def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO.)
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
|
|
|
|
|
|
|
þ
|
|
Preliminary Proxy Statement
Definitive Proxy Statement
|
|
o
|
|
Confidential, for
Use of the
Commission Only (as
permitted by
Rule
14a-6(e)(2)) |
o
|
|
Definitive Additional Materials |
|
|
|
|
o
|
|
Soliciting Material Pursuant to §240.14a-12 |
|
|
|
|
(Name of Registrant as Specified in its Charter)
PAYMENT OF FILING FEE (Check the appropriate box):
|
|
|
|
|
|
|
o |
|
|
No fee required. |
o |
|
|
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
|
|
|
1) |
|
|
Title of each class of securities to which the transaction applies: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2) |
|
|
Aggregate number of securities to which the transaction applies: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3) |
|
|
Per unit price or other underlying value of the transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount
on which the filing fee is calculated and state how it was
determined): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4) |
|
|
Proposed maximum aggregate value of the transaction: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5) |
|
|
Total fee paid: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
o |
|
|
Fee paid previously with preliminary materials. |
o |
|
|
Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was previously paid. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing. |
|
|
|
1) |
|
|
Amount Previously Paid: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2) |
|
|
Form, Schedule or Registration Statement No.: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3) |
|
|
Filing Party: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4) |
|
|
Date Filed: |
|
|
|
|
|
|
|
|
Notice of 2008 Annual Meeting of Shareholders
And
Proxy Statement
March 7, 2008
Dear Shareholder:
It is my pleasure to invite you to Bank of Commerce Holdings 2008 Annual Meeting of Shareholders.
We will hold the meeting on May 20, 2008, at 5:00 p.m., in the lobby of Bank of Commerce located at
1951 Churn Creek Road, Redding, California, 96002. In addition to the formal items of business, I
will report on past performance and future prospects.
At the annual meeting you will be asked to elect directors and to ratify the appointment of
independent accountants for 2007. The Board of Directors recommends that you vote FOR the director
nominees and FOR the ratification of independent accountants.
This mailing includes the formal notice of the Annual Meeting and the Proxy Statement. The Proxy
Statement describes the business that we will conduct at the meeting and our 2007 Form 10-K and
Annual Report provides financial results and information about Bank of Commerce Holdings &
Subsidiaries.
Please vote promptly by mail, telephone or internet regardless of whether you plan to attend the
meeting. You may later decide to vote in person at the meeting if you are a stockholder of record,
or you may revoke you proxy or voting instructions for any other reason before your shares are
voted. Your vote is important.
We look forward to seeing you at the meeting.
Sincerely,
/s/
Patrick J.
Moty
Patrick J. Moty
President and
Chief Executive Officer
Bank of Commerce Holdings & Subsidiaries
This proxy statement and the accompanying form of proxy are being mailed to shareholders on or
about April 4, 2008
Page 2
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
|
|
|
|
|
|
|
Date:
|
|
Tuesday, May 20, 2008 |
|
|
|
|
|
|
|
Time:
|
|
5:00 p.m. |
|
|
|
|
|
|
|
Place:
|
|
Bank of Commerce Redding |
|
|
|
|
1951 Churn Creek Road |
|
|
|
|
Redding, California 96002 |
Dear Shareholders:
|
|
At our 2008 Annual Meeting, we will ask you to: |
|
|
|
Elect eleven directors each to serve for a term of one year; |
|
|
|
Ratify the selection of Moss Adams, LLP as our independent public accountants for
2007; and |
|
|
|
Transact any other business that may properly be presented at the Annual Meeting. |
If you were a shareholder of record as of the close of business on March 31, 2008, you
are entitled to notice of and to vote at the Annual Meeting and any adjournment thereof.
This proxy statement and the accompanying form of proxy are being mailed to shareholders
on or about April 4, 2008.
Whether or not you plan to attend, please grant a proxy to vote your shares in
one of three ways: via Telephone, fax or mail. Instructions regarding telephone
voting are included on the proxy card. If you choose to vote by mail, please
mark, sign and date the proxy card and return it in the enclosed envelope. Your
proxy may be revoked at any time before it is exercised as explained in the
proxy statement. Our transfer agents facsimile number is (415) 989-5241.
Returning your proxy will not limit your rights to attend or vote at the Annual
Meeting.
By Order of the Board of Directors,
/s/
David H.
Scott
David H. Scott
Corporate Secretary, Bank of Commerce Holdings
Redding, California
Dated: March 7, 2008
-1-
TABLE OF CONTENTS
|
|
|
|
|
Information about the Annual Meeting and voting |
|
|
|
|
|
|
|
3 |
|
|
|
|
3 |
|
|
|
|
3 |
|
|
|
|
3 |
|
|
|
|
3 |
|
|
|
|
4 |
|
|
|
|
4 |
|
|
|
|
4 |
|
|
|
|
4 |
|
|
|
|
5 |
|
|
|
|
5 |
|
|
|
|
5 |
|
Corporate Governance and Board Matters |
|
|
|
|
|
|
|
7 |
|
|
|
|
8 |
|
|
|
|
9 |
|
|
|
|
9 |
|
|
|
|
10 |
|
|
|
|
10 |
|
|
|
|
10 |
|
|
|
|
11 |
|
|
|
|
13 |
|
|
|
|
14 |
|
|
|
|
14 |
|
|
|
|
16 |
|
|
|
|
17 |
|
|
|
|
18 |
|
|
|
|
18 |
|
|
|
|
19 |
|
|
|
|
20 |
|
|
|
|
22 |
|
|
|
|
23 |
|
|
|
|
24 |
|
|
|
|
26 |
|
|
|
|
27 |
|
|
|
|
28 |
|
|
|
|
30 |
|
|
|
|
31 |
|
|
|
|
33 |
|
|
|
|
36 |
|
|
|
|
36 |
|
|
|
|
38 |
|
|
|
|
39 |
|
|
|
|
39 |
|
|
|
|
41 |
|
|
|
|
48 |
|
|
|
|
50 |
|
Page 2
Why did you send me this Proxy Statement?
The Board of Directors of Bank of Commerce Holdings is soliciting proxies from its stockholders to
be used at the annual meeting of stockholders on Tuesday, May 20, 2008. This Proxy Statement
summarizes the information you need to know to cast an informed vote at the Annual Meeting. You do
not need to attend the Annual Meeting to vote your shares. Instead you may simply complete, sign
and return the enclosed proxy card, or use the convenient telephone or internet voting method as
described in the proxy card.
Along with this Proxy Statement, we are also sending you our 2007 Form 10-K and Annual Report.
Who is entitled to vote?
Shareholders of record at the close of business on March 31, 2008 (the Record Date) are entitled
to notice of and to vote at the Annual Meeting. As of the close of business on the Record Date,
the Company had 8,745,793 shares of Common Stock outstanding and entitled to vote.
What constitutes a quorum?
The presence in person or by proxy of the holders of a majority of the Companys outstanding shares
of Common Stock (Common Stock) constitutes a quorum for the transaction of business at the Annual
Meeting. Abstentions and broker non-votes are each included in the determination of the number
of shares present and voting for purposes of determining the presence of a quorum. A broker
non-vote occurs when the nominee holding shares for a beneficial owner does not have
discretionary voting power with respect to that item and has not received instructions from the
beneficial owner. Abstentions will be included in the tabulations of the votes cast on proposals
presented to the shareholders and therefore will have the effect of a negative vote. Broker
non-votes will not be counted for purposes of determining the number of votes cast for a
proposal.
How many votes do I have?
Each share of Bank of Commerce Holdings Common Stock that you owned as of the record date entitles
you to one vote. The proxy card indicates the number of votes that you have.
How do I vote by proxy? Can I vote by telephone or internet?
Whether or not you plan to attend the Annual Meeting, we urge you to complete, sign and date the
enclosed proxy card and to return it promptly. You may also cast your votes by telephone or
internet as indicated on the proxy card. Returning the proxy card will not affect your right to
attend the Annual Meeting and vote. If you fill in your proxy card and send it to us in time to
vote, your proxy (as appointed on your proxy card) will vote your shares as you have directed. If
you sign the proxy card but do not make specific choices, your proxy will vote your shares as
recommended by the Board of Directors as follows:
For the election of all nominees for Director
For the ratification of independent accountants
If any other matter is presented, your proxy will vote in accordance with the recommendation of the
Board of Directors, or, if no recommendation is given, in accordance with his or her best judgment.
At the time this Proxy Statement went to press, we knew of no matters that needed to be acted upon
at the Annual Meeting, other than those discussed in this Proxy Statement.
Page 3
How do I change my vote?
Only holders of record at the close of business on March 31, 2008 will be entitled to vote at the
annual meeting. Whether or not you plan to attend the Annual Meeting, you may vote your shares via
mail, telephone or internet. If you fill out and vote the proxy card, you may change your vote at
any time before the vote is conducted at the Annual Meeting. You may notify the Companys Corporate
Secretary in writing before the Annual Meeting that you have revoked your proxy. You may also
attend the Annual Meeting and vote in person.
What vote is required to approve each proposal?
Proposal 1: Elect eleven directors
The eleven nominees for director who receive the most votes will be elected. If you do not vote for
a particular nominee, or you indicate Withhold Authority to vote for a particular nominee on your
proxy card, your vote will not count for or against the nominee.
Proposal 2: Ratification of the selection of Independent Public Accountants
The affirmative vote of a majority of votes cast at the Annual Meeting on this proposal is required
to ratify the selection of independent public accountants. If you abstain from voting, it has no
effect on the outcome of this proposal.
What are the costs of soliciting these Proxies?
The expense of printing and mailing proxy materials, including the annual statement, will be borne
by the Company. In addition to the solicitation of proxies by mail, certain directors, officers
and other employees of the Company may make solicitation by personal interview, telephone or
facsimile. No additional compensation will be paid to such persons for such solicitation. The
Company will reimburse brokerage firms and others for their reasonable expenses in forwarding
solicitation materials to beneficial owners of the Companys Common Stock. We have contracted with
Mellon-Investor Services and ADP Investor Services to assist us in the distribution of materials
and tabulation of the results. This service will cost the Company approximately $40,000.00 plus out
of pocket expenses.
How do I obtain an Annual Report on Form 10-K?
The consolidated financial statements of Bank of Commerce Holdings and subsidiaries for the year
ended December 31, 2007, as part of the Companys Form 10-K and 2007 Annual Report to Shareholders
accompany this proxy statement.
Additional copies of the annual report on Form 10-K and 2007 Annual Report to Shareholders may be
obtained upon written request to Linda J. Miles, Executive Vice President & Chief Financial Officer
at the Companys administrative offices, 1901 Churn Creek Road, Redding, California 96002.
The Securities and Exchange Commission (SEC) maintains an internet site at
http://www.sec.gov that contains Bank of Commerce Holdings SEC filings. Access to the
filings are also available from Bank of Commerces website under the heading Investor
Information. The website address is www.bankofcommerceholdings.com.
Page 4
Information about Bank of Commerce Holdings Stock Ownership
Does anyone own 5% or more of Bank of Commerce Holdings Common Stock?
Yes. Bank of Commerce Holdings is aware of three shareholders who beneficially own 5% or more of
our outstanding common stock. The Securities and Exchange Commission has defined beneficial
ownership (1) to mean more than ownership in the usual sense. For example, a person has beneficial
ownership of a share not only if he owns it in the usual sense, but also if he has the power to
vote, sells or otherwise disposes of the share. Beneficial ownership also includes that number of
shares that a person has a right to acquire within sixty (60) days. The following table shows, to
the knowledge of the Company, the only beneficial owners of more than five percent of the
Corporations shares as of the record date.
|
|
|
|
|
|
|
|
|
Name and address of Beneficial Owner |
|
Number of shares |
|
Percent of Class* |
Robert C. Anderson
1960 Bechelli Lane
Redding, California 96002 |
|
|
547,110 |
|
|
|
6.26 |
% |
|
|
|
|
|
|
|
|
|
Harry L. Grashoff, Jr.
3162 Pinot Path
Redding, California 96001 |
|
|
512,395 |
|
|
|
5.86 |
% |
|
|
|
|
|
|
|
|
|
John C. Fitzpatrick
822 Northridge Drive
Redding, California 96001 |
|
|
459,905 |
|
|
|
5.26 |
% |
|
|
|
* |
|
Based upon 8,745,793 shares outstanding at the record date. |
How much of Bank of Commerce Holdings Stock is owned by Directors and Executive Officers?
The following table sets forth certain information regarding beneficial ownership of the Companys
Common Stock as of March 31, 2008 by (i) each person who is known by the Company to beneficially
own more than five percent of the Companys Common Stock, (ii) each of the Companys directors and
nominees, (iii) each of the Named Executive Officers (as defined on page 24) and (iv) all directors
and executive officers of the Company as a group.
|
|
|
|
|
|
|
|
|
|
|
Number of Shares of |
|
|
|
|
|
|
Common Stock |
|
|
Percentage of |
|
Name and Address of Beneficial Owner |
|
Beneficially Owned |
|
|
Class |
|
Robert C. Anderson (1) |
|
|
547,110 |
|
|
|
6.26 |
% |
Harry L. Grashoff, Jr. (2) |
|
|
512,395 |
|
|
|
5.86 |
% |
John C. Fitzpatrick (3) |
|
|
459,905 |
|
|
|
5.26 |
% |
Welton L. Carrel (4) |
|
|
342,738 |
|
|
|
3.92 |
% |
Kenneth R. Gifford, Jr. (5) |
|
|
251,560 |
|
|
|
2.88 |
% |
Russell L. Duclos (6) |
|
|
150,600 |
|
|
|
1.72 |
% |
Patrick J. Moty (7) |
|
|
125,564 |
|
|
|
1.44 |
% |
David H. Scott (8) |
|
|
90,366 |
|
|
|
1.03 |
% |
Lyle L. Tullis (9) |
|
|
85,785 |
|
|
|
0.98 |
% |
Robert J. ONeil (10) |
|
|
32,190 |
|
|
|
0.37 |
% |
Linda J. Miles (11) |
|
|
33,750 |
|
|
|
0.39 |
% |
Orin Bennett (12) |
|
|
33,400 |
|
|
|
0.38 |
% |
Randall S. Eslick (13) |
|
|
23,109 |
|
|
|
0.26 |
% |
Jon Halfhide (14) |
|
|
10,400 |
|
|
|
0.12 |
% |
|
|
|
|
|
|
|
All directors and executive officers as a group (14 persons) |
|
|
2,698,872 |
|
|
|
30.86 |
% |
Page 5
|
|
|
|
|
Beneficial ownership is determined in accordance with the rules of the Commission and
generally includes voting or investment power with respect to securities. Shares of Common
Stock subject to options currently exercisable or exercisable within 60 days of March 31,
2008, are deemed to be beneficially owned by the person holding such option for the purpose
of computing the percentage ownership of such person but are not treated as outstanding for
the purposes of computing the percentage ownership of any other person. Except as
indicated by footnotes and subject to community property laws, where applicable, the
persons named above have sole voting and investment power with respect to all shares of
Common Stock shown as beneficially owned by them. |
|
(1) |
|
Includes 547,110 shares held by the Anderson Family Revocable Living Trust, of which
Mr. Anderson is a co-trustee and shares voting and investment power with respect to such
shares. Mr. Anderson is retired as Founding Chairman of the Board of the Company. |
|
(2) |
|
Includes 471,145 shares held by the Grashoff Family Revocable Trust of which Mr.
Grashoff and his spouse are co-trustees, 18,612 shares held separately in his spouses IRA
account, 22,638 held individually in an IRA account. |
|
(3) |
|
Includes 317,878 shares held by Carbonated Industries Inc.; 129,527 shares owned by
the J.C. and Betty Fitzpatrick 1984 Revocable Trust and 12,500 owned by John C.
Fitzpatrick individually. Mr. Fitzpatrick was chief executive officer of Carbonated
Industries, Inc. Mr. Fitzpatrick disclaims beneficial ownership of the shares held by
Carbonated Industries, Inc. |
|
(4) |
|
Includes 339,238 shares held by the Carrel Family Living Trust of which Mr. Carrel is
a co-trustee with his spouse Judith, and shares voting and investment power with respect
to such shares, and 3,500 shares held jointly with his spouse. |
|
(5) |
|
Includes 231,760 shares held jointly with Mr. Giffords spouse and 19,800 shares held
by Gifford Construction, Inc. |
|
(6) |
|
Includes 150,600 shares held by the Duclos Family Trust of whom Mr. Duclos and his
spouse are co-trustees. |
|
(7) |
|
40,000 shares jointly with Mr. Motys spouse, 3,426 individually in an IRA account
53,938 shares in the Redding Bank of Commerce 401(k) Plan to which Mr. Moty has voting
powers as Trustee and 28,200 shares issuable to Mr. Moty upon the exercise of options
exercisable within 60 days of March 31, 2008. |
|
(8) |
|
Includes 69,241 shares held jointly with Mr. Scotts spouse, 204 shares held
individually by his spouse, 6,241 shares in 401(k) retirement plan, 14,680 shares in his
spouses individual retirement account. |
|
(9) |
|
Includes 81,163 shares held jointly with Mr. Tullis spouse and 4,000 shares held
separately in his spouses name and 622
shares issuable to Mr. Tullis upon the exercise of options exercisable within 60 days of
March 31, 2008. |
|
(10) |
|
Includes 1,920 shares individually, 390 shares individually in an IRA account and
29,880 shares issuable to Mr. ONeil upon the exercise of options exercisable within 60
days of March 31, 2008. |
|
(11) |
|
Includes 19,750 shares held by the Miles Family Trust of whom Mrs. Miles and her
spouse are co-trustees, and 14,000 shares issuable to Ms. Miles upon the exercise of
options exercisable within 60 days of March 31, 2008. |
|
(12) |
|
Includes 2,000 shares held jointly with Mr. Bennetts spouse, 25,000 shares held by
the Bennett Family Revocable Trust and 6,400 shares issuable to Mr. Bennett upon the
exercise of options exercisable within 60 days of March 31, 2008. |
|
(13) |
|
Includes 5,109 shares held individually in an IRA account and 18,000 shares issuable
to Mr. Eslick upon the exercise of options exercisable within 60 days of March 31, 2008. |
|
(14) |
|
Includes 6,700 shares held by the Halfhide Family Trust of which Mr. Halfhide is
co-trustee with his spouse Teresa, 500 shares held jointly with his spouse, and 3,200
shares issuable to Mr. Halfhide upon the exercise of options exercisable within 60 days of
March 31, 2008. |
Page 6
CORPORATE GOVERNANCE ROLE AND FUNCTIONS OF THE BOARD OF DIRECTORS
The Board of Directors is committed to sound and effective corporate governance principles and
practices. The Board of Directors has adopted corporate governance guidelines to provide the
framework for the governance of the company. These guidelines set forth director qualifications and
standards of independence, and mandate that at least a majority of the Board and all the members of
the Audit and the Nominating and Corporate Governance Committees meet the criteria for independence
as discussed below. Highlights of our corporate governance practices are described below. To
fulfill its role the Board or Board Committee must perform the following primary functions:
|
|
|
Oversee the conduct of the Companys business to evaluate whether the Company is being
properly managed; |
|
|
|
|
Review and, where appropriate, approve the Companys major financial objectives,
strategic plans and actions; |
|
|
|
|
Review and, where appropriate, approve major changes in, and determinations of other
major issues respecting the appropriate auditing and accounting principles and practices
to be used in the preparation of the companys financial statements; |
|
|
|
|
Assess major risk factors relating to the Company and its performance, and review
measures to address and mitigate such risks; |
|
|
|
|
Evaluate regularly the performance and approve the compensation of the CEO and, with
the advice of the CEO, evaluate regularly the performance of principal senior executives;
and |
|
|
|
|
Plan for succession of the CEO and monitor managements succession planning for other
key executives. |
In discharging these obligations, directors are entitled to rely reasonably on the honesty and
integrity of their fellow directors and the Companys executives and its outside advisors and
auditors. Directors shall be entitled to reasonable directors and officers liability insurance on
their behalf; the benefits of indemnification to the fullest extent permitted by law under the
Companys charter, by-laws and any indemnification agreements; and exculpation as provided by state
law and the Companys charter.
The Company expects its employees to adhere to the highest possible standards of ethics and
business conduct with other employees, customers, stockholders and the communities it serves, and
to comply with all applicable laws, rules and regulations that govern its business. The Board of
Directors has adopted a code of ethics to promote honesty and integrity through out the Company.
The Board recognizes that the actual management of the business and affairs of the Company are
conducted by the CEO and other senior executives under his supervision and that, in performing the
management function, the CEO and other senior executives are obliged to act in a manner that is
consistent with the oversight functions and powers of the board and the standards of the Company
and to execute any specific plans, instructions or directions of the Board.
The adopted charter of the Nominating and Corporate Governance Committee is included in this
document as appendix B. Interested parties may view our Company Code of Ethics on our Corporate
website: www.bankofcommerceholdings.com.
Director Qualifications
The Board shall have a majority of directors who meet the independence criteria adopted by the
Board.
Page 7
Qualifications: A director should possess personal and professional integrity; have good business
judgment, relevant experience and skills to be an effective director in conjunction with the full
Board in collectively serving the long-term interests of the Company stockholders. Directors should
be committed to devoting sufficient time and energy to diligently performing their duties as
directors.
Size of Board: The Board shall determine the appropriate size of the Board within the requirements
of the Companys charter and bylaws.
Selection process: In accordance with the policies and principles in its charter, the Nominating
and Corporate Governance Committee is responsible for identifying and recommending potential
director nominees to the Board for its approval when there is a vacancy on the board. The Chairman
of the Nominating and Corporate Governance Committee and the Chairman of the Board will extend an
invitation to the potential director nominee to join the board.
Annual Review of Independence and Qualifications: The Nominating and Corporate Governance Committee
shall distribute annually a self-evaluation to the Board that includes an assessment of the
directors independence and qualifications.
Resignation from the board: An individual director should offer his or her resignation in the event
the directors principal occupation or business association changes substantially from the position
he or she held when originally invited to join the board. The board should consider the continued
appropriateness of the directors membership on the board under the changed circumstances and then
the board should determine whether or not to accept the directors resignation. Also, a director
should tender a resignation in the event there is a substantial conflict of interest between the
director and the Company or the Board and such conflict cannot be resolved to the satisfaction of
the board.
Retirement from the board: A director shall retire from the Board upon reaching the age of
seventy-two (72). At the discretion of the board of directors, terms may be extended once for a
period of one-year for specific business needs and to ensure good corporate governance.
Standards of Director Independence
A majority of the Board and all members of the Audit, Executive Compensation and the Nominating and
Corporate Governance Committees shall be independent. A director is deemed to be independent if he
or she does not have a direct or indirect material relationship with the Company or any of its
affiliates or with any senior executive member of the Company or any of its affiliates.
A director shall be deemed to have a material relationship with the Company and/or its affiliates
and thus, shall not be deemed independent if, within the past three years:
|
|
|
The director has been employed by the Company or its affiliates; |
|
|
|
|
An immediate family member of the director is or has been employed by the Company or
any of its affiliates as an officer; |
|
|
|
|
The director is or has been affiliated with or employed by the Companys present or
former auditor; |
|
|
|
|
The director or an immediate family member of the director is an officer, general
partner, director or large equity owner of a significant customer, paid advisor or
supplier to the Company of non professional services and goods; |
|
|
|
|
The director or an immediate family member of the director is an officer, director or
trustee of a charitable or tax-exempt organization to whom the Company makes substantial
charitable contributions. |
Page 8
Other than Patrick J. Moty and Kenneth Gifford, Jr., all other members of the Board of Directors
are independent.
Director Orientation and Continuing Education
Each year, the board and each of its committees evaluate their effectiveness. The Board views
self-evaluation as an ongoing process designed to achieve high levels of Board and committee
performance.
All new directors participate in an orientation program their first year as a director. As part of
the orientation, each director receives a copy of the Directors Policy Manual which includes a copy
of the Companys by-laws and charter. Orientation also includes presentations by Senior Management
to familiarize new directors with our strategic plans, significant financial, accounting and risk
management issues, compliance programs, conflict policies. Each director is required to review and
sign, on an annual basis, the Companys Code of Ethics and Insider Trading Policy. A new director
will attend a meeting with the CEO and CFO to be briefed on Board reports, significant financial,
accounting and risk management issues and current exploration and development projects.
All directors receive annual directors education in subjects relevant to the duties of a director,
including the study of corporate governance best practices and ethics. The Board requires directors
to participate in continuing education programs and reimburses directors for the expenses of such
participation. All directors have successfully completed the Directors Certification Program
sponsored by the California Bankers Association.
Board Attendance and Annual Meeting Policy
Directors are expected to attend all Board meetings and meetings of committees on which they serve,
and each annual stockholders meeting. Directors are expected to devote an adequate amount of time
and effort to discharge properly their responsibilities. Information and data are important to the
Boards understanding of the business and is distributed to the directors sufficiently in advance
of the meeting to permit their review.
The Board of Directors held 12 meetings during 2007. All directors attended at least 92% of the
aggregate number of meetings of the Board of Directors and of the committees on which such director
serves.
Chairman of the Board
The Board will appoint the Chairman of the Board. The Chairman will chair all regular sessions of
the Board and (with input from the CEO to the extent not inappropriate) set the agenda for Board
meetings, subject to the right of each board member to suggest the inclusion of item(s) on the
agenda.
Directors Access to Officers, Employees and Independent Advisors
Directors are encouraged to keep themselves informed with regard to the Company and its operations.
Directors have full and free access to Company officers and employees. Any meetings or contacts
that a director wishes to initiate may be arranged through the CEO, CFO or directly by the
director. Directors shall use their judgment to ensure that any such contact is not disruptive to
the Companys business operations and shall, to the extent that it is not appropriate, copy the CEO
on any written communications between a director and a Company officer or employee.
Page 9
Certain Relationships and transactions with Directors; Compensation Committee Interlocks and
Insider Participation
Almost all of our directors and some of their respective family members and or affiliated entities
had certain relationships and/or transactions with the Company in 2007, as described below.
Family Relationships
No current directors have family members who are employed by the Company or a subsidiary.
Lending and Other Ordinary Business Transactions
During 2007, almost all of our directors as well as some of their respective family members and/or
affiliated entities, engaged in loan transactions and/or had other extensions of credit in the
ordinary course of business with our banking and mortgage subsidiaries. All of these transactions
were on substantially the same terms, including interest rates, collateral and repayment and other
terms, as those available at the time for similar transactions with unrelated parties. None of
these loans or credit transactions involves more than the normal risk of collectibility or presents
other unfavorable features.
Related Party Transaction and Approval of Related Party Transactions
Kenneth R. Gifford, Jr., is a Director, President and Chief Executive Officer of Gifford
Construction, Inc. Gifford Construction Inc. was the selected bidder to construct the Companys
Technology and Support Center (TASC) on properties owned by the Company adjacent to the Churn
Creek Branch facility. The process for selection included invitation to qualified vendors to submit
sealed bids with the selection based upon lowest overall cost. The project was completed April 1,
2007. In addition, Gifford Construction Inc. was hired to construct the tenant improvements on the
West side office opening in January 2008.
Policy and Procedures on Related Person Transaction
The Company adopted its code of ethics to promote a tone at the top of highest ethical standards
within the Company. The code of ethics requires all Company personnel to make immediate disclosure
of situations that might create a conflict of interest, or the perception of a conflict of
interest, which includes transactions involving entities with which such personnel are associated.
The Board of Directors recognizes that related party transactions present a heightened risk of
conflicts of interest and/or improper valuation (or the perception thereof). Such transactions,
after full disclosure of the material terms to the Board, must be approved by the members of the
Board who are not parties to the specific transaction determine are just and reasonable to the
Company at the time of such approval, with those members of the Board (if any) who have an interest
in the transaction abstaining. Such procedures are consistent with the terms of California
corporate law but the Company does not presently have a written policy evidencing such terms.
Compensation Committee Interlocks and Insider Participation
During the fiscal year 2007, Harry L. Grashoff, Jr., retired President and CEO of the Company,
participated in deliberations of the Corporations Executive Compensation Committee of the Board of
Directors concerning executive officer compensation. Mr. Grashoff retired as President and CEO of
the Company in July 1997. No other member of the Executive Compensation Committee of the Board of
Directors serves or has served as a bank officer or employee of Bank of Commerce Holdings or its
subsidiaries.
Page 10
Information about Directors and Executive Officers
Committees of the Board of Directors
The Board of Directors has established six standing committees, each of which is identified below.
Information about each committee of the Board, its members, purpose, and the number of meetings
held in 2007 follows.
The Board of Directors has a standing Audit Committee, Loan Committee, Executive Committee,
Asset/Liability Committee, Executive Compensation Committee, and Nominating and Corporate
Governance Committee. All Directors participate in the Long-Range planning of the Company. The
Executive Compensation Committee and Audit Committee also meet the standards of independence
prescribed by NASDAQ National Market and applicable SEC regulations.
|
|
|
|
|
Audit and Qualified Legal
Compliance Committee |
|
|
|
|
|
|
|
|
|
Members:
|
|
David H. Scott, Chairman
|
|
Harry L. Grashoff, Jr. |
|
|
Russell L. Duclos
|
|
Lyle L. Tullis |
|
|
Jon Halfhide |
|
|
|
|
|
|
|
Purpose: |
|
To assist the Board of Directors in fulfilling its responsibilities to oversee
management activities related to accounting and financial reporting policies,
internal controls, auditing practices, and legal and regulatory compliance; to
review and discuss the integrity of the Companys financial statements and the
adequacy and reliability of disclosures to stockholders; to review the
qualifications and independence of the outside accountants and the performance
of internal and outside accountants, to prepare the Committee report included
in the Companys annual proxy statement in accordance with SEC rules; to act as
the qualified legal compliance committee of the Company in accordance with its
charter; and to perform the audit committee and fiduciary audit committee
functions on behalf of the Company in accordance with federal banking
regulations. Independent directors meet in an executive session of the Audit
Committee each meeting. |
|
|
|
|
|
Number of meetings in 2007:
|
|
Five |
|
|
|
|
|
|
|
Nominating and Corporate
Governance Committee |
|
|
|
|
|
|
|
|
|
Members:
|
|
Lyle. L. Tullis, Chairman
|
|
John C. Fitzpatrick |
|
|
Harry L. Grashoff, Jr.
|
|
Welton L. Carrel |
|
|
Orin N. Bennett |
|
|
|
|
|
|
|
Purpose: |
|
To assist the Board of Directors by identifying individuals qualified to become
Board members and to recommend to the Board nominees for director and director
nominees for each committee; to recommend to the Board the corporate governance
guidelines of the Company and to oversee an annual review of the Boards
performance; to recommend to the Board a determination of each non-management
directors independence under applicable rules and guidelines, and to review
from time to time directors compensation and recommend any changes for approval
by the Board. |
|
|
|
|
|
Number of meetings in 2007
|
|
Five |
|
|
Page 11
|
|
|
|
|
Executive Committee |
|
|
|
|
|
|
|
|
|
Members:
|
|
Kenneth R. Gifford, Jr., Chairman
|
|
Patrick J. Moty |
|
|
John C. Fitzpatrick
|
|
Orin N. Bennett |
|
|
Harry. L. Grashoff, Jr. |
|
|
|
|
|
|
|
Purpose: |
|
To review all current and pending strategies for achieving financial
objectives; to review financial performance results; and to oversee the
administration and effectiveness of financial risk management policies |
|
|
|
|
|
Number of meetings in 2007:
|
|
Eleven |
|
|
|
|
|
|
|
Executive Compensation
Committee |
|
|
|
|
|
|
|
|
|
Members:
|
|
John C. Fitzpatrick, Chairman
|
|
Harry L. Grashoff, Jr. |
|
|
Welton L. Carrel
|
|
Jon Halfhide |
|
|
Orin N. Bennett |
|
|
|
|
|
|
|
Purpose: |
|
To discharge the Board of Directors responsibilities relating to compensation
of the Companys executive officers; to review the Compensation Discussion and
Analysis and to recommend inclusion of such disclosure in the Companys proxy
statement; to conduct the annual chief executive officer performance evaluation
process; to evaluate and approve compensation plans, policies, and programs of
the Company applicable to Executive Officers; and to oversee succession
planning. |
|
|
|
|
|
Number of meetings in 2007
|
|
Five |
|
|
|
|
|
|
|
Loan Committee |
|
|
|
|
|
|
|
|
|
Members:
|
|
Harry L. Grashoff, Jr., Chairman
|
|
Kenneth R. Gifford, Jr. |
|
|
Russell L. Duclos
|
|
Patrick J. Moty |
|
|
David H. Scott |
|
|
|
|
|
|
|
Purpose: |
|
To review the quality of the Companys loan portfolio and the trends affecting
the loan portfolio; to oversee the effectiveness and administration of
loan-related policies; and to review the adequacy of the allowance for loan and
lease losses. The loan committee has the full Bank delegated authority for
approval of loans. |
|
|
|
|
|
Number of meetings in 2007
|
|
Forty six |
|
|
|
|
|
|
|
Asset Liability Committee |
|
|
|
|
|
|
|
|
|
Members:
|
|
Russell L. Duclos, Chairman
|
|
Harry L. Grashoff, Jr. |
|
|
David H. Scott
|
|
Patrick J. Moty |
|
|
Linda J. Miles
|
|
Kenneth R. Gifford, Jr. |
|
|
|
|
|
Purpose: |
|
To review the quality of the Companys investment portfolio and current and
future interest rate risks and trends; to produce and Interest Rate View; to
oversee the effectiveness and administration of investment and interest rate
risk related policies; to review and monitor exposure to interest rate risk. |
|
|
|
|
|
Number of meetings in 2007
|
|
Four |
|
|
Page 12
Identifying and Evaluating Nominees for Director
The Nominating and Corporate Governance Committee of the Board of Directors has been delegated the
responsibility to identify, evaluate, and recommend for nomination candidates for election as new
directors. Each of the members of the Committee is an independent director as determined by the
Board under the rules of the NASDAQ global stock exchange.
The goal of the Committees nominating process is to assist the Company in attracting competent
individuals with the requisite management, financial and other expertise who will act as directors
in the best interests of the company and all its stockholders. The Committee consults with other
Board members, the Companys Chief Executive Officer, and other Company personnel in this process.
The Committee will consider an individual recommended by a stockholder for nomination as a new
director provided the stockholder making the recommendation follows the procedures for submitting a
proposed nominees name and the required information described below.
Director Qualifications and the Nomination Process
The Board has approved certain minimum standards for candidates for service as a first-time
director and the Committee has developed a process for identifying and evaluating first-time
nominees in light of these standards and other such factors as the Committee deems appropriate.
These standards, and the Committees evaluation process, apply to all first-time nominees for
directors, including those nominees recommended by stockholders. This process is based on the
Committees familiarity with the composition of the current Board, its awareness of anticipated
openings, and its assessments of desirable talents or expertise. The Committee regularly reviews
the composition of the Board in light of its understanding of the backgrounds, industry, and
professional experience, and the various communities, both geographic and demographic, represented
by the current members. It also monitors the expected service dates of Board members, any planned
retirement dates, and other anticipated events that may affect a directors continued ability to
serve. The Committee periodically reviews Board self-evaluations and information with respect to
the business and professional expertise represented by current directors in order to identify any
specific skills desirable for future Board members.
The Board has approved the following minimum qualifications for first-time nominees for director,
including nominees recommended by stockholders, for election to the Companys Board: (1) a
demonstrated breadth and depth of management and/or leadership experience, preferably in a senior
leadership role (i.e. chief executive officer, managing partner, president, chief financial
officer); (2) financial literacy or other professional or business experience relevant to an
understanding of the Company and its business; (3) a demonstrated ability to think and act
independently as well as the ability to work constructively in a group environment. The Committee
will determine, in its sole discretion, whether a nominee meets these minimum qualifications.
The Committee is responsible for managing the new director nomination process and may use a variety
of sources. The Committee then commences an inquiry to obtain sufficient information on the
background of a potential new director-nominee. Included in this inquiry is an initial review of
the candidate with respect to the following three factors: whether the individual meets the minimum
qualifications for first-time director nominees approved by the Board; whether the individual would
be considered independent under the NASDAQ rules and Companys standard of independence; and
whether the individual would meet any additional requirements imposed by law or regulation on the
members of the Audit and Executive Compensation Committees of the Board.
Following the initial review, the Committee arranges an introductory meeting with the candidate and
the Companys Chief Executive Office, Chairman of the Board of Directors, and in some cases with
additional directors, to determine the candidates interest in serving on the Board.
Page 13
The Committee, together with several members of the Board and the Chief Executive Officer then
conducts a comprehensive interview with the candidate. The individual will also be asked to provide
the information required to be disclosed in the Companys proxy statement.
Assuming a satisfactory conclusion to the process outlined above, the Committee then presents the
candidates name to the Board of Directors for election as a director.
Director Nominations by Stockholders
A stockholder who wishes to submit an individuals name for consideration by the Committee for
nomination as a director of the Company must provide (1) the stockholders name and address and the
number of shares of the Companys common stock beneficially owned by the stockholder; (2) the name
of the proposed nominee and the number of shares of the Companys common stock beneficially owned
by the nominee; (3) sufficient information about the nominees experience and qualifications for
the Committee to make a determination whether the individual would meet the minimum qualifications
for directors; and (4) such individuals written consent to serve as a director of the Company, if
elected. The Committee has the right to request, and the stockholder will be required to provide,
such additional information with respect to the stockholder nominee as the Committee may deem
appropriate or desirable to evaluate the proposed nominee in accordance with the nomination process
described above, including the information about the proposed nominee that is required to be
disclosed by the Company in its proxy statement under Regulation 14A of the Securities Exchange Act
of 1934, as amended.
Communications with the Board of Directors
The Board has established a process for stockholders and other interested parties to communicate
with Independent members of the Board or a specific committee. Parties may send a letter to Bank of
Commerce Holdings, Attention: Corporate Secretary, 1901 Churn Creek Road, Redding, California
96002.
Code of Ethics
The Board has adopted a Code of Ethics that applies to all of our directors, officers and staff
including our principal executive officer and principal financial officer. The Code of Ethics
embodies our commitment to high standards of ethical and professional conduct. All directors,
officers and staff are required to annually certify that they have read and complied with the Code
of Ethics. The Code of Ethics consists of basic standards of business practice as well as
professional and personal conduct. A copy of the Code of Ethics is available on our website;
www.bankofcommerceholdings.com.
How we compensate Directors
Annual Compensation
Compensation paid to non-employee directors consists of cash (in the form of a monthly retainer and
meeting fees) and equity (in the form of stock option grants) and participation in the Directors
Deferred Compensation Plan. The Executive Compensation Committee is responsible for all matters
related to directors compensation in connection with reviewing and establishing or recommending to
the Board non-employee director compensation. Generally, the Executive Compensation Committee will
review the amount of director compensation at least annually. For purposes of establishing director
compensation for 2007, the Executive Compensation Committee evaluated directors compensation as
compared to detailed public company information provided by Equilar®, a leading marketer for
benchmarking executive compensation and a trusted data provider to NASDAQ. As a result of the
benchmarking our director compensation fell in the 53rd percentile.
Page 14
A Director who is an officer/employee of the Company or of a subsidiary is not compensated for his
or her membership on the Board.
Monthly Retainer and Meeting Fees
Each independent director of the Company receives a $500 monthly retainer. Independent Directors
are paid $800 for each Board of Directors meeting attended and $250 for each committee meeting
attended. Committee chairman are paid an additional $50 per meeting. The Chairman of the Board is
paid an additional $750 per month and the Chairman of the Audit Committee is paid an additional
$375 per month.
Equity Compensation
Independent directors are also eligible to participate in the 1998 Stock Option Plan, as determined
by the Executive Compensation Committee. A non-employee director may receive a stock option at a
discounted exercise price equal to 85% of the closing price per share of the common stock as of the
day of trading at the close the date of the meeting when the option is granted. This plan expires
in May 2008.
Summary Director Compensation Table
The following is a summary of the compensation earned by our Directors during 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Non- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualified |
|
|
|
|
|
|
Fees |
|
|
|
|
|
Stock |
|
Non-Equity |
|
Deferred |
|
|
|
|
|
|
earned or |
|
Stock |
|
Option |
|
Incentive |
|
Compensation |
|
All Other |
|
|
|
|
paid in |
|
Awards |
|
Awards |
|
Compensation |
|
Earnings |
|
Compensation |
|
Total |
Director |
|
cash ($) |
|
($) |
|
($)(1) |
|
($) |
|
($) (2) |
|
($) |
|
($) |
|
Gary Burks |
|
$ |
8,600 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
8,600 |
|
Orin N. Bennett |
|
$ |
18,750 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
2,170 |
|
|
$ |
0 |
|
|
$ |
20,920 |
|
Welton L. Carrel |
|
$ |
17,800 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
20,413 |
|
|
$ |
0 |
|
|
$ |
38,213 |
|
Russell L. Duclos |
|
$ |
27,000 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
20,379 |
|
|
$ |
0 |
|
|
$ |
47,379 |
|
John C. Fitzpatrick |
|
$ |
19,400 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
19,400 |
|
Kenneth R. Gifford, Jr. |
|
$ |
35,700 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
27,525 |
|
|
$ |
0 |
|
|
$ |
63,225 |
|
Harry L. Grashoff, Jr. |
|
$ |
38,550 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
45,500 |
|
|
$ |
0 |
|
|
$ |
84,050 |
|
Jon Halfhide |
|
$ |
16,500 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
619 |
|
|
$ |
0 |
|
|
$ |
17,119 |
|
David H. Scott |
|
$ |
31,800 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
15,895 |
|
|
$ |
0 |
|
|
$ |
47,695 |
|
Lyle L. Tullis |
|
$ |
21,300 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
8,735 |
|
|
$ |
0 |
|
|
$ |
30,035 |
|
|
|
|
|
|
1) |
|
The value of the stock option award is the amount recognized for financial statement
reporting purposes. |
|
2) |
|
Directors deferred compensation earns interest at a rate of 10% per annum. Long term
directors have had the opportunity to defer fee income as of January 1, 1993. Item (2)
represents the interest paid on such balances. Differences in earnings are based upon the
balances in the deferred accounts. |
The form and amount of compensation paid to independent non-management directors is reviewed from
time to time by the Executive Compensation Committee.
Page 15
Directors Deferred Compensation Plan
The Directors Deferred Compensation Plan, adopted by the Board of Directors effective January 1,
1993 is a non-qualified director benefit plan in which the eligible director voluntarily elects to
defer some or all of his or her current fees in exchange for the Companys promise to pay a
deferred benefit. The deferred fees are credited with interest under the plan and the accrued
liability is paid to the director at retirement. The current interest rate on the plan is ten
percent.
As a non-qualified plan, the plan is only available to independent directors without regard to
nondiscrimination requirements of qualified plans. The account is segregated from other assets
owned by the Bank, only by way of its identification on the books of the Bank as a liability of the
Bank to the Director. The account is subject to claims of general creditors of the Bank and the
account shall be a general unsecured creditor of the Bank.
No compensation so deferred shall be payable to a director until the death, disability,
resignation, retirement or removal from office of such director, whereupon all such compensation,
together with interest thereon shall be provided to such director, or his beneficiary within thirty
(30) days from the date of death, disability or resignation. If the director shall designate an
optional installment payment method, in which event the first installment shall be paid after six
months of his or her normal retirement date.
Upon the death of a director, while serving in such capacity, distribution of compensation deferred
together with interest shall be made in one lump sum to his or her designated beneficiary. Upon the
death of a director who had previously retired and had elected an installment method of
distribution, all sums remaining undistributed shall be paid in one lump sum to his or her
designated beneficiary.
Deferred compensation by reason of the resignation or retirement, may at the option of the
director, be payable in approximately equal monthly installments over a period not to exceed
fifteen (15) years, provided however, that on any such installment method of distribution, interest
shall continue to be credited on the undistributed sums.
As of December 31, 2007 the Companys accrued obligations under the Directors Deferred Compensation
Plan were $2,310,824.
Directors and Officers liability insurance and Indemnification matters
The Companys bylaws provide for indemnification of the Companys directors, officers, employees
and other agents of the Company to the extent and under the circumstances permitted by the
California General Corporation Law. The Companys bylaws also provide that the Company shall have
the power to purchase and maintain insurance covering its directors, officers and employees against
any liability asserted against any of them and incurred by any of them, whether or not the Company
would have the power to indemnify them against such liability under the provisions of applicable
law or the provisions of the Companys bylaws.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers or persons controlling the Company pursuant to provisions in the
Companys bylaws, the Company understands that it is in a position of the Securities and Exchange
Commission (the SEC), that such indemnification is against public policy as expressed in the
Securities Act of 1933, and is therefore unenforceable.
Page 16
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the Exchange Act), requires the
Companys directors and executive officers and persons who own more than ten percent of a
registered class of the Companys equity securities to file with the SEC initial reports of
ownership and reports of changes of ownership of Common Stock and other equity securities of the
Company. To the Companys knowledge, based solely upon a review of such reports and written
representations, the Company believes that all reports required by Section 16(a) of the Exchange
Act to be filed by its executive officers and directors during the last fiscal year were filed in a
timely manner.
Page 17
Compensation Discussion and Analysis
Objectives of Executive Compensation Programs
The Companys compensation programs and policies are designed to enhance shareholder value by
aligning the financial interests of the executive officers of the Company with those of the
Companys shareholders. The compensation program has two goals: To help the Company compete with
other financial services organizations by attracting and retaining highly qualified individuals as
executive officers; and to pay executive officers based upon their contribution to the Companys
performance.
The Executive Compensation Committee meets annually to review the salaries of executive officers,
to reestablish the base salary, to propose adjustments to the incentive compensation portion and to
establish a discretionary bonus plan if all performance objectives are met. The long-term
compensation components (equity incentives and post-termination benefits) are reviewed in the
context of other compensation provided to executives; however, adjustments to long-term
compensation are not necessarily made annually.
Equity compensation and post-termination benefits are intended to provide retention incentives to
executives and are not specifically intended to reward current employment. Salary, bonus and
perquisite compensation are related to, and affected by, current performance.
The Companys philosophy for providing equity compensation in the form of stock options is based on
the principles of encouraging key employees to remain with the Company and to encourage ownership
thereby providing them with a long-term interest in the Companys overall performance. The Company
intends to retain the flexibility necessary to provide total cash compensation in line with
competitors practice, the Companys compensation philosophy and the Companys best interests,
including compensation that may not be deductible.
Commitment to Quality Governance
The Executive Compensation Committee oversees the Companys executive compensation programs. The
Committee has adopted the following procedures intended to ensure quality governance of the
Companys pay for performance.
|
|
Only independent members of the Board may serve on the Executive Compensation Committee. |
|
|
|
The committee meets on a regular basis as needed throughout the year. Generally the
committee will review year-to-date financial performance versus budget; year-to-date and multi
year performance versus competitor group performance (Uniform Bank Performance Report);
executive officer stock ownership levels; each executive officers target total compensation
for the year; and other topics as appropriate. |
|
|
|
At least once a year, the committee reviews each executive officers total compensation
package, including base salary, cash and stock incentive awards, qualified and non-qualified
retirement and deferred compensation benefit packages. |
|
|
|
The committee utilizes independent compensation reports to assist in the analysis of
compensation packages. |
|
|
|
At least once a year, the committee reviews and reassesses its charter and recommends any
proposed changes to the Board of Directors for approval. The committee also conducts an annual
review of its own performance. |
|
|
|
The committee reports on its meetings to the full Board. The independent members of the
Board, after a review of the Companys performance, approve each year the total compensation
awards for the executive officers. |
Page 18
Measuring Performance
|
|
Competence and effective execution by executive management is critical to achieving and
maintaining consistent upper-quartile annual and long term performance. |
|
|
|
In order to retain and when necessary, attract talented management with proven skills and
experience, our Company must offer a compensation program that compares favorably with Peers. |
|
|
|
The Board holds the CEO accountable for the Companys well-being, and for our business and
community reputation. |
|
|
|
The committee reviews the extent to which the Companys internal goals, both short and long
term, have been achieved. |
|
|
|
In reviewing achievement of internal goals, the committee considers the quality of the
Companys earnings, quality of the investment and loan portfolios, core deposit growth and
key performing ratios. |
|
|
|
The committee reviews objective data concerning the Companys financial performance, with a
focus on top line revenue, net income, quality within the asset portfolios, operating earnings
per share, shareholder value and total shareholder return. |
Compensation Review
In 2007, the Compensation Committee initiated a review of the Companys compensation philosophy to
ensure that it continued to meet the overall objective of enhancement of shareholder interests. The
Compensation Committee evaluated a number of compensation practices of the Companys competitors
and analyzed the compensation and benefit practices used within the Company for executive officers.
The Compensation Committee evaluated executive officer total compensation as compared to detailed
public company information provided by Equilar®, a leading marketer for benchmarking executive
compensation and a trusted data provider to NASDAQ. Members of the Compensation Committee reviewed
data to determine appropriate benchmarks for the Companys executive officers, without
recommendations from executives or outside parties.
For the purposes of 2007 compensation, the Executive Compensation Committee used compensation and
financial performance data from a group of 18 publicly traded financial service companies of the
same size and top line revenues. These companies, referred to as our Peer Group make up the
compensation benchmarks considered for 2007. The Companys Peer Group consisted of the following
companies:
1st Centennial Bancorp
American River Bankshares
Americanwest Bancorp
BWC Financial Corporation
Central Valley Community Bankshares
First Northern Community
Heritage Oaks Bancorp
North Bay Bancorp
North Valley Bancorp
Northrim Bancorp
Plumas Bancorp
Premier West Bancorp
Sierra Bancorp
TriCo Bancshares
Western Sierra Bancorp
Page 19
Compensation Philosophy
The Company seeks to attract, retain and motivate executives who can thrive in a challenging and
dynamic environment by providing compensation that is highly competitive for top management and
with substantial performance-based components. It is the Companys practice to structure cash and
equity-based incentives in a manner that rewards employees consistent with shareholder interests.
The Compensation Committee believes that it is important to retain the best possible executives in
the industry, and so, compensation opportunities for the top executive officers assuming strong
performance are targeted at the highest quartile. Incentive opportunities for top executives are
largely tied to the performance of the Company, while incentives for other employees include
emphasis on activities associated within various business units.
Components of Executive Officer Compensation
The Companys compensation program consists of five components, namely, (i) base salary; (ii) cash
incentives; (iii) long-term compensation, generally in the form of equity incentives; (iv)
participation in the same benefit plans provided to all staff members, including defined
contribution (401(k)), health, life and other benefit plans; (v) perquisites; and (vi)
post-employment pay and benefits (cash balance retirement plans).
These components are intended to work together to compensate the executive officer fairly for
services, reward the executive officer based upon the Companys overall performance and, depending
on the position, their own performance during the year. In assessing the executive officers total
rewards, the Compensation Committee reviews each component of an executives compensation and
considers and evaluates pay mix, the competitive market, the value of total pay, benefits and
perquisites.
Base Salary:
Base salary is generally established by an individuals performance, potential, responsibilities,
promotions, other compensation and at or near the median of peer group compensation levels. The
Compensation Committee considers other compensation earned as well as the terms of an employment
agreement, if any, with the executive. All of the factors described herein are considered on a
subjective basis in the aggregate, and not of the factors is accorded a specific weight.
The base salary for the Chief Executive Officer for 2007 was determined by (i) examining the
Companys performance against its preset goals, (ii) comparing the Companys performance against
companies determined by the Compensation Committee to be competitors, (iii) evaluating the
effectiveness and performance of the Chief Executive Officer and (iv) comparing the base salary of
the Chief Executive Officer to that of other chief executive officers in similarly situated
companies. The total compensation received by the Companys Chief Executive Officer is detailed in
the Summary Compensation Table.
Cash Incentive Compensation:
The Companys Incentive Profit Sharing Plan (the Profit Sharing Plan) allow the Company to
provide cash incentives to executive officers based on the Companys overall financial performance,
and, in some cases, individual performance and personal goals. The Profit Sharing Plan provides
that incentives are computed after a 20% return on the prior years equity, before income taxes,
less any gain and plus any loss on investment securities sold. Cash incentives are paid quarterly
as to 70% of the incentive earned for the previous calendar quarter. The remaining 30% holdback is
paid upon verification and completion of the Companys audited annual financial statements.
Page 20
The Companys President and Chief Executive Officer and the Companys Executive Vice President and
Chief Financial Officer has the opportunity to earn a percentage of the profits as defined above,
upon meeting specific pre-defined financial goals and limited by absolute dollar caps. All
employees participate in the cash incentive compensation. The percentage is recalculated each year
based upon the budgeted financial targets.
Sarbanes Oxley provides that if the Company is required to restate its financial results due to
material noncompliance with any financial reporting requirement under the securities laws resulting
from misconduct, then the Chief Executive Officer and Chief Financial Officer must reimburse the
company for any bonus or other incentive-based or equity-based compensation received and any
profits from the sale of company securities during the year following the restated financial
statements.
Long-Term Equity Compensation:
The Company believes that long-term compensation for our executive officers should be in equity
awards tied to our common stock, so that management acquires an ownership interest in the Company
that will align their interest with our stockholders.
Equity compensation consists of stock options. The Company maintains an equity compensation plan
which has been approved by the Companys shareholders. The number of shares granted to an employee
is based on several factors including performance and the value placed on expected future employee
performance, retention and, in some cases, internal or external pay equity. The Companys executive
officers realize value only when the Companys stock price increases and stockholders are also
rewarded.
In general, stock option grants are determined based on (i) prior award levels, (ii) total awards
received to date by the individual executives, (iii) the total stock award to be made and the
executives percentage participation in that award, (iv) the executives direct ownership of
Company Common Stock, (v) the number of options vested and non-vested and (vi) the options
outstanding as a percentage of total shares outstanding.
The 2008 Stock Option Plan is intended to permit the Company to reward employees for the strong
performance of the Company in keeping with shareholder interests. As shareholders have been
rewarded over the years for their investment in the Company, the Committee believes that grants of
equity to employees will continue to enhance the Companys ability to reward, motivate and attract
high performing employees.
Perquisites:
The Compensation Committee believes that offering certain perquisites helps in the operation of the
business as well as assists the Company to recruit and retain key executives. The Companys
executive officers may participate in the same benefit programs available to all employees. This
includes health, life and disability insurance, participation in non-qualified 401(k) plans, and in
some cases, automobiles and country club memberships to our executive management.
Post-Employment Compensation:
The Company maintains an Executive Salary Continuation Plan (SCP) and a change in control severance
provision in employment agreements, providing for certain payments following the termination of
employment for five executive officers. The payments are fixed by contract and do not depend on
years of credited service. The Company makes contributions to segregated accounts for the benefit
of the plan beneficiaries. Such accounts earn interest at ten percent.
Page 21
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers
The Board of Directors of Bank of Commerce Holdings (the Company) terminated the Employment
Agreement (the Agreement) with Michael C. Mayer as president and CEO of the Company effective
August 28, 2007. Mr. Mayer no longer serves as President and CEO of the Company, and has resigned
as a director of the Company. The employment agreement was entered into as of December 31, 2006
and had a four year term. The Agreement acknowledges that the term of the Agreement is four years
but subject to prior termination as herein provided. Section 7 of the Agreement deals with the
employers right to terminate the Agreement prior to the end of the term. The relevant portions of
Section 7 are subsections (b) and (d). Section 7 then provides for the benefits to be received by
the employee upon termination. Under the terms of Section 7(b) the Executive will be paid six
months total compensation package calculated as of the date of the Executives termination, plus any
accrued profit sharing and vacation accrued to, but not taken as of the date of the termination.
The calculation of the total compensation package as of the date of termination was $325,280.00.
On August 28, 2007, the Board of Directors of the Company elected Patrick J. Moty to the position
of President and Chief Executive Officer of the Company and its subsidiaries. Mr. Moty was born in
1957. Prior to his election as President and Chief Executive Officer, he served as Executive Vice
President & Chief Credit Officer for the Company since December 2005. Prior to that, he served as
the Companys Senior Vice President and Chief Credit Officer since 2000; Senior Vice President and
Senior Loan Officer since 1998; Vice President and Senior Loan Officer since 1993; Vice President
and Loan Officer since 1988; and Assistant Vice President and Loan Officer since 1987. Mr. Moty
joined the company in 1985 as a Loan Officer following four years in lending at a large regional
financial institution.
As of December 31, 2007, John C. Fitzpatrick has retired from the Board of Directors. On January
15, 2008, the Board elected Jon Halfhide to preside as Chairman of the Executive Compensation
Committee.
Page 22
Executive Compensation Committee Report
The Executive Compensation Committee is appointed by the Board to discharge the Boards
responsibilities relating to compensation for the Companys directors and officers. The Committee
has overall responsibility for approving and evaluating the director and officer compensation
plans, policies and programs of the Company.
The Committee has the sole authority to retain and terminate any legal counsel or compensation or
other consultant to be used to assist in the evaluation of directors or executive compensation and
has sole authority to approve the consultants fees and other retention terms.
We have reviewed and discussed the foregoing Compensation Discussion and Analysis with management.
Based on our review and discussion with management, we have recommended to the Board of Directors
that the Compensation Discussion and Analysis be included in this proxy statement and in the
Companys Annual Report on Form 10-K for the year ended December 31, 2007.
March 7, 2008,
Respectfully submitted by the members of the Executive Compensation Committee,
John C. Fitzpatrick, Chairman of the Executive Compensation Committee
Welton L. Carrel
Harry L. Grashoff, Jr.
Jon Halfhide, CPA
Page 23
Executive Officers and Senior Management
Set forth below are the names and most recent biographies of Bank of Commerce Holdings executive
officers and senior leadership team. Only Mr. Moty, Mrs. Miles, Mrs. Blais, Mr. Eslick and Mr.
ONeil are Named Officers for purposes of the Securities Exchange Act and rules. Information
relating to other Company personnel in this proxy statement is provided solely for the information
of shareholders.
|
|
|
Name, Age and Principal Occupation |
|
Business Experience |
|
|
|
Patrick J. Moty, born in 1957
President & Chief Executive Officer
|
|
President and Chief
Executive Officer and a
director of Redding Bank
of Commerce (the Bank)
and Bank of Commerce
Mortgage since September
2007. Executive Vice
President and Chief
Credit Officer since
December 2005. Senior
Vice President and Chief
Credit Officer since
2000. Senior Vice
President and Senior
Loan Officer since
1998. Vice President and
Senior Loan Officer
since 1993. Vice
President and Loan
Officer since 1988.
Assistant Vice President
and Loan Officer since
1987. Mr. Moty joined
the company in 1985 as a
Loan Officer following
four years in lending at
a large Regional
financial institution. |
|
|
|
|
|
|
Linda J. Miles, born in 1953
Executive Vice President & Chief Financial Officer
|
|
Executive Vice President
and Chief Financial
Officer of Bank of
Commerce Holdings,
Redding Bank of Commerce
and Bank of Commerce
Mortgage since January
1996. From October 1989
to December 1995, she
served as Senior Vice
President and Chief
Financial Officer of the
Bank. Before joining the
Bank, Ms. Miles was
Senior Vice President
and Chief Financial
Officer at another
California independent
financial institution. |
|
|
|
Theodore Cumming, born in 1957
Senior Vice President & Chief Credit Officer
|
|
Senior Vice President &
Chief Credit Officer
since October 2007.
Senior Vice President
and Lending Group
Manager of Redding Bank
of Commerce Placer
Division since 2001.
Prior to joining the
company, Vice President
of Commercial Lending
for a large Regional
Bank. |
Page 24
|
|
|
Name, Age and Principal Occupation |
|
Business Experience |
Randall S. Eslick, born in 1957
Regional President Roseville Division
|
|
Regional President
Roseville Bank of
Commerce since December
2005. Senior Vice
President and Regional
Manager of the Roseville
Bank of Commerce since
2002. Prior to joining
the company, Vice
President and Commercial
Loan Officer at another
California independent
financial institution.
Joined the Company in
March 2001 as Senior
Vice President and
Commercial Loan Officer. |
|
|
|
Caryn A. Blais, born in 1951
Senior Vice President & Chief Information Officer
|
|
Senior Vice President
and Chief Information
Officer of Redding Bank
of Commerce since 1991.
Prior to joining the
Company she served as
Vice President Data
Processing at another
California independent
financial institution.
Ms. Blais has held
administrative positions
since 1986. |
|
|
|
Samuel Jimenez, C.P.A., born in 1964
Senior Vice President & Director of Risk
Management
|
|
Senior Vice President
and Director of Risk
Management of Redding
Bank of Commerce since
September 2003. Federal
Deposit Insurance
Examiner from 1992 -
2003. Certified Public
Accountant. |
|
|
|
Robert A. Matranga, born in 1953
Senior Vice President & Lending Group Manager
|
|
Senior Vice President
and Lending Group
Manager Redding Bank of
Commerce Churn Creek
division since 1997.
Vice President of
Commercial Lending at
the time of joining the
Bank. Prior to joining
the company, Vice
President of Commercial
Lending for another
California independent
financial institution. |
|
|
|
Robert J. ONeil, born in 1955
Senior Vice President & Regional Credit Manager-
Roseville Bank of Commerce
|
|
Senior Vice President
and Regional Credit
Manager Roseville Bank
of Commerce since 2002.
Vice President of
Commercial lending at
time of joining company.
1986 2002 as a Senior
executive with another
California independent
financial institution.
1975-1986 majoring in
lending at a large
Regional financial
institution. |
|
|
|
Debra A. Sylvester, born in 1958
Senior Vice President & Chief Administrative
Officer
|
|
Senior Vice President
since 1999. Appointed to
Chief Administrative
Officer during 2004. Has
held administrative
positions with the
Company since 1984. |
Page 25
Stock Price Performance Graph
The following graph compares the Companys cumulative total return to shareholders during the past
five years with that of the Standard & Poors 500 Composite Stock Index (the S&P) and the SNL
Securities $250-$500 million Bank Asset-Size Index (the SNL Securities Index). The stock price
performance shown on the following graph is not necessarily indicative of future performance of the
Companys Common Stock.
Five Year Performance Graph
Stock Performance Graph (1)
SNL Securities LC© 2006 |
(804) 977-1600 |
(1) Assumes $100 invested on December 31, 2002, in the Companys Common Stock, the NASDAQ, the S&P
500 and the SNL Securities Index. The model assumes reinvestment of dividends. Source: SNL
Securities (share prices for the Companys Common Stock was furnished to SNL Securities through the
NASDAQ).
Page 26
COMPENSATION TABLES AND INFORMATION
Summary Compensation Table
The following table sets forth certain summary information concerning compensation paid to the
Companys Chief Executive Officer, Chief Financial Officer, Senior Vice President and Regional
President, Senior Vice President and Regional Credit Manager, and the Chief Information Officer
(the Named Executive Officers) on December 31, 2007, and whose aggregate salary and bonus
exceeded $100,000 in fiscal 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan |
|
|
Option |
|
|
Non-Qualified |
|
|
All Other |
|
|
Total |
|
Name and Principal |
|
|
|
|
|
Salary |
|
|
Compensation |
|
|
Awards |
|
|
Deferred Earnings |
|
|
Compensation |
|
|
Compensation |
|
Position |
|
Year |
|
|
(1) ($) |
|
|
(2) ($) |
|
|
(3) ($) |
|
|
(4) ($) |
|
|
(5) ($) |
|
|
($) |
|
|
Patrick J. Moty |
|
|
2007 |
|
|
$ |
190,500 |
|
|
$ |
49,150 |
|
|
$ |
56,400 |
|
|
$ |
2,282 |
|
|
$ |
83,440 |
|
|
$ |
381,772 |
|
President & Chief |
|
|
2006 |
|
|
$ |
160,000 |
|
|
$ |
77,000 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
10,950 |
|
|
$ |
247,950 |
|
Executive Officer |
|
|
2005 |
|
|
$ |
127,200 |
|
|
$ |
69,500 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
3,240 |
|
|
$ |
199,940 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Linda J. Miles |
|
|
2007 |
|
|
$ |
199,200 |
|
|
$ |
56,498 |
|
|
$ |
28,200 |
|
|
$ |
41,514 |
|
|
$ |
52,030 |
|
|
$ |
377,442 |
|
EVP & Chief |
|
|
2006 |
|
|
$ |
195,000 |
|
|
$ |
60,000 |
|
|
$ |
0 |
|
|
$ |
31,157 |
|
|
$ |
77,544 |
|
|
$ |
363,701 |
|
Financial Officer |
|
|
2005 |
|
|
$ |
170,000 |
|
|
$ |
56,000 |
|
|
$ |
0 |
|
|
$ |
13,386 |
|
|
$ |
74,022 |
|
|
$ |
313,408 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Randall S. Eslick |
|
|
2007 |
|
|
$ |
160,000 |
|
|
$ |
44,110 |
|
|
$ |
0 |
|
|
$ |
1,304 |
|
|
$ |
9,720 |
|
|
$ |
215,134 |
|
Regional President |
|
|
2006 |
|
|
$ |
150,000 |
|
|
$ |
63,550 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
19,892 |
|
|
$ |
233,442 |
|
Roseville Bank of |
|
|
2005 |
|
|
$ |
128,160 |
|
|
$ |
57,500 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
12,490 |
|
|
$ |
198,150 |
|
Commerce |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert J. ONeil |
|
|
2007 |
|
|
$ |
144,600 |
|
|
$ |
38,250 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
9,720 |
|
|
$ |
194,570 |
|
Senior VP |
|
|
2006 |
|
|
$ |
140,000 |
|
|
$ |
55,500 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
12,500 |
|
|
$ |
208,000 |
|
Regional Credit |
|
|
2005 |
|
|
$ |
122,201 |
|
|
$ |
50,500 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
12,490 |
|
|
$ |
185,191 |
|
Manager |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Caryn A. Blais |
|
|
2007 |
|
|
$ |
133,450 |
|
|
$ |
37,500 |
|
|
$ |
0 |
|
|
$ |
2,654 |
|
|
$ |
37,456 |
|
|
$ |
211,060 |
|
Senior VP & |
|
|
2006 |
|
|
$ |
117,824 |
|
|
$ |
54,500 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
14,959 |
|
|
$ |
187,283 |
|
Chief Information |
|
|
2005 |
|
|
$ |
102,981 |
|
|
$ |
50,500 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
153,481 |
|
Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Base salaries include 401(K) contributions made by the named executive officers
of approximately $89,503 during 2007. |
|
(2) |
|
The Companys Incentive Profit Sharing Plan (the Profit Sharing Plan) provide
the opportunity to pay cash incentives to executive officers based on the Companys
overall financial performance, and, in some cases, individual performance and personal
goals. The Profit Sharing Plan provides that incentives are computed after a 20% return
on the prior years equity, before income taxes, less any gain and plus any loss on
investment securities sold. Cash incentives are paid quarterly as to 70% of the
incentive earned for the previous calendar quarter to the CEO and CFO, and semi-annually
to other executives. The remaining 30% holdback is paid upon verification and completion
of the Companys audited annual financial statements. This income item includes bonus
amounts in the year earned rather than in the year paid. |
|
(3) |
|
The value of the stock option award is the amount recognized for financial
statement reporting purposes. No options were granted during 2005, 2006. Two options
were granted during 2007. |
|
(4) |
|
The Company makes contributions to segregated accounts for the benefit of Salary
Continuation Plan beneficiaries. Such accounts earn annual interest at 10%. |
|
(5) |
|
Other Compensation consists of perquisites and contributions to the Salary
Continuation Plan. Perquisite expenses represent an automobile for business use or car
allowance, and membership expenses in connection with the use of a private club for
business purposes, particularly for the purpose of entertaining the Banks customers.
The officers may have derived some personal benefit from the use of such automobiles and
membership. |
Page 27
|
|
|
|
|
The Company, after reasonable inquiry, believes that the value of any personal benefit
not directly related to job performance which is derived from the personal use of such
automobile and membership does not exceed $10,000 per year in the aggregate for any single
executive officer. Perquisite amounts were (a) $4,750, $3,400 and $3,240 for Patrick J. Moty
in 2007, 2006 and 2005, respectively (b) $6,720 for Linda Miles in each year, (d) $9,720,
$12,500 and $12,500 for Randall Eslick in each of 2007, 2006 and 2005, respectively and
$9,720, $12,500 and $12,500 for Robert ONeill in each of 2007, 2006 and 2005, respectively.
The remaining balance represents contributions made in each year in connection with the
Salary Continuation Plan. |
GRANTS OF PLAN-BASED AWARDS TABLE
The following table summarizes the options granted during fiscal 2007 to the individuals identified
below.
Option Grants for 2007
The following table summarizes the options granted during fiscal 2007 to the individuals identified
below.
The Named Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential |
|
|
Potential |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realizable Value |
|
|
Realizable Value |
|
|
|
Number of |
|
|
Percentage |
|
|
|
|
|
|
|
|
|
|
at Assumed |
|
|
at Assumed |
|
|
|
Securities |
|
|
of Total |
|
|
|
|
|
|
|
|
|
|
Annual Rates of |
|
|
Annual Rates of |
|
|
|
Underlying |
|
|
Options |
|
|
|
|
|
|
|
|
|
|
Stock Price |
|
|
Stock Price |
|
|
|
Options |
|
|
Granted to |
|
|
Exercise |
|
|
|
|
|
|
Appreciation for |
|
|
Appreciation for |
|
|
|
Granted (#) |
|
|
Employees in |
|
|
Price |
|
|
Expiration |
|
|
Option Term |
|
|
Option Term |
|
Name |
|
(1) |
|
|
Fiscal Year |
|
|
($/Share)(2) |
|
|
Date (3) |
|
|
5%($) |
|
|
10%($) |
|
Patrick J. Moty |
|
|
20,000 |
|
|
|
61.5 |
% |
|
$ |
10.49 |
|
|
|
10/16/2017 |
|
|
$ |
10,400.00 |
|
|
$ |
21,000.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Linda J. Miles |
|
|
10,000 |
|
|
|
30.8 |
% |
|
$ |
10.49 |
|
|
|
10/16/2017 |
|
|
$ |
5,200.00 |
|
|
$ |
10,500.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The right to exercise these stock options vests on an annual basis
over a five-year period from the date of the grant. Under the terms of
the Companys stock plans, the committee designated by the Board of
Directors to administer such plans retains the discretion, subject to
certain limitations, to modify, extend or renew outstanding options
and to reprice outstanding options. Options may be re-priced by
canceling outstanding options and reissuing new options with an
exercise price equal to the fair market value on the date of reissue,
which may be lower than the original exercise price of such canceled
options. |
|
(2) |
|
The exercise price is equal to 100% of the fair market value on the
date of grant as determined by the Board of Directors. |
|
(3) |
|
The options have a term of ten years, subject to earlier termination
in certain events related to termination of employment. |
|
(4) |
|
The five- percent and ten percent assumed rates of appreciation are
suggested by the rules of the Securities and Exchange Commission and
do not represent the Companys estimate or projection of the future
price of the Common Stock. No assurance can be given that any of the
values reflected in the table will be achieved. |
Page 28
Option Exercises in 2007
The following tables set forth the number of shares of Bank of Commerce Holdings Common Stock
acquired by each of the named Executive Officers during fiscal year 2007, if any, the net value
realized upon exercise:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Vested during |
|
|
Options Exercised |
|
|
Value Realized |
|
Name |
|
2007 |
|
|
during 2007 |
|
|
($)(1)(2) |
|
|
Patrick J. Moty |
|
|
4,000 |
|
|
|
5,000 |
|
|
$ |
27,600 |
|
Linda J. Miles |
|
|
3,200 |
|
|
|
15,000 |
|
|
$ |
31,200 |
|
Randall S. Eslick |
|
|
0 |
|
|
|
0 |
|
|
$ |
0 |
|
Robert J. ONeil |
|
|
0 |
|
|
|
0 |
|
|
$ |
0 |
|
Caryn A. Blais |
|
|
0 |
|
|
|
2,500 |
|
|
$ |
5,200 |
|
|
|
|
|
(1) |
|
Based on the fair market value of the Companys Common Stock at December 31, 2007 of $8.75
per share less the applicable exercise price per share. The fair market value of the
Companys Common Stock at December 31, 2007 was determined based on the last reported sale of
the Companys Common Stock in 2007 as reported on the NASDAQ National Market. |
|
(2) |
|
The realized value represents the market value at exercise less the exercise price. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards: |
|
|
|
|
|
|
|
|
|
Number of |
|
|
Number of |
|
|
Number of |
|
|
|
|
|
|
|
|
|
Securities |
|
|
Securities |
|
|
Securities |
|
|
|
|
|
|
|
|
|
Underlying |
|
|
Underlying |
|
|
Underlying |
|
|
|
|
|
|
|
|
|
Unexercised |
|
|
Unexercised |
|
|
Unexercised |
|
|
Option |
|
|
|
|
|
|
Options (#) |
|
|
Options (#) |
|
|
Unearned Options |
|
|
Exercise |
|
|
Option |
|
Name |
|
Exercisable |
|
|
Un-exercisable |
|
|
(#) |
|
|
Price ($) |
|
|
Expiration Date |
|
|
Patrick J. Moty |
|
|
7,700 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
3.23 |
|
|
|
05/01/2008 |
|
Patrick J. Moty |
|
|
10,800 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
6.67 |
|
|
|
08/21/2011 |
|
Patrick J. Moty |
|
|
1,440 |
|
|
|
360 |
|
|
|
0 |
|
|
$ |
7.30 |
|
|
|
07/16/2012 |
|
Patrick J. Moty |
|
|
3,900 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
10.60 |
|
|
|
06/15/2014 |
|
Patrick J. Moty |
|
|
0 |
|
|
|
20,000 |
|
|
|
0 |
|
|
$ |
10.49 |
|
|
|
10/16/2017 |
|
Linda J. Miles |
|
|
4,800 |
|
|
|
1,200 |
|
|
|
0 |
|
|
$ |
6.75 |
|
|
|
01/01/2013 |
|
Linda J. Miles |
|
|
6,000 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
10.60 |
|
|
|
06/15/2014 |
|
Linda J. Miles |
|
|
0 |
|
|
|
10,000 |
|
|
|
0 |
|
|
$ |
10.49 |
|
|
|
10/16/2017 |
|
Randy Eslick |
|
|
13,500 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
5.42 |
|
|
|
06/01/2011 |
|
Randy Eslick |
|
|
2,250 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
7.30 |
|
|
|
07/16/2012 |
|
Randy Eslick |
|
|
4,500 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
10.60 |
|
|
|
06/15/2014 |
|
Robert J. ONeill |
|
|
28,080 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
7.30 |
|
|
|
07/16/2012 |
|
Robert J. ONeil |
|
|
1,800 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
10.60 |
|
|
|
06/15/2014 |
|
Caryn A. Blais |
|
|
7,300 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
6.67 |
|
|
|
08/01/2011 |
|
Caryn A. Blais |
|
|
2,250 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
7.30 |
|
|
|
07/16/2012 |
|
Caryn A. Blais |
|
|
4,500 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
10.60 |
|
|
|
06/15/2014 |
|
|
Page 29
Employment contracts, change in control agreements and termination of employment
Effective September 30, 2007, Bank of Commerce Holdings and Redding Bank of Commerce entered into
an employment agreement with its President and Chief Executive Officer, Patrick J. Moty. The
agreement provides for, among other things, (a) a base salary of $225,000 per year, which the
Executive Compensation Committee of the Board of Directors can and does adjust annually at its
discretion; (b) profit sharing opportunity of $125,000, which the Executive Compensation Committee
of the Board of Directors can adjust annually at its discretion; (c) five weeks annual vacation;
(d) an automobile allowance of $650 per month; (e) supplemental retirement benefits (see Salary
Continuation Plan below); (f) Country Club membership dues; (g) health and life insurance benefits
that are now or may hereinafter be in effect for all other full time employees; and (h)
reimbursement for ordinary and necessary expenses incurred by Mr. Moty in connection with his
employment.
Upon Mr. Motys termination for specific cause, Mr. Moty will be entitled to six months total
compensation package. Upon termination at the sole and absolute discretion of the Board of
Directors, Mr. Moty will be entitled to one year of Mr. Motys then total compensation package.
Upon termination Mr. Moty agrees to resign from any and all board memberships. In the event of a
change in control, Mr. Moty will be entitled to the then full compensation package for a period of
twenty-four months. The executive is required to give ninety (90) days prior notice in writing to
the Employer in the event the Executive resigns or voluntarily terminates employment, or takes an
early retirement.
Effective April 2001 and amended December 31, 2006, Bank of Commerce Holdings and Redding Bank of
Commerce entered into a four-year employment agreement with its Executive Vice President and Chief
Financial Officer, Linda J. Miles. The agreement provides for, among other things, (a) a base
salary of $200,000 per year, which the Executive Compensation Committee of the Board of Directors
can and does adjust annually at its discretion; (b) profit sharing opportunity of $67,750 per year,
which the Executive Compensation Committee of the Board of Directors can adjust annually at its
discretion; (c) five weeks annual vacation; (d) an automobile of predetermined value, including
expenses; (e) supplemental retirement benefits (see Salary Continuation Plan below); (f) Country
Club membership dues; (g) health and life insurance benefits that are now or may hereinafter be in
effect for all other full time employees; and (h) reimbursement for ordinary and necessary expenses
incurred by Ms. Miles in connection with her employment.
Upon Ms. Miles termination for specific cause, Ms. Miles will be entitled to six months of total
compensation package. Upon termination at the sole and absolute discretion of the Board of
Directors, Ms. Miles will be entitled to one year of Ms. Miles then total compensation package. In
the event of a change in control, Ms. Miles will be entitled to the then full compensation package
for a period of twenty-four months.
The executive is required to give ninety (90) days prior notice in writing to the Employer in the
event the Executive resigns or voluntarily terminates employment, or takes an early retirement.
Effective December 2005, Bank of Commerce Holdings and Redding Bank of Commerce entered into a
change of control agreement with three Executive officers; Randall S. Eslick, Robert ONeil and
Caryn A. Blais. Each of the agreements is identical. The terms of the agreements provide upon a
change in control and in the event of an early termination or diminution in salary or job duties,
the Bank shall pay to the executive benefits equal to one years salary at the salary rate being
paid to the executive at the time of the change in control together with an amount equal to one
years profit sharing payment based upon the average profit sharing received by the executive for
the past three years. The executive shall also receive, at the Banks expense, a continuation of
health benefits for a period of one year.
Page 30
In event that the executive is terminated by the bank not in the event of an early termination and
not as a termination for cause, the Bank shall pay to the executive benefits equal to six months
salary at the salary rate being paid to the executive at the time of termination, together with an
amount equal to one-half years profit sharing payment based upon the average profit sharing
received by the executive for the past three years. The executive shall also receive, at the Banks
expense, a continuation of health benefits for a period of six months.
Salary Continuation Plan
In April 2001, and amended December 31, 2006, and September 30, 2007, the Board of Directors
approved the implementation of the Executive Salary Continuation Plan (SCP), which is a
non-qualified executive benefit plan in which the Company agrees to pay the executive additional
benefits in the future in return for continued satisfactory performance by the executive.
The payments are fixed by contract and do not depend on years of credited service. The Company
makes contributions to segregated accounts for the benefit of the Salary Continuation Plan
beneficiaries. Such accounts earn annual interest at ten percent.
Benefits under the salary continuation plan include income generally payable commencing upon a
designated retirement date for the employees life, disability, or termination of employment, and a
death benefit for the participants designated beneficiaries.
Key-man life insurance policies were purchased as an investment to offset the Companys contractual
obligation to pay pre-retirement death benefits and to recover the Companys cost of providing
benefits. The executive is the insured under the policy, while the Company is the owner and
beneficiary. The insured executive has no claim on the insurance policy, its cash value or the
proceeds thereof.
A termination resulting from a reason other than specific cause or change of control will be deemed
an early retirement. In the event of an early retirement, the vested balance will be paid as a lump
sum or over a period of five years. In the event of a change in control, the payment terms are
fixed (see discussion below), and would be paid in addition to amounts owned under the executives
employment agreement. In the event of a termination for cause, no payments will be made to the
terminated executive.
The following table illustrates the approximate annual retirement income that may become payable to
a named executive officer assuming benefits commence at age 65 and 61. Mr. Moty and Mrs. Miles
benefits are payable over twenty years, or life. Mr. Eslick and Mrs. Blais benefits are payable
over a period of ten years.
Salary Continuation Plan Benefits Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Present Value |
|
|
Payments |
|
|
Annual |
|
|
Vested Balance |
|
|
|
Years Credited |
|
|
of Accumulated |
|
|
During Last |
|
|
Retirement |
|
|
at Last Fiscal |
|
Name |
|
Service (#) |
|
|
Benefit ($) |
|
|
Fiscal Year ($) |
|
|
Benefit |
|
|
Year ($) |
|
|
Patrick J. Moty |
|
|
2 |
|
|
$ |
85,892 |
|
|
$ |
0 |
|
|
$ |
150,000 |
|
|
$ |
85,892 |
|
Linda J. Miles |
|
|
7 |
|
|
$ |
458,559 |
|
|
$ |
0 |
|
|
$ |
125,000 |
|
|
$ |
458,559 |
|
Randall S. Eslick |
|
|
2 |
|
|
$ |
28,612 |
|
|
$ |
0 |
|
|
$ |
35,000 |
|
|
$ |
28,612 |
|
Caryn A. Blais |
|
|
2 |
|
|
$ |
71,500 |
|
|
$ |
0 |
|
|
$ |
35,000 |
|
|
$ |
71,500 |
|
|
Page 31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Registrant |
|
|
Aggregate |
|
|
Aggregate |
|
|
Aggregate |
|
|
|
|
|
|
Contributions in |
|
|
Earnings in Last |
|
|
Withdrawals/ |
|
|
Balance at Last |
|
|
Vested Balance |
|
|
|
Last Fiscal Year |
|
|
Fiscal Year |
|
|
Distributions |
|
|
Fiscal Year |
|
|
at Last Fiscal |
|
Name |
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
Year ($) |
|
|
Patrick J. Moty |
|
$ |
77,830 |
|
|
$ |
2,282 |
|
|
$ |
0 |
|
|
$ |
85,892 |
|
|
$ |
85,892 |
|
Linda J. Miles |
|
$ |
49,930 |
|
|
$ |
41,514 |
|
|
$ |
0 |
|
|
$ |
458,559 |
|
|
$ |
458,559 |
|
Randall S. Eslick |
|
$ |
15,154 |
|
|
$ |
1,304 |
|
|
$ |
0 |
|
|
$ |
28,612 |
|
|
$ |
28,612 |
|
Caryn A. Blais |
|
$ |
37,456 |
|
|
$ |
2,654 |
|
|
$ |
0 |
|
|
$ |
71,500 |
|
|
$ |
71,500 |
|
|
The retirement benefit is derived from accruals to a benefit account during the participants
employment. At the end of the executives period of service, the aggregate amount accrued should
equal the then present value of the benefits expected to be paid to the executive.
The participant is entitled to all vested benefits in the case of termination without cause;
however, if a participant voluntarily resigns prior to reaching normal retirement age, his or her
retirement benefits are reduced by accrual amounts not yet funded. Upon a change of control, the
participant is entitled to the full retirement benefit.
Potential Payments upon termination or change in control
The following table sets out the amounts that would have been payable to the named executive
officers at December 31, 2007 (a) upon a change of control, and (b) as a result of termination
other than termination arising from a change of control, assuming in each case that the payments
were made as a lump sum.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER THAN |
|
|
|
|
|
|
|
|
|
|
|
TERMINATION |
|
|
CONTROL |
|
|
|
CHANGE OF |
|
|
CONTROL |
|
|
CHANGE OF |
|
|
Salary |
|
|
|
Payments under |
|
|
Salary |
|
|
Payments under |
|
|
Continuation |
|
|
|
employment |
|
|
Continuation |
|
|
employment |
|
|
Plan |
|
|
|
agreements |
|
|
Plan Payments |
|
|
agreements |
|
|
Payments |
|
Name |
|
($)(1) |
|
|
($)(2) |
|
|
($)(3) |
|
|
($) (4) |
|
|
Patrick J. Moty |
|
$ |
763,370 |
|
|
$ |
1,145,055 |
|
|
$ |
190,843 |
|
|
$ |
85,892 |
|
Linda J. Miles |
|
$ |
754,818 |
|
|
$ |
1,132,227 |
|
|
$ |
188,705 |
|
|
$ |
458,559 |
|
Randall S. Eslick |
|
$ |
0 |
|
|
$ |
204,115 |
|
|
$ |
0 |
|
|
$ |
28,612 |
|
Robert ONeil |
|
$ |
0 |
|
|
$ |
192,683 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Caryn A. Blais |
|
$ |
0 |
|
|
$ |
180,928 |
|
|
$ |
0 |
|
|
$ |
71,500 |
|
|
|
|
|
(1) |
|
Under employment agreements at a change of control, severance pay is equal to two
years of most recent total compensation package as of the date of the Executives
termination. |
|
(2) |
|
SCP payments are limited under IRS Section 280-G to three times the average total
compensation package. |
|
(3) |
|
Under employment agreements, termination other than change of control the Executive
will be paid six months total compensation package as of the date of the termination. |
|
(4) |
|
Under termination for specific cause, the Bank shall not pay any benefit under the
SCP agreement. With respect to early retirement, disability, or termination without cause
(other than arising from a change in control) under the employment agreements, the amounts
to be paid over time would be any accrued salary, sick and vacation benefits at the time
of termination. With respect to early retirement, disability, or termination without cause
(other than arising from a change in control) under the SCP, the amounts to be paid over
time would be the vested balance in the salary continuation plan. |
Page 32
REPORT OF THE AUDIT AND QUALIFIED LEGAL COMPLIANCE COMMITTEE
The Audit Committee is responsible for the appointment, compensation, and oversight of the work of
the Companys independent accountants. The Committee pre-approves on an annual basis services that
are of a recurring nature. The Committee must pre-approve any scope changes resulting in fee
increase.
In accordance with its written charter adopted by the Board of Directors (Board), a copy of which
is included as an appendix to this proxy statement, the Audit Committee of the Board ( Audit
Committee) assists the board in fulfilling its responsibility for oversight of the quality and
integrity of the accounting, auditing, and reporting practices of the Company and other such duties
as directed by the board. The membership of the Audit Committee consists of at least three
directors who are generally knowledgeable in financial and auditing matters, including at least one
member with accounting or related financial management expertise. Each member of the Audit
Committee is free of any relationship that, in the opinion of the board, would interfere with his
or her individual exercise of independent judgment, and meets the director independence
requirements for serving on Audit Committees as set forth in the corporate governance standards of
the NASDAQ National Market.
During 2007, the Audit and Qualified Legal Compliance Committee met five times. An executive
session excluding management preceded each of the meetings. The Chairman of the Audit Committee
reviewed the financial information contained in each of the quarterly press announcements and SEC
Form 10-Q and 10-K filings with the Chief Executive Officer, Chief Financial Officer and
independent accountants before public release. In addition the committee actively participated in
the control documentation work being performed by the Sarbanes-Oxley 404 Committee (SOX 404).
The Company considers all outside auditing consultants to be independent accountants. In
discharging its oversight responsibility with respect to the Audit process, the Committee obtained
from the independent accountants a formal written statement describing all relationships between
the accountants and the Company that might bear on the accountants independence consistent with
Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees,
discussed with the accountants any relationships that may impact their objectivity and independence
and satisfied itself as to the auditors independence. The Audit Committee also discussed with
management and the independent accountants the quality and adequacy of the Companys internal
controls and the outsourced audit functions, responsibilities, budget and staffing. The Audit
Committee reviewed with the independent accountants their audit plans, audit scope and
identification of audit risks.
The Audit Committee discussed and reviewed with the independent accountants all communications
required by auditing standards generally accepted in the United States of America, including those
described in Statement on Auditing Standards No. 61, as amended, Communication with Audit
Committees, (SAS 61) and discussed and reviewed the results of the independent auditors audit
of the financial statements. The SAS 61 communications referred to above includes matters such as
significant adjustments, management judgments and accounting estimates, significant new accounting
policies, and disagreements with management. SAS 61 was amended in the year 2000, by Statement on
Auditing Standards No. 90, Audit Committee Communications, to require discussion of the independent
auditors judgments about quality, not just the acceptability of the companys accounting
principles. SAS 61 was also amended by Statement on Auditing Standards No. 89, Audit Adjustments,
to require the auditor to inform the audit committee about any uncorrected misstatements pertaining
to the current period whose effects management believes are immaterial to the financial statements
taken as a whole. The Audit Committee also discussed the results of all internal audit examinations.
Page 33
The Audit Committee reviewed the audited financial statements of the company as of and for the year
ended December 31, 2007, with management and the independent accountants. Management has the
responsibility for the preparation of the Companys financial statements and the overall reporting
process, for maintaining adequate internal control over financial reporting for the Company, and
for assessing the effectiveness of the Companys internal control over financial reporting. The
independent accountants are responsible for performing independent audits of the Companys
consolidated financial statements. These audits serve as a basis for the accountants opinions
included in the annual report to stockholders addressing whether the financial statements fairly
present the Companys financial position, results of operations, and cash flows in conformity with
generally accepted accounting principles in the United States. The Committees responsibility is to
monitor and oversee these processes.
Based on the above-mentioned review and discussions with management and the independent
accountants, the Audit Committee recommended to the Board that Bank of Commerce Holdings audited
financial statements be included in its annual Report on Form 10-K for the year ended December 31,
2007, for filing with the Securities and Exchange Commission.
Principal Accounting Firm fees
Audit Fees
The aggregate fees billed by Moss Adams LLP., for professional services rendered for the audit of
the Companys annual financial statements for the fiscal years ended December 31, 2007 and 2006 and
for the reviews of the financial statements included in the Companys Quarterly Reports on Form
10-Q for those fiscal years were $152,290 and $126,152 respectively.
Audit-Related Fees
Moss Adams LLP., did not render any professional services for information technology services
relating to financial information systems design and implementation for the fiscal years ended
December 31, 2007 and December 31, 2006.
Tax Fees
Moss Adams LLP., did not render any professional services for tax compliance, tax advice, or tax
planning during 2007 or 2006.
All Other Fees
The aggregate fees billed by Moss Adams LLP. for services rendered to the Company, other that the
services described under Audit Fees and Audit-Related Fees and tax fees amount to $0 and $0 for
the fiscal years December 31, 2007 and 2006, respectively.
In discharging its oversight responsibility with respect to the audit process, the Audit Committee
of the Board of Directors obtained from the independent accountants a formal written statement
describing all relationships between the accountants and the Company that might bear on the
accountants independence consistent with Independence Standards Board Standard No.1, Independence
Discussions with Audit Committees, discussed with the accountants any relationships that may
impact their objectivity and independence and satisfied itself as to the accountants independence.
The Committee also discussed with management and the independent accountants the quality and
adequacy of Bank of Commerce Holdings internal controls and the outsourced audit functions,
responsibilities, budgeting and staffing. The Committee reviewed with the independent accountants
their audit plans, audit scope and identification of audit risks.
Page 34
Pre-approval Policies and Procedures
Under the audit committees pre-approval policies and procedures, the audit committee is required
to pre-approve the audit and non-audit services performed the Companys independent registered
public accounting firm. The audit committee may pre-approve a list of services that may be provided
by the independent registered public accounting firm without obtaining specific pre-approval from
the audit committee.
This list of services includes: audit services, audit-related services, tax services and all other
services. The audit committee sets pre-approved fee levels for each of these listed services. Any
type of service that is not included on the list of pre-approved services must be specifically
approved by the audit committee. Any proposed service that will fall outside of the pre-approved
fee levels will also require specific pre-approval by the audit committee.
All above fees paid to Moss Adams, LLP during 2007 were pre-approved by the audit committee.
Respectfully submitted by the members of the Audit and Qualified Legal Compliance Committee,
David H. Scott, CPA & Chairman of the Audit
and Qualified Legal Compliance Committee
Harry L. Grashoff, Jr.
Russell L. Duclos
Lyle L. Tullis
Jon Halfhide, CPA
Page 35
Discussion of proposals recommended by the Board of Directors
Proposal 1
Election of Directors
The Board of Directors has nominated eleven persons for election at the Annual Meeting. If you
elect them, they will hold office until the election of their successors at the Annual Meeting in
2009, or until they resign.
We know of no reason why any nominee may be unable to serve as a director. If any nominee is unable
to serve, your proxy may vote for another nominee proposed by the Board of Directors. If for any
reason these nominees prove unable or unwilling to stand for election, the Board will nominate
alternatives. The Board of Directors has no reason to believe that its nominees would prove unable
to serve if elected.
The Board of Directors recommends a vote FOR the election of each of the eleven nominees for
director.
Brief summaries of the background and business experience of each of the nominees other than Mr.
Moty, who was profiled earlier in this document:
Orin N. Bennett, born in 1948, has been a director of Redding Bank of Commerce since September
2005. Mr. Bennett is a registered Civil Engineer in California and Oregon. He owns Bennett
Engineering Services providing engineering services to cities, counties and special districts
primarily in Northern California. He is also a partner in BD Properties, a real estate investment
company. Mr. Bennett was previously employed by the respected international engineering firm of
CH2M Hill prior to forming his own business. Mr. Bennett serves on the Executive Committee,
Nominating and Corporate Governance Committee, Executive Compensation and Long-Range planning
committees of the Board of Directors.
Dave Bonuccelli was born in 1954, and has been a director of Redding Bank of Commerce since January
2008. Mr. Bonuccelli is the owner of Davie L. Bonuccelli & Associates, Inc. a real estate
investment consulting and advisory firm located in Sacramento. The Company provides a full range of
services to tax exempt public and private institutional investors, corporations, trust and
individual investors.
Gary
Burks, born in 1954, has been a director of Redding Bank of Commerce since June 2007. Mr. Burks
is Vice President and General Manager of Foothill Distributing Company in Redding. Mr. Burks is a
member of the Long-Range Planning Committee of the Board of Directors.
Welton L. Carrel, born in 1937, has served as a director of the Company since January 1982. Mr.
Carrel is retired. From 1961 to 1989, he was President of Western Business Equipment d.b.a.
Carrels Office Machines. Mr. Carrel is a member of the Executive Compensation Committee,
Nominating and Corporate Governance Committee and Long-Range Planning Committee of the Board of
Directors.
Russell L. Duclos, born in 1939, has served as a director of the Company since July 1997. From July
1997 through December 2000, Mr. Duclos served as President and Chief Executive Officer of the Bank
and from January 2001 through April 2001 as President and Chief Executive Officer of the Company.
Mr. Duclos is Chairman of the Asset Liability Management Committee (ALCO), and presently serves on
the Loan Committee, Audit & Qualified Legal Compliance and Long-Range Planning Committee of the
Board of Directors.
Page 36
Kenneth R. Gifford, Jr., born in 1945, has served as a director of the Company since January 1998.
Mr. Gifford has been a director, President and Chief Executive Officer of Gifford Construction,
Inc. since 1972. Mr. Gifford serves as Chairman of the Board and is a member of the Executive
Committee, Loan committee, ALCO Committee and Long-Range Planning Committee of the Board of
Directors. During 2007 Mr. Gifford was named as Chairman of the Board of Directors.
Harry L. Grashoff, Jr., born in 1935, and has served as a director of the Company since January
1982. Mr. Grashoff is currently retired. From 1982 to July 1997, Mr. Grashoff was President and
Chief Executive Officer of the Company. Mr. Grashoff serves as Chairman of the Loan Committee and
he is a member of the Long-Range Planning, Executive Compensation committee, Nominating and
Corporate Governance, Audit and ALCO committees of the Board of Directors.
Jon Halfhide, CPA, born in 1957, has been a director of Redding Bank of Commerce since July
2005. Since 2000, he has served as president of Catholic Healthcare West North State Service Area
(CHW) and St. Elizabeth Community Hospital. He has over twenty years management experience with
CHW and has served in the capacity of Controller and Chief Financial Officer. Mr. Halfhide is a
certified public accountant. Mr. Halfhide meets the criteria to serve as financial expert on the
Audit Committee. Mr. Halfhide serves on the Audit & Qualified Legal Compliance, Executive
Compensation committee and Long-Range Planning Committees of the Board of Directors.
David H. Scott, CPA, born in 1944, has been a director of the Company since April 1997. He is a
partner of D. H. Scott & Company, LLP, a public accounting firm, a position he has held since 1986.
Mr. Scott serves as Chairman of the Audit and Qualified Legal Compliance Committee and is a member
of the ALCO committee, Loan committee and Long-Range Planning committees of the Board of Directors.
The Board of Directors has determined that Mr. Scott meets the criteria to serve as financial
expert on the Audit Committee. Mr. Scott also serves as the Corporate Secretary of the Company.
Lyle L. Tullis, born in 1950, has been a director of the Company since May 2003. Since 1976, he has
served as president of Tullis Inc. a general engineering construction company. His company
specializes in public works projects that include grading and paving. Mr. Tullis is the past
District Chairman of the Eureka and Shasta Districts of the Associated General Contractors of
California. Mr. Tullis serves as Chairman of the Nominating and Corporate Governance and is a
member of the Executive Committee, Audit & Qualified Legal Compliance Committee and Long-Range
Planning Committee of the Board of Directors.
None of the directors were selected pursuant to arrangements or understandings other than with the
directors and shareholders of the Company acting within their capacity as such. There are no
family relationships between any of the directors, and none of the directors serve as a director of
any other company which has a class of securities registered under, or subject to periodic
reporting requirements of, the Securities Exchange Act of 1934, as amended, or any company
registered as an investment company under the Investment Company Act of 1940.
Page 37
Proposal 2
The Board of Directors recommends a vote FOR the ratification of Moss Adams, LLP as the
Companys independent accountants for the year ended December 31, 2007.
The Audit Committee has selected Moss Adams, LLP as the independent registered public accounting
firm to audit the books of the Company and its subsidiaries for the year ending December 31, 2007,
to report on the consolidated statement of financial position and related statement of earnings of
the Company and its subsidiaries, and to perform other appropriate accounting services as may be
required by the Board of Directors. The Board recommends that the stockholders vote in favor of
ratifying the selection of Moss Adams, LLP for the purposes set forth above. If the stockholders do
not ratify the selection of Moss Adams, LLP, the Audit Committee will consider a change in
accountants for the next year.
Moss Adams, LLP has advised the Company that they are independent accountants with respect to the
Company, within the meaning of standards established by the American Institute of Certified Public
Accountants, the Public Company Accounting Oversight Board, the Independence Standards Board and
federal securities laws administered by the SEC. The Company does not expect that representatives
of Moss Adams LLP will be present at the Annual Meeting and accordingly shall not be available to
answer questions or make a statement.
Page 38
Other Business
Requirements, including deadlines for submissions or proposals, nomination of Directors and other
Shareholder business
Under the Rules of the SEC, if a shareholder wants to include a proposal in the Companys Proxy
Statement and form of proxy for presentation at the Companys 2009 Annual Meeting of Shareholders,
the proposal must be received by the Company at its principal administrative office located at 1901
Churn Creek Road, Redding, California by November 20, 2008.
Under the Companys bylaws, as permitted by the SEC, certain procedures are provided which a
shareholder must follow to nominate persons for election as directors or to introduce an item of
business at an annual meeting of shareholders.
Nomination of directors must be made by notification in writing delivered or mailed to the
President of the Company at the Companys principal administrative office not less than 30 days or
more than 60 days prior to any meeting of shareholders called for election of directors. The
Companys annual meeting of shareholders is generally held on the third Tuesday of May. If the
Companys 2009 Annual Meeting of Shareholders is held on schedule, the Company must receive notice
of any nomination no earlier than March 20, 2009, and no later than April 20, 2009. The Chairman of
the meeting may refuse to acknowledge the nomination of any person not made in compliance with the
foregoing procedures.
If the Chairman of the meeting acknowledges the nomination of a person not made in compliance with
the foregoing procedures, the persons named as proxies in the proxy materials relating to that
meeting will use their discretion in voting the proxies when the nomination is made at the meeting.
Notice of any business item proposed to be brought before an annual meeting by a shareholder must
be received by the Secretary of the Company not less than 70 days or more than 90 days before the
annual meeting. If the Companys 2009 Annual Meeting of Shareholders is held on schedule, the
Company must receive notice of any proposed business item no earlier than February 20, 2009, and no
later than March 10, 2009.
If the Company does not receive timely notice, the Companys bylaws preclude consideration of the
business item at the annual meeting. The Companys bylaws also provide that notices regarding
nomination of directors must contain certain information about the director nominee.
With respect to notice of a proposed item of business, the bylaws provide that the notice must
include a brief description of the business desired to be brought before the meeting, the reasons
for conducting such business at the meeting and certain information regarding the shareholder
giving the notice. Shareholders may obtain a copy of the Companys bylaws by sending a written
request to the Secretary of the Company at the Companys principal executive offices.
Shareholders may contact an individual director, the Board of Directors as a group, or a specified
committee or group, at the Companys headquarters address. Each communication should specify the
applicable addressee or addressees to be contacted as well as the general topic of the
communication. The Company will initially receive and process communications before forwarding them
to the addressee.
Page 39
The Company generally will not forward to the directors a shareholder communication that it
determines to be primarily commercial in nature or relates to an improper or irrelevant topic, or
that requests general information about the Company. The Company knows of no other business that
will be presented at the Annual Meeting. If any other business is properly brought before the
Annual Meeting, it is intended that proxies in the enclosed form will be voted in accordance with
the judgment of the persons voting the proxies. Whether or not you intend to be present at the
Annual Meeting, we request you to return your signed proxy promptly.
By Order of the Board of Directors,
/s/
David H.
Scott
David H. Scott, Corporate Secretary
Redding, California
March 7, 2008
Page 40
Appendix A
Bank of Commerce Holdings
Audit Committee and Qualified Legal Compliance Committee Charter
Purpose
The Audit Committee is appointed by the Board of Directors to assist in monitoring the (1)
integrity of the financial statements of the Company, (2) the independent accountants
qualifications and independence, (3) the performance of the Companys internal audit function and
independent accountants, and (4) the compliance by the Company with legal and regulatory
requirements.
The Audit Committee shall prepare the report required by the rules of the Securities and Exchange
Commission to be included in the Companys annual proxy statement.
Role and Independence
The membership of the committee shall consist of at least three directors who are generally
knowledgeable in financial and auditing matters, including at least one member with accounting or
related financial management expertise construed to be a financial expert. By definition, the audit
committee financial expert is an individual who is determined by the board of directors to possess
all of the following attributes:
|
|
An understanding of financial statements and generally accepted accounting principles
(GAAP) |
|
|
An ability to assess the general application of such principles in connection with the
accounting for estimates, accruals and reserves |
|
|
Experience preparing, auditing, analyzing, or evaluating financial statements that present
a breadth and level of complexity of accounting issues generally comparable to what can be
expected to be raised by the Companys financial statements, or experience actively
supervising one or more persons engaged in such activities |
|
|
An understanding of internal controls and procedures for financial reporting |
|
|
An understanding of audit committee functions |
The final rule for audit committee financial experts indicates that the attributes may be acquired
by:
|
|
Education and experience as a principal financial officer, principal accounting officer,
controller, public accountant, or auditor, or experience in one or more positions that involve
the performance of similar functions |
|
|
Experience actively supervising a principal financial officer, controller, public
accountant, auditor, or person performing similar functions, or experience overseeing or
assessing the performance of companies or public accountants with respect to the preparation,
auditing, or evaluation of financial statements. |
The members of the Audit Committee shall meet the independence and experience requirements of the
NASDAQ National Market stock exchange, Section 10A(m)(3) of the Securities and Exchange Commission
Act of 1934 and the rules and regulations of the commission. Each member shall be free of any
relationship that, in the opinion of the board, would interfere with his or her individual exercise
of independent judgment, and shall meet the director independence requirements for serving as set
forth in the corporate governance standards of the NASDAQ.
The committee is expected to maintain free and open communication (including private executive
sessions at each meeting) with the independent accountants, the internal accountants and the
management of the Company. The Audit Committee shall have the authority, to the extent it deems
necessary or appropriate, to retain independent legal, accounting or other advisors.
Page 41
The Company shall provide for appropriate funding, as determined by the Audit Committee, for
payment of compensation to the independent auditor for the purpose of rendering or issuing an audit
report and to any advisors employed by the Audit Committee.
The Board of Directors shall appoint the audit committee financial expert as chairperson. In
addition to the professional requirements, this person plays a pivotal role in Audit Committee
effectiveness. He or she will be responsible for the leadership of the committee, including
preparing the agenda, presiding over meetings, making committee assignments, and reporting to the
Board of Directors. The chairperson will also maintain regular liaison with the President, Director
of Risk Management, Chief Financial Officer, and the lead Independent Audit Partner.
Responsibilities
The Audit Committees primary responsibilities include:
|
|
The Audit Committee shall have the sole authority to appoint or replace the independent
auditor (subject, if available, to shareholder ratification.) In doing so, the committee will
request from the auditor a written affirmation that the auditor is in fact independent,
discuss with the auditor any relationships that may impact the auditors independence, and
recommend to the board any actions necessary to oversee the auditors independence. |
|
|
Overseeing the independent auditor relationship by discussing with the auditor the nature
and rigor of the audit process, receiving and reviewing audit reports, and providing the
auditor full access to the committee (and the board) to report on any and all appropriate
matters. |
|
|
The Audit Committee shall be directly responsible for the compensation and oversight of the
work of the independent auditor (including resolution of disagreements between management and
the independent auditor regarding financial reporting) for the purpose of preparing or issuing
an audit report or related work. The independent auditor shall report directly to the Audit
Committee. |
|
|
The Audit Committee shall pre-approve all auditing services and permitted non-audit
services (including the fees and terms) to be performed for the Company by its independent
auditor, |
|
|
The Audit Committee shall oversee managements annual assessment of, and report on, the
companys internal control over financial reporting. |
The Audit Committee shall make regular reports to the Board of Directors. The Audit Committee shall
review and reassess the adequacy of this Charter annually and recommend any proposed changes to the
Board of Directors for approval. The Audit Committee shall annually review the Committees own
performance.
The Audit Committee shall:
Financial Statement and disclosure matters
|
|
Review and discuss with management and the independent auditor the annual audited financial
statements, including disclosures made in managements discussion and analysis, and approve
the filing of such documents with the SEC. Recommend the acceptance of the annual audited
financial statements as the annual Directors examination. |
|
|
Review and discuss with management and the independent auditor the Companys quarterly
financial statements prior to the filing of its Form 10-Q, including the results of the
independent auditors review of the quarterly financial statements. |
|
|
Discuss with management and the independent auditor significant financial reporting issues
and judgments made in connection with the preparation of the Companys financial statements,
including any significant changes in the Companys selection or application of financial
principles, any major issues as to the adequacy of the Companys internal controls and any
special steps adopted in light of material control deficiencies. |
Page 42
|
|
Discuss with management the Companys earnings press releases, including the use of pro
forma or adjusted non-GAAP information, as well as financial information and earnings
guidance provided to analysts and rating agencies. Such discussion may be done generally
(consisting of discussing the types of information to be disclosed and the types of
presentations to be made.) |
|
|
Discuss with management and the independent auditor the effect of regulatory and accounting
initiatives as well as off-balance sheet structures on the Companys financial statements. |
|
|
Discuss with management the Companys major financial risk exposures and the steps
management has taken to monitor and control such exposures, including the Companys risk
assessment and risk management policies. |
|
|
Discuss with the Independent auditor the matters required to be discussed by Statement on
Auditing Standards No. 61 relating to the conduct of the audit, including any difficulties
encountered in the course of the audit work, any restrictions on the scope of activities or
access to requested information, and any significant disagreements with management. |
|
|
Review disclosures made to the Audit Committee by the Companys CEO and CFO during the
certification process for the Form 10-K and Form 10-Q about any significant deficiencies in
the design or operation of internal controls or material weaknesses therein and any fraud
involving management or other employees who have a significant role in the Companys internal
controls. |
Oversight of the Companys Relationship with the Independent Auditor
|
|
Review and evaluate the lead partner of the independent audit team. |
|
|
Obtain and review a report from the independent auditor, at least annually regarding (a)
the independent auditors internal quality-control procedures, (b) any material issues raised
by the most recent internal quality-control review, or peer review of the firm, or by any
inquiry or investigation by governmental or professional authorities within the preceding five
years respecting one or more independent audits carried out by the firm, (c) any steps taken
to deal with any such issues, and (d) all relationships between the independent auditor and
the Company. The Audit Committee shall present its conclusions with respect to the independent
auditor to the Board of Directors. |
|
|
Ensure the rotation of the audit partners as required by law. Consider whether, in order to
assure continuing auditor independence, it is appropriate to adopt a policy of rotating the
independent auditing firm on a regular basis. |
|
|
The Audit Committee recommends prohibiting the auditor from acting as a director, officer,
or employee of the Company, or performing any decision-making, supervisory, or ongoing
monitoring function for the Company for a cooling off period of one year from the date of
engagement. |
Oversight of the Companys Internal Audit Function
|
|
Review the appointment and replacement of the Director of Risk Management. |
|
|
Review the significant reports to management prepared by the internal auditing department
and managements response. |
|
|
Discuss with the independent auditor and management the internal audit responsibilities,
budget and staffing and any recommended changes in the planned scope of the internal audit. |
Compliance Oversight Responsibilities
|
|
Obtain reports from management, the Director of Risk Management and the independent auditor
that the Company and its affiliated entities are in conformity with applicable legal
requirements and the Companys Code of Ethics and Conflict of Interest. |
|
|
Review reports and disclosures of insider and affiliated party transactions. Advise the
Board of Directors with respect to the Companys policies and procedures regarding compliance
with applicable laws and regulations with the Companys Code of Ethics and Conflict of
Interest. |
Page 43
|
|
Establish procedures for the receipt, retention and treatment of complaints received by the
Company regarding accounting, internal accounting controls or auditing matters, and the
confidential, anonymous submission by employees of concerns regarding questionable accounting
or auditing matters. |
|
|
Discuss with management and the independent auditor any correspondence with regulators or
governmental agencies and any published reports which raise material issues regarding the
Companys financial statements or accounting policies. |
|
|
Discuss with the Companys counsel legal matters that may have a material impact on the
financial statements or the Companys compliance policies. |
It is the policy of the Board of Directors that a system of internal controls be maintained
sufficient to provide reasonable assurance that assets are safeguarded, transactions are properly
authorized and recorded, and reasonable, detailed records are maintained which accurately reflect
the financial activities.
To monitor the effectiveness of the system of internal controls, the Board of Directors established
an audit and review policy as follows:
Audit and Review Certified Public Accounting Firm
It is the policy of the Board of Directors to engage a qualified certified public accounting firm
to conduct a full audit of financial statements at least once annually. This will constitute the
annual Director examination. Credit quality reviews, Compliance reviews and Operational reviews
are regularly scheduled to support the audit and may be performed by parties other than the
certified public accounting firm selected to conduct the financial statement audit.
Audit and Review In House
The Board of Directors recognizes that it is not necessary and may not be economically feasible for
the Bank to employ a full time internal auditor until the bank achieves a certain size and
complexity. However, the Board of Directors may elect to have an outside auditor perform audits of
operational and compliance policies and procedures and an outside auditor to perform an independent
loan review for credit quality, compliance, documentation and appropriate grading.
Although outside consultants, these accountants will be considered our In-house accountants. The
Board of Directors will outline the scope of the audits on an annual basis, and will communicate
the scope directly with the independent accountants.
The Audit Committee may consult with and have the Companys Certified Public Accountants review the
scope and work papers of the in-house accountants, and make a recommendation to the Board of
Directors as to the need to employ a full time internal auditor.
Examination and Review Regulatory Agencies
It is the policy of the Board of Directors that results from examinations and audits conducted by
Regulatory Agencies such as the Department of Financial Institutions, Federal Reserve Board and the
FDIC are fully disclosed to the Board of Directors. Further, it is Board policy that at least three
representatives from the Board of Directors will be included in the exit review conducted by
regulatory personnel with the management of the Company.
Page 44
Limitation of Audit Committees Role
While the Audit Committee has the responsibilities and powers set forth in this charter, it is
reinforced that such duties include the oversight, scheduling and review of such work and it is not
the duty of the Audit Committee to conduct audits or to determine whether the Companys financial
statements and disclosures are complete and accurate and are in accordance with generally accepted
accounting principles and applicable rules and regulations. These are the responsibilities of
management and the independent auditor.
QUALIFIED LEGAL COMPLIANCE COMMITTEE
Purpose and Adoption
The purpose of the Qualified Legal Compliance Committee (the Committee) of the Board of Directors
(the Board) of Bank of Commerce Holdings (the Company) is to: (i) receive, review and take
appropriate action with respect to any report made or referred to the Committee by an attorney of
evidence of a material violation of applicable U.S. federal or state securities law, material
breach of a fiduciary duty under U.S. federal or state law or a similar material violation by the
Company or by any officer, director, employee, or agent of the Company, (ii) otherwise fulfill the
responsibilities of a qualified legal compliance committee pursuant to Section 307 of the Sarbanes
Oxley Act of 2002 and the rules promulgated there under and (iii) perform such other duties as may
be assigned to it, from time to time, by the Board.
The scope of the Committees responsibilities and its structure, process and membership
requirements are set forth in this charter (the Charter), which has been adopted and approved by
the Board and may be amended by the Board from time to time in compliance with applicable laws,
rules and regulations.
Membership
The Companys Audit Committee shall serve as the Qualified Legal Compliance Committee.
Procedures
The Committee shall adopt written procedures for the confidential receipt, retention and
consideration of any oral or written reports received by the Committee. The Committee shall have
the authority to establish other rules and operating procedures in order to fulfill its obligations
under this Charter and under applicable law, rules and regulations. The Chairman of the Committee
shall call a meeting of the Committee whenever circumstances warrant.
Authority and Responsibilities
The Committee shall have the following authority and responsibilities in respect of reports of
evidence of a material violation:
a. The Committee shall inform the Companys SEC Attorney and Chief Executive Officer of any report
of evidence of a material violation.
b. The Committee shall determine whether an investigation is necessary regarding any such report.
Page 45
c. If the Committee has determined that an investigation is necessary, the Committee shall: (i)
notify the Board of Directors, (ii) initiate an investigation to be conducted either by the
Companys SEC Attorney or by an outside attorney retained by the Committee and (iii) retain such
additional expert personnel as the Committee deems necessary.
d. At the conclusion of an investigation, the Committee shall: (i) recommend, by majority vote,
that the Company implement an appropriate response and (ii) inform the Companys SEC Attorney, the
Chief Executive Officer and the Board of the results of the investigation and the appropriate
remedial measures that it recommends to be adopted.
2. The Committee has the authority and responsibility to act, by majority vote, to take all other
appropriate action, including the authority to notify the Securities and Exchange Commission in the
event that the Company fails in any material respect to implement an appropriate response that the
Committee has recommended to the Company.
3. The Committee shall report to the Board on a regular basis regarding the matters that it
oversees.
QUALIFIED LEGAL COMPLIANCE COMMITTEE PROCEDURES
Any attorney of Bank of Commerce Holdings (the Company) may submit a report (a Report) of
evidence of a material violation of applicable U.S. federal or state securities law, material
breach of a fiduciary duty under U.S. federal or state law or a similar material violation by the
Company or by any officer, director, employee or agent of the Company to the Qualified Legal
Compliance Committee (the Committee).
In order to facilitate the Committees confidential receipt, retention, and consideration of
Reports, the Committee has established the following procedures:
1. The Committee shall send a written acknowledgement of receipt of each oral or written Report to
the sender. The Committee shall maintain confidentiality in its activities to the maximum extent
possible consistent with performing a full and fair investigation.
2. The Committee shall take appropriate measures so that, to the maximum extent possible, the
Companys legal privileges are protected in connection with the Committees activities, consistent
with the Committees obligations. The Committee shall maintain all documents received or reviewed
by it in accordance with the Companys document retention policy.
3. The Committee shall notify the Companys Chief Executive Officer and SEC Attorney promptly upon
receipt of a Report.
4. The Chair of the Committee shall convene a meeting of the full Committee as often as deemed
necessary or desirable and, in any case, promptly upon receipt of a Report.
5. The Committee shall keep minutes of each of its meetings.
6. The Committee shall review each Report and determine whether an investigation is necessary or
desirable in connection with the matters addressed in such Report.
7. The Committee may consult with appropriate officers of the Company, or retain outside attorneys
or experts in connection with its determination as to whether to commence an investigation in
connection with a Report. The Committee may rely on the advice of counsel as to whether further
investigation is required.
Page 46
If the Company does not have a chief legal officer at the time of any report, the Committee may
consult with, and rely on the advice of, the Companys SEC Attorney.
8. If the Committee has determined that further investigation is necessary or desirable in
connection with a Report, the Committee shall: (i) notify the Companys Board of Directors, (ii)
initiate an investigation, (iii) determine who shall conduct such investigation, and (iv) retain
such outside attorneys and expert personnel as the Committee deems necessary.
9. The Committee shall have the authority to enter into engagement letters, as appropriate, with
outside attorneys and experts retained by it.
10. At the conclusion of an investigation, the Committee shall: (i) recommend, by majority vote,
that the Company implement an appropriate response, if any, and (ii) inform the Chief Executive
Officer, the Companys SEC Attorney and the Board of Directors of the results of the investigation
and the appropriate remedial measures, if any, that it recommends to be adopted.
11. The Committee shall take appropriate action to determine whether the Company has implemented an
appropriate response to a Report, as recommended by the Committee, and, if not, shall determine
what, if any, additional action should be taken.
12. The Committee shall retain a log of all Reports, tracking their receipt, investigation and
resolution and shall periodically report on these matters to the Board of Directors.
Page 47
Appendix B
Bank of Commerce Holdings
Nominating and Corporate Governance Committee Charter
Committee mission statement
The Committee acts on behalf of the RBC Board of Directors in the best interests of the Corporation
and its shareholders with regard to the identification of individuals qualified to become Board
members, selecting or recommending to the Board that the Board select the director nominees,
including for the next annual meeting of shareholders, and providing guidance on board and
corporate governance issues including recommending to the Board corporate governance guidelines
applicable to the Corporation.
Organization
Members of the Committee are appointed by and serve at the pleasure of the Board of Directors. The
members of the Nominating and Corporate Governance Committee shall be independent directors as
determined in accordance with the laws, rules and regulations of the NASDAQ stock exchange and
shall also comply with and satisfy all other applicable laws, rules, regulations and requirements.
The Chairman of the Nominating and Corporate Governance Committee shall be elected annually by the
Board of Directors.
The Committee shall conduct and review with the Board of Directors annually an evaluation of the
committees performance with respect to the requirements of this Nominating and Corporate
Governance Charter.
The Committee shall have sole authority to employ professional advisers in fulfilling its duties.
Advisers include, but are not limited to, search professionals, compensation consultants, and
attorneys. The Committee shall have sole authority to approve fees, establish retention terms, and
terminate such advisers.
Purpose
The purpose of the Nominating and Corporate Governance Committee is to 1) identify individuals
qualified to serve on the Board of Directors and to recommend that the Board of Directors select
director nominees to be considered at the Companys next annual meeting of shareholders or to be
appointed by the Board of Directors to fill an existing or newly created vacancy on the Board of
Directors, 2) identify members of the Board of Directors to serve on each board committee and to
serve as chairman thereof and recommend each such member and chairman to the Board of Directors, 3)
develop and revise as appropriate Corporate Governance Guidelines applicable to the Company and
recommend such guidelines to the Board of Directors, 4) oversee managements annual assessment of,
and report on, the companys internal control over financial reporting, 5) oversee the evaluation
by the Board of Directors of itself and its committees, 6) identify individuals to serve as
executive officers of the Company and recommend such individuals to the Board of Directors and 6)
review with the Chief Executive Officer matters of management succession.
Meetings
The Nominating and Corporate Governance Committee shall meet as often as it deems necessary or
appropriate to carry out its responsibilities, no less than annually, and may, in its sole
discretion, form and delegate authority to subcommittees (comprised only of Nominating and
Corporate Governance Committee members) in furtherance of such responsibilities. Meetings of the
Nominating and Corporate Governance Committee shall be called by the Chairman of the Nominating and
Corporate Governance Committee or the Chairman of the Board.
Page 48
All such meetings shall be held pursuant to the by-laws of the Company with regard to notice and
waiver thereof, and written minutes of each such meeting shall be duly filed in the Companys
records.
Powers and Responsibilities
The Nominating and Corporate Governance Committee shall:
1. |
|
Actively seek to identify individuals qualified to serve on the Board of Directors and to
recommend that the Board of Directors select director nominees to be considered for election
at the Companys next annual meeting of shareholders or to be appointed by the Board of
Directors to fill an existing or newly created vacancy on the Board of Directors in accordance
with Board membership criteria set forth in the Companys corporate governance guidelines. The
Committee shall also consider written proposals for director nominees received from
shareholders in accordance with the Companys corporate governance guidelines and by-laws. |
2. |
|
The Committee shall develop specific criteria to define what minimum qualifications are
required to serve on the Board of Directors. |
3. |
|
Identify qualified members of the Board of Directors to serve on each board committee and to
serve as chairman thereof and recommend each such member and chairman to the Board of
Directors. In addition, the Nominating and Corporate Governance Committee may designate a
member of such committee to attend the meetings of any other Board committee ex-officio with
the concurrence of the chairman of such other committee. |
4. |
|
Develop corporate governance guidelines applicable to the Company and recommend such
guidelines or revisions of such guidelines to the Board of Directors. All guidelines shall be
reviewed at least annually. |
5. |
|
Review at least annually, the nominating and corporate governance charter and executive
compensation charter of the Board of Directors and, when necessary or appropriate, recommend
changes in such charters to the Board of Directors. |
6. Conduct the annual peer review of the Board of Directors, itself, and its committees.
7. Review with the Chief Executive Officer matters relating to management succession.
8. |
|
Identify individuals to serve as executive or corporate officers of the Company and recommend
such individuals to the Board of Directors. |
9. |
|
Monitor the development of best practices regarding corporate governance and take a
leadership role in shaping the corporate governance of the Company. |
Page 49
Appendix C
Bank of Commerce Holdings
Compensation Committee Charter
General
The Compensation Committee (the Committee) shall be appointed by the Board of Directors (the
"Board) of Bank of Commerce Holdings. (the Company). The primary function of the Committee is to
discharge the responsibilities of the Board relating to compensation of the Companys Executive
Officers (i.e. CEO, COO and CFO) and directors who are not employees of the Company, and, in
connection with the Companys benefits plans (e.g., stock option and bonus plans). The Committee
shall have all authority necessary to fulfill the duties and responsibilities assigned to the
Committee in this Charter or otherwise assigned to it by the Board.
Composition and Delegation
The Committee shall be composed of at least three members. Each member of the Committee shall be a
member of the Board and shall (i) meet the independence requirements established by the Board and
applicable laws, regulations and listing requirements, (ii) be a non-employee director within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934, and (iii) be an outside director
within the meaning of Section 162(m) of the Internal Revenue Code. The members of the Committee
shall be appointed annually by the Board or as necessary to fill vacancies in the interim. The
Board shall designate one of the Committee members as Chairperson. The Board may remove any member
from the Committee at any time with or without cause. The Committee, when appropriate, may form and
delegate authority to subcommittees and, to the extent permitted by applicable law, regulations and
listing standards, may delegate authority to one or more designated members of the Committee, the
Board or Company officers.
The Committee shall have the sole authority to engage or terminate any outside consultant that is
retained to assist the Committee in the evaluation of Executive Officers and directors
compensation, including the sole authority to approve fees and other retention terms. As the
Committee deems appropriate, it may also retain independent counsel and other professionals to
assist the Committee without seeking Board approval with respect to the selection, fees or
retention terms for any such advisers.
Duties and Responsibilities
Compensation Philosophy and Goal
|
|
|
Develop the Companys executive compensation philosophy and establish and annually
review and approve policies regarding executive compensation programs and practices. |
CEO and Executive Officer Compensation
|
|
|
Review, solicit input from the entire Board and approve corporate goals and objectives
relevant to the Chief Executive Officers compensation and, at a meeting at which the
Chief Executive Officer is not present, evaluate the Chief Executive Officers performance
in light of those goals and objectives and determine the Chief Executive Officers
compensation based on this evaluation. In determining the long-term incentive component of
Chief Executive Officer compensation; the Committee will consider the Companys
performance and relative shareholder return, the value of similar incentive awards to
chief executive officers at comparable companies, the awards given to the Chief Executive
Officer in past years and any other factors that the Committee deems relevant. |
|
|
|
|
Review the Chief Executive Officers recommendations, if any, and determine annual
compensation for the Companys other Executives and Officers. |
Page 50
|
|
|
Establish and administer annual and long-term incentive compensation plans for
Executive Officers. |
|
|
|
|
Recommend to the Board for its approval and, when appropriate, submission to the
Companys shareholders, incentive compensation plans and equity-based plans. |
|
|
|
|
Recommend to the Board for its approval changes to Executive Officer compensation
policies and programs. |
|
|
|
|
Review and approve all Executive Officer employment, compensation and retirement
arrangements. |
|
|
|
|
Determine procedures for Board review of, and for communicating such review to, the
Chief Executive Officer and other senior management. |
|
|
|
|
The Compensation Committee will present compensation recommendations to the Board of
Directors and the Board of Directors will vote to either accept or reject compensation
recommendations. |
Board Compensation
|
|
|
Periodically review director compensation practices in relation to comparable
companies. |
|
|
|
|
Recommend to Board, as appropriate, revisions to director compensation practices. |
General Compensation and Benefits Matters
|
|
|
Consult periodically with the Chief Executive Officer and the regarding compensation
and benefit matters deemed appropriate by them or the members of the Committee. |
|
|
|
|
Provide oversight regarding the Companys retirement, welfare and other benefit plans,
policies and arrangements on an as-needed basis. |
Tax-Qualified & Nonqualified Benefit Plans
|
|
|
Recommend to the Board for Board action (i) all Internal Revenue Service tax-qualified
retirement plans and all plan amendments that are non-administrative in nature and (ii)
all nonqualified benefit plans and all plan amendments that are non-administrative in
nature. |
|
|
|
|
Approve and recommend to the Board for its action: the designation of the trustee and
the execution of trust agreements for any such plan of plans; the termination, merger or
consolidation of any such plan or plans; and the extension of plan participation to
employees of affiliates or subsidiaries. |
|
|
|
|
Periodically review plan administration, participation and regulatory compliance of
nonqualified plans. |
Reports
|
|
|
Prepare the report on executive compensation required by the rules of the Securities
and Exchange Commission to be included in the Companys annual proxy statement. |
Meetings
In accordance with the applicable provisions of the Companys Bylaws, as amended from time to time,
the Committee shall meet at such times and places, as the members deem advisable, and shall make
such recommendations to the Board as the Committee considers appropriate. When appropriate, the
Committee may meet in separate executive session with management, employees, general counsel,
internal audit and the independent auditor to discuss matters that the Committee or the other
groups believe warrant Committee attention. At each meeting of the Committee, an executive session
of only the Committee members shall be held.
Page 51
|
|
|
Name
|
|
Bank of Commerce Holdings |
Address 2
|
|
2008 Annual Meeting of Shareholders |
City State ZIP
|
|
Tuesday, May 20, 2008 at 5:00 p.m. |
|
|
Lobby of the Redding Bank of Commerce |
|
|
1951 Churn Creek Road |
# of shares:
|
|
Redding, California 96002 |
Annual Meeting Proxy Card
This proxy when properly executed will be voted in the manner, directed by the undersigned
shareholder. If no direction is made, this proxy will be voted for all nominees listed under Item 1
and in favor of Item 2.
o Please mark this box with an X if you plan to attend the annual meeting
The Board of Directors recommends a vote FOR Items 1, and 2 below.
Proposal 1
The Board of Directors recommends a vote FOR the election of the following director nominees.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR |
|
WITHHOLD |
|
|
Orin N. Bennett
|
|
|
(01 |
) |
|
o
|
|
o
|
|
|
Dave Bonuccelli
|
|
|
(02 |
) |
|
o
|
|
o |
|
|
Gary Burks
|
|
|
(03 |
) |
|
o
|
|
o |
|
|
Welton L. Carrel
|
|
|
(04 |
) |
|
o
|
|
o |
|
|
Russell L. Duclos
|
|
|
(05 |
) |
|
o
|
|
o |
|
|
Kenneth R. Gifford, Jr.
|
|
|
(06 |
) |
|
o
|
|
o |
|
|
Harry L. Grashoff, Jr.
|
|
|
(07 |
) |
|
o
|
|
o |
|
|
Jon Halfhide
|
|
|
(08 |
) |
|
o
|
|
o |
|
|
Patrick J. Moty
|
|
|
(09 |
) |
|
o
|
|
o |
|
|
David H. Scott
|
|
|
(10 |
) |
|
o
|
|
o |
|
|
Lyle L. Tullis
|
|
|
(11 |
) |
|
o
|
|
o |
|
|
Proposal 2
The Board of Directors recommends a vote FOR the ratification of the appointment of Moss Adams, LLC
as the Companys independent registered public accounting firm for 2007
|
|
|
|
|
|
|
For
|
|
Against
|
|
Abstain
|
|
|
o
|
|
o
|
|
o |
|
|
This proxy is solicited on behalf of the Board of Directors.
You, the undersigned stockholder, appoint each Kenneth R. Gifford, Jr. and Patrick J. Moty, your
attorney and proxy, with full power of substitution, on your behalf and with all powers you would
possess if personally present, to vote all shares of Bank of Commerce Holdings Common Stock that
you would be entitled to vote at the Annual Meeting of Shareholders to be held at 1951 Churn Creek
Road, Redding, California on Tuesday, May 20, 2008 at 5:00 p.m.
The shares represented by this proxy will be voted as instructed by you and in the discretion of
the proxies on other matters. If not otherwise specified, shares will be voted in accordance with
the recommendations of the Board of Directors.
PROXY VOTING INSTRUCTIONS
Please sign on the reverse side and return promptly in the enclosed envelope or vote by telephone.
TELEPHONE VOTING INSTRUCTIONS
TO VOTE BY PHONE: Call toll-free 1-800-840-1208 on touch-tone telephone 24-hours a day 7 days a
week.
There is NO CHARGE to you for this call. Have your proxy card in hand.
You will be asked to enter a Control Number, which is located in the box in the lower right hand
corner of this form.
Option 1: To vote as the Board of Directors recommends on ALL proposals.
Proposal 1 To vote FOR ALL Nominees, Press 1; to WITHHOLD FOR ALL nominees, press 9, to WITHHOLD
FOR AN INDIVIDUAL nominee, press 0 and listen to the instructions.
When asked, please confirm by pressing 1.
The instructions are the same for all remaining proposals.
NOTE: If you vote by telephone or internet, THERE IS NO NEED TO MAIL BACK your Proxy Card.