
(c) limit in any way the right of the Company to terminate the
employment or service of any person at any time; or
(d) be evidence of any agreement or understanding, expressed or implied,
that the Company will employ any person in any particular position
at any particular rate of compensation or for any particular period
of time.
A-10
15. Regulations and Other Approvals; Governing Law.
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(a) This Plan and the rights of all persons claiming hereunder shall be
construed and determined in accordance with the laws of the State of
New Jersey without giving effect to the choice of law principles
thereof, except to the extent that such law is preempted by federal
law.
(b) The obligation of the Company to sell or deliver Shares with respect
to Options and Awards granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable
federal and state securities laws, and the obtaining of all such
approvals by governmental agencies as may be deemed necessary or
appropriate by the Committee.
(c) The Plan is intended to comply with Rule 16b-3 promulgated under the
Exchange Act and Section 162(m) of the Code (each as amended from
time to time) and the Committee shall interpret and administer the
provisions of the Plan or any Agreement in a manner consistent
therewith to the extent necessary. Any provisions inconsistent with
such Rule or Section shall be inoperative but shall not affect the
validity of the Plan or any grants thereunder.
(d) Except as otherwise provided in Section 12, the Board may make such
changes as may be necessary or appropriate to comply with the rules
and regulations of any government authority or to obtain for
Eligible Employees granted Incentive Stock Options the tax benefits
under the applicable provisions of the Code and regulations
promulgated thereunder.
(e) Each Option and Award is subject to the requirement that, if at any
time the Committee determines, in its absolute discretion, that the
listing, registration or qualification of Shares issuable pursuant
to the Plan is required by any securities exchange or under any
state or federal law, or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in
connection with, the grant of an Option or the issuance of Shares,
no Options shall be granted or payment made or Shares issued, in
whole or in part, unless listing, registration, qualification,
consent or approval has been effected or obtained free of any
conditions unacceptable to the Committee.
(f) In the event that the disposition of Shares acquired pursuant to the
Plan is not covered by a then current registration statement under
the Securities Act of 1933, as amended, and is not otherwise exempt
from such registration, such Shares shall be restricted against
transfer to the extent required by the Securities Act of 1933, as
amended, or regulations thereunder, and the Committee may require
any individual receiving Shares pursuant to the Plan, as a condition
precedent to receipt of such Shares (including upon exercise of an
Option), to represent to the Company in writing that the Shares
acquired by such individual are acquired for investment only and not
with a view to distribution.
16. Miscellaneous.
-------------
(a) Multiple Agreements. The terms of each Option or Award may differ
--------------------
from other Options or Awards granted under the Plan at the same
time, or at some other time. The Committee may also grant more than
one Option or Award to a given Eligible Employee during the term of
the Plan, either in addition to, or in substitution for, one or more
Options or Awards previously granted to that Eligible Employee. The
grant of multiple Options and/or Awards may be evidenced by a single
Agreement or multiple Agreements, as determined by the Committee.
(b) Withholding of Taxes. The Company shall have the right to deduct
---------------------
from any distribution of cash to any Optionee or Grantee an amount
equal to the federal, state and local income taxes and other amounts
required by law to be withheld with respect to any Option or Award.
Notwithstanding anything to the contrary contained herein, if an
Optionee or Grantee is entitled to receive Shares upon exercise of
an Option or pursuant to an Award, the Company shall have the right
to require such Optionee or Grantee, prior to the delivery of such
Shares, to pay to the Company the amount of any federal, state or
local income taxes and other amounts which the Company is required
by law to withhold. The Agreement evidencing any Incentive Stock
Options granted under this Plan shall provide that if the Optionee
makes a disposition, within the meaning of Section 425(c) of the
Code and regulations promulgated thereunder, of any Share or Shares
issued to him or her pursuant to his or
A-11
her exercise of the Incentive Stock Option within the two-year
period commencing on the day after the date of grant of such Option
or within the one-year period commencing on the day after the date
of transfer of the Share or Shares to the Optionee pursuant to the
exercise of such Option, he or she shall, within ten (10) days of
such disposition, notify the Company thereof and immediately deliver
to the Company any amount of federal income tax withholding required
by law.
(c) Designation of Beneficiary. Each Optionee and Grantee may, with the
--------------------------
consent of the Committee, designate a person or persons to receive
in the event of his/her death, any Option or Award or any amount
payable pursuant thereto, to which he/she would then be entitled.
Such designation will be made upon forms supplied by and delivered
to the Company and may be revoked in writing. If an Optionee fails
effectively to designate a beneficiary, then his/her estate will be
deemed to be the beneficiary.
17. Effective Date. The effective date of the Plan shall be the date of its
---------------
adoption by the Board, subject only to the approval by the affirmative
vote of a majority of the votes cast at a meeting of shareholders at which
a quorum is present to be held within twelve (12) months of such adoption.
No Options or Awards shall vest hereunder unless such Shareholder approval
is obtained.
A-12
[X]PLEASE MARK VOTES
AS IN THIS EXAMPLE
REVOCABLE PROXY
PEAPACK-GLADSTONE FINANCIAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
The undersigned hereby appoints John D. Kissel, James R. Lamb and Jack D.
Stine, or any one of them, as Proxy, each with full power to appoint his
substitute and hereby authorizes them to represent and to vote, as designated
below, all of the shares of common stock of Peapack-Gladstone Financial
Corporation (the "Corporation"), standing in the undersigned's name at the
Annual Meeting of Shareholders of the Corporation to be held on April 25, 2006
at 2:00 p.m. or any adjournment thereof. The undersigned hereby revokes any and
all proxies heretofore given with respect to the meeting.
With- For
hold All
1. ELECTION OF THIRTEEN (13) DIRECTORS For Authority Except
[_] [_] [_]
Anthony J. Consi, II Pamela Hill T. Leonard Hill Frank A. Kissel
John D. Kissel James R. Lamb Edward A. Merton F. Duffield Meyercord
John R. Mulcahy Robert M. Rogers Philip W. Smith, III Craig C. Spengeman
Jack D. Stine
INSTRUCTION:To withhold authority to vote for any individual nominee, mark "For
All Except"and write that nominee's name in the space provided below.
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For Against Abstain
2. PROPOSAL TO APPROVE THE CORPORATION'S 2006 [_] [_] [_]
LONG-TERM STOCK INCENTIVE PLAN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Meeting.
This Proxy, when properly signed will be voted in the manner directed herein by
the undersigned shareholder. IF NO DIRECTION is made, this Proxy will be voted
"FOR" the election of all thirteen nominees for Director.
PLEASE CHECK BOX IF YOU PLAN TO ATTEND THE MEETING. [_]
Please sign exactly as names appear above. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor, administrator,
trustee or guardian, please give full corporate names by President or other
authorized officer. If a partnership or limited liability company, please sign
in the entity name by an authorized person.
------------------------
Please be sure to sign and date | Date |
this Proxy in the box below. | |
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| |
| |
-----------Stockholder sign above----------Co-holder (if any) sign above-------
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Detach above card, sign, date and mail in postage paid envelope provided.
PEAPACK-GLADSTONE FINANCIAL CORPORATION
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PLEASE ACT PROMPTLY
SIGN, DATE &MAIL YOUR PROXY CARD TODAY
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IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
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