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PEAPACK-GLADSTONE FINANCIAL CORPORATION
500 HILLS DRIVE
BEDMINSTER, NEW JERSEY 07921
PROXY STATEMENT
DATED MARCH 17, 2015
GENERAL PROXY STATEMENT INFORMATION
This proxy statement is furnished to the shareholders of Peapack-Gladstone Financial Corporation (“Peapack-Gladstone” or the “Company”) in connection with the solicitation by the Board of Directors of Peapack-Gladstone of proxies for use at the Annual Meeting of Shareholders to be held on the first floor of our headquarters building at 500 Hills Drive, Bedminster, New Jersey on Tuesday, April 28, 2015Wednesday, May 9, 2018 at 2:10:00 p.m.a.m. local time. This proxy statement is first being made available to shareholders on approximately March 17, 2015.27, 2018.
Outstanding Securities and Voting Rights
The record date for determining shareholders entitled to notice of, and to vote at, the meeting is March 4, 2015.16, 2018. Only shareholders of record as of the record date will be entitled to notice of, and to vote at, the meeting.
On the record date 15,296,33718,946,564 shares of Peapack-Gladstone'sPeapack-Gladstone’s common stock, no par value, were outstanding and eligible to be voted at the meeting. Each share of Peapack-Gladstone'sPeapack-Gladstone’s common stock is entitled to one vote.
Delivery of Proxy Materials
The 2018 notice of annual meeting of shareholders, this proxy statement, the Company’s 2017 annual report on Form 10-K and the proxy card or voting instruction form are referred to as our “proxy materials.” Pursuant to the rules of the Securities and Exchange Commission (the “SEC”), we are furnishing our proxy materials to certain shareholders over the Internet. Most shareholders are receiving by mail a Notice of Internet Availability of Proxy Materials (an “E-Proxy Notice”), which provides general information about the annual meeting, the matters to be voted on at the annual meeting, the website where our proxy statement and annual report are available for review, downloading and printing, and instructions on how to submit proxy votes. The E-Proxy Notice also provides instructions on how to request a paper copy of the proxy materials and how to elect to receive either a paper copy or an electronic copy of the proxy materials for future meetings.
Shareholders that have previously elected to receive proxy materials via electronic delivery will receive an e-mail with the proxy statement, annual report and instructions on how to vote. Shareholders who previously elected to receive paper copies of the proxy materials will receive the proxy statement, annual report and instructions on how to vote by mail.
Householding
When more than one holder of our common stock shares the same address, we may deliver only one E-Proxy Notice or set of proxy materials, as applicable, to that address unless we have received contrary instructions from one or more of those shareholders. Similarly, brokers and other intermediaries holding shares of our common stock in “street name” for more than one beneficial owner with the same address may deliver only one E-Proxy Notice or set of proxy materials, as applicable, to that address if they have received consent from the beneficial owners of the stock.
We will deliver promptly upon written demand or oral request a separate copy of the E-Proxy Notice or set of proxy materials, as applicable, to any shareholder or record at a shared address to which a single copy of those documents was delivered. To receive additional copies, you may write to or call Todd M. Poland, Corporate Secretary of Peapack-Gladstone, at 500 Hills Drive, Suite 300, P.O. Box 700, Bedminster, New Jersey 07921 or (908) 443-5386. If your shares are held in “street name,” you should contact the broker or other intermediary who holds the shares on your behalf to request an additional copy of the E-Proxy Notice or proxy materials.
If you are a shareholder of record and are either receiving multiple E-Proxy Notices or multiple paper copies of the proxy materials, as applicable, and wish to request future delivery of a single copy or are receiving a single E-Proxy Notice or copy of the proxy materials, as applicable, and wish to request future delivery of multiple copies, please contact Todd M. Poland, Corporate Secretary at the address or telephone number above. If your shares are held in “street name,” you should contact the broker or other intermediary who holds the shares on your behalf.
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Required Vote
The presence, in person or by proxy, of a majority of the shares entitled to vote is necessary to constitute a quorum at the meeting. Abstentions and broker non-votes are counted to determine a quorum. A broker non-vote occurs when a broker holding shares for a beneficial holder does not vote on a particular proposal because the broker does not have discretionary power to vote with respect to that item and has not received voting instructions from the beneficial owner.
The election of directors requires the affirmative vote of a plurality of Peapack-Gladstone'sPeapack-Gladstone’s common stock voted at the meeting, whether voted in person or by proxy. AtThis means that the meeting, inspectorsnominees receiving the greatest number of electionvotes will tabulate both ballots cast by shareholders present and voting in person, and votes cast by proxy. Under applicable New Jersey law and Peapack-Gladstone's certificate of incorporation and by-laws, abstentionsbe elected. Abstentions and broker non-votes are counted for purpose of establishing a quorum butwill have no impact on the election of directors.
The approval of each of (1) the amendment to the Restated Certificate of Incorporation, (2) on a non-binding basis, of the compensation of the Corporation’sCompany’s named executive officers as determined byand (3) the Compensation Committee requires the affirmative vote of a majority of the votes cast at the meeting, whether voted in person or by proxy. Abstentions and broker non-votes will have no impact on the approval of this advisory proposal.
The ratification of the appointment of Crowe Horwath LLP requires the affirmative vote of a majority of the votes cast at the meeting, whether voted in person or by proxy. Abstentions and broker non-votes will have no impact on the ratificationapproval of Crowe Horwath LLP’s appointment.these proposals.
All shares represented by valid proxies received pursuant to this solicitation will be voted FOR the election of the 13 nominees for director who are named in this proxy statement, FOR the approval, on a non-binding basis, of the compensation of the Corporation’s named executive officers as determined by the Compensation Committee, and FOR ratification of the appointment of Crowe Horwath LLP as the Corporation’s independent registered public accounting firm for the year ending December 31, 2015,follows, unless the shareholder specifies a different choice by means of the proxy or revokes the proxy prior to the time it is exercised. exercised:
| · | Proposal 1 – FOR the election of the 13 nominees for director; |
| · | Proposal 2 – FOR the approval, on a non-binding basis, of the compensation of the Company’s named executive officers; |
| · | Proposal 3 – FOR approval of the amendment of the Restated Certificate of Incorporation to increase the authorized number of shares of common stock from 21,000,000 to 42,000,000; and |
| · | Proposal 4 – FOR the ratification of the appointment of Crowe Horwath LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2018. |
Should any other matter properly come before the meeting, the persons named as proxies will vote upon such matters accordingin their discretion.
Voting
We are offering you four alternative ways to their discretion.vote your shares:
Internet. If you wish to vote using the Internet, you can access the webpage at www.envisionreports.com/PGC and follow the on-screen instructions or scan the QR code on your E-Proxy Notice or proxy card with your smartphone. Have your proxy card available when you access the webpage.
Telephone. If you wish to vote by telephone, call toll free 1-800-652-VOTE(8683) and follow the instructions. Have your proxy card available when you call.
Mail. If you wish to vote by mail, please sign your name exactly as it appears on your proxy card, date and mail your proxy card in the envelope provided as soon as possible.
In Person. The method by which you vote will not limit your right to vote in person at the meeting if you decide to attend in person. If your shares are held in the name of a bank, broker or other holder of record, you must obtain a proxy executed in your favor from the holder of record to be able to vote at the meeting. If you submit a proxy and then wish to change or vote in person at the meeting, you will need to revoke the proxy that you have submitted, as described below.
Revocability of Proxy
Any shareholder giving a proxy has the right to attend and to vote at the meeting in person. A proxy may be revoked prior to the meeting by filingsubmitting a later-dated proxy or a written revocation if it is sent to theTodd M. Poland, Corporate Secretary, of Peapack-Gladstone, Mary M. Russell, at 500 Hills Drive, Suite 300, POP.O. Box 700, Bedminster, New Jersey, 07921, and is received by Peapack-Gladstone in advance of the meeting.07921. A proxy may be revoked at the meeting by filing a later-dated proxy or a written revocation with the Secretary of the meeting prior to the voting of such proxy or by voting in person at the meeting.
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Solicitation of Proxies
This proxy solicitation is being made by the Board of Peapack-Gladstone and its agent Laurel Hill Advisory Group LLC and the costs of the solicitation will be borne by Peapack-Gladstone. In addition to the use of the mails, proxies may be solicited personally or by telephone, e-mail or facsimile transmission by directors, officers and employees of Peapack-Gladstone and its subsidiaries or Laurel Hill Advisory Group LLC.LLC, a proxy solicitor firm. Directors, officers and employees will not be specially compensated for such solicitation activities. The amount Peapack-Gladstone will pay $6,000 plus certain out of pocket costs to Laurel Hill Advisory Group LLC for its proxy solicitation services is $6,000 plus certain out of pocket costs.services. Peapack-Gladstone will also make arrangements with brokers, dealers, nominees, custodians and fiduciaries to forward proxy soliciting materials to the beneficial owners of shares held of record by such persons, and Peapack-Gladstone maywill reimburse them for their reasonable expenses incurred in forwarding the materials.
PROPOSAL 1
ELECTION OF DIRECTORSAnnual Meeting Attendance
DIRECTOR INFORMATIONOnly shareholders or their proxy holders and Peapack-Gladstone guests may attend the annual meeting. Please bring your E-Proxy Notice to be admitted to the meeting.
Peapack-Gladstone's by-laws authorize a minimumIf your shares are held in “street name,” you must bring to the meeting evidence of fiveyour stock ownership indicating that you beneficially owned the shares on the record date for voting and a maximumvalid form of 25 directors; currently,photo identification to be allowed access. If you wish to vote at the Board has 13 members. Directors are elected annually bymeeting, you much bring a proxy executed in your favor from the shareholders for one-year terms. Peapack-Gladstone's Nominating Committee has recommended to the Board the 13 current directors for reelection for one-year terms expiring at Peapack-Gladstone’s 2016 Annual Meetingholder of Shareholders or until their successors shall have been duly elected and qualified. If, for any reason, any of the nominees become unavailable for election, the proxy solicited by the Board will be voted for a substitute nominee selected by the Board. The Board has no reason to believe that any of the named nominees is unavailable for election or will not serve if elected.record.
Unless a shareholder indicates otherwise on the proxy, the proxy will be voted for the persons named in the table below to serve until the expiration of their terms, and thereafter until their successors have been duly elected and qualified.
The following table sets forth the names and ages of the Board's nominees for election, the nominees' positions with Peapack-Gladstone (if any), the principal occupation or employment of each nominee for the past five years and the period during which each nominee has served as a director of Peapack-Gladstone. The nominee's prior service as a director includes prior service as a director of Peapack-Gladstone Bank (the “Bank”) prior to the formation of the holding company. In addition, described below is each director nominee’s particular experience, qualifications, attributes or skills that have led the Board to conclude that the person should serve as a director.
| NOMINEES FOR ELECTION AS DIRECTORS | ||||||
| Name and Position | Director | Principal Occupation or Employment for the Past Five Years; | ||||
| With Peapack-Gladstone | Age | Since | Other Company Directorships | |||
Finn M. W. Caspersen, Jr. Senior Executive Vice | 45 | 2012 | Senior Executive Vice President, Chief Operating Officer and General Counsel of Peapack-Gladstone and the Bank. Mr. Caspersen began his career with Peapack-Gladstone in 2004 and is qualified to serve on the Board of Directors because of his business skills, his judgment, and his proven leadership. | |||
| Dr. Susan A. Cole | 72 | 2014 | President of Montclair State University. Dr. Cole, named to the Board in February 2014, is qualified to serve on the Board of Directors because of her 17 years as President of Montclair State University, the second largest university in New Jersey, with approximately 20,000 students, which is invaluable in the oversight of Bank operations. | |||
| Anthony J. Consi, II | 69 | 2000 | Retired; previously Senior Vice President of Finance and Operations, Weichert Realtors. Mr. Consi is qualified to serve on the Board of Directors because of his 15 years of public accounting experience at Coopers & Lybrand and his 22 years of finance and operations leadership at Weichert Realtors, both of which are invaluable to his role as Audit Committee Chairman. | |||
| Richard Daingerfield | 61 | 2014 | Retired; previously Executive Vice President and General Counsel of Citizens Financial Group, Inc., Boston, Massachusetts. Mr. Daingerfield is qualified to serve on the Board of Directors because of his expertise in corporate governance, executive management, risk management, corporate banking and commercial banking. His broad legal experience in all aspects of commercial and retail banking, including international and domestic private banking, are invaluable to his role as Risk Committee Chairman. | |||
| Name and Position | Director | Principal Occupation or Employment for the Past Five Years; | ||||
| With Peapack-Gladstone | Age | Since | Other Company Directorships | |||
| Edward A. Gramigna, Jr. | 54 | 2012 | Partner of Drinker Biddle & Reath LLP. Mr. Gramigna is qualified to serve on the Board of Directors because of his26 years of experience in trust, estate planning and estate administration, which is invaluable in the oversight of our wealth management division. | |||
Douglas L. Kennedy CEO | 58 | 2012 | President & CEO of Peapack-Gladstone and the Bank. Mr. Kennedy, who began his career in commercial banking in 1978, is qualified to serve on the Board of Directors because of his 37 years of commercial banking experience, demonstrated business leadership, judgment and vision. | |||
Frank A. Kissel
| 64 | 1989 | Former Chairman of the Board of Peapack-Gladstone and the Bank. Mr. Kissel, who began his career in banking in 1973, is qualified to serve on the Board of Directors because of his 42 years of banking experience, demonstrated business leadership, judgment and vision. Mr. Kissel is also an employee of the Bank focused on business development. | |||
| John D. Kissel | 62 | 1987 | Real Estate Broker, Turpin Real Estate, Inc. Mr. Kissel is qualified to serve on the Board of Directors because of his 25 years of experience in the residential real estate market, which is invaluable to the Board’s oversight of the Corporation’s real estate loan portfolio. | |||
| James R. Lamb | 72 | 1993 | Principal of James R. Lamb, P.C., Attorney at Law. Mr. Lamb is qualified to serve on the Board of Directors because of his 48 years of legal experience, which is invaluable to the Board’s corporate governance program and the Board’s oversight of the Bank’s legal and regulatory affairs. | |||
| Edward A. Merton | 74 | 1981 | Retired; previously President of Merton Excavating and Paving Co. Mr. Merton is qualified to serve on the Board of Directors because of his 52 years of experience in managing a successful New Jersey business, which is invaluable to the Board’s oversight of the Corporation’s small business lending. | |||
| F. Duffield Meyercord Chairman | 68 | 1991 | Chairman of the Board of Peapack-Gladstone and the Bank; Partner of Carl Marks Advisory Group, LLC; President, Meyercord Advisors, Inc.; Director of Wayside Technology Group, Inc. (formerly Programmer’s Paradise, Inc.). Mr. Meyercord is qualified to serve on the Board of Directors because of his 40 years of experience in directing strategic projects and providing operational advisory services to numerous businesses, which is invaluable to the Board’s oversight of corporate strategy. | |||
| Philip W. Smith, III | 59 | 1995 | President, Phillary Management, Inc., a real estate management company. Mr. Smith is qualified to serve on the Board of Directors because of his 28 years of experience in commercial real estate agency and management, which is invaluable to the Board’s oversight of the Corporation’s real estate loan portfolio. | |||
| Beth Welsh | 56 | 2012 | General Manager of Bassett Associates. Ms. Welsh is qualified to serve on the Board of Directors because of her20 years of experience in the commercial real estate market as well as her past banking experience, which is invaluable to the Board’s oversight of the Corporation’s real estate lending and small business banking. |
Other than Mr. Meyercord, none of our directors hold, or have held in the past five years, any directorships with respect to a public company or registered investment company.
Frank A. Kissel and John D. Kissel are brothers.
The members of our Board of Directors are persons who as a group we believe have demonstrated appropriate leadership skills, experience and judgment in areas that are relevant to our business. We believe that their collective ability to challenge and stimulate management and their dedication to the affairs of the Corporation serve the interests of the Corporation and its shareholders. In accordance with its charter, the Nominating Committee has established director qualifications and standards, and identifies and evaluates each candidate on a case-by-case basis including an assessment of the requisite skills and characteristics of new board members as well as the composition of the Board as a whole. This assessment includes consideration of the independence, diversity, skills, experience and other elements relevant to the success of our Corporation in today’s business environment. In selecting director nominees for our Board, we consider the collective experience, attributes and skills of the entire Board, as well as the ability of the individuals to work together with other members of the Board.
RECOMMENDATION AND VOTE REQUIRED ON PROPOSAL 1
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE ‘FOR’ THE NOMINATED SLATE OF DIRECTORS INCLUDED IN PROPOSAL 1. Directors will be elected by a plurality of the votes cast at the meeting. Abstentions and broker non-votes will have no impact on the election of directors.
General and Corporate Governance Principles
The business and affairs of Peapack-Gladstone are managed under the direction of the Board of Directors. Members of the Board are kept informed of Peapack-Gladstone'sPeapack-Gladstone’s business through discussions with our President and CEO and Peapack-Gladstone’s other officers, by reviewing materials provided to them and by participating in meetings of the Board and its committees. All members of the Board also served as directors of Peapack-Gladstone'sPeapack-Gladstone’s subsidiary bank, Peapack-Gladstone Bank (the “Bank”), during 2014.2017. The Board of Directors of Peapack-Gladstone and Peapack-Gladstone Bank each held 1213 meetings during 2014.2017. During 2014,2017, each director of Peapack-Gladstone attended no fewer than 95%75% of the total number of meetings of Peapack-Gladstone’s Board and meetings of committees on which such director served. It is Peapack-Gladstone’s policy to encourage director attendance at the Annual Meeting absent a compelling reason such as illness. Last year, all but fourtwo directors attended the Annual Meeting.
Our Board of Directors believes that the purpose of corporate governance is to maximize shareholder value in a manner consistent with legal requirements. The Board has adopted corporateCorporate Governance Principles, which are intended to provide guidelines for the governance principles, whichof Peapack-Gladstone, including: the qualification and selection of the Board of Directors and seniorits committees; convening executive sessions of independent directors; the Board of Directors’ interaction with management believe promote this purpose.and third parties; director compensation, orientation and continuing education and the evaluation of the performance of the CEO. The Corporate Governance Principles are available in the Government Documents portion of the Investor Relations section of Peapack-Gladstone’s website located at www.pgbank.com.. We periodically review these governance principles, the rules and listing standards of the NASDAQ Stock Market (“NASDAQ”) and Securities and Exchange Commission (the “SEC”)SEC regulations.
Board Leadership Structure and Role in Risk Oversight
Our Board of Directors is comprised of 13 directors, a majorityall of whichwhom are independent directors. F. Duffield Meyercord serves as our Chairman and Douglas L. Kennedy is our Chief Executive Office and is also a member of our board of directors. The board has three primary committees composed solely of independent directors – Audit, Compensation, and Nominating - under applicable NASDAQ rules, with each of the three committees having a separate independent chair. In addition to these three committees, the Corporation also hasexcept for Douglas L. Kennedy, our Chief Executive Officer. The Company maintains a Risk Committee, which, along with our Board of Directors, is responsible for overseeing the Company’s risk management. Our full Board receives and reviews a company-wide risk assessment annually. While the Board Risk Committee and the full Board oversee the Company’s risk management, management is responsible for day-to-day risk management processes. We believe this division of responsibilities is an appropriate approach for addressing the risks facing our Company at this time.Company. Our independent directors conduct separate executive sessions to discuss Company affairs on at least a semi-annual basis.basis and more frequently as necessary. The ChairmanChair of the Board, who is independent, presides over these sessions. If in the future our Board Chair is not independent, our bylaws provide for the appointment of an independent lead director.
We believe that having a separate chairmanChair and CEO, independent chairs and membership for each of our Audit, Compensation and Nominating Committees and holding executive sessions of independent director sessionsdirectors provides the right form of leadership for our Company. Separating the chairmanChair and CEO positions allowedallows us the CEO to expand our management structure to positionbetter focus on his responsibilities of running the Company, enhancing shareholder growth and better positioning the Company for future
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growth, while our experienced independent director majority provides oversight of Company operations and provides different perspectives based on the directors’ experience, oversight and expertise from outside our Company.
Director Independence
The Board has determined that a majority of the directors and all current members of the Nominating, Compensation, and Audit Committees are “independent” for purposes of thein accordance with NASDAQ rules and Peapack-Gladstone’s internal independence standards provided in our Corporate Governance Principles. The Board has determined that the members of the Audit Committee are also “independent” for purposes of the
heightened standards of independence under NASDAQ rules and Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and that the members of the Compensation Committee are also “independent” for purposes of the heightened standard of independence under the NASDAQ rules. The Board based these determinations onBoard’s conclusion follows a review by the Nominating Committee and on a review by management of the responses of the directors and executive officers to questions regarding employment and transaction history, transactions with the Bank, affiliations and family and other relationships. The independent directors are Dr. Susan A. Cole, Anthony J. Consi, II, Richard Daingerfield, Edward A. Gramigna, Jr., James R. Lamb, Edward A. Merton, F. Duffield Meyercord, Philip W. Smith, III and Beth Welsh.
To assist it in making determinations of independence, the Board has concluded that the following relationships are immaterial and that a director whose only relationships with Peapack-Gladstone fall within these categories is independent absent any other relationship whichthat would interfere with the exercise of the director’s exercise of independent judgment in carrying out the responsibilities of a director:
| · | A loan made by the Bank to a director, his or her immediate family member or an entity affiliated with a director or his or her immediate family member, or a loan personally guaranteed by such persons, if such loan |
| · | A deposit, trust, insurance brokerage, securities brokerage or similar customer relationship between Peapack-Gladstone or its subsidiaries and a director, his or her immediate family member or an affiliate of his or her immediate family member if such relationship is on customary and usual market terms and conditions. |
| · | The employment by Peapack-Gladstone or its subsidiaries of any immediate family member of the director if the employee serves below the level of a senior vice president. |
| · | Annual contributions by Peapack-Gladstone or its subsidiaries to any charity or non-profit corporation with which a director is affiliated if the contributions do not exceed an aggregate of $20,000 in any calendar year and the contribution is made in the name of Peapack-Gladstone. |
| · | Purchases of goods or services by Peapack-Gladstone or any of its subsidiaries from a business in which a director or his or her immediate family member is a partner, shareholder or officer, if the director or his or her immediate family member owns five percent or less of the equity interests of that business and does not serve as an executive officer of the business. |
| · | Purchases of goods or services by Peapack-Gladstone, or any of its subsidiaries, from a director or a business in which the director or his or her immediate family member is a partner, shareholder or officer if the annual aggregate purchases of goods or services from the director, his or her immediate family member or such business in the last calendar year does not exceed the greater of $60,000 or two percent of the gross revenues of the business. |
| · | Fixed retirement benefits paid or payable to a director either currently or on retirement. |
The following categories or types of transactions, relationships or arrangements were considered by the Board in determining that each listed director is independent in accordance with the NASDAQ listing standardsrules and Peapack-Gladstone’s Corporate Governance Principles.
| Independent Director | Category or Type |
| Trust | |
| Anthony J. Consi, II | Loans, Deposits |
| Richard Daingerfield | Loans, Deposits, Trust |
| Deposits, Trust | |
| John D. Kissel | Loans, Deposits |
| Loans, Deposits, Trust | |
| Loans, Deposits, Trust |
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| Category or Type | |
| Philip W. Smith | Loans, Deposits, Trust, Employment of Immediate Family |
| Loans, Deposits, Trust |
___________________
IndependentMr. Smith’s sister in-law Anne Smith was promoted to Senior Managing Director Sessions
Our Corporate Governance Principles require thatin 2017. Anne Smith is not an executive sessions including only independent directors be held at least semi-annually. The Chairmanofficer of the Board, who is independent, presides over these independent director sessions.Company.
Shareholder Communication with Directors
The Board of Directors has established the following procedures for shareholder communications with the Board of Directors:
| · | Shareholders wishing to communicate with the Board of Directors should send any communication to the Board of Directors, Peapack-Gladstone Financial Corporation, c/o Todd M. Poland, Corporate Secretary |
| · | The Corporate Secretary will forward such communication to the Board of Directors or as appropriate to the particular Committee |
| · | The Corporate Secretary will maintain a log of, and copies of, all communications, for inspection and review by any Board member, and |
The Board of Directors has also established the following procedures for shareholder communications with the Chairman,Chair, who presides over the independent director sessions:
| · | Shareholders wishing to communicate with the |
| · | The Corporate Secretary will forward such communication to the |
| · | The Corporate Secretary will maintain a log of, and copies of, all communications, for inspection and review by the |
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Committees of the Board of Directors
In 2014,2017, the Board of Directors maintained an Audit Committee, a Compensation Committee, a Nominating Committee, a Risk Committee, and a CEO Advisoryan Executive Committee. The following table identifies the Company’s Audit, Committee, Compensation Committee and Nominating Committee are each solely comprisedCommittees and their members as of independent directors;March 16, 2018. Each committee operates under a descriptionwritten charter that is approved by the Board of eachDirectors that governs its composition, responsibilities and operations. Each committee reviews and reassesses the adequacy of theseits charter at least annually. The charters of all three committees follows.are available in the Governance Documents portion of the Investor Relations section of the Company’s web site (www.pgbank.com).
| Director | Audit Committee | Compensation Committee | Nominating Committee | |||
| Carmen M. Bowser | X | |||||
| Susan A. Cole | X | |||||
| Anthony J. Consi, II | X* | X | ||||
| Richard Daingerfield | X | |||||
| Edward A. Gramigna, Jr. | X | X* | ||||
| Steven A. Kass | X | |||||
| Douglas L. Kennedy | ||||||
| John D. Kissel | ||||||
| James R. Lamb, Esq. | X | |||||
| F. Duffield Meyercord | X* | X | ||||
| Philip W. Smith, III | X | |||||
| Tony Spinelli | X | |||||
| Beth Welsh | X | |||||
| Number of meetings in 2017 | 8 | 6 | 2 |
_____________
*Chairperson
Audit Committee
Mr. Consi serves as Chair of the Audit Committee. Other members of the Audit Committee currently are Messrs. Daingerfield, Gramigna, Lamb and Ms. Welsh. Mr. Daingerfield was added to the Committee in October 2014. The Audit Committee met seven times during 2014.
The Board of Directors has determined that at least one member of the Audit Committee, Mr. Consi, meets the NASDAQ standard of being financially sophisticated. The Board of Directors has also determined that Mr. Consi meets the SEC criteria of an “audit committee financial expert.”
The Audit Committee operates pursuant to a charter. The charter can be viewed at the Investor Relations link on our website www.pgbank.com. The charter givesprovides the Audit Committee the authority and responsibility for the appointment, retention, compensation and oversight of our independent auditors, including pre-approval of all audit and non-audit services to be performed by our independent auditors. Other responsibilities of the Audit Committee pursuant to the charter include: reviewing the scope and results of the audit with our independent auditors; reviewing with management and our independent auditors Peapack-Gladstone’s interim and year-end operating results including pressearnings releases; considering the appropriateness of the internal accounting and auditing procedures of Peapack-Gladstone; considering our outside auditors’ independence; reviewing examination reports by bank regulatory agencies; reviewing audit reports prepared by the Internal Audit Department of Peapack-Gladstone,Peapack-Gladstone; reviewing audit reports prepared by any outside firm whichthat may conduct some internal audit functions for Peapack-Gladstone; and reviewing the response of management to those reports. The Audit Committee reports to the full Board concerning pertinent matters coming before it.
Compensation Committee
Peapack-Gladstone’s Compensation Committee currently consists of Messrs. Meyercord (Chair), Consi, Merton and Smith. During 2014, the Compensation Committee met four times.
The Compensation Committee operates under a written charter setting out the functions and responsibilities of this committee. The charter can be viewed at the Investor Relations link on our website www.pgbank.com. The Compensation Committee recommends to the independent members of the Board the CEO’s compensation, sets specific compensation for executive officers (other than the CEO) and ratifies general compensation levels for all other officers and employees. It also administers our long-term stock incentive plans and makes awards under those plans. The Compensation Committee also recommends Board has approved its charter, which delegates tocompensation. In setting compensation levels, the Compensation Committee the responsibility to recommend Board compensation. Included in this process isundertakes a thorough analysis and consideration of overall Company performance, individual job performance, the overall need of the Company to attract, retain and incent executive talent, and the total cost of the compensation programs.programs, and peer compensation comparison.
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The Compensation Committee has the authority to hire, fire, and seekresponsibility for the servicesappointment, retention, compensation and oversight of compensation consulting and advisory firms as it deems appropriate to its role. In 2014,2017, the Compensation Committee engaged the services of McLagan, an Aon Hewitt Company (“McLagan”), an independent compensation consulting firm specializing in executive compensation. Services were related to providingcompensation, which provided an updated competitive market analysis. McLagan reports directly to the Compensation Committee and carries out its responsibilities to the Compensation Committee in coordination with the Human Resources Department as requested by the Compensation Committee. As a matter of policy the Compensation Committee does not prohibit its advisors from providing services to management, but any such engagement must be requested or approved by the Compensation Committee.
Nominating Committee
Peapack-Gladstone’s Nominating Committee currently consists of Messrs. Smith (Chair), Merton, Meyercord and Ms. Welsh. The Nominating Committee met four times during 2014.
The Nominating Committee operates under a written charter setting out the functions and responsibilities of this committee. The charter can be viewed at the Investor Relations link on our website www.pgbank.com. The Nominating Committee reviews qualifications of and recommends to the Board candidates for election as director of Peapack-Gladstone and the Bank, considers the composition of the Board, recommends committee assignments, and discusses management succession for the ChairmanChair and the CEO positions. The Nominating Committee is also charged with reviewing the Board’s adherence to the Corporate Governance Principles and the Code of Business Conduct and Ethics. The Nominating Committee reviews recommendations from shareholders regarding corporate governance and director candidates. The procedure for submitting recommendations of director candidates is set forth below under the caption “Nomination of Directors.”
Nomination of Directors
Nominations for director may be made only by the Board of Directors, or a committee of the Board or by a shareholder of record entitled to vote. The Board of Directors has established minimum criteria for members of the Board.
TheseBoard, which include:
| · |
| · |
| · |
| · | An appropriate mix of educational background, professional background and business experience to make a significant contribution to the overall composition of the Board. |
| · | If the Committee deems it applicable, whether the candidate would be able to read and understand fundamental financial statements and considered to be financially sophisticated as described in the NASDAQ rules, or considered to be an audit committee financial expert as defined pursuant to the Sarbanes-Oxley Act of 2002. |
| · | Whether the candidate would be considered independent under the NASDAQ rules and the Board’s additional independence guidelines set forth in Peapack-Gladstone’s Corporate Governance Principles. |
| · | Demonstrated character and reputation, both personal and professional, consistent with that required for a bank director. |
| · | Willingness to apply sound and independent business judgment. |
| · | Ability to work productively with the other members of the Board. |
| · | Availability for the substantial duties and responsibilities of a Peapack-Gladstone director. |
| · | Meets the additional criteria set forth in the Peapack-Gladstone’s Corporate Governance Principles. |
The Nominating Committee has not adopted a formal diversity policy with regard to the selection of director nominees. The Nominating Committee considers diversity of experience, both of the individual under consideration and of the Board as a whole, as a factor in identifying nominees for director. In accordance with the Company’s Corporate Governance Principles, in assessing candidates for nomination, the Nominating Committee considers, among other factors, the candidate’s independence, diversity, skills and experience in the context of the needs of the Board.
The Nominating Committee has adopted a policy regarding consideration of director candidates recommended by shareholders. The NominatingShareholders wishing to submit a director candidate for consideration by the Committee will consider nominations made by shareholders. In order for a shareholdermust submit such director candidate recommendations to make a nomination, the shareholder must provide a notice along withCommittee, c/o the additional information and supporting materials to our Corporate Secretary, 500 Hills Drive, Bedminster, NJ 07921, in writing, not less than 120 days ornor more than 150 days prior to the first anniversary of the date of the precedingprior year’s annual meeting. TheFor our annual meeting in 2019, we must receive this notice between December 10, 2018 and January 9, 2019. To ensure that a shareholder wishing to propose a candidate for consideration by the Nominating Committee must havehas a significant stake in Peapack-Gladstone. Tothe Company, to qualify for consideration by the Nominating Committee, the shareholder submitting the candidate must demonstrate that he or she has been the beneficial owner of at least one percent1% of Peapack-Gladstone’sthe Company’s outstanding shares for a minimum of one year prior to the submission of the request. In addition, the Nominating Committee has the right to require any additional background or other information from any director candidate or the recommending shareholder as it may deem appropriate. Shareholders who wish
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to nominate a director must follow the requirements in our bylaws. For our annual meeting in the year 2016, we must receive this notice on or after November 30, 2015, and on or before December 30, 2015.
The following factors, at a minimum, are considered by the Nominating Committee as partinformation regarding shareholder nominations of its review of all director candidates, and in recommending potential director candidates to the Board:see “Shareholder Proposals” below.
You can obtain a copy of the full text of our policy regarding shareholder nominationsrecommendations for director candidates by writing to MaryTodd M. Russell,Poland, Corporate Secretary, Peapack-Gladstone Financial Corporation, 500 Hills Drive, Suite 300, P.O. Box 700, Bedminster, New Jersey 07921.
Code of Business Conduct and Conflict of Interest Policy and Corporate Governance Principles
Peapack-Gladstone has adopted a Code of Business Conduct and Conflict of Interest Policy, which applies to Peapack-Gladstone’s chairman, chief executive officer, principal financial officer, principal accounting officer and to all other Peapack-Gladstoneof Peapack-Gladstone’s directors, officers and employees. The Code of Business Conduct and Conflict of Interest Policy is available in the Government Documents portion of the Investor Relations section of Peapack-Gladstone’s website located at www.pgbank.com. The Code of Business Conduct and Conflict of Interest Policy is also available in print to any shareholder who requests it from Mary M. Russell, Corporate Secretary, Peapack-Gladstone Financial Corporation, 500 Hills Drive, Suite 300, P.O. Box 700, Bedminster, New Jersey, 07921. Peapack-Gladstone will disclose any substantive amendments to or waiver from provisions of the Code of Business Conduct and Conflict of Interest Policy on our website as may be required and within the time period specified under applicable SEC and NASDAQ rules.
As noted above, we have also adopted Corporate Governance Principles, which are intended to provide guidelines for the governance 8
The following table summarizes the compensation of the non-employee directors of Peapack-Gladstone in 2014.2017. Douglas L. Kennedy, as a full-time employee, was not compensated for his service rendered as a director.
| Name | Fees Earned or Paid in Cash (1) | Stock Awards (2) | Change in Pension Value and Nonqualified Deferred Compensation Earnings (3) (4) | Total | ||||||||||||
| Susan A. Cole (5) | $ | 24,770 | $ | — | $ | — | $ | 24,770 | ||||||||
| Anthony J. Consi, II | 79,200 | 29,224 | 33,168 | 141,592 | ||||||||||||
| Richard Daingerfield (5) | 12,420 | — | 2,082 | 14,502 | ||||||||||||
| Edward A. Gramigna, Jr. | 54,100 | 17,348 | 7,518 | 78,966 | ||||||||||||
| John D. Kissel | 36,100 | 8,567 | 20,637 | 65,304 | ||||||||||||
| James R. Lamb, Esq. | 37,300 | 10,903 | — | 48,203 | ||||||||||||
| Edward A. Merton | 31,500 | 11,098 | 28,266 | 70,864 | ||||||||||||
| F. Duffield Meyercord | 123,900 | 49,804 | 38,484 | 212,188 | ||||||||||||
| Philip W. Smith, III | 41,500 | 15,498 | 13,478 | 70,476 | ||||||||||||
| Beth Welsh | 40,000 | 11,682 | 7,807 | 59,489 | ||||||||||||
| Name | Fees Earned or Paid in Cash (1) | Stock Awards | Change in Pension Value and Nonqualified Deferred Compensation Earnings (2) (3) | Total | ||||||||||||
| Carmen M. Bowser (4) | $ | 12,200 | $ | — | $ | — | $ | 12,200 | ||||||||
| Susan A. Cole | 49,700 | 9,836 | — | 59,536 | ||||||||||||
| Anthony J. Consi, II | 127,950 | 54,116 | — | 182,066 | ||||||||||||
| Richard Daingerfield | 110,300 | 36,176 | — | 146,476 | ||||||||||||
| Edward A. Gramigna, Jr. | 97,400 | 29,040 | — | 126,440 | ||||||||||||
| John D. Kissel | 48,800 | 9,174 | — | 57,974 | ||||||||||||
| James R. Lamb, Esq. | 67,800 | 12,393 | — | 80,193 | ||||||||||||
| F. Duffield Meyercord | 148,950 | 130,645 | — | 279,595 | ||||||||||||
| Philip W. Smith, III | 49,700 | 10,558 | — | 60,258 | ||||||||||||
| Tony Spinelli (5) | 33,000 | — | — | 33,000 | ||||||||||||
| Beth Welsh | 68,300 | 12,092 | — | 80,392 | ||||||||||||
| (1) | In |
| (2) |
| Name | Number of Shares Awarded 2014 | Grant Date Fair Market Value of Stock Awarded (a) | Aggregate Number of Options Outstanding at 12/31/2014 | Aggregate Number of Awards Outstanding at 12/31/2014 | ||||||||||||
| Susan A. Cole | — | $ | — | — | — | |||||||||||
| Anthony J. Consi, II | 1,501 | 29,224 | 17,120 | 1,501 | ||||||||||||
| Richard Daingerfield | — | — | — | — | ||||||||||||
| Edward A. Gramigna, Jr. | 891 | 17,348 | 2,500 | 891 | ||||||||||||
| John D. Kissel | 440 | 8,567 | 17,120 | 440 | ||||||||||||
| James R. Lamb, Esq. | 560 | 10,903 | 17,120 | 560 | ||||||||||||
| Edward A. Merton | 570 | 11,098 | 17,120 | 570 | ||||||||||||
| F. Duffield Meyercord | 2,558 | 49,804 | 17,120 | 2,558 | ||||||||||||
| Philip W. Smith, III | 796 | 15,498 | 17,120 | 796 | ||||||||||||
| Beth Welsh | 600 | 11,682 | 2,500 | 600 | ||||||||||||
| Peapack-Gladstone | ||
| (4) | Ms. Bowser joined the Board of Directors effective September 28, 2017. |
| (5) |
The following table represents the number of restricted shares awarded to each director during 2017, the grant date fair market value of these awards computed in accordance with ASC 718 and the aggregate number of options or restricted stock outstanding at December 31, 2017, for each of the following directors.
| Name | Number of Shares of Restricted Stock Awarded in 2017 | Grant Date Fair Market Value of Stock Awarded (a) | Aggregate Number of Options Outstanding at 12/31/2017 | Aggregate Number of Restricted Stock Awards Outstanding at 12/31/2017 | ||||||||||||
| Carmen M. Bowser | — | $ | — | — | — | |||||||||||
| Susan A. Cole | 327 | 9,836 | — | 426 | ||||||||||||
| Anthony J. Consi, II | 1,748 | 54,116 | 5,000 | 2,189 | ||||||||||||
| Richard Daingerfield | 1,172 | 36,176 | — | 1,221 | ||||||||||||
| Edward A. Gramigna, Jr. | 945 | 29,040 | 2,500 | 1,203 | ||||||||||||
| John D. Kissel | 305 | 9,174 | 14,810 | 449 | ||||||||||||
| James R. Lamb, Esq. | 412 | 12,393 | 12,500 | 560 | ||||||||||||
| F. Duffield Meyercord | 4,190 | 130,645 | 12,500 | 5,174 | ||||||||||||
| Philip W. Smith, III | 351 | 10,558 | 12,500 | 549 | ||||||||||||
| Tony Spinelli | — | — | — | — | ||||||||||||
| Beth Welsh | 402 | 12,092 | 2,500 | 561 | ||||||||||||
(a) Represents the aggregate grant date fair value of restricted stock awards in accordance with ASC 718. See Note 12 – Stock-Based Compensation of Peapack-Gladstone’s Annual Report on Form 10-K for the year ended December 31, 2017 for additional information on the valuation methodology.
9
BENEFICIAL OWNERSHIP OF COMMON STOCK
Certain Beneficial Owners
The following table sets forth as of February 28, 2015March 16, 2018 certain information as to beneficial ownership of each person known to Peapack-Gladstone to own beneficially more than 5five percent of the outstanding common stock of Peapack-Gladstone.
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership |
Percent of Class | Amount and Nature of Beneficial Ownership |
Percent of Class |
Entities affiliated with The Banc Funds Company LLC (1) 20 North Wacker Drive Chicago, IL 60606 | 1,324,019 | 8.66% | 1,472,263 | 7.77% |
Wellington Management Company, LLP (2) 280 Congress Street Boston, MA 02210 | 1,216,629 | 7.96% | ||
James M. Weichert (2) 1625 State Highway 10 Morris Plains, NJ 07950 | 1,070,480
| 5.65% | ||
James M. Weichert (3) 1625 State Highway 10 Morris Plains, NJ 07950 | 1,070,480
| 7.00% | ||
BlackRock Inc. (3) 55 East 52d Street New York, NY 10055 | 1,066,794 | 5.63% | ||
Wellington Management Group, LLP (4) 280 Congress Street Boston, MA 02210 | 964,316 | 5.09% | ||
| _________________________ |
| (1) | Based on a Schedule |
| (2) | Based on a Schedule |
| (3) | Based on a Schedule |
| (4) | Based on a Schedule 13G/A filed with |
Stock Ownership of Directors and Executive Officers
The following table sets forth as of March 4, 201516, 2018 the number of shares of Peapack-Gladstone'sPeapack-Gladstone’s common stock, beneficially owned by each of the directors/nominees and the executive officers of Peapack-Gladstone for whom individual information is required to be set forth in this proxy statement (the “named executive officers”) pursuant to the regulations of the SEC, and by all directors and executive officers as a group.
| Name of Beneficial Owner | Amount and Nature of Beneficial Ownership (1) | Percent of Class (2) | |
| John P. Babcock | 64,035 | (3) | * |
| Jeffrey J. Carfora | 82,719 | (4) | * |
| Finn M. W. Caspersen, Jr. | 80,924 | (5) | * |
| Dr. Susan A. Cole | 540 | (6) | * |
| Anthony J. Consi, II | 100,376 | (7) | * |
| Richard Daingerfield | 2,000 | (8) | * |
| Edward A. Gramigna, Jr. | 4,367 | (9) | * |
| Douglas L. Kennedy | 127,931 | (10) | * |
| Frank A. Kissel | 140,705 | (11) | * |
| John D. Kissel | 60,701 | (12) | * |
| James R. Lamb | 36,440 | (13) | * |
| Edward A. Merton | 44,230 | (14) | * |
| F. Duffield Meyercord | 55,785 | (15) | * |
| Philip W. Smith, III | 60,860 | (16) | * |
| Vincent A. Spero | 60,616 | (17) | * |
| Beth Welsh | 3,038 | (18) | * |
All directors and executive officers as a group (16 persons) |
925,267 |
6.00% | |
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| Name of Beneficial Owner | Amount and Nature of Beneficial Ownership (1) | Percent of Class (2) | |
| John P. Babcock | 88,581 | (3) | * |
| Carmen M. Bowser | 400 | (1) | * |
| Jeffrey J. Carfora | 101,508 | (4) | 0.54 |
| Lisa P. Chalkan | 8,506 | (6) | * |
| Dr. Susan A. Cole | 1,623 | (7) | * |
| Anthony J. Consi, II | 99,079 | (8) | 0.52 |
| Richard Daingerfield | 5,870 | (9) | * |
| Edward A. Gramigna, Jr. | 9,501 | (10) | * |
| Steven A. Kass | 1,000 | (1) | * |
| Douglas L. Kennedy | 165,691 | (11) | 0.87 |
| John D. Kissel | 60,725 | (12) | * |
| James R. Lamb | 35,640 | (13) | * |
| F. Duffield Meyercord | 81,330 | (14) | * |
| Robert Plante | - | * | |
| Philip W. Smith, III | 63,089 | (15) | * |
| Anthony Spinelli | 430 | (1) | * |
| Beth Welsh | 6,440 | (16) | * |
| All directors and executive officers | |||
| as a group (25 persons) | 987,895 | (17) | 4.84% |
NOTES:
| * | Less than one-half of one percent |
| (1) | Beneficially owned shares include shares over which the named person exercises either sole or shared voting |
| (2) | The number of shares of common stock used in calculating the percentage of the class owned by all directors and executive officers as a group includes shares of common stock outstanding as of March |
| (3) |
| (4) |
| (5) | Includes 1,433 shares allocated under Peapack-Gladstone’s 401(k) Plan, 135 shares purchased under the Employee Stock Purchase Plan, and |
| (7) | Includes 99 shares of restricted stock awards and 327 shares of restricted stock units. |
| (8) | Includes 441 shares of restricted stock awards, 1,748 shares of restricted stock units, and 5,000 shares purchasable pursuant to options exercisable within 60 days of March |
11
| (12) | Includes 1,789 shares owned by Mr. Kissel’s wife, 4,224 shares owned by Mr. Kissel’s children, 144 shares of restricted stock awards, 305 shares of restricted stock units, and 12,500 shares purchasable pursuant to options exercisable within 60 days of March |
Stock Ownership Guidelines
In 2017, the Board of Directors updated the Company’s Stock Ownership Guidelines. The Stock Ownership Guidelines apply to the Board of Directors, the Chief Executive Officer and the named executive officers of the Company and impose the following requirements:
| · | All new members elected to the Board must own a minimum of $10,000 in Company stock at the time of his or her appointment; |
Individuals can count shares owned in a Company benefit plan towards the stock ownership requirement. There is no set compliance period to meet the guidelines, with the exception of the minimum ownership requirement applicable to new Board members, which must be met at the time of a new Board member’s appointment. However, until the guidelines are achieved, individuals will be required to retain 100% of any net shares received through a Company grant under the 2012 Long-Term Incentive Plan.
ELECTION OF DIRECTORS
The Board has 13 members. Peapack-Gladstone’s Nominating Committee has recommended to the Board that the 13 current directors be re-elected for one-year terms expiring at Peapack-Gladstone’s 2019 Annual Meeting of Shareholders or until their successors shall have been duly elected and qualified. If, for any reason, any of the nominees become unavailable for election, the proxy solicited by the Board may be voted for a substitute nominee selected by the Board. The Board has no reason to believe that any of the named nominees is unavailable for election or will not serve if elected.
Unless a shareholder indicates otherwise on the proxy, the proxy will be voted for the persons named in the table below to serve until the expiration of their terms, and thereafter until their successors have been duly elected and qualified.
The following table sets forth the names and ages of the Board’s nominees for election, the nominees’ positions with Peapack-Gladstone (if any), the principal occupation or employment of each nominee for the past five years and the period during which each nominee has served as a director of Peapack-Gladstone. The nominee’s prior service as a director includes prior service as a director of the Bank prior to the formation of the holding company. In addition, described below is each director nominee’s particular experience, qualifications, attributes or skills that have led the Board to conclude that the person should serve as a director.
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NOMINEES FOR ELECTION AS DIRECTORS
| Name and Position With Peapack- Gladstone | Age | Director Since | Principal Occupation or Employment for the Past Five Years; Other Company Directorships | |||
| Carmen M. Bowser | 63 | 2017 | Retired; former Managing Vice President, Commercial Real Estate Division, Capital One Bank. Ms. Bowser is qualified to serve on the Board of Directors because of her extensive experience in the commercial real estate market, which includes serving as Managing Vice President, Commercial Real Estate Division at Capital One Bank and as Managing Director for Prudential Mortgage Capital Company. Her expertise and leadership experience will be invaluable to the oversight of the Company’s real estate portfolio. | |||
| Dr. Susan A. Cole | 75 | 2014 | President of Montclair State University. Dr. Cole is qualified to serve on the Board of Directors because of her 19 years as President of Montclair State University, the second largest university in New Jersey, with approximately 20,000 students, which provides invaluable experience in the oversight of Bank operations. | |||
| Anthony J. Consi, II | 72 | 2000 | Retired; previously Senior Vice President of Finance and Operations, Weichert Realtors. Mr. Consi is qualified to serve on the Board of Directors because of his 15 years of public accounting experience at Coopers & Lybrand and his 22 years of finance and operations leadership at Weichert Realtors, both of which are invaluable to his role as Audit Committee Chair. | |||
| Richard Daingerfield | 64 | 2014 | Retired; Executive Vice President and General Counsel of Citizens Financial Group, Inc., Boston, Massachusetts from 2010 to 2014. Mr. Daingerfield is qualified to serve on the Board of Directors because of his expertise in corporate governance, executive management, risk management, corporate banking and commercial banking. His broad legal experience in all aspects of commercial and retail banking, including international and domestic private banking, are invaluable to his role as Risk Committee Chair. | |||
| Edward A. Gramigna, Jr. | 57 | 2012 | Partner of Drinker Biddle & Reath LLP. Mr. Gramigna is qualified to serve on the Board of Directors because of his 28 years of experience in trust, estate planning and estate administration, which is invaluable in the oversight of our wealth management division. | |||
| Steven A. Kass | 62 | 2018 | Retired; Previously senior partner of KPMG from 2014 to 2016. Mr. Kass was Chief Executive Officer of Rothstein Kass, an accounting firm that specialized in audit, tax and advisory services to hedge fund, private equity and venture capital clients, before it was sold to KPMG in 2014. Mr. Kass is qualified to serve on the Board of Directors because of his public company accounting and management level experience. | |||
Douglas L. Kennedy Chief Executive Officer | 61 | 2012 | President and CEO of Peapack-Gladstone and the Bank since 2012. Prior to joining the Company, Mr. Kennedy served as Executive Vice President and Market President at Capital One Bank/North Fork and held key executive level positions with Summit Bank and Bank of America/Fleet Bank. Mr. Kennedy, who began his career in commercial banking in 1978, is qualified to serve on the Board of Directors because of his 39 years of commercial banking experience, demonstrated business leadership, judgment and vision. | |||
| John D. Kissel | 65 | 1987 | Retired: former Real Estate Broker, Turpin Real Estate, Inc. Mr. Kissel is qualified to serve on the Board of Directors because of his 27 years of experience in the residential real estate market, which is invaluable to the Board’s oversight of the Bank’s real estate loan portfolio. | |||
| James R. Lamb | 75 | 1993 | Attorney at Law. Mr. Lamb is qualified to serve on the Board of Directors because of his 50 years of legal experience, which is invaluable to the Board’s corporate governance program and the Board’s oversight of the Bank’s legal and regulatory affairs. |
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| Name and Position With Peapack- Gladstone | Age | Director Since | Principal Occupation or Employment for the Past Five Years; Other Company Directorships | |||
| F. Duffield Meyercord Chair | 71 | 1991 | Chair of the Board of Peapack-Gladstone and the Bank; Partner of Carl Marks Advisory Group, LLC; President, Meyercord Advisors, Inc. Mr. Meyercord is qualified to serve on the Board of Directors because of his 42 years of experience in directing strategic projects and providing operational advisory services to numerous businesses, which is invaluable to the Board’s oversight of corporate strategy. | |||
| Philip W. Smith, III | 62 | 1995 | President, Phillary Management, Inc., a real estate management company. Mr. Smith is qualified to serve on the Board of Directors because of his 30 years of experience in commercial real estate agency and management, which is invaluable to the Board’s oversight of the Company’s real estate loan portfolio. | |||
| Tony Spinelli | 50 | 2017 | Chief Operating Officer and President, Cyberdivision for Fractal Industries, Inc. Mr. Spinelli also served as Senior Vice President, Chief Information Security Officer, Capital One Bank. Mr. Spinelli is qualified to serve on the Board of Directors because his expertise in cybersecurity, security engineering and compliance will provide insight into emerging threats to the Company and our clients. | |||
| Beth Welsh | 59 | 2012 | General Manager of Bassett Associates, a real estate management company in Summit, New Jersey. Ms. Welsh is qualified to serve on the Board of Directors because of her 22 years of experience in the commercial real estate market as well as her past banking experience, which is invaluable to the Board’s oversight of the Company’s real estate lending and small business banking. |
The members of our Board of Directors collectively demonstrate appropriate leadership skills, experience and judgment in areas that are relevant to our business. We believe that their collective ability to challenge and stimulate management and their dedication to the affairs of the Company serve the interests of the Company and its shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE
DIRECTORS INCLUDED IN PROPOSAL 1.
ADVISORY VOTE ON COMPENSATION OF NAMED EXECUTIVE OFFICERS
We believe that our compensation policies and procedures are competitive, are focused on pay-for-performance principles and are strongly aligned with the long-term interests of our shareholders. We also believe that both wethe Company and our shareholders benefit from responsive corporate governance policies and constructive and consistent dialogue. The proposal described below, commonly known as a “Say on Pay” proposal, gives you, as a shareholder of Peapack-Gladstone the opportunity to endorse or not endorse the compensation for our named executive officers by voting to approve or not approve such compensation as described in this proxy statement. We currently hold our “Say on Pay” vote on an annual basis.officers.
As part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), Congress adopted Section 14A of the Securities Exchange Act of 1934, pursuant to which the Board is giving our shareholders thiswere provided an opportunity to approve on an advisory, or non-binding basis, the compensation of our named executive officers as disclosed pursuant to Item 402 of Regulation S-K.officers. Accordingly, we are asking you to approvevote on the compensation of Peapack-Gladstone’s named executive officers as described under “Compensation Discussion and Analysis” and the tabular disclosure regarding named executive officer compensation (together with the accompanying narrative disclosure) in this proxy statement. Your vote is advisory and will not be binding upon the Board. However, the Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements.
14
The following summarizes the backgrounds of the named executive officers.
| · | Mr. Kennedy joined the Bank in October 2012 as Chief Executive Officer. He is a career banker with over |
| · | Mr. Carfora joined the Bank in April 2009 as Chief Financial Officer having previously served as a Transitional Officer with New York Community Bank from April 2007 until January 2008 as a result of a merger with PennFed Financial Services Inc. and Penn Federal Savings Bank (collectively referred to as “PennFed”). |
| · | Mr. |
| · | Mr. Babcock joined the Bank in |
| · |
RECOMMENDATION AND VOTE REQUIRED ON PROPOSAL 2
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE NON-BINDING APPROVAL OF THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS DETERMINED BYOFFICERS.
AMENDMENT TO THE COMPENSATION COMMITTEE. ApprovalRESTATED CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES
The Board of Directors recommends that shareholders approve an amendment to Article Fourth of the Restated Certificate of Incorporation of the Company that would increase the authorized number of shares of common stock from 21,000,000 (as presently authorized) to 42,000,000 shares. The Board of Directors unanimously voted to approve this advisoryamendment and to recommend that shareholders approve it.
As of March 16, 2018, 18,946,564 shares of common stock were issued and outstanding, and 408,178 shares of common stock were held as treasury shares. In addition, approximately 897,797 shares are subject to restricted and performance stock awards. As a result, the number of shares of common stock available for issuance, after taking into account shares reserved for issuance under the Company’s employee stock plans, is 677,326.
The Board believes that the availability of additional authorized shares of common stock will provide the Company with additional flexibility to issue common stock for a variety of general corporate purposes as the Board may determine to
15
be desirable including, without limitation, stock splits (including splits effected through the declaration of stock dividends), raising capital, future financings, investment opportunities, acquisitions, or other distributions. The Board has not authorized the Company to take any action with respect to the shares that would be authorized under this proposal, requiresand the favorableCompany currently does not have any definitive plans, arrangements or understandings with respect to the issuance of the additional shares of common stock authorized by the proposed amendment to the Restated Certificate of Incorporation of the Company.
The proposed amendment to increase the authorized number of shares of common stock could, under certain circumstances, have an anti-takeover effect or delay or prevent a change in control of the Company by providing the Company the capability to engage in actions that would be dilutive to a potential acquiror, to pursue alternative transactions, or to otherwise increase the potential cost to acquire control of the Company. Thus, while the Company currently has no intent to employ the additional unissued authorized shares as an anti-takeover device, the proposed amendment and the future issuance of additional shares of common stock may have the effect of discouraging future unsolicited takeover attempts. The Board is not aware of any such attempt to take control of the Company, and would act in the best interest of shareholders if any attempt was made. The proposed amendment has been prompted by business and financial considerations. The proposed increase in the number of authorized shares of the Company’s common stock will not change the number of shares of common stock outstanding, nor will it have any immediate dilutive effect or change the rights of current holders of the Company’s common stock. However, the issuance of additional shares of common stock authorized by this amendment to the Restated Certificate of Incorporation may occur at times or under circumstances as to have a dilutive effect on earnings per share, book value per share or the percentage voting or ownership interest of the present holders of the Company’s common stock, none of whom have preemptive rights under the Restated Certificate of Incorporation to subscribe for additional securities that the Company may issue.
Once the proposed amendment is approved, no further action by the shareholders would be necessary prior to the issuance of additional shares of common stock unless required by law or the rules of any stock exchange or national securities association on which the common stock is then listed or quoted. Under the proposed amendment, each of the newly authorized shares of common stock will have the same rights and privileges as currently authorized common stock. Adoption of the proposed amendment will not affect the rights of the holders of currently outstanding common stock of the Company nor will it change the par value of the common stock. The proposed amendment to increase the authorized number of shares of common stock does not change the number of shares of preferred stock that the Company is authorized to issue. The last increase in the number of authorized shares of common stock was approved by the shareholders in 2009.
If the proposed amendment is adopted, it will become effective upon filing of Articles of Amendment to the Company’s Restated Certificate of Incorporation with the New Jersey Secretary of State.
The affirmative vote of athe majority of the votes cast. Abstentionscast on this proposal is required to amend the Restated Certificate of Incorporation.
THE BOARD RECOMMENDS A VOTE FOR APPROVAL TO AMEND THE RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES.
RATIFICATION OF THE APPOINTMENT OF THE
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors appointed Crowe Horwath LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2018. Representatives from Crowe Horwath LLP are expected to be present at the annual meeting to answer questions and broker non-votesthey will have no impactthe opportunity to speak if desired. The Audit Committee will consider the outcome of our shareholders’ vote in connection with the selection of Crowe Horwath LLP, but is not bound by the vote. If the appointment is not ratified, the Audit Committee will consider whether a different independent registered public accounting firm should be selected.
16
Aggregate fees for the fiscal years ending December 31, 2017 and December 31, 2016 billed by Crowe Horwath LLP were as follows:
| Type of Service | 2017 | 2016 | ||||||
| Audit Fees | $ | 470,000 | $ | 400,000 | ||||
| Audit-Related Fees (1) | 145,208 | 156,750 | ||||||
| Total | $ | 615,208 | $ | 556,750 | ||||
| (1) | Includes fees for procedures related to the offering of subordinated debt and consents for registration statements for 2017 and for Peapack-Gladstone common stock offering and consents for registration statements for 2016. |
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF CROWE HORWATH AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2018.
Audit Committee Pre-Approval Procedures
The Audit Committee maintains a policy concerning the pre-approval of audit and non-audit services to be provided by the independent registered public accounting firm to Peapack-Gladstone. The policy requires that all services to be performed by Peapack-Gladstone’s independent registered public accounting firm, including audit services, audit-related services and permitted non-audit services, be pre-approved by the Audit Committee. Specific services being provided by the independent registered public accounting firm are regularly reviewed in accordance with the pre-approval policy. At subsequent Audit Committee meetings, the Audit Committee receives updates on the approvalservices actually provided by the independent registered public accounting firm, and management may present additional services for approval. All services rendered by Crowe Horwath LLP are permissible under applicable laws and regulations. Each new engagement of this advisory proposal.Crowe Horwath LLP in 2017 was approved in advance by the Audit Committee.
Audit Committee Report
To the Board of Directors of Peapack-Gladstone Financial Corporation:
The Company’s management is responsible for the Company’s internal control over financial reporting. The Company’s independent registered public accounting firm is responsible for performing an independent audit of the Company’s consolidated financial statements and issuing an opinion on the conformity of those financial statements with U.S. generally accepted accounting principles. The independent registered public accounting firm is also responsible for issuing an opinion on the Company’s internal control over financial reporting based on criteria issued by the Committee on Sponsoring Organizations of the Treadway Commission. The Audit Committee oversees the Company’s internal control over financial reporting on behalf of the Board of Directors.
In this context, the Audit Committee has met and held discussions with management and the independent registered public accounting firm. Management represented to the Audit Committee that the Company’s consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles, and the Audit Committee has reviewed and discussed the consolidated financial statements with management and the Company’s independent registered public accounting firm.
We have discussed with the independent auditors the matters required to be discussed by Auditing Standard No. 1301, adopted by the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and have discussed with the independent accountant the independent accountant’s independence. In concluding that the independent registered public accounting firm is independent, the Audit Committee considered, among other factors, whether the non-audit services provided by the firm were compatible with its independence.
The Audit Committee discussed with the Company’s independent registered public accounting firm the overall scope and plans for their audit. The Audit Committee meets with the independent registered public accounting firm, with and without management present, to discuss the results of their examination, their evaluation of the Company’s internal control over financial reporting and the overall quality of the Company’s financial reporting process.
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In performing all of these functions, the Audit Committee acts only in an oversight capacity. In its oversight role, the Audit Committee relies on the work and assurances of the Company’s management, which has the primary responsibility for financial statements and reports, and of the independent registered public accounting firm that, in its report, expresses an opinion on the conformity of the Company’s financial statements with U.S. generally accepted accounting principles. The Audit Committee’s oversight does not provide it with an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or policies, or appropriate internal control over financial reporting designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the Audit Committee’s considerations and discussions with management and the independent registered public accounting firm do not assure that the Company’s financial statements are presented in accordance with U.S. generally accepted accounting principles, that the audit of the Company’s financial statements has been carried out in accordance with the standards of the Public Company Accounting Oversight Board (United States) or that the Company’s independent registered public accounting firm is “independent.”
Based on the reviews and discussions referred to above, we recommend to the Board of Directors that the audited financial statements referred to above be included in Peapack-Gladstone’s Annual Report on Form 10-K for the year ended December 31, 2017.
| The Audit Committee | |
| Anthony J. Consi, II, Chair | |
| Richard Daingerfield | |
| Edward A. Gramigna, Jr. | |
| Steven A. Kass | |
| James R. Lamb, Esq. | |
| Beth Welsh | |
| March 16, 2018 |
18
COMPENSATION DISCUSSION AND ANALYSIS
The following is a discussion and analysis of our compensation programs as they apply to our Chief Executive Officer (“CEO”), our Chief Financial Officer (“CFO”) and the three other most highly compensated individuals who were serving as executive officers at the end of fiscal 20142017, and one highly compensated former executive officer (collectively,the “Named Executive Officers”“named executive officers”).
Executive Summary
20142017 Financial Highlights and Company Performance
The Compensation Committee of the Board of Directors (“Committee”(the “Committee”) believes that the Company, under the leadership and guidance of its CEO and other Named Executive Officers,named executive officers, has been successful in executing its Strategic Plan – “Expanding Our Reach.” The Strategic Plan focuses on the client experience and aggressively building and maintaining a private banking platform.
In particular, the Committee noted the following factors, which it believes demonstrated the success of the Company and of the CEO and other Named Executive Officersnamed executive officers individually in 2014:2017:
| · | For the year ended December 31, |
| (Dollars in millions, except EPS) | 2014 | 2013 | Improvement | 2017 | 2016 | Improvement 2017 vs. 2016 | ||||||||||||||||||||||||||
| Pretax income | $ | 24.29 | $ | 14.76 | $ | 9.53 | 65 | % | $ | 54.31 | $ | 42.74 | $ | 11.57 | 27 | % | ||||||||||||||||
| Net income | $ | 14.89 | $ | 9.26 | $ | 5.63 | 61 | % | $ | 36.50 | $ | 26.48 | $ | 10.02 | 38 | % | ||||||||||||||||
| Diluted EPS | $ | 1.22 | $ | 1.01 | $ | 0.21 | 21 | % | ||||||||||||||||||||||||
| Diluted earnings per share (EPS) | $ | 2.03 | $ | 1.60 | $ | 0.43 | 27 | % | ||||||||||||||||||||||||
| Total revenue | $ | 88.70 | $ | 73.37 | $ | 15.33 | 21 | % | $ | 145.77 | $ | 125.35 | $ | 20.42 | 16 | % | ||||||||||||||||
| Return on average assets | 0.63 | % | 0.54 | % | 0.09 | 0.89 | % | 0.72 | % | 0.17 | % | |||||||||||||||||||||
| Return on average equity | 7.96 | % | 7.37 | % | 0.59 | 10.12 | % | 8.92 | % | 1.20 | % | |||||||||||||||||||||
| Efficiency ratio | 67.45 | % | 76.63 | % | (9.18 | ) | ||||||||||||||||||||||||||
| Nonperforming assets as a percent of total assets | 0.37 | % | 0.30 | % | 0.07 | % | ||||||||||||||||||||||||||
| · |
| · | Loans at December 31, |
| · | Total “customer” deposit balances amounted to $3.45 billion at December 31, 2017. This reflected net growth of $308 million (10 percent) when compared to $3.14 billion of total “customer” deposit balances at December 31, 2016. |
| · | Asset quality metrics continued to be strong at December 31, |
| · |
| Actual vs. Budget | ||||||||||||||||
| (Dollars in millions, except EPS) | 2014 | Budget | Variance | |||||||||||||
| Pretax income | $ | 24.29 | $ | 21.09 | $ | 3.20 | 15 | % | ||||||||
| Net income | $ | 14.89 | $ | 12.97 | $ | 1.92 | 15 | % | ||||||||
| Diluted EPS | $ | 1.22 | $ | 1.09 | $ | 0.13 | 12 | % | ||||||||
| Total revenue | $ | 88.70 | $ | 88.29 | $ | 0.41 | 1 | % | ||||||||
| Return on average assets | 0.63 | % | 0.58 | % | 0.05 | |||||||||||
| Return on average equity | 7.96 | % | 7.31 | % | 0.65 | |||||||||||
| Efficiency ratio | 67.45 | % | 67.28 | % | 0.17 | |||||||||||
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After consideration of 2014’s results compared to budget, we determined 2014 Company performance to be ratedmaximum under the2017 Executive Performance Plan based onResults
For 2017, overall results were better than our budget/plan for 2017 (“2017 Budget”) as shown in the following guidelines:table below.
| Achievement | ||||||||||||||||
| 2017 | 2017 Actual vs | |||||||||||||||
| (Dollars in millions, except EPS) | 2017 | Budget | 2017 Budget | |||||||||||||
| Pretax income | $ | 54.31 | $ | 48.20 | $ | 6.11 | 13 | % | ||||||||
| Net income | $ | 36.50 | $ | 29.89 | $ | 6.61 | 22 | % | ||||||||
| Diluted earnings per share (EPS) | $ | 2.03 | $ | 1.69 | $ | 0.34 | 20 | % | ||||||||
| Total revenue | $ | 145.77 | $ | 139.17 | $ | 6.60 | 5 | % | ||||||||
| Return on average assets | 0.89 | % | 0.73 | % | 0.16 | % | ||||||||||
| Return on average equity | 10.12 | % | 8.62 | % | 1.50 | % | ||||||||||
For purposes of the Company’s Executive Performance Plan (the “EPP”), Company performance was measured as follows:
| · | Threshold – |
| · | Target – 100% to |
| · | Maximum – 110% and |
| “2017 Budget |
We believe that we need to offer competitive compensation in order to retain, motivate and recruit qualified executives. In addition, we are committed to delivering strong performance for our shareholders, and, as such, we link executive compensation to performance. As a result, the Committee undertook the following compensation initiatives:
In 2014 we continued the performance2017 Budget achievement is based incentive plan established in 2013 that links compensation to the Strategic Plan on both an annual and multi-year basis. The EPP provides for both annual short-term (cash) and annual long-term (equity) awards based upon achieving Company and individual performance goals and objectives, and also provides for a long term Strategic Plan Award (Equity) based upon achieving Company performance goals.
Under the EPP, annual awards are made based upon achievement of Company goals and individual objectives. The Company measurements include: pretax income and net income, EPS, ROAA, ROAE, total revenue, and asset quality.
Under the EPP, restricted stock will be granted to Named Executive Officers. For the EVP, Commercial Banking the grant is generally made annually and vests in equal increments over a five year period. For the CEO, CFO, Chief Operating Officer (“COO”), and President of Private Wealth Management the grant is not an annual grant and is expected to cover multiple years up to and including the year ended December 31, 2017. 50% of the grant vests in equal increments over a five year period and the remaining 50% vests only if four of five pre-determined high performing annual targets are met for an annual period of time. If the high performing targets are not met by year end 2017, the stock is forfeited. The high performing targets are as follows:
The CEO, COO, and CFO received these grants in 2013. The President of Private Wealth Management received his grant in 2014 when he joined the Company.
The following was adopted by the Committee effective for the 2014 EPP grants: For Plan years 2014 and forward, the Company shall recover any award made under the EPP that is later found to have been based on materially inaccurate financial statements or other materially inaccurate measurements of performance.
The excise tax gross-up provisions pursuant to Section 280G of the Internal Revenue Code (the “Code”) were eliminated from all Change in Control contracts. For officers other than the CEO, CFO, and COO, the change in control period and payment was reduced from three years to either two years or 18 months, depending on the executive officer.
Mr. Kennedy joined the Company in October 2012 at a base salary of $500,000. He did not receive a base salary increase in 2013 or in 2014.
Mr. Kennedy received a short-term incentive award (cash) under the EPP of $450,000. This award was based on 2014 Company performance (75% weighting) and 2014 individual performance (25% weighting). As fully described previously, Company performance for 2014 was set at themaximum level as results were in excess of 10 percent ahead of the 2014 Budget/Plan. Individual performance was also set at themaximumlevel. In evaluating Mr. Kennedy’s individual performance for 2014, the Committee considered, among other things, Mr. Kennedy’s 2014 strategic objectives which were set at the beginning of 2014.
The following include the more significant broad objectives, all of which were met or exceeded:
In March 2014, Mr. Kennedy was granted a long-term incentive award (restricted stock) under the EPP of $337,500. This award was based on 2013 Company performance (75% weighting) and 2013 individual performance (25% weighting). Company performance for 2013 was ontarget with the 2013 Budget/ Plan, after adjusting for several large unusual items not contemplated by the 2013 Budget/Plan (the larger of which included gain on sale of classified loans, write-down of an REO property, various severance expenses, and accelerated depreciation associated with the Operations Center move to the headquarters building). Individual performance was at themaximum level. This grant vests in equal increments over three years.income.
Lastly, in 2013 Mr. Kennedy executed an Employment Agreement and a Change in Control Agreement which provide for severance and other benefits combined with a non-competition clause. The Change in Control Agreementdid not include Section 280G tax gross up provisions.After consideration of 2017’s results to budget, we considered Company’s performance to be rated at the maximum level under the Executive Performance Plan.
Compensation Philosophy and Program Objectives
The fundamental objective of the Company’s executive compensation program, the elements of which are summarized in the table below, is to fairly compensate our Named Executive Officersnamed executive officers at levels appropriate in our market and grant equity compensation to align the interests of our Named Executive Officersnamed executive officers with those of our shareholders. Our compensation program is designed to retain and attract qualified executives and motivate such executives to achieve short-term and long-term strategic and operational goals that strengthen our franchise value and ultimately deliver shareholder value. We believe in a pay-for-performance philosophy that appropriately aligns our executives’ total compensation with the performance and value of their contributions and the Company’s ultimate success. In 2014,
| Element | Purpose | Link to Performance | Fixed/Performance Based |
| Annual Cash Bonus (STI) | Encourages achievement of short-term strategic and financial performance metrics that create long-term shareholder value | Based on achievement of short-term, pre-defined corporate performance objectives and an assessment of individual performance | Performance Based |
| Annual Equity (LTI) | Encourages achievement of short-term strategic and financial performance metrics that create long-term shareholder value | Based on achievement of short-term, pre-defined corporate performance objectives and an assessment of individual performance | Performance Based |
| Strategic Plan Award (SPA) | Motivate executives to focus on the achievement of the Company’s high performing long-term strategic planning goals | 50% of the awards to the CEO, CFO, and President of Private Wealth Management would have vested if high performance targets had been met by year end 2017 | Performance Based |
| Benefits and Perquisites | Establishes limited perquisites in line with market practice, as well as health and welfare benefits on the same basis as our general employee population | -- | Fixed |
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Change in Future Equity Compensation Structure
For 2018, the Committee continuedadopted a new Long-Term Incentive Plan intended to further interlace executive pay with Company performance. The new LTIP combines the dual LTI and SPA grants into one program that is separated into a performance-vested grant and a time-vested grant, with such awards related to the LTIP made under the 2012 Long-Term Incentive Plan. The performance-vested portion of the LTIP is granted, with the final number of shares cliff vesting three years later based on a three-year performance period. The time-vested shares are granted based upon prior-year performance and vest equally over a three-year period. For the CEO, CFO and President of Private Wealth Management, half of the LTI grants will be performance based.
2017 CEO Compensation Decisions
Mr. Kennedy joined the Company in October 2012 at a base salary of $500,000. He did not receive a base salary increase in 2013, 2014, 2015 or 2016. Mr. Kennedy received a salary increase of 100,000 in 2017 bringing his base salary to $600,000.
Mr. Kennedy received a short-term incentive award (cash) under the EPP thatof $540,000 for 2017. This award was adoptedbased on 2017 Company performance (75% weighting) and 2017 individual performance (25% weighting). As described above, Company performance for 2017 was achieved at the maximum level. Individual performance for 2017 was also rated at the maximum level. The following includes the significant objectives considered in 2013,determining Mr. Kennedy’s individual performance, all of which linkswere met or exceeded: continue to expand our wealth business; continue to expand our C&I lending business; continue to enhance the Named Executive Officers’ short-term andclient experience; continue to drive risk management excellence; continue migration to a private banking model; continue to focus on expanding fee based revenue; continue to enhance communications with shareholders; deliver financial results.
In March 2017, Mr. Kennedy was granted a long-term incentive compensation directly toaward (restricted stock) under the EPP of $449,997 and a transition award of $99,986, respectively. The EPP award was based on 2016 Company performance (75% weighting) and 2016 individual performance (25% weighting). Company performance for 2016 was set at the maximum level as described in the 2017 Proxy. Individual performance for 2016 was set at the maximum level, as also described in the 2017 Proxy. See the discussion in our Compensation Discussion and Analysis under “2016 Financial Highlights and Company Performance” and “2016 CEO Compensation Decisions” included in our proxy statement filed on March 17, 2017 for information regarding Company and individual performance.performance for 2016. The $449,997 grant vests in equal increments over three years and the $99,986 grant vests in equal increments over five years.
Our compensation program consistsSummary of base salary, cash and equity incentive compensation, as well as benefits and perquisites. We pay base salary in order to fairly compensate our Named Executive Officers for their day-to-day efforts in managing our business. We pay short term incentives (cash) to incentivize performance over a one-year period. We make awards of long term incentives (equity) in order to give our Named Executive Officers a stake in our business, align their interests with those of our shareholders and to retain our Named Executive Officers.Key Compensation Compliance Policies
| Policy | Description |
| Stock Ownership | Our directors and named executive officers have stock ownership guidelines. |
| Clawback | All awards made under the EPP are subject to clawback based on inaccurate financial statements. |
| No Excise Tax Gross-Ups | During 2013, we eliminated 280G tax gross-up provisions from our executive’s agreements. |
| Double Trigger CIC Severance | Cash severance is not automatically triggered upon a change-in-control without a corresponding termination. |
| Double Trigger Equity in CIC | Beginning in 2017, equity grants require a change-in-control along with a corresponding termination in order to trigger an acceleration of equity in the case of a change-in-control. |
| Anti-Hedging Policy | During 2016, the Committee adopted a policy prohibiting our executives from hedging Peapack shares, including buying or selling puts or calls, short sales, or engaging in any other transaction designed to hedge or offset any decrease in the market value of Peapack’s stock. |
| Anti-Pledging Policy | During 2016, the Committee adopted a policy prohibiting our executives and directors from holding Peapack shares in a margin account as collateral for a margin loan or otherwise pledging Peapack shares as collateral for a loan. |
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Roles and Decision Process
The Compensation Committee of the Board of Directors (“the Committee”) is responsible for establishing and overseeing policies governing annual and long-term compensation programs for our executives, and for determining executive compensation levels in line with our philosophy. Details of the Committee’s functions are more fully described in its charter, which has been approved by the Board of Directors and is available on our website. The Committee met four times in 2014. The Chair of the Committee regularly reports on Committee actions at the Company’s Board of Directors meetings.
The Committee reviews all compensation components for the Company’s CEO and other Named Executive Officers,named executive officers, including base salary, annual cash and equity incentives, benefits and contracts/arrangements.
Although the Committee makes independent determinations on all matters related to compensation of the Named Executive Officers,named executive officers, certain members of management may be requested to attend or provide input to the Committee. The CEO provides advice to the Committee relative to the compensation of the four other Named Executive Officers.named executive officers. The Chief Executive OfficerCEO is not present for the discussion by the Committee of his compensation. Other senior officers, such as the Head of Human Resources, COO/Capital, General Counsel, the CFO, and/or the ComptrollerCFO may provide information and perspective to the Committee as appropriate and/or as requested. The Committee’s independent compensation consultant (McLagan) also provides benchmarking information and advice as appropriate. The Committee makes all of its determinations based on its holistic assessment of the Company’s performance and individual performance and on data provided by management and its independent compensation consultant.
The Committee has the sole authority to retain, terminate, obtain advice from, oversee and compensate its outside advisors, including its independent compensation consultant. The Committee has determined that it has the funding it needs to retain the advisors necessary to carry out its duties effectively. In 2013, the Committee first retained McLagan an Aon Hewitt Company, as an independent outside compensation consultant. McLagan was retained again for 2014.2017. McLagan’s 2013 and 2014 services included peer group development and market benchmarking studies, assisting with the design and subsequent review of the incentive program, and providing insight and best practices with respect to the compensation of our Named Executive Officersnamed executive officers as well as the Employment Agreementimplementation of employment agreements and Changechange in Control Agreement for Mr. Kennedy and the Amended Change in Control Agreements for other Executive Officers.control agreements.
While the Committee seeks independent external perspective, the Committee makes all decisions regarding the compensation of Peapack-Gladstone’s Named Executive Officers.named executive officers.
The Committee reviewed its relationship with McLagan and considered McLagan’s independence in light of all relevant factors, including those set forth in Rule 10C-1(b)(4)(i) through (vi) under the Securities Exchange Act of 1934 and under the applicable NasdaqNASDAQ listing rules. The Compensation Committee received a report from McLagan addressing its independence, including the following factors: (1) there were no services provided to the Company, other than compensation related to consulting services provided by McLagan; (2) fees paid by the Company as a percentage of McLagan'sAon’s total revenue; (3) policies or procedures maintained by McLagan that are designed to prevent a conflict of interest; (4) any business or personal relationships between the senior advisors and a member of the Compensation Committee; (5) any Company stock owned by the senior advisors; and (6) any business or personal relationships between the executives and the senior advisors. The Compensation Committee discussed these considerations and concluded that the work performed by McLagan and McLagan'sMcLagan’s senior advisors involved in the engagements did not raise any conflict of interest.
Compensation Review
Understanding the competitive landscape is a key element the Committee considers in making compensation decisions. Each year, the Committee commissions a compensation review by its independent compensation consultant. The purpose of this review is to provide an independent and objective analysis of our total compensation relative to a peer group and industry practices. The Committee utilizes the benchmarking data and best practices information for ongoing monitoring of executive pay relative to market practices and to determine executive compensation.
The foundation for the review is data from a peer group of banks. In late 2016, the Committee reviewed benchmarking information provided by McLagan that the Committee used to set 2017 compensation. The 2014 peer group for this study was selected by the Committee after considering recommendations from McLagan. The peer group used for executive compensation comparisons consisted of 1916 commercial banks. The selection criteria generally included: eastern U.S. commercial banks in metro areas;areas with total assets $1.1 billion to $4.7 billion;revenue between $70 million and $240 million, non-interest income to total revenue greater than 12.5% or trust and investment revenue greater than $2 million; and non-performingnonperforming assets to total assets of less than or equal to 2%. This peer group of 1916 banks had median total assets of $2.2$4.0 billion (comparable to the Company’s $2.7$3.8 billion at December 31, 2014)2016), and median revenue of $89$123 million (comparable to the Company’s $89$125 million for 2014)2016).
The 2014 proxy peer group consisted of the following 1916 banks:
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| · | ·First of Long Island Corp. |
| · Bridge Bancorp Inc. | · Lakeland Bancorp |
| · | |
| · | |
| ·Cardinal Financial Corp. | · Suffolk Bancorp |
| · Century Bancorp Inc. | · |
| ·Chemung Financial Corp. | ·TriState Capital Holdings Inc. |
| · Dime Community Bancshares Inc. | · Univest Corp. of Pennsylvania |
| ·Enterprise Bancorp Inc. | ·Washington Trust Bancorp Inc. |
The following salary and estimated total compensation (at target) comparisons were considered by the Committee in determining salaries and total compensation for the Named Executive Officers:named executive officers:
| · |
| · | 2017 estimated total compensation at the target level for the Company’s named executive officers were 10% above the 50th percentile and |
The salaries for the CEO, COO, CFO and EVP, Commercial Banking were 4.8% below the 50th percentile and 19.0% below the 75th percentile of the peer group. The salary for the President of Private Wealth Management was 35.5% above the 50th percentile and 14.9% above the 75th percentile of the peer group.
The estimated total compensation at target for the CEO, COO, CFO and EVP, Commercial Banking were 4.3% above the 50th percentile and 15.0% below the 75th percentile of the peer group. The estimated total compensation at target for the President of Private Wealth Management was 1.1% above the 50th percentile and 7.0% below the 75th percentile of the peer group.
Say on Pay Consideration
The Committee also considers feedback from our shareholders in making compensation determinations. In 2013 and in 2014 our shareholders showed strong support for our compensation practices. At the 20142017 Annual Meeting, over 85%89% of votes cast were in favor of the say-on-pay proposal. We view this as a positive endorsement of pay practices.
Even in light ofpractice. Notwithstanding this strong support, we continue to monitor our pay alignment and seek ways to improve our compensation program. In 2013 we implementedAs a result, the EPP which ties a significant portionCommittee has decided to restructure the long-term incentive plan for 2018 and beyond. More detail on the specifics of executive compensation to Company and individual performance on both an annual and long-term basis, and we also eliminatedthat plan can be found in the change in control excise tax gross-up feature in our employment agreements pursuant to Section 280G of the Code. Effective for 2014, we added claw-back language to our EPP.Executive Performance Plans section below.
Elements of Compensation and Decisions
We target our total compensation in a way that is fair and appropriate considering market conditions, peer group comparisons, Company performance, individual performance, as well as our long-term strategic goals. We believe our compensation policies and practices appropriately balance risk against our desire to award competitive compensation and are unlikely to have an adverse effect on our Company. The elements of our compensation include base salary and short-term incentive awards, long-term incentive awards and long-term strategic plan awards under our EPP as highlighted below.
Base Salary
Our Named Executive Officers’named executive officers’ base salaries are set to reflect a combination of factors, including but not limited to, level of responsibility, being competitive in the market, experience, skill-set, and individual performance, as well as the Company’s compensation philosophy and overall performance. We design our base salaries in significant part to retain and attract talented executives who can help drive long-term shareholder value. We believe we must keep our base salaries competitive, within the context of our conservative compensation culture, or risk losing executive talent because the markets in which we operate present current and potential executives with higher-paying alternatives.
The following summarizes the 20142016 and 20132017 salaries for the Company’s Named Executive Officers:named executive officers:
| Named Executive Officer | 2014 Base Salary Rate | 2013 Base Salary Rate | % Increase | 2016 Base Salary Rate | 2017 Base Salary Rate | % Increase | ||||
| Douglas L. Kennedy President and Chief Executive Officer | $ | 500,000 | $ | 500,000 | 0% | $ | 500,000 | $ | 600,000 | 20% |
| Jeffrey J. Carfora Senior EVP and Chief Financial Officer | $ | 256,376 | $ | 256,376 | 0% | $ | 281,376 | $ | 316,000 | 12% |
| Finn M.W. Caspersen, Jr. Senior EVP, COO and General Counsel | $ | 300,000 | $ | 300,000 | 0% | |||||
John P. Babcock President- Private Wealth Management | $ | 500,000 | (A) | (A) | ||||||
| Vincent A. Spero EVP, Commercial Banking | $ | 236.385 | $ | 229,500 | 3.0% | |||||
| Finn M.W. Caspersen, Jr. (1) Former Senior EVP, Chief Strategy Officer and General Counsel | $ | 320,000 | $ | 320,000 | 0% | |||||
| Robert A. Plante (2) EVP, Chief Operating Officer | $ | - | $ | 300,000 | 0% | |||||
John P. Babcock Senior EVP, President- Private Wealth Management | $ | 500,000 | $ | 500,000 | 0% | |||||
Lisa P. Chalkan EVP Chief Credit Officer | $ | 255,000 | $ | 270,000 | 6% | |||||
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(A) Mr. Babcock joined the Company in March 2014
Although Company performance for 2014 was at themaximum level as overall results were in excessTable of 10 percent aheadContents
| (1) | Mr. Caspersen resigned from the Company effective December 30, 2017. |
| (2) | Mr. Plante was named EVP, Chief Operating Officer, effective March 2017. |
For purposes of the 2014 Budget/Plan, and each executive’s individual performance was attarget or atmaximumlevel, salary increases were limited in 2014 in light of each executive’s March 2014 cash bonus,CD&A he is shown as well as earnings underCOO throughout the EPP.CD&A section.
Executive Performance Plans
As noted earlier, in 2014For 2017 compensation, the Committee continued the EPP, which was put in place in 2013. The EPP consistsconsisted of the following three components, as previously described:
| · |
| · |
| · |
The amount of STI Awards, LTI Awards and SPA Grants earned by each Named Executive Officernamed executive officer is dependent on the achievement of both Company goals and individual goals. The following chart depicts the potential for awards granted to each Named Executive Officernamed executive officer under the EPP. The percentages referenced in the chart with respect to the STI Awards (Cash), LTI Awards (Restricted Stock) and the SPA Grants (Restricted Stock) refer to percentages of base salary. The SPA Grants in 2013 for the CEO, CFO and COO (at that time) and, in 2014 for the President of Private Wealth Management were one-time, intended to cover multiple periods of up to and including the year ended December 31, 2017, as discussed above.later in this document under “SPA Grants.” The EVP, Commercial BankingChief Credit Officer is eligible to receive an annual SPA Grant, in the set percentage noted below.below; such grant vests equally over a five-year period.
| Goals & Objectives | STI Awards (Cash) | LTI Awards (Stock) | SPA (Stock) | Goals & Objectives | STI Awards (Cash) | LTI Awards (Stock) | SPA Grants | |||||||||||
| Company | Individual | Threshold | Target | Max | Threshold | Target | Max | Grants | Company | Individual | Threshold | Target | Max | Threshold | Target | Max | (Stock) | |
| Douglas L. Kennedy President and Chief Executive Officer | 75% | 25% | 45% | 60% | 90% | 45% | 60% | 90% | 0% (250% granted | 75% | 25% | 45% | 60% | 90% | 45% | 60% | 90% | 0% (250% granted |
| Jeffrey J. Carfora Senior EVP and Chief Financial Officer | 75% | 25% | 30% | 40% | 60% | 30% | 40% | 60% | 0% (200% granted | 75% | 25% | 30% | 40% | 60% | 30% | 40% | 60% | 0% (200% granted |
Finn M.W. Caspersen, Jr. Senior EVP, COO and | 75% | 25% | 30% | 40% | 60% | 30% | 40% | 60% | 0% (200% granted | |||||||||
Finn M.W. Caspersen, Jr. Former Senior EVP, | 75% | 25% | 30% | 40% | 60% | 30% | 40% | 60% | 0% (200% granted | |||||||||
Robert A. Plante EVP, COO | 50% | 50% | 23% | 30% | 45% | 23% | 30% | 45% | 0%
| |||||||||
John P. Babcock President of Private | 50% | 50% | 30% | 40% | 60% | 30% | 40% | 60% | 200% (Granted in | 50% | 50% | 30% | 40% | 60% | 30% | 40% | 60% | 0% (200% granted |
Vincent A. Spero EVP, Commercial Banking | 50% | 50% | 23% | 30% | 45% | 23% | 30% | 45% | 30% | |||||||||
Lisa P. Chalkan EVP, Chief Credit Officer | 25% | 75% | 15% | 20% | 30% | 15% | 20% | 30% | 20%
| |||||||||
In formulating the EPP, the Committee also considered internal policies and relevant guidance from bank regulatory authorities whichthat direct the Committee to ensure that compensation incentive programs do not jeopardize the safety and soundness of the Company or the Bank. To that end, the Committee believes that the EPP and the Company’s other incentive compensation policies:
| · | appropriately balance risk and reward; |
| · | are compatible with effective controls and procedures; and |
| · | are supported by strong corporate governance, including active oversight by the Committee. |
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While the Committee adopted the EPP in 2013, it uses the EPP as a general guideline and is not required to award compensation based strictly on the terms of the EPP. Accordingly, the Committee has the absolute discretion to make awards that are less than or greater than awards contemplated by the EPP. The Committee also may change, modify or discontinue the EPP at any time, including during the course of a particular year. The Committee may take into account the following factors:
| · | the safety and soundness of the Company; |
| · | unexpected events that occur during the year; |
| · | the Company’s performance relative to its peer group; |
| · | regulatory changes; and |
| · | extraordinary efforts in achieving financial and/or non-financial, but important strategic goals. |
In 2017, the Committee approved an amended long-term portion of the EPP, to take effect in 2018. The new LTI plan will be split between performance-vested and time-vested shares. The time-vested portion of the plan provides annual restricted stock awards, with three-year ratable vesting, with the grant based on the discretion of the Committee (between approximately 55% - 165% of the predefined target level). The Committee will consider the prior year’s performance of the Company and the prior year’s performance of the individual among other things. The performance-vested shares will be granted based on the discretion of the Committee (between approximately 55% - 165% of the predefined target level), and will vest at the conclusion of a three-year performance period based on EPS growth relative to peers. This grant is intended to motivate executives to focus on the achievement of the Company’s high performing long-term strategic planning goals and to further align Company executives with shareholders.
| 2018 LTI Plan | % of Grant | Performance Metric | Vesting Length | Vesting Type | Performance Condition | # of shares vested | |||
| CEO & SEVPs | EVPs | ||||||||
| Time-Vested Shares | 50% | 75% | Discretionary | 3 years | Ratable | Award is granted at a discretionary level from approximately 55% of target to 165% of target. The Committee will consider prior year performance of the company and the individual, among other things. | 100% of shares granted | ||
| Performance- Vested Shares | 50% | 25% | 3-yr relative EPS Growth | 3 years | Cliff | Award is granted at a discretionary level from approximately 55% of target to 165% of target. The Committee will consider prior year performance of the Company and the individual, among other things. | Threshold | Target | Maximum |
| 25th percentile of peer EPS growth = approximately 55% of grant | 50th percentile of peer EPS growth = 100% of grant | 75th percentile of peer EPS growth = approximately 165% of grant | |||||||
Due to the nature of this plan change, no equity under the EPP was granted for the CEO and SEVPs for performance in 2017. The awards made in 2017 were granted based upon 2016 performance, while the 2018 award will be granted based on 2018-2020 performance. In an effort to keep executives aligned with Company performance throughout this 2017 transition year, the Committee granted a transition award to executives in 2017, which vests ratably over five years.
EPP Company Performance
The following table shows the income targets at various levels compared to the actual performance of the Company and the corresponding Company performance achievement as it relates to payouts for the annual STI (cash) awards in the EPP.
Threshold (85% of Budget) | Target 2017 Budget | Max (110% of Budget) | 2017 Actual | Company Performance 2017 as % of Budget | |
| Pretax Income | 40.97 | 48.20 | 53.02 | 54.31 | 113% |
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| Net Income | 25.41 | 29.89 | 32.88 | 36.50 | 122% |
| Average | 118% (= Max) |
After reviewing these measures, the Committee concluded Company performance was achieved at the maximum level for 2017, as calculated.
Short Term Incentive Awards (Cash)
We paid short term incentive awards (cash) to our Named Executive Officersnamed executive officers based on 20142017 Company performance and Individual2017 individual performance. As fully described previously, Company performance for 20142017 was rated at themaximum level. Individual 2017 performance was rated at the maximum level as results were in excess of 10 percent aheadfor the CEO and at maximum for each of the 2014 Budget/Plan. Individual performance for eachother four named executive officers that received an award. The individual performance of those other four named executive officers was eitherdetermined by the CEO and agreed to by the Compensation Committee. Among other things, the CEO considered performance relative to: specifics relative to each individual’s responsibilities as included in the budget, wherever applicable; specifics relative to each individual’s responsibilities as included in prior year results, wherever applicable; and various goals and targets previously set by the CEO and the individual at themaximum level or beginning of thetarget level. Based on these factors, fiscal year, including personal accountability for critical performance with respect to standard banking industry company metrics, such as deposit growth, loan growth, credit quality, efficiency ratio, and other such goals. The use of individual goals represents the clear assignment by the Compensation Committee of direct personal accountability for specific financial, organizational, operational and risk management objectives, the attainment of which contribute significantly to the Company’s performance. The Committee awarded the short termshort-term incentives (cash) detailed below.
| Named Executive Officer |
Cash Bonus |
% of | Short Term Incentive Award (Cash) Paid in December 2014 and March 2015 |
% of | ||
| Douglas L. Kennedy President and Chief Executive Officer | $ | 112,500 | 23% | $ | 450,000 | 90% |
| Jeffrey J. Carfora Senior EVP and Chief Financial Officer | $ | 38,456 | 15% | $ | 153,826 | 60% |
| Finn M.W. Caspersen, Jr. Senior EVP, COO and General Counsel | $ | 45,000 | 15% | $ | 165,000 | 55% |
| John P. Babcock President of Private Wealth Management | $ | 500,000 | (B) | $ | 250,000 | 50% |
| Vincent A. Spero EVP, Commercial Banking | $ | 25,819 | 11% | $ | 106,373 | 45% |
| Named Executive Officer | Short Term Incentive Award (Cash) Paid for 2017 |
% of | |
| Douglas L. Kennedy President and Chief Executive Officer | $ | 540,000 | 90% |
| Jeffrey J. Carfora Senior EVP and Chief Financial Officer | $ | 189,600 | 60% |
| Finn M.W. Caspersen, Jr. Former Senior EVP, Chief Strategy Officer and General Counsel | $ | - | - |
| Robert A. Plante EVP and COO | $ | 135,000 | 45% |
| John P. Babcock President of Private Wealth Management | $ | 300,000 | 60% |
| Lisa P. Chalkan EVP, Chief Credit Officer | $ | 100,000 | 37% |
Long Term Incentive Awards (Restricted Stock)
Our long termlong-term incentive awards (restricted stock)(generally restricted stock units) are designed to focus our executives on long-term performance and shareholder value. We granted long term incentive awards (restricted stock)(generally restricted stock units) to Messrs. Kennedy, Carfora, Caspersen, Babcock, and SperoMs. Chalkan in March 2014.2017. These awards were based on 20132016 Company performance and 20132016 individual performance. Company performance for 20132016 was ontarget withat the 2013 Budget/Strategic Plan, after adjusting for several large unusual items not contemplated by the 2013 Budget/Plan (the larger of which included gain on sale of classified loans, write-down of an REO property, various severance expenses, and accelerated depreciation associated with the move of our Operations Center to our headquarters building).maximum level. Individual performance was eitherrated at themaximum level for the CEO and at maximum or target level for the other named executive officers for 2016. The individual performance of those other four named executive officers was determined by the CEO and agreed to by the Compensation Committee. Among other things, the CEO considered performance relative to: specifics relative to each individual’s responsibilities as included in the budget, wherever applicable; specifics relative to each individual’s responsibilities as included in prior year results, wherever applicable; and various goals and targets previously set by the CEO and the individual attarget level. These grants vest the beginning of the fiscal year, including personal accountability for critical performance with respect to standard banking industry company metrics, such as deposit growth, loan growth, credit quality, efficiency ratio, and other such goals. The use of individual goals represents the clear assignment by the Compensation Committee of direct personal accountability for specific financial, organizational, operational and risk management objectives, the attainment of which contribute significantly to the Company’s performance. See the discussion in our Compensation Discussion and Analysis under “2016 Financial Highlights and Company Performance” and “2016 CEO Compensation Decisions” included in our proxy statement filed on March 17, 2017 for information regarding Company and individual performance for 2016. This grant vests in equal increments over three years.
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The following table shows the income targets at various levels compared to the actual 2016 performance of the Company and the corresponding Company performance achievement as it relates to payouts for the annual LTI (restricted stock) awards.
Threshold (85% of Budget) | Target 2016 Budget | Max (110% of 2015 as considered for compensation determination ) | 2016 Actual | Company Performance 2016 as % of Budget | Company Performance 2016 as a % of 2015 as considered for compensation determination | |
| Pretax Income | 27.32 | 32.14 | 38.10 | 42.74 | 133% | 123% |
| Net Income | 16.94 | 19.93 | 23.68 | 26.48 | 133% | 123% |
| Average | 133% | 123%(= Max) |
After reviewing these measures, the Committee concluded Company performance was achieved at the maximum level for 2017, as calculated. The Committee concluded Company performance was achieved at maximum for 2016, as calculated. The following table sets forth the awards of restricted stock granted in March 20142017 based on 2016 performance to our Named Executive Officers.named executive officers.
| Named Executive Officer | Short Term Incentive Award (Restricted Stock) Granted March 2014 (in Dollars) | Short Term Incentive Award (Restricted Stock) Granted March 2014 (in Shares) | % of Base Salary | ||
| Douglas L. Kennedy President and Chief Executive Officer | $ | 337,500 | 17,334 | 68% | |
| Jeffrey J. Carfora Senior EVP and Chief Financial Officer | $ | 115,369 | 5,925 | 45% | |
| Finn M.W. Caspersen, Jr. Senior EVP, COO and General Counsel | $ | 135,000 | 6,934 | 45% | |
| John P. Babcock President of Private Wealth Management | $ | 200,000 | 10,272 | (A) | |
| Vincent A. Spero EVP, Commercial Banking | $ | 86,063 | 4,420 | 38% | |
(A) Mr. Babcock joined the Company in March 2014. In connection with his offer letter and hiring, Mr. Babcock was granted $200,000 of restricted stock which vests evenly over three years.
| Named Executive Officer | Long Term Incentive Award (Restricted Stock) Granted March 2017 (in Dollars) (1) | Long Term Incentive Award (Restricted Stock) Granted March 2017 (in Shares) | % of Base Salary | ||
| Douglas L. Kennedy President and Chief Executive Officer | $ | 449,997 | 14,960 | 75% | |
| Jeffrey J. Carfora Senior EVP and Chief Financial Officer | $ | 168,809 | 5,612 | 53% | |
| Finn M.W. Caspersen, Jr. Senior EVP, Chief Strategy Officer and General Counsel | $ | 175,998 | 5,851 | 55% | |
| Robert A. Plante EVP and COO | $ | - | - | - | |
| John P. Babcock President of Private Wealth Management | $ | 249,995 | 8,311 | 50% | |
| Lisa P. Chalkan EVP, Chief Credit Officer | $ | 127,479 | 4,238 | 47% | |
| (1) | Messrs. Kennedy, Carfora, Caspersen, and Babcock LTI (stock) awards were calculated at $450,000, $168,826, $176,000, and $250,000 respectively (all grants were rounded down slightly to convert to whole shares). These vest over three years. |
SPA Grants
As described previously, SPA Grantsgrants of restricted stock arehave been intended to motivate executives to focus on the achievement of the Company’s high performing long-term strategic planning goals. For the EVP, Commercial Banking the grant is generally made annually and vests in equal increments over a five year period. For the CEO, CFO, COO, and President of Private Wealth Management the grant iswas not an annual grant and iswas expected to cover multiple years up to and including the year ended December 31, 2017:2017. The CEO and CFO received these grants in 2013. The President of Private Wealth Management received his grant in 2014 when he joined the Company. These SPA grants were subject to vesting as follows: 50% of the grant vests in equal increments over a five yearfive-year period and the remaining 50% vestswould have vested only if four of
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five pre-determined high performing annual targets arewere met for an annual period of time. If the high performing targets are not mettime, by year end 2017,2017. Since four of the stock isfive targets were not met, this portion of the grant will be forfeited. The high performing targets arewere as follows:
| · | ROAA |
| · | ROAE of 12 percent; |
| · | revenue growth of 15 percent; |
| · | EPS growth of 15 |
| · |
The CEO, COOWhile we attained the revenue growth target, EPS growth target, and CFOnonperforming asset target, we did not generate a one percent ROAA or a 12 percent ROAE in 2017, thus only attaining three of the five high performance targets (as opposed to the four required for performance-based vesting). In December 2015, we reversed the accumulated restricted stock expense that had been amortized since grant date, and have not accrued any expense since.
As noted in the table above, the EVP, Chief Credit Officer received these grants in 2013. The President of Private Wealth Management received hisan annual SPA grant in 2014 when he joinedMarch 2017 with a value of 20 percent of her base salary. Such grant time vests equally over a five-year period.
Transition Grants
As described earlier, the Company.CEO and SEVPs received a transitional award at the beginning of 2017 which represents 1/6th of the 2018 LTI plan target opportunity. These shares vest over five years.
| Named Executive Officer | Transition Award (Restricted Stock) Granted March 2017 (in Dollars) (1) | Transition Award (Restricted Stock) Granted March 2017 (in Shares) | % of Base Salary | ||
| Douglas L. Kennedy President and Chief Executive Officer | $ | 99,986 | 3,324 | 17% | |
| Jeffrey J. Carfora Senior EVP and Chief Financial Officer | $ | 42,202 | 1,402 | 13% | |
| Finn M.W. Caspersen, Jr. Former Senior EVP, Chief Strategy Officer and General Counsel | $ | 47,978 | 1,595 | 15% | |
| Robert A. Plante EVP and COO | $ | - | - | - | |
| John P. Babcock President of Private Wealth Management | $ | 74,989 | 2,493 | 15% | |
| Lisa P. Chalkan EVP, Chief Credit Officer | $ | - | - | - | |
| (1) | Messrs. Kennedy, Carfora, Caspersen, and Babcock LTI (stock) awards were calculated at $100,000, $42,206, $48,000, and $75,000 respectively. These vest over three years (all grants were rounded down slightly to convert to whole shares). |
Deferred Compensation Retention Award
In 2017, Peapack instituted a retention tool for the top three executives (Mr. Kennedy, Mr. Carfora and Mr. Babcock). The Deferred Compensation Retention Award (“DCRA”) is a cash-based retention award with contributions made to the plan over a five-year period. Beginning with the third quarter of 2017, quarterly contributions of $50,000 for Mr. Kennedy and $25,000 for the other two executives will be made assuming the executive is employed and the Company has generated EPS of at least 60% of budget for the previous 12 months. Vesting occurs ratably over three years. The account balance receives interest crediting based on the Wall Street Journal prime rate, provided that the rate shall not exceed 7.5%.
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| Named Executive Officer | 2017 Contribution | Annualized Contribution | ||
| Douglas L. Kennedy President and Chief Executive Officer | $ | $100,000 | $200,000 | |
| Jeffrey J. Carfora Senior EVP and Chief Financial Officer | $ | $50,000 | $100,000 | |
| Robert A. Plante EVP and COO | $ | - | - | |
| John P. Babcock President of Private Wealth Management | $ | $50,000 | $100,000 | |
| Lisa P. Chalkan EVP, Chief Credit Officer | $ | - | - | |
The SPA Grant to Mr. SperoCommittee determined a retention award based in cash instead of stock was an annual grant, with future grants to be conditioned upon achieving goals consistent withappropriate because of the substantial stock ownership of the top executives. The current equity ownership of these executives is well in excess of the Company’s Strategic Plan. The following table sets forth SPA Grants in 2014 to the Named Executive Officers.ownership guidelines.
| Named Executive Officer | Strategic Plan Award (Restricted Stock) (in dollars) | Strategic Plan Award (Restricted Stock) (in shares) | % of Base Salary | ||
| Douglas L. Kennedy Chief Executive Officer and President | $ | 0 | 0 | 0% | |
| Jeffrey J. Carfora Senior EVP and Chief Financial Officer | $ | 0 | 0 | 0% | |
| Finn M.W. Caspersen, Jr. Senior EVP, COO and General Counsel | $ | 0 | 0 | 0% | |
| John P. Babcock President of Private Wealth Management | $ | $1,000,000 | 51,362 | 200% | |
| Vincent A. Spero EVP, Commercial Banking | $ | 68,850 | 3,536 | 30% | |
Benefits/Other Compensation
The Company provides bank-sponsored insurance and retirement benefit plans tofor our Named Executive Officers.named executive officers. The benefit packages are designed to assist Named Executive Officersnamed executive officers in providing for their financial security.
The Company provides retirement benefits to Named Executive Officersnamed executive officers through a combination of plans that are qualified and nonqualified under the Internal Revenue Code of 1986, as amended (the “Code”). The Company has established a qualified defined contribution plan under Section 401(k) of the Code, covering substantially all salaried employees over the age of twenty-one21 with at least twelve months of service and whose participation is not prohibited by the 401(k) plan.Plan. Under the savings portion of the 401(k) plan,Plan, employees may contribute up to 15% of their base pay (up to a maximum of $17,500$18,000 in 2014) to their elective account via payroll withholding.2017). Annually, the Company makes a matching contribution equal to 50% of the first 6% of an employee’s salary, plus up to an additional 3% employer contribution for all employees, on a discretionary basis. The Committee believes that employees require 401(k) plans, and that to attract and retain able employees the Company must offer these benefits to its employees, including its Named Executive Officers.named executive officers.
The Named Executive Officersnamed executive officers receive the same employer-provided health and welfare insurance package coveringavailable to all full-time employees, which includes health, dental, vision, disability and basic group life insurance.
The Company has also purchased bank owned life insurance and entered into a split-dollar plan with the Named Executive Officers (except for Mr. Kennedy and Mr. Babcock)named executive officers and certain other employees to provide current and post-employment life insurance in an amount whichthat ranges from $25,000 to 2.5 times the participant’s annual base salary. A life insurance benefit of 2.5 times a Named Executive Officer’snamed executive officer’s annual base salary vests if prior to the termination of employment there is a change in control or the Named Executive Officernamed executive officer becomes disabled. A benefit of 2.5 times the Named Executive Officer’snamed executive officer’s salary is paid if the participant dies while employed by the Company. Named Executive Officersexecutive officers are also entitled to a vested post-employment life insurance benefit based on years of service and age as of the date of termination of employment. This vested benefit ranges from a minimum of 1.0 times base annual salary at age 50 to a maximum of 2.5 times annual base salary at age 60, in each case after completion of 15 years of service. There is a minimum benefit of $25,000 if the participant does not reach the vesting levels. Bank ownedBank-owned life insurance assists the Company in offsetting the rising costs of employee benefits by providing the Company with current income prior to the death of an insured, and a lump-sum payment upon the death of an insured. The Company owns the cash surrender value of the policies and records the increases in the cash surrender value as income. Upon the death of an insured the Company will receive cash equal to the cash surrender value of the policy and excess life insurance over the amount paid to the insured’s beneficiary. The Committee believes that bank ownedbank-owned life insurance is primarily a good investment for the Company, and secondarily a supplementary life insurance benefit for many of our officers, including our Named Executive Officers.named executive officers.
Change in Control Agreements
Upon his hire in March 2014, we entered into a change in control agreement with Mr. Babcock. In December 2013 we entered into a change in control agreement with Mr. Kennedy, our CEO, and amendedWe maintain individual change in control agreements with each of our other three Named Executive Officers. With the exception of Mr. Spero’s agreement, the terms of each of these agreements are substantially the same among the Named Executive Officers.Kennedy, Mr. Carfora, Mr. Plante, Mr. Babcock and Ms. Chalkan. The agreements each provide for the employment of the Named Executive Officernamed executive officer for a period of three yearsContract Period (defined in the table below) commencing on the day prior to a change in control (as defined in the agreement). During the three year period in which the agreement is in effect,Contract
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Period, the executives will each be provided with (i)(1) the same base salary that existed prior to the change in control, (ii)(2) an opportunity for a bonus equal to at least the bonus opportunity in effect immediately prior to the change in control, and (iii)(3) benefits and perquisites at levels generally available to the executive prior to the change in control. If, during such three-year period,the Contract Period, the executive resigns for good reason (as defined in the agreement) or is terminated other than for cause (as defined in the agreement) hehe/she will be entitled to a lump-sum payment equal to threethe multiple defined in the table below times hishis/her then base salary and the greater of hishis/her average bonus amount for the three preceding fiscal years and the bonus paid during the most recent fiscal year. For Mr. Spero, upon a resignation for good reason or a termination for other than cause, he will be entitled to a lump-sum payment equal to two times his then base salary and the greater of his average bonus amount for the two preceding fiscal years and the bonus paid during the most recent fiscal year. Each named executive officer will also be entitled to receive payments from the Company equal to the costs of COBRA continuation lifeof health insurance coverage for 18 monthsa period defined in the table below following termination of employment. In the event that the total paymentsbenefits payable under the agreements and other arrangements following a change in control would require the executive to pay an excise tax under Section 4999 of the Internal Revenue Code, as amended, then the total payments paid to the executive will be the greater of (i)(1) a reduced payment equal to the amount whichthat would not result in the payment of an excess parachute payment under Section 280G of the Internal Revenue Code and an excise tax by the executive under Section 4999, and (ii)(2) a payment equal to the greatest after tax amount payable to the executive after taking into account any excise tax imposed under Section 4999. The agreements also prohibit the executives from competing against the Company and soliciting the Company’s customers and employees for a one yearone-year period following termination of employment. The Committee feels these agreements are necessary to encourage our Named Executive Officersnamed executive officers to approach an advantageous merger or acquisition transaction without regard to immediate loss of salary and benefits. The Committee also believes that, given the high degree of consolidation within the banking business, these agreements are necessary to retain and attract talented Named Executive Officers.named executive officers.
| Named Executive Officer | Contract Period | Change-in-Control and Termination Severance Multiple | Change-in-Control and Termination Health Care Continuation |
| Douglas L. Kennedy President and Chief Executive Officer | 3 years | 3 times | 3 years |
| Jeffrey J. Carfora Senior EVP and Chief Financial Officer | 3 years | 3 times | 3 years |
| Robert A. Plante EVP and COO | 2 years | 2 times | 2 years |
| John P. Babcock President of Private Wealth Management | 3 years | 3 times | 3 years |
| Lisa P. Chalkan EVP, Chief Credit Officer | 3 years | 1.5 times | 1.5 years |
Employment Contracts
We are also a party to employment agreements that give the Named Executive Officersnamed executive officers certain benefits. These agreements provide, among other things, for eligibility for (i)(1) participation during the employment term in all compensation and employee benefits plans for which any salaried employees of the Company are eligible, (ii)(2) an annual base salary and (iii) discretionary(3) bonus payments with respect to each calendar year.year within the Committee’s discretion. Under these agreements, if a Named Executive Officer’snamed executive officer’s employment is terminated without cause (at any time preceding the date prior to a change in control), the Company shall pay the executive’s base salary for a period equal to two years from the effective date of such termination. In the event that the Company terminates a Named Executive Officer’snamed executive officer’s employment for cause or in the event of the Named Executive Officer’snamed executive officer’s retirement, permanent disability or death, the Company shall pay the Named Executive Officernamed executive officer any earned but unpaid base salary as of the date of termination of employment. The employment agreements also include certain non-compete and non-solicitation provisions. The Committee believes the Company would be unable to retain and attract talented senior executives without employment agreements, which are customary in the Company’s competitive market.market, are important in order to retain and attract talented senior executives.
Separation and Release with Finn M.W. Caspersen, Jr.
Mr. Caspersen’s resigned as Chief Strategy Officer and General Counsel and from the Board of Directors of the Bank and the Company, effective December 30, 2017. In consideration of releasing all claims against the Company and the Bank, the Company will pay Mr. Caspersen severance of $640,000 over a two-year period, paid him a separation payment for 2017 of $176,000, fully vested 19,356 shares of restricted stock, which would have vested over the next several years, and provided other perquisites that were consistent with other executives at his level.
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Income Tax Considerations
Our federal income tax deduction for non-performance basedexecutive compensation paid to certainour named executive officers listed in the summary compensation table, with the exception of our Named Executive Officersthe executive listed as a result of serving as the principal financial officer, is limited by Section 162(m)(1) of the Internal Revenue Code to $1 million annually. Compensation paid to any of them exceeding $1 million is non-deductible for federal income tax purposes unless they are “performance based,it is “qualified performance-based compensation,” as defined in Section 162(m), meaning generally, that the compensation is based on the executive’s achieving pre-established objective performance goals and paid under a plan pre-approved by our shareholders.
The Tax Cuts and Jobs Act (the “Tax Act”) enacted on December 22, 2017 significantly modified Section 162(m) of the Internal Revenue Code. The Tax Act eliminated the “qualified performance-based compensation” exception to the deductibility limitation under Section 162(m) for tax years commencing after December 31, 2017. The Tax Act provides “grandfathered” treatment for qualified performance-based compensation in excess of $1 million that meets the requirements of Section 162(m), is payable pursuant a written binding contract in effect as of November 2, 2017 and is not modified in any material respect. In addition, the Tax Act expands the definition of “covered employee” to include the principal financial officer as well as any employee who has been designated a covered employee for any fiscal year beginning after December 31, 2016.
In 2017 and in prior years, the Committee monitors, and will continue to monitor,monitored the effect of Section 162(m) on the deductibility of the Company’s compensation. The Committee weighsweighed the benefits of full deductibility with the other objectives of the executive compensation program and, accordingly, may from time to time payhave paid compensation subject to the deductibility limitations of Section 162(m). A number of requirements must be met for particular compensation to qualify for tax deductibility under Section 162(m), so there can be no assurance that the incentive compensation awarded will be fully deductible in all circumstances.
The Committee has historically attempted to structure its compensation arrangements to achieve deductibility under Section 162(m), unless the benefit of such deductibility is considered by the Committee to be outweighed by the need for flexibility or the attainment of other objectives. As was the case prior to the enactment of the Tax Act, the Committee will continue to monitor issues concerning the deductibility of executive compensation. Since corporate objectives may not always be consistent with the requirements for tax deductibility, the Committee is prepared, when it deems appropriate, to enter into compensation arrangements under which payments will not be deductible under Section 162(m). Thus, deductibility will be one of many factors considered by the Committee in designing our executive compensation program.
The Committee has reviewed and discussed with management the Compensation Discussion and Analysis and based on such review and discussions the Committee has recommended to the Board that the Compensation Discussion and Analysis be included in Peapack-Gladstone’s Annual Report on Form 10-K and the Proxy Statement.
The Compensation Committee
Of the Board of Directors
F. Duffield Meyercord, ChairmanChair
Anthony J. Consi, II
Edward A. MertonTony Spinelli
Philip W. Smith, III
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20142017 Summary Compensation Table
The following table sets forth compensation information for Peapack-Gladstone’s named executive officers. For a summary of the Committee’s decisions on compensation awarded to our named executive officers in 2017, see the “Compensation Discussion and Analysis” above.
| Name and Principal Position |
Year |
Salary |
Bonus |
Stock Awards | Incentive Compensation Non-Equity | All Other Compensation (2) |
Total | |||||||
Douglas L. President & | 2014 2013 2012 | $500,000 500,000 107,029 | $112,500 0 0 | $ 337,493 1,499,980 0 | $450,000 225,000 0 | $42,056 21.416 1,260 | $1,442,049 2,246,396 108,289 | |||||||
Jeffrey J. Carfora Senior | 2014 2013 2012 | $256,376 256,376 225,120
| $38,456 0 78,792
| $ 115,360 572,099 52,500
| $ 153,826 76,913 0 | $35,629 25,861 25,740
| $599,647 931,249 382,152
| |||||||
Finn M. W. Senior | 2014 2013 2012
| $300,000 300,000 235,000
| $45,000 0 82,250 | $135,005 664,635 53,750
| $ 165,000 90,000 0 | $33,774 44,058 44,143
| $ 678,779 1,098,693 415,143
| |||||||
John P. Senior | 2014 | $394,231 | $500,000 | $1,200,014 | $250,000 | $17,433 | $2,361,678 | |||||||
Vincent A. Executive Vice | 2014 2013 2012 | $236,379 229,500 225,000 | $25,819 0 78,780 | $154,903 126,232 52,500 | $106,373 60,244 0 | $29,548 23,978 24,238 | $553,022 439,954 390,488 |
| Name and Principal Position | Year | Salary ($) | Stock Awards ($)(1) | Incentive Compensation Non-Equity ($)(2) | All Other Compensation ($)(3) | Total ($) | ||||||||||||||||||
| Douglas L. Kennedy | 2017 | 573,077 | 549,983 | 540,000 | 132,541 | 1,795,601 | ||||||||||||||||||
| President & CEO of Peapack- | 2016 | 500,000 | 350,614 | 450,000 | 34,007 | 1,334,621 | ||||||||||||||||||
| Gladstone and the Bank | 2015 | 500,000 | 449,979 | 309,375 | 29,091 | 1,288,445 | ||||||||||||||||||
| Jeffrey J. Carfora | 2017 | 306,678 | 211,011 | 189,600 | 67,792 | 775,081 | ||||||||||||||||||
| Senior Executive Vice President | 2016 | 281,376 | 131,541 | 168,600 | 16,702 | 598,219 | ||||||||||||||||||
| and CFO of Peapack-Gladstone and the Bank | 2015 | 281,376 | 153,825 | 116,068 | 16,579 | 567,848 | ||||||||||||||||||
| Finn M. W. Caspersen, Jr. | 2017 | 320,000 | 901,822 | — | 227,719 | 1,449,541 | ||||||||||||||||||
| Former Senior Executive Vice | 2016 | 320,000 | 149,587 | 176,000 | 27,661 | 673,248 | ||||||||||||||||||
| President, Chief Strategy Officer and General Counsel of Peapack-Gladstone and the Bank (4) | 2015 | 320,000 | 164,986 | 132,000 | 27,606 | 644,592 | ||||||||||||||||||
| Robert A. Plante | 2017 | 236,538 | — | 135,000 | — | 371,538 | ||||||||||||||||||
| Executive Vice President and | ||||||||||||||||||||||||
| Chief Operating Officer of Peapack-Gladstone and the Bank (5) | ||||||||||||||||||||||||
| John P. Babcock | 2017 | 500,000 | 324,984 | 300,000 | 68,967 | 1,193,951 | ||||||||||||||||||
| Senior Executive Vice President | 2016 | 500,000 | 249,990 | 250,000 | 17,806 | 1,017,796 | ||||||||||||||||||
| of Peapack-Gladstone and President of Private Wealth Managemen | 2015 | 500,000 | 350,000 | 250,000 | 15,900 | 1,115,900 | ||||||||||||||||||
| Lisa P. Chalkan | 2017 | 256,153 | 127,479 | 100,000 | 16,200 | 499,832 | ||||||||||||||||||
| Executive Vice President and Chief Credit Officerof Peapack- Gladstone and the Bank (6) | ||||||||||||||||||||||||
| (1) | Represents the aggregate grant date fair value of restricted stock awards in accordance with ASC |
| (2) | Amounts represent short-term incentive awards (cash) paid in the first quarter of 2018 under our |
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| The following table itemizes the compensation in this |
| Name | Auto Allowance | Company Contributions to 401(k) | BOLI Premiums | |||||||||
| Douglas L. Kennedy | $ | 12,796 | $ | 29,260 | $ | 0 | ||||||
| Jeffrey J. Carfora | 7,200 | 27,794 | 635 | |||||||||
| Finn M.W. Caspersen, Jr. | 11,281 | 21,965 | 528 | |||||||||
| John P. Babcock | 5,400 | 12,033 | 0 | |||||||||
| Vincent A. Spero | 6,888 | 22,264 | 396 | |||||||||
| Name | Company Auto | Company Contributions to 401(k) | Deferred Retention Award Plan (A) | Separation Payment | BOLI Premiums | |||||||||||||||
| Douglas L. Kennedy | $ | 12,464 | $ | 16,200 | $ | 101,388 | $ | — | $ | 2,489 | ||||||||||
| Jeffrey J. Carfora | ─ | 16,200 | 50,694 | ─ | 898 | |||||||||||||||
| Finn M.W. Caspersen, Jr. | 11,163 | 16,200 | ─ | 199,726 | 630 | |||||||||||||||
| Robert A. Plante | ─ | ─ | ─ | ─ | ─ | |||||||||||||||
| John P. Babcock | ─ | 16,200 | 50,694 | ─ | 2,073 | |||||||||||||||
| Lisa P. Chalkan | ─ | 16,200 | ─ | ─ | ─ | |||||||||||||||
2014(A) This is a defined contribution plan with annual contributions to be made of $200,000 for Mr. Kennedy and $100,000 for Messrs. Carfora and Babcock for a period of five years. All contributions are to be made in cash. The effective date of the Plan was August 2017. The account balance receives interest based on the Wall Street Journal prime rate.
| (4) | Mr. Caspersen resigned from the Company, effective December 30, 2017. |
| (5) | Mr. Plante joined the Company in March 2017. |
| (6) | Ms. Chalkan was added as a named executive officer in 2017. |
2017 Grants of Plan-Based Awards
| Name | Grant Date | All Other Stock Awards: Number of Shares of Stocks or Units (#) (1) | Grant Date Fair Value of Stock and Option Awards | |||||||
| Douglas L. Kennedy | 3/11/2014 | 17,334 | $ | 337,493 | ||||||
| Jeffrey J. Carfora | 3/11/2014 | 5,925 | 115,360 | |||||||
| Finn M.W. Caspersen, Jr. | 3/11/2014 | 6,934 | 135,005 | |||||||
| John P. Babcock | 3/11/2014 | 61,634 | 1,200,014 | |||||||
| Vincent A. Spero | 3/11/2014 | 7,956 | 154,903 | |||||||
The following tables set forth additional detail regarding 2017 incentive compensation non-equity (cash) and stock award grants under the Executive Performance Plan.
| Estimated Payouts Under the Short Term (Cash) Incentive Plan | ||||||||||||||||
| Name | Threshold ($) | Target ($) | Maximum ($) | Actual Cash Payments ($) | ||||||||||||
| Douglas L. Kennedy | $ | 270,000 | $ | 360,000 | $ | 540,000 | $ | 540,000 | ||||||||
| Jeffrey J. Carfora | 94,800 | 126,400 | 189,600 | 189,600 | ||||||||||||
| Finn M. W. Caspersen, Jr. | 76,000 | 128,000 | 192,000 | — | ||||||||||||
| Robert A. Plante | 69,000 | 90,000 | 135,000 | 135,000 | ||||||||||||
| John P. Babcock | 150,000 | 200,000 | 300,000 | 300,000 | ||||||||||||
| Lisa P. Chalkan | 40,500 | 54,000 | 100,000 | 100,000 | ||||||||||||
| Estimated Payouts Under the Long Term (Stock) Incentive Plan | All Other Stock Awards: Number of | Grant Date Fair | ||||||||||||||||||||||
| Maximum | Shares of Stocks or | Value of Stock | ||||||||||||||||||||||
| Name | Threshold ($) | Target ($) | ($) | Grant Date | Units (#) | Awards (1) (2) | ||||||||||||||||||
| Douglas L. Kennedy | $ | 225,000 | $ | 300,000 | $ | 450,000 | 3/11/2017 | 14,960 | $ | 449,997 | ||||||||||||||
| Jeffrey J. Carfora | 84,413 | 112,550 | 168,826 | 3/11/2017 | 5,612 | 168,809 | ||||||||||||||||||
| Finn M. W. Caspersen, Jr. | 96,000 | 128,000 | 192,000 | 3/11/2017 | 5,851 | 175,998 | ||||||||||||||||||
| Robert A. Plante | — | — | — | — | — | — | ||||||||||||||||||
| John P. Babcock | 150,000 | 200,000 | 300,000 | 3/11/2017 | 8,311 | 249,995 | ||||||||||||||||||
| Lisa P. Chalkan | 38,250 | 51,000 | 76,500 | 3/11/2017 | 2,543 | 76,493 | ||||||||||||||||||
| (1) |
| Mr. Kennedy - | $99,986; 3,324 shares | |
| Mr. Carfora - | $42,202; 1,402 shares | |
| Mr. Caspersen- | $47,978; 1,595 shares | |
| Mr. Babcock- | $74,989; 2,493 shares |
| (2) | Excludes Strategic Plan award grant of $50,986; 1,695 shares for Ms. Chalkan |
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Outstanding Equity Awards at 20142017 Fiscal Year-End
The following table represents stock options and stock awards outstanding for each named executive officer as of December 31, 2014.2017. The market value of shares that have not vested is calculated using our closing market price of $35.02 as of December 29, 2017. There were no outstanding options for any of the named executive officers as of December 31, 2017.
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| Stock Awards | ||||||||||||
| Name | Grant Date | Number of Shares That Have Not Vested | Market Value of Shares That Have Not Vested | |||||||||
| Douglas L. Kennedy | 1/2/2013 | 3,406 | (1 | ) | $ | 119,278 | ||||||
| 12/4/2013 | 7,099 | (1 | ) | 248,607 | ||||||||
| 12/4/2013 | 35,491 | (2 | ) | 1,242,895 | ||||||||
| 3/11/2015 | 7,150 | (3 | ) | 250,393 | ||||||||
| 3/11/2016 | 13,782 | (3 | ) | 482,646 | ||||||||
| 3/11/2017 | 14,960 | (3 | ) | 523,899 | ||||||||
| 3/11/2017 | 3,324 | (1 | ) | 116,406 | ||||||||
| Jeffrey J. Carfora | 12/4/2013 | 14,559 | (2 | ) | $ | 509,856 | ||||||
| 12/4/2013 | 2,912 | (1 | ) | 101,978 | ||||||||
| 3/11/2015 | 2,444 | (3 | ) | 85,589 | ||||||||
| 3/11/2016 | 5,171 | (3 | ) | 181,088 | ||||||||
| 3/11/2017 | 5,612 | (3 | ) | 196,532 | ||||||||
| 3/11/2017 | 1,403 | (1 | ) | 49,133 | ||||||||
| Finn M.W. Caspersen, Jr. | — | $ | — | |||||||||
| Robert A. Plante | — | $ | — | |||||||||
| John P. Babcock | 3/11/2014 | 10,273 | (1 | ) | $ | 359,760 | ||||||
| 3/11/2014 | 25,681 | (2 | ) | 899,349 | ||||||||
| 3/11/2015 | 3,972 | (3 | ) | 139,099 | ||||||||
| 12/4/2015 | 1,467 | (3 | ) | 51,374 | ||||||||
| 3/11/2016 | 9,827 | (3 | ) | 344,142 | ||||||||
| 3/11/2017 | 8,311 | (3 | ) | 291,051 | ||||||||
| 3/11/2017 | 2,493 | (1 | ) | 87,305 | ||||||||
| Lisa P. Chalkan | 5/19/2015 | 2,025 | (3 | ) | $ | 70,915 | ||||||
| 3/11/2016 | 1,741 | (3 | ) | 60,970 | ||||||||
| 3/11/2016 | 2,089 | (1 | ) | 73,157 | ||||||||
| (1) |
| The restricted stock vests in |
| (2) | Performance-based restricted stock which will cliff vest in March following the fiscal year in which the Company meets four out of five performance measures as described under “Strategic Plan Award (SPA) Grants” in the Compensation Discussion and Analysis. If the Company does not meet four of the five high-performance measures in 2014, 2015, 2016 or 2017, the shares will be forfeited. As discussed previously, these awards will not vest. |
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| The restricted stock vests in three equal annual installments commencing on the first anniversary of issuance and only if the executive continues to serve as an executive at such applicable vesting date. Upon termination of employment by reason of death, disability or retirement, or upon a |
Option Exercises and Stock Vested
The following table represents the options exercises and the vesting of restricted stock during 2014.2017. There were no stock options exercised by any named executive officers in 2017.
| Option Awards | Stock Awards | |||||||||||||||
| Number of Shares | Number of Shares | |||||||||||||||
| Acquired on | Value Realized | Acquired on | Value Realized | |||||||||||||
| Exercise | On Exercise | Vesting | On Vesting | |||||||||||||
| Name | (#) | ($) | (#) | ($) | ||||||||||||
| Douglas L. Kennedy | — | — | 10,503 | $ | 190,499 | |||||||||||
| Jeffrey J. Carfora | — | — | 8,529 | 160,172 | ||||||||||||
| Finn M.W. Caspersen, Jr | — | — | 9,166 | 171,525 | ||||||||||||
| John P. Babcock | — | — | — | — | ||||||||||||
| Vincent A. Spero | — | — | 6,347 | 121,738 | ||||||||||||
| Stock Awards | ||||||||
| Number of Shares Acquired on Vesting | Value Realized On Vesting (1) | |||||||
| Name | (#) | ($) | ||||||
| Douglas L. Kennedy | 30,438 | $ | 953,648 | |||||
| Jeffrey J. Carfora | 10,936 | 344,388 | ||||||
| Finn M.W. Caspersen, Jr. (2) | 31,685 | 1,066,623 | ||||||
| Robert A. Plante | ― | ― | ||||||
| John P. Babcock | 18,981 | 578,254 | ||||||
| Lisa P. Chalkan | 3,417 | 101,589 | ||||||
| (1) | The value realized upon vesting is equal to the closing market price of the Company’s common stock on the date of vesting multiplied by the number of shares acquired. In each case, the amount reported is the aggregate of shares vesting from more than one grant of restricted stock. |
| (2) | Included in Mr. Caspersen’s vesting were 19,356 restricted stock awards/units that were accelerated for vesting purposes. |
CEO Pay Ratio
As required by Item 402(u) of Regulation S-K, we are providing the following information:
For fiscal 2017, our last completed fiscal year:
| § | The median of the annual total compensation of all employees of our Company was $61,415; and |
| § | The annual total compensation of Mr. Kennedy, our Chief Executive Officer, was $1,795,601. |
Based on this information, the ratio for 2017 of the annual total compensation of our Chief Executive Officer to the median of the annual total compensation of all employees is 29 to 1.
We completed the following steps to identify the median of the annual total compensation of all our employees and to determine the annual total compensation of our median employee and CEO:
| 1. | As of December 31, 2017, our employee population consisted of approximately 471 individuals, including any full-time, part-time, temporary, or seasonal employees employed on that date. |
| 2. | To find the median of the annual total compensation of all our employees, we used wages from our payroll records as reported to the Internal Revenue Service on Form W-2 for fiscal 2017. In making this determination, we annualized the compensation of full-time and part-time permanent employees who were employed on December 31, 2017, but did not work for us the entire year. No full-time equivalent adjustments were made for part time employees. |
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| 3. | We identified an initial median employee using this compensation measure and methodology, which was consistently applied to all our employees included in the calculation. We identified an anomaly with this employee’s 2017 compensation that would have significantly impacted our pay ratio and therefore substituted this employee with an adjacent employee with substantially similar W-2 compensation to that of the original identified employee. |
| 4. | After identifying the median employee, we added together all of the elements of such employee’s compensation for 2017 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $61,415. |
| 5. | With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column of our 2017 Summary Compensation Table. |
Potential Payments Upon Termination or Change in Control
Peapack-Gladstone and the Bank have entered into employment agreements with the named executive officers, which set forth the terms of employment of the officers and provide for benefits in the event of termination without “cause.” Peapack-Gladstone and the Bank have also entered into change in control agreements with the named executive officers, each of which provide for benefits in the event a termination without “cause” or for “good reason” during a specified period following a merger or acquisition of Peapack-Gladstone. A detailed description of the employment agreements and change-in-control agreements may be found in the Compensation Discussion and Analysis section of this proxy under “Employment Contracts” and “Change Inin Control Agreements.”
Potential Payments upon Termination or Change in Control
The following table shows the potential payments under each named executive’sexecutive officer’s change-in-control or employment agreement if he or she had terminated employment with the BankCompany effective December 31, 2014,2017, under each of the following retirement or termination circumstances (i)circumstances: (1) death or disability; (ii)(2) voluntary resignation or dismissal for cause; (iii)(3) retirement; (iv)(4) dismissal without cause; and (v)(5) dismissal without cause or resignation for good reason following a change-in-control of Peapack-Gladstone on December 31, 2014.Peapack-Gladstone. These payments are considered estimates as of specific dates as they contain some assumptions regarding stock price, life expectancy, salary and non-incentive compensation amounts and income tax rates and laws.
| Compensation and/or Benefits Payable Upon Termination | Death or Disability | Voluntary Resignation or Dismissal For Cause | Retirement | Dismissal Without Cause (no Change in Control) (1) (3) | Dismissal Without in Control) (1) (2) (3) |
| Douglas L. Kennedy | |||||
| Cash Severance | -- | -- | -- | $1,000,000 | $2,512,500 |
| Equity Acceleration (4) | $1,760,268 | -- | $1,760,268 | -- | $1,760,268 |
| Welfare Benefits Continuation | -- | -- | -- | -- | $26,744 |
| Reduction in Payment (5) | -- | -- | -- | -- | -- |
| Total Benefit | $1,760,268 | $0 | $1,760,268 | $1,000,000 | $4,299,511 |
| Compensation and/or Benefits Payable Upon Termination | Death or Disability | Voluntary Resignation or Dismissal For Cause | Retirement | Dismissal Without Cause (no Change in Control) (1) (3) | Dismissal Without in Control) (1) (2) (3) |
| Jeffrey J. Carfora | |||||
| Cash Severance | -- | -- | -- | $512,752 | $1,085,235 |
| Equity Acceleration (4) | $759,085 | -- | $759,085 | -- | $759,085 |
| Welfare Benefits Continuation | -- | -- | -- | -- | $26,744 |
| Life Insurance Benefit (6) (7) | $640,940 | -- | -- | -- | $101,226 |
| Reduction in Payment (5) | -- | -- | -- | -- | -- |
| Total Benefit | $1,400,025 | $0 | $759,085 | $512,752 | $1,972,290 |
| Finn M. W. Caspersen, Jr. | |||||
| Cash Severance | -- | -- | -- | $600,000 | $1,305,000 |
| Equity Acceleration (4) | $866,269 | -- | $866,269 | -- | $866,269 |
| Welfare Benefits Continuation | -- | -- | -- | -- | $32,241 |
| Life Insurance Benefit (6) (7) | $750,000 | -- | -- | -- | $216,417 |
| Reduction in Payment (5) | -- | -- | -- | -- | -- |
| Total Benefit | $1,616,269 | $0 | $866,269 | $600,000 | $2,419,928 |
| John P. Babcock | |||||
| Cash Severance | -- | -- | -- | $1,000,000 | $1,500,000 |
| Equity Acceleration (4) | $1,143,927 | -- | $1,143,927 | -- | $1,143,927 |
| Welfare Benefits Continuation | -- | -- | -- | -- | $18,601 |
| Reduction in Payment (5) | -- | -- | -- | -- | -- |
| Total Benefit | $2,662,528 | ||||
| Vincent Spero | |||||
| Cash Severance | -- | -- | -- | $472,770 | $644,896 |
| Equity Acceleration (4) | $366,634 | -- | $366,634 | -- | $366,634 |
| Welfare Benefits Continuation | -- | -- | -- | -- | $21,494 |
| Life Insurance Benefit (6) (7) | $590,963 | -- | -- | -- | $110,142 |
| Reduction in Payment (5) | -- | -- | -- | -- | 27,302 |
| Total Benefit | $957,597 | $0 | $366,634 | $472,770 | $1,115,864 |
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The following table does not reflect the potential payments to upon termination or change in control to Mr. Caspersen because he resigned from employment with, and from the board of directors of, the Company and the Bank, effective December 30, 2017. Please see the Compensation Discussion and Analysis and the Summary Compensation Table above for further details regarding the amounts payable to Mr. Caspersen in connection with his resignation.
| Compensation and/or Benefits Payable Upon Termination | Death or Disability | Voluntary Resignation or Dismissal For Cause | Retirement | Dismissal Without Cause(no Change in Control) (1) (2) | Dismissal Without Cause or Resignation For Good Reason (following a Change in Control) (1) (2) (3) | |||||||||||||||
| Douglas L. Kennedy | ||||||||||||||||||||
| Cash Severance | $ | — | $ | — | $ | — | $ | 1,200,000 | $ | 3,150,000 | ||||||||||
| Equity Acceleration (4) | 2,984,124 | — | 2,984,124 | — | 2,984,124 | |||||||||||||||
| Welfare Benefits Continuation | — | — | — | — | 14,163 | |||||||||||||||
| Life Insurance Benefit (5) (6) | 1,250,000 | — | — | — | 208,510 | |||||||||||||||
| Reduction in Payment (7) | — | — | — | — | — | |||||||||||||||
| Total Benefit | $ | 4,234,124 | $ | — | $ | 2,984,124 | $ | 1,200,000 | $ | 6,356,797 | ||||||||||
| Jeffrey J. Carfora | ||||||||||||||||||||
| Cash Severance | $ | — | $ | — | $ | — | $ | 632,000 | $ | 1,453,800 | ||||||||||
| Equity Acceleration (4) | 1,124,177 | — | 1,124,177 | — | 1,124,177 | |||||||||||||||
| Welfare Benefits Continuation | — | — | — | — | 14,170 | |||||||||||||||
| Life Insurance Benefit (5) (6) | 721,026 | — | — | — | 102,922 | |||||||||||||||
| Reduction in Payment (7) | — | — | — | — | — | |||||||||||||||
| Total Benefit | $ | 1,845,203 | $ | — | $ | 1,124,177 | $ | 632,000 | $ | 2,695,069 | ||||||||||
| Robert A. Plante | ||||||||||||||||||||
| Cash Severance | $ | — | $ | — | $ | — | $ | — | $ | 870,000 | ||||||||||
| Equity Acceleration (4) | — | — | — | — | — | |||||||||||||||
| Welfare Benefits Continuation | — | — | — | — | 18,105 | |||||||||||||||
| Life Insurance Benefit (5) (6) | — | — | — | — | — | |||||||||||||||
| Reduction in Payment (7) | — | — | — | — | — | |||||||||||||||
| Total Benefit | $ | — | $ | — | $ | — | $ | 600,000 | $ | 888,105 | ||||||||||
| John P. Babcock | ||||||||||||||||||||
| Cash Severance | $ | — | $ | — | $ | — | $ | 1,000,000 | $ | 2,250,000 | ||||||||||
| Equity Acceleration (4) | 2,172,080 | — | 2,172,080 | — | 2,172,080 | |||||||||||||||
| Welfare Benefits Continuation | — | — | — | — | 17,438 | |||||||||||||||
| Life Insurance Benefit (5) (6) | 1,250,000 | — | — | — | 97,681 | |||||||||||||||
| Reduction in Payment (7) | — | — | — | — | — | |||||||||||||||
| Total Benefit | $ | 3,422,080 | $ | — | $ | 2,172,080 | $ | 1,000,000 | $ | 4,537,199 | ||||||||||
| Lisa P. Chalkan | ||||||||||||||||||||
| Cash Severance | $ | — | $ | — | $ | — | $ | — | $ | 555,000 | ||||||||||
| Equity Acceleration (4) | 353,457 | — | 353,457 | — | 353,457 | |||||||||||||||
| Welfare Benefits Continuation | — | — | — | — | 18,105 | |||||||||||||||
| Life Insurance Benefit (5) (6) | — | — | — | — | — | |||||||||||||||
| Reduction in Payment (7) | — | — | — | — | — | |||||||||||||||
| Total Benefit | $ | 353,457 | $ | — | $ | 353,457 | $ | 405,000 | $ | 926,562 | ||||||||||
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| (1) | The term “cause” generally means |
| (2) | The term “change in control” generally means (1) the acquisition of 30% or more of the voting power of the Company’s securities, (2) the first purchase of the Company’s common stock pursuant to a tender or exchange offer, (3) the shareholder approval of (a) a merger or consolidation of the Company into another corporation wherein the other corporation exercises control over the Company, (b) a sale or disposition of all or substantially all of the Company’s assets or (c) a plan of liquidation or dissolution of the Company, (4) a change in board membership such that over a two-year period the directors constituting the Board at the beginning of such period do not constitute two-thirds of the Board of the Company or a successor corporation at the end of such period, or (5) a sale of (a) the common stock of the Company following which a person or entity other than the Company or its affiliates owns a majority thereof or (b) all or substantially all of the Company’s assets. |
| (3) | The term “good reason” generally means a change in job description, location, compensation or benefits. |
| (4) |
| (5) |
triggering an excise tax under Section 4999 of the Code, or (ii) the greatest after-tax amount payable to the executive after taking into account any excise tax imposed under Section 4999 of the Code on the total payments.
The greatest after-tax amount payable to the executive after taking into account any excise tax imposed under Section 4999 of the Code on the total payments to Messrs. Kennedy, Carfora, and Caspersen is greater than the dollar amount which can be paid to Messrs. Kennedy, Carfora, and Caspersen without triggering an excise tax under Section 4999 of the Code. Accordingly, the payments to Messrs. Kennedy, Carfora, and Caspersen in connection with a termination following a change in control on December 31, 2014 are not subject to a reduction.
The dollar amount which can be paid to Mr. Babcock in connection with a termination following a change in control on December 31, 2014 is not greater than the 280G limit. Accordingly, Mr. Babcock’s payment is not subject to a reduction.
The dollar amount which can be paid to Mr. Spero without triggering an excise tax under Section 4999 of the Code is greater than the greatest after-tax amount payable to the executive after taking into account any excise tax imposed under Section 4999 of the Code on the total payments to Mr. Spero. Accordingly, the payments to Mr. Spero in connection with a termination following a change in control on December 31, 2014 are subject to a reduction.
| Peapack-Gladstone has purchased |
| The life insurance benefit at dismissal without cause or resignation for good reason following a change in control represents the imputed income from December |
| (7) | In the event any payments to the named executive officers would exceed the amount that could be received without the imposition of an excise tax under Section 4999 of Code, the payments will be reduced to the extent necessary to ensure that such payments will be limited to the greater of (1) the dollar amount that can be paid to the named executive officers without triggering an excise tax under Section 4999 of the Code, or (2) the greatest after-tax amount payable to the executive after taking into account any excise tax imposed under Section 4999 of the Code on the total payments. |
Equity Compensation Plan
The greatest after-tax amount payable to the executive after taking into account any excise tax imposed under Section 4999 of the Code on the total payments to Messrs. Kennedy, Carfora, Plante and Ms. Chalkan is greater than the dollar amount that can be paid to Messrs. Kennedy, Carfora, Plante and Ms. Chalkan, without triggering an excise tax under Section 4999 of the Code. Accordingly, the payments to Messrs. Kennedy, Carfora, Plante and Ms. Chalkan in connection with a termination following table shows information ata change in control on December 31, 2014 for all equity compensation plans under which shares2017 are not subject to a reduction.
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Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires that Peapack-Gladstone'sPeapack-Gladstone’s executive officers, directors and persons who own more than ten percent of a registered class of Peapack-Gladstone'sPeapack-Gladstone’s common stock, file reports of ownership and changes in ownership with the SEC. Based upon copies of reports furnished by these insiders of Peapack-Gladstone, all Section 16(a) reporting requirements applicable to insiders during 20142017 were satisfied on a timely basis with the exception ofexcept for: one Form 54 (representing one transaction), which was filed late on behalf of Mr. Kennedy with regard to a previously unreported dispositionFrancesco Rossi, Senior Vice President, Chief Accounting Officer; one Form 3 (representing one transaction), which was filed late on behalf of common stock,Robert A. Plante, Executive Vice President, Chief Operating Officer; and one Form 4 (representing one transaction), which was filed late on February 12, 2015.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATIONbehalf of Lisa Chalkan, Executive Vice President, Chief Credit Officer.
The Board of Directors has established a Compensation Committee, which has been charged with overseeing executive compensation practices at Peapack-Gladstone. Members of the Board who served on the Compensation Committee during 2014 were Messrs. Meyercord (Chair), Consi, Gramigna (left the Compensation Committee on December 31, 2014), Merton and Smith. All members of the Compensation Committee, or their affiliates, have engaged in loan, deposit or trust transactions with the Bank, as discussed below, in “Transactions with Related Persons, Promoters and Certain Control Persons” and under “Director Independence” above. No other relationships required to be reported under the rules promulgated by the Securities and Exchange Commission exist with respect to members of Peapack-Gladstone’s Compensation Committee.
TRANSACTIONS WITH RELATED PERSONS PROMOTERS AND CERTAIN CONTROL PERSONS
Peapack-Gladstone uses the same policies and procedures for the review, approval and ratification of related persons transactions as described above under the caption “Director Independence.” In addition to the matters discussed above under the captions “Director Independence” and “Compensation Committee Interlocks and Insider Participation,Independence,” directors and officers and their associates were customers of and had transactions with the Bank during the year ended December 31, 2014,2017, and it is expected that such persons will continue to have such transactions in the future. All deposit accounts, loans, and commitments comprising such transactions were made in the ordinary course of business of the Bank on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons not related to Peapack-Gladstone, and, in the opinion of management of Peapack-Gladstone, did not involve more than normal risks of collectability or present other unfavorable features.
REPORT OF THE AUDIT COMMITTEE
To the Board of Directors of Peapack-Gladstone Financial Corporation:
We have reviewed and discussed with management Peapack-Gladstone's audited consolidated financial statements as of and for the year ended December 31, 2014.
We have discussed with the independent auditors the matters required to be discussed by the Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1 AU Section 380) as adopted by the Public Company Accounting Oversight Board in Rule 3200T.
We have received and reviewed the written disclosures and the letter from the independent accountant required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the audit committee concerning independence, and have discussed with the independent accountant the independent accountant’s independence.
Based on the reviews and discussions referred to above, we recommend to the Board of Directors that the audited financial statements referred to above be included in Peapack-Gladstone's Annual Report on Form 10-K for the year ended December 31, 2014.
PROPOSAL 3
RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors appointed Crowe Horwath LLP as independent registered public accounting firm to examine Peapack-Gladstone’s consolidated financial statements for the fiscal year ending December 31, 2014 and to render other professional services as required. Representatives from Crowe Horwath LLP are expected to be present at the annual meeting to answer questions and they will have the opportunity to speak if desired. The Audit Committee will consider the outcome of our shareholders’ vote in connection with the selection of Crowe Horwath LLP, but is not bound by the vote. If the appointment is not ratified, the Audit Committee will consider whether a different independent registered public accounting firm should be selected.
Aggregate fees for the fiscal years ending December 31, 2014 and December 31, 2013, billed by the Corporation’s independent registered public accounting firm, Crowe Horwath LLP (“Crowe”) were as follows:
| Type of Service | 2014 | 2013 | ||||||
| Audit Fees (1) | $ | 260,000 | $ | 249,830 | ||||
| Audit-Related Fees (2) | 140,000 | 161,380 | ||||||
| Total | $ | 400,000 | $ | 411,210 | ||||
AUDIT COMMITTEE PRE-APPROVAL PROCEDURES
The Audit Committee has adopted a formal policy concerning the pre-approval of audit and non-audit services to be provided by the independent registered public accounting firm to Peapack-Gladstone. The policy requires that all services to be performed by Crowe Horwath LLP, Peapack-Gladstone’s independent registered public accounting firm, including audit services, audit-related services and permitted non-audit services, be pre-approved by the Audit Committee. Specific services being provided by the independent registered public accounting firm are regularly reviewed in accordance with the pre-approval policy. At subsequent Audit Committee meetings, the Committee receives updates on the services actually provided by the independent registered public accounting firm, and management may present additional services for approval. All services rendered by Crowe Horwath LLP are permissible under applicable laws and regulations. Each new engagement of Crowe Horwath LLP was approved in advance by the Audit Committee.
RECOMMENDATION AND VOTE REQUIRED ON PROPOSAL 3
Approval of this proposal requires the favorable vote of a majority of the votes cast. Abstentions and broker non-votes will have no impact on the approval of this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” PROPOSAL 3.
New Jersey corporate law requires that the notice of shareholders'shareholders’ meeting (for either a regular or special meeting) specify the purpose or purposes of such meeting. Thus, any substantive proposals, including shareholder proposals, must be referred to in Peapack-Gladstone'sPeapack-Gladstone’s notice of shareholders'shareholders’ meeting for such proposal to be properly considered at a meeting of Peapack-Gladstone.
Proposals of shareholders which are eligible under the rules of the SEC to be included in Peapack-Gladstone'sPeapack-Gladstone’s year 20162019 proxy materials must be received by the Secretary of Peapack-Gladstone no later than November 30, 2015.27, 2018.
Under the terms of our bylaws, a shareholder who intends to nominate a person for election to our Board or to present an item of business at the 2019 Annual Meeting (other than a proposal submitted for inclusion in our proxy materials) must deliver to the Secretary of Peapack-Gladstone Bank written notice of such business, including the information specified in the bylaws, between January 9, 2019 and February 8, 2019. Such notice must meet the requirements in our bylaws. If Peapack-Gladstone changesadvances its 20162019 Annual Meeting date to a date more than 30 days from the anniversary date of its 20152018 Annual Meeting or delay it more than 70 days, then notice by the deadline referredshareholder to inbe timely must be delivered not earlier than 90 days prior to the preceding paragraph will be changed to a reasonable time before Peapack-Gladstone begins to printannual meeting date and mail its proxy materials.not later than the close of business 10 days following the day on which the public announcement of the date of the meeting is made. If Peapack-Gladstone changes the date of its 20162019 Annual Meeting in a manner that alters the deadline, Peapack-Gladstone will so state under Item 5 of the first quarterly report on Form 10-Q it files with the SEC after the date change or notify its shareholders by another reasonable means.
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING
The Board of Directors knows of no business that will be presented for consideration at the meeting other than that stated in this proxy statement. Should any other matter properly come before the meeting or any adjournment thereof, it is intended that proxies in the enclosed form will be voted in respect thereof in accordance with the judgment of the person or persons voting the proxies.
WHETHER YOU INTEND TO BE PRESENT AT THE MEETING OR NOT, YOU ARE URGED TO RETURN YOUR SIGNED PROXY PROMPTLY.
By Order of the Board of Directors
F. DUFFIELD MEYERCORD
CHAIRMAN
Bedminster, New Jersey
March 17, 2015
A COPY OF PEAPACK-GLADSTONE'S ANNUAL REPORT FOR THE YEAR-ENDED DECEMBER 31, 2014 CAN BE FOUND, ALONG WITH OUR PROXY STATEMENT, AT WWW.ENVISIONREPORTS.COM/PGC, OR IF A REGISTERED SHAREHOLDER REQUESTED A PAPER COPY, IT IS BEING MAILED WITH THIS PROXY STATEMENT. HOWEVER, SUCH ANNUAL REPORT IS NOT INCORPORATED INTO THIS PROXY STATEMENT AND IS NOT DEEMED TO BE A PART OF THE PROXY SOLICITING MATERIAL.In addition, a copy of our PROXY statement OR Annual Report (without exhibits) will be furnished to any REGISTERED shareholder upon written request addressed to mary m. russell, CORPORATE Secretary, Peapack-Gladstone Financial Corporation, 500 HILLS DRIVE, P.O. Box 700, BEDMINSTER, New Jersey 07921.
