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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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o | Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 |
Sovereign Bancorp, Inc.
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EXECUTIVE AND DIRECTOR COMPENSATION | 28 | |||
28 | ||||
COMPENSATION DISCUSSION AND ANALYSIS | 31 | |||
COMPENSATION COMMITTEE REPORT | 38 | |||
SUMMARY COMPENSATION TABLE — 2006 | 38 | |||
GRANTS OF PLAN-BASED AWARDS — 2006 | 41 | |||
OUTSTANDING EQUITY AWARDS AT FISCAL 2006 YEAR END | 42 | |||
OPTION EXERCISES AND STOCK VESTED — 2006 | 44 | |||
OUR COMPENSATION PLANS | 45 | |||
DESCRIPTION OF EMPLOYMENT AGREEMENTS | 48 | |||
PENSION BENEFITS — 2006 | 55 | |||
NONQUALIFIED DEFERRED COMPENSATION — 2006 | 57 | |||
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL | 59 | |||
DIRECTOR COMPENSATION IN FISCAL YEAR 2006 | 61 | |||
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67 | ||||
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C-1 |
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Annual Meeting of Shareholders
May 3, 2007
• | To elect three Class II directors of Sovereign, each to serve for a term of three years and until their successors shall have been duly elected by the shareholders and qualified; | |
• | To ratify the appointment by the Audit Committee of our Board of Ernst & Young LLP as our independent auditor for the fiscal year ending December 31, 2007; and | |
• | To amend our amended and restated articles of incorporation (as amended and restated, the “Articles of Incorporation”) to “opt out” of coverage of Subchapter E of Chapter 25 of Pennsylvania’s Business Corporation Law. In general, Subchapter E of Chapter 25 of Pennsylvania’s Business Corporation Law is an anti-takeover provision which permits shareholders of a Pennsylvania corporation to “opt out” of its coverage by, among other methods, amending a company’s articles of incorporation. For a more detailed description of this statutory provision as well as the Board’s recommendation with respect to the proposal to amend the Articles of Incorporation to “opt out” of Subchapter E of Chapter 25 of Pennsylvania’s Business Corporation Law, please see page 70. |
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• | you are present and vote in person at the meeting; or | |
• | you have properly submitted a proxy card by mail, telephone or Internet. |
• | over the telephone by calling the toll-free number specified on the enclosed proxy card; | |
• | electronically, using the Internet; or | |
• | by completing, signing and mailing the enclosed proxy card. |
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• | Election of three Class II directors: P. Michael Ehlerman; Andrew C. Hove, Jr.; and Juan Rodriguez-Inciarte; | |
• | Ratification of the selection of Ernst & Young LLP as our independent auditor for the fiscal year ending December 31, 2007; and | |
• | Amendment of our Articles of Incorporation to “opt out” of coverage of Subchapter E of Chapter 25 of the Pennsylvania Business Corporation Law. |
• | “FOR”all of the nominees for Class II director; | |
• | “FOR”the ratification of the selection of Ernst & Young LLP as our independent auditor for the fiscal year ending December 31, 2007; and | |
• | “FOR”the amendment of the Articles of Incorporation to “opt out” of coverage by Subchapter E of Chapter 25 of the Pennsylvania Business Corporation Law. |
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BENEFICIAL OWNERS AND MANAGEMENT
Amount and | ||||||||||||||||
Nature of | Percentage | |||||||||||||||
Beneficial | of | |||||||||||||||
Director | Ownership | Common | ||||||||||||||
Age | Since | (#)(1) | Stock | |||||||||||||
DIRECTORS | ||||||||||||||||
Joseph P. Campanelli(2) | 50 | 2007 | 560,977 | (3) | — | |||||||||||
Gonzalo de las Heras | 67 | 2006 | 0 | (4) | ||||||||||||
P. Michael Ehlerman | 68 | 2001 | 39,483 | — | ||||||||||||
Brian Hard | 60 | 1996 | 100,139 | (5) | — | |||||||||||
Marian L. Heard | 66 | 2004 | 7,369 | — | ||||||||||||
Andrew C. Hove, Jr. | 72 | 2001 | 39,728 | — | ||||||||||||
William J. Moran | 65 | 2006 | 492 | — | ||||||||||||
Maria Fiorini Ramirez | 59 | 2006 | 1,542 | — | ||||||||||||
Juan Rodriguez-Inciarte | 54 | 2006 | 0 | (6) | ||||||||||||
Daniel K. Rothermel | 69 | 1976 | 339,610 | (7) | — | |||||||||||
Alberto Sanchez | 43 | 2007 | 0 | (8) | ||||||||||||
Jay S. Sidhu | 55 | N/A | 4,852,751 | (9) | 1.0 | |||||||||||
Cameron C. Troilo, Sr. | 68 | 1974 | 854,403 | (10) | — | |||||||||||
Ralph V. Whitworth | 51 | 2006 | 31,475,796 | (11) | 6.7 | % | ||||||||||
NAMED EXECUTIVE OFFICERS | ||||||||||||||||
James J. Lynch(12) | 57 | N/A | 200,501 | (13) | — | |||||||||||
Mark R. McCollom(14) | 43 | N/A | 246,172 | (15) | — | |||||||||||
Lawrence M. Thompson, Jr.(16) | 54 | N/A | 725,060 | (17) | — | |||||||||||
M. Robert Rose(18) | 55 | N/A | 62,771 | (19) | ||||||||||||
All Sovereign directors and executive officers as a group (18 persons) | N/A | N/A | 39,506,794 | (20) | 8.2 | % | ||||||||||
All Sovereign Bank directors (excluding Sovereign directors listed above) and team members of Sovereign Bank (excluding executive officers listed above) as a group | N/A | N/A | 25,131,785 | (21) | 5.1 | % | ||||||||||
Total aggregate stock ownership of the above persons | N/A | N/A | 64,638,579 | (22) | 13.2 | % | ||||||||||
OTHER PRINCIPAL HOLDERS | ||||||||||||||||
Banco Santander Central Hispano, S.A. | N/A | N/A | 117,630,664 | (23) | 24.9 | % | ||||||||||
c/o Banco Santander Central Hispano, S.A., New York Branch 45 East 53rd Street New York, NY 10022 | ||||||||||||||||
Relational Investors, LLC | N/A | N/A | 31,475,796 | (24) | 6.7 | % | ||||||||||
12400 High Bluff Drive Suite 600 San Diego, CA 92130 |
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(1) | Except as otherwise provided for herein, the table reflects data supplied by each director and executive officer as of March 1, 2007. The table also reflects shares of our common stock held by the trustee of the Sovereign Retirement Plan which have been allocated to the accounts of the executive officers identified in the table, and as a group. | |
(2) | Mr. Campanelliwas appointed President and interim Chief Executive Officer of Sovereign, effective October 10, 2006, upon the resignation and retirement of Mr. Sidhu. On January 16, 2007, Mr. Campanelli was appointed as the permanent Chief Executive Officer and as a Class III director of Sovereign. Prior to this appointment, Mr. Campanelli served as President and Chief Executive Officer of the Sovereign Bank New England Division from January 1, 2005, President and Chief Operating Officer of the Sovereign Bank New England Division from January 2000 and Vice Chairman of Sovereign since September 2002. Mr. Campanelli has been employed by us as an executive team member since 1997. | |
(3) | The number and percentage of shares beneficially owned by Mr. Campanelli include (a) 369,079 shares issuable upon exercise of outstanding options, (b) 18,367 shares held by the Sovereign Retirement Plan which are allocated to Mr. Campanelli’s account and over which he exercises voting power, (c) 30,613 shares of our common stock awarded as restricted stock under one or more of our stock incentive plans and (d) 56,405 shares of our common stock under the Sovereign Bancorp, Inc. Bonus Recognition and Retention Program (the “Bonus Deferral Program”), which is more fully described following the table captioned “Nonqualified Deferred Compensation Plans — 2006.” For information regarding the vesting of outstanding stock option and restricted stock awards, see the table captioned “Outstanding Equity Awards at Fiscal 2006 Year End.” | |
(4) | Excludes 117,630,664 shares owned by Santander, to which Mr. de las Heras disclaims beneficial ownership. Mr. de las Heras is General Director and Executive Vice President of Santander and Chairman of Santander BanCorp, Inc., an affiliate of Santander. See footnote 23 to this table for more information regarding Santander’s ownership of our common stock. | |
(5) | The number and percentage of shares beneficially owned by Mr. Hard include 50,400 shares issuable upon exercise of outstanding options. | |
(6) | Excludes 117,630,664 shares owned by Santander, to which Mr. Rodriguez-Inciarte disclaims beneficial ownership. Mr. Rodriguez-Inciarte is Director General of Santander. See footnote 23 to this table for more information regarding Santander’s ownership of our common stock. | |
(7) | Mr. Rothermelholds shared voting and investment power over 12,366 shares. The number and percentage of shares includes 3,820 shares held by Mr. Rothermel’s spouse with respect to which Mr. Rothermel disclaims beneficial ownership. The number and percentage of shares beneficially owned by Mr. Rothermel also include 126,000 shares issuable upon exercise of outstanding options. | |
(8) | Excludes 117,630,664 shares owned by Santander, to which Mr. Sanchez disclaims beneficial ownership. Mr. Sanchez is President and Chief Executive Officer of Santander Investment Securities Inc., an affiliate of Santander. See footnote 23 to this table for more information regarding Santander’s ownership of our common stock. | |
(9) | Mr. Sidhuresigned and retired as our President and Chief Executive Officer, effective October 10, 2006, and as a director and the Chairman of Sovereign, effective December 31, 2006. Mr. Sidhu holds shared voting or investment power over 752,317 shares. The number and percentage of shares beneficially owned by Mr. Sidhu include (a) 1,576,821 shares issuable upon exercise of outstanding options, (b) 61,054 shares held by the Sovereign Retirement Plan that are allocated to Mr. Sidhu’s account and over which he exercises voting power, and (c) 441,370 shares under the Bonus Deferral Program. For information regarding the vesting of outstanding stock option and restricted stock awards, see the table captioned “Outstanding Equity Awards at Fiscal 2006 Year End.” | |
(10) | Mr. Troiloholds shared voting or investment power over 520,855 shares. The number and percentage of shares beneficially owned by Mr. Troilo include 126,000 shares issuable upon exercise of outstanding options. | |
(11) | Mr. Whitworthis a Principal of Relational. Based on Amendment No. 8 to the Schedule 13D filed with the Securities and Exchange Commission (the “Commission” or the “SEC”) on December 4, 2006 (the |
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“Relational 13D”), Relational is the sole general partner of Relational Investors, L.P., which holds 5,152,989 shares, Relational Partners, L.P., which holds 121,125 shares, Relational Fund Partners, L.P., which holds 121,070 shares, Relational Coast Partners, L.P., which holds 281,095 shares, RH Fund 1, L.P., which holds 3,478,800 shares, RH Fund 2, L.P., which holds 2,572,018 shares, RH Fund 4, L.P., which holds 862,601 shares, RH Fund 6, L.P., which holds 660,020 shares, RH Fund 7, L.P., which holds 308,188 shares, Relational Investors VIII, L.P., which holds 4,956,898 shares, Relational Investors IX, L.P., which holds 2,021,517 shares, Relational Investors XI, L.P., which holds 1,595,062 shares, Relational Investors XII, L.P., which holds 253,979, Relational Investors XIV, L.P., which holds 911,346 shares, and Relational Investors XV, L.P., which holds 615,385 shares. Relational is also the sole managing member of the general partners of Relational Investors III, L.P., which holds 279,435 shares, and Relational Investors X, L.P., which holds 2,951,208 shares. An additional 4,332,362 shares are held by and in accounts managed by Relational. Mr. Whitworth disclaims beneficial ownership of these securities except to the extent of his pecuniary interest therein. Under the terms of the Settlement Agreement, Relational and its affiliates are required to vote all of the shares of our common stock they own and are entitled to vote for the election of the Board’s three Class II nominees for director. See Exhibit 10.1 to our Current Report onForm 8-K, filed with the Commission on March 24, 2006, for the complete text of the Settlement Agreement. Mr. Whitworth also beneficially owns 698 shares of our common stock which he received as compensation for his service as a director. | ||
(12) | Mr. Lynchhas served as Chairman and Chief Executive Officer of the Sovereign Bank Mid-Atlantic Division since September 2002, and a Vice Chairman of Sovereign since February 2006. | |
(13) | The number and percentage of shares beneficially owned by Mr. Lynch include (a) 63,000 shares issuable upon exercise of outstanding options, (b) 39,731 shares of our common stock awarded as restricted stock under one or more of our stock incentive plans, (c) 5,666 shares held by the Sovereign Retirement Plan that are allocated to Mr. Lynch’s account and over which he exercises voting power and (d) 47,832 shares under the Bonus Deferral Program. For information regarding the vesting of outstanding stock option and restricted stock awards, see the table captioned “Outstanding Equity Awards at Fiscal 2006 Year End.” | |
(14) | Mr. McCollomhas served as Chief Financial Officer since May 2005 and as Chief Financial Officer of Sovereign Bank since 2002. Prior to that, Mr. McCollom served as Chief Accounting Officer of Sovereign and Sovereign Bank from 2004 through May 2005. Mr. McCollom also served as Sovereign’s Managing Director of Corporate Planning from 2002 until May 2005. | |
(15) | The number and percentage of shares beneficially owned by Mr. McCollom include (a) 159,508 shares issuable upon exercise of outstanding options, (b) 38,429 shares of our common stock awarded as restricted stock under one or more of our stock incentive plans, (c) 19,197 shares held by the Sovereign Retirement Plan which are allocated to Mr. McCollom’s account and over which he exercises voting power and (d) 10,098 shares of our common stock under the Bonus Deferral Program. For information regarding the vesting of outstanding stock option and restricted stock awards, see the table captioned “Outstanding Equity Awards at Fiscal 2006 Year End.” | |
(16) | Mr. Thompsonresigned as Vice Chairman and Chief Administrative Officer of Sovereign and as Chief Administrative Officer of Sovereign Bank, effective January 5, 2007. Previously, Mr. Thompson had served as Chief Operating Officer of Sovereign Bank from 1997 until June 2006. He had been employed by us in various capacities since 1987. | |
(17) | Mr. Thompsonholds shared voting or investment power over 142,339 shares. The number and percentage of shares beneficially owned by Mr. Thompson include (a) 301,313 shares issuable upon exercise of outstanding options and (b) 31,164 shares held by the Sovereign Retirement Plan which are allocated to Mr. Thompson’s account and over which he exercises voting power. For information regarding the vesting of outstanding stock option and restricted stock awards, see the table captioned “Outstanding Equity Awards at Fiscal 2006 Year End.” | |
(18) | Mr. Rosehas served as Credit Risk Management Officer and Executive Vice President of Sovereign since May 2004 and Executive Vice President and Regulation O Officer of Sovereign Bank since May 2004. Previously, Mr. Rose had served as Chief Credit Policy Officer and Executive Vice President of |
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Sovereign from May 2002 until May 2004 and Chief Credit Officer and Senior Vice President of Sovereign from 2000 until May 2002. | ||
(19) | Mr. Roseholds shared voting or investment power over 210 shares. The number and percentage of shares beneficially owned by Mr. Rose include (a) 23,787 shares issuable upon exercise of outstanding options, (b) 2,719 shares held by the Sovereign Retirement Plan which are allocated to Mr. Rose’s account and over which he exercises voting power, (c) 20,430 shares of our common stock awarded as restricted stock under one or more of our stock incentive plans and (d) 5,145 shares of our common stock under the Bonus Deferral Program. For information regarding the vesting of outstanding stock option and restricted stock awards, see the table captioned “Outstanding Equity Awards at Fiscal 2006 Year End.” | |
(20) | In the aggregate, these persons hold shared voting or investment power over 1,428,087 shares. The number and percentage of shares beneficially owned by them include (a) 2,795,908 shares issuable upon exercise of outstanding options, (b) 138,169 shares held by the Sovereign Retirement Plan allocated to the executive officers’ accounts and over which they exercise voting power, (c) 129,203 shares of our common stock awarded as restricted stock under one or more of our stock incentive plans and (d) 560,850 shares under the Bonus Deferral Program. | |
(21) | Shares include (a) 7,727,033 shares allocated under the Sovereign Retirement Plan and acquired plans plus 2,760,133 unallocated shares held in the ESOP component of the Sovereign Retirement Plan (which are voted in proportion to the allocated shares), (b) 236,746 shares under the Bonus Deferral Program, (c) approximately 10,401,705 shares issuable upon the exercise of both vested and unvested options granted under one or more of our stock incentive plans and (d) 3,080,437 shares of restricted stock awarded under such plans, representing approximately 5.1% in the aggregate of our outstanding shares, after giving effect to the applicable vesting of plan shares and the exercise of options and the lapse of restrictions with respect to restricted stock awards. | |
(22) | Shares include (a) 7,865,202 shares allocated under the Sovereign Retirement Plan and acquired plans plus 2,760,133 unallocated shares held in the ESOP component of the Sovereign Retirement Plan (which are voted in proportion to the responses received from participants with respect to the allocated shares), (b) 797,596 shares under the Bonus Deferral Program, (c) approximately 13,197,613 shares issuable upon the exercise of both vested and unvested options granted under one or more of our stock incentive plans and (d) 3,209,640 shares of restricted stock awarded under such plans, representing approximately 13.2% in the aggregate of our outstanding shares, after giving effect to the applicable vesting of plan shares and the exercise of options and the lapse of restrictions with respect to restricted stock awards. | |
(23) | Based on Amendment No. 7 to the Schedule 13D filed on March 9, 2007 with the Commission (the “Santander 13D”), Santander beneficially owns 117,630,664 shares, or 24.9%, of our common stock of which it is entitled to vote 94,036,940 shares, or 19.9%. Pursuant to the Investment Agreement, Santander purchased 94,034,149 shares (after giving effect to the 5% stock dividend paid by Sovereign on July 6, 2006), from Sovereign on May 31, 2006, constituting 19.8% of the outstanding shares on such date after giving effect to such purchase. Based on the Santander 13D, Santander acquired an additional 23,596,515 shares of our common stock in the open market and through stock dividends after May 31, 2006. The 23,593,724 shares of our common stock Santander acquired in excess of the 94,034,149 shares, or 19.8%, initially purchased of our outstanding shares were deposited with a trustee pursuant to a Voting Trust Agreement, dated as of May 31, 2006, by and among Santander, Sovereign and The Bank of New York, as trustee (the “Voting Trust Agreement”). Under the terms of the Voting Trust Agreement, the remaining shares of our common stock owned by Santander in excess of 19.99% are required to be voted on all other matters in the same proportion as the shares voted by shareholders other than Santander and its affiliates. For additional information regarding the Investment Agreement, see the description contained in our Annual Report onForm 10-K filed for the year ended December 31, 2006. See Exhibit 10.1 to our Current Report onForm 8-K, filed with the Commission on October 27, 2005, Exhibit 10.2 to our Current Report onForm 8-K, filed with the Commission on November 22, 2005, and Exhibit 10.3 to our Current Report onForm 8-K, filed with the Commission on June 6, 2006, for the complete text of the Investment Agreement. See Exhibit 5 to Santander’s Schedule 13D, filed with the Commission on June 9, 2006, for the complete text of the Voting Trust Agreement. | |
(24) | See footnote 11 to this table for information regarding Relational’s ownership of our common stock. |
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GOVERNANCE POLICIES, PRACTICES AND PROCEDURES
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Class I | Class II | Class III | ||
(To Serve Until 2009) | (To Serve Until 2007) | (To Serve Until 2008) | ||
Brian Hard | P. Michael Ehlerman | Joseph P. Campanelli | ||
Marian L. Heard | Andrew C. Hove, Jr. | William J. Moran | ||
Gonzalo de las Heras | Juan Rodriguez-Inciarte | Maria Fiorini Ramirez | ||
Cameron C. Troilo, Sr. | Daniel K. Rothermel | Alberto Sanchez | ||
Ralph V. Whitworth |
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• | loan relationships with directors which are in compliance with Federal Regulation O, promulgated by the Board of Governors of the Federal Reserve System, do not constitute material relationships; | |
• | directors’ accounts that are maintained in accordance with established Sovereign policies and are on the same terms as those available to similar customers do not constitute material relationships; | |
• | direct compensation paid to a director (excluding director and committee fees and pension or other forms of deferred compensation for prior service) or member of his or her immediate family in any 12 month period over the last three years from us or Sovereign Bank amounting to less than $50,000 does not constitute a material relationship; | |
• | payments for property or services to or from Sovereign or Sovereign Bank and an entity that is affiliated with a director that do not exceed the greater of $1 million or 2% of such entity’s revenue do not constitute material relationships; | |
• | indebtedness of an entity affiliated with a director to Sovereign or Sovereign Bank that is below certain asset-based thresholds with interest and fees not exceeding $1 million or 2% of such entity’s revenue does not constitute a material relationship; and | |
• | donations to and the indebtedness of a charitable, educational or governmental entity that is affiliated with a one of our directors or a member of his or her immediate family does not constitute a material relationship if: |
• | the total amount of indebtedness does not exceed 2% of the entity’s total consolidated assets and the aggregate interest and fees paid by the entity does not exceed the greater of $1 million or 2% of the entity’s consolidated gross revenues; or | |
• | the discretionary donations do not exceed the greater of $1 million or 2% of the entity’s consolidated gross revenues. |
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• | Messrs. de las Heras and Rodriguez-Inciarte serve as executive officers of Santander or its affiliates. As of the record date, Santander owned 117,630,664 shares, or 24.9%, of our common stock and may vote 94,036,940 shares, or 19.9%, of our common stock in its sole discretion. Under the terms of a related Voting Trust Agreement, the remaining shares of our common stock owned by Santander are required to be voted on all other matters in the same proportion as the shares voted by shareholders other than Santander and its affiliates. | |
• | Santander is the obligor on a $5,000 letter of credit supporting the debt of a Sovereign borrower. | |
• | In May 2006, Santander’s capital markets group, Santander Investment Securities Inc., received approximately $800,000 in underwriting discounts in connection with our capital market initiatives to fund the acquisition of Independence Community Bank Corp. | |
• | Pursuant to the order issued by the Board of Governors of the Federal Reserve System in connection with Santander’s investment in Sovereign, Santander is deemed to be in control of us for purposes of the U.S. Bank Holding Company Act and is expected to serve as a “source of strength” for Sovereign Bank. |
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• | In January 2006, Santander extended a total of $400 million in unsecured lines of credit to Sovereign Bank for federal funds and Eurodollar borrowings and for the confirmation of standby letters of credit issued by Sovereign Bank. In May 2006, Santander issued a $25 million unsecured line of credit to Independence Community Bank, prior to its acquisition by Sovereign Bank, to be used solely for confirmation of standby letters of credit issued by Independence. These lines of credit are at market rates, in the ordinary course of business and can be cancelled by either Sovereign Bank or Santander at any time and can be replaced by Sovereign at any time. As of December 31, 2006, the average balance outstanding was $147.4 million, of which $88.4 million was federal funds and Eurodollar borrowings and $59.0 million was for confirmation of standby letters of credit. Sovereign Bank paid approximately $147,000 in fees and $4.4 million in interest to Santander in 2006 in connection with these lines of credit, which, for the fiscal year ended December 31, 2006, comprised less than 0.03% of Santander’s net operating income and less than 0.01% of Santander’s combined gross operating income. | |
• | Sovereign and Santander have certain rights and obligations under the Investment Agreement, including those provisions, among other things, relating to a possible sale of Sovereign to Santander after a two-year standstill or to another institution approved by the Board and our shareholders, as well as provisions which affect the ongoing interaction between us and Santander including: |
• | Sovereign and Santander have an obligation to each appoint at least one of the other party’s employees to at least one position with direct reporting to the department head within each of its financial control department, internal audit department and risk management department. Presently, one Santander representative is located in each of the Audit, Risk Management, Marketing and Finance Departments; | |
• | The affirmative vote of the Board, including at least one Santander director is required in order to expand our Board over 12 directors and amend our bylaws in any manner adversely affecting Santander; and | |
• | In general, Santander must be notified of any acquisition proposals to acquire us, following which Santander has certain exclusive rights to negotiate an acquisition proposal; provided that any Santander acquisition must be approved by a majority of the non-Santander shareholders present and voting at the relevant shareholder meeting. For additional information regarding the Investment Agreement, see the description contained in our Annual Report onForm 10-K for the year ended December 31, 2006. |
• | The statement in the commentary to the NYSE listing standards that because “the concern is independence from management, the Exchange does not view ownership of even a significant amount of stock, by itself, as a bar to an independence finding.” |
Members: | Brian Hard,Chair | Andrew C. Hove, Jr. | ||
Daniel K. Rothermel,Vice Chair | William J. Moran | |||
P. Michael Ehlerman | Maria Fiorini Ramirez | |||
Ralph V. Whitworth |
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Members: | Daniel K. Rothermel,Chair | Andrew C. Hove, Jr. | ||
Gonzalo de las Heras | Juan Rodriguez-Inciarte* | |||
P. Michael Ehlerman | Ralph V. Whitworth | |||
Brian Hard |
* | As an alternate to serve in the absence of Mr. de las Heras. |
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Members: | Andrew C. Hove, Jr.,Chair | Marian L. Heard | ||
Brian Hard | William J. Moran | |||
Gonzalo de las Heras | Juan Rodriguez-Inciarte* | |||
Daniel K. Rothermel |
* | As an alternate to serve in the absence of Mr. de las Heras. |
Members: | P. Michael Ehlerman,Chair | William J. Moran | ||
Gonzalo de las Heras | Juan Rodriguez-Inciarte* | |||
Brian Hard | Daniel K. Rothermel | |||
Andrew C. Hove, Jr. | Ralph V. Whitworth |
* | As an alternate to serve in the absence of Mr. de las Heras. |
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• | excellent character and integrity (mandatory); | |
• | no real or apparent material conflicts of interest and a willingness to acknowledge that he or she represents all shareholders (mandatory); | |
• | experience in the financial services business and “hands on” familiarity with the regulatory relationship between banks and bank holding companies evidenced by prior service on the Board of Directors of Sovereign Bank, or service on a board of a bank or bank holding company acquired by Sovereign (mandatory). Persons who the Nominating Committee determines to be otherwise qualified but do not meet this prior experience requirement may be invited to serve on the Board of Directors of Sovereign Bank before becoming eligible to be a nominee for election as a director of Sovereign; | |
• | willingness to agree to observe our corporate governance policies, including our Code of Conduct and Ethics, and the principles underlying applicable federal and state banking laws (mandatory); | |
• | leadership in his or her field; | |
• | a history of achievements that reflect high standards for himself or herself and others; | |
• | broad experience and the ability to exercise sound business judgment; | |
• | experience as either a CEO, CFO, or COO of a significant business; | |
• | the ability to work in a collegial board environment (mandatory); | |
• | the ability to approach others assertively, responsibly and supportively, and a willingness to ask tough questions in a manner that encourages open discussion; | |
• | service on no more than one other for-profit public company board and such service does not prevent the individual from devoting adequate time to Sovereign; | |
• | the director is “financially literate”; | |
• | significant executive, professional, educational or regulatory experience in financial, auditing, accounting, or banking matters; | |
• | experience as an audit committee member preferably at a financial services company; | |
• | understands and stays current on corporate governance and management “best practices” and their application in complex, rapidly evolving business environments; | |
• | the ability and time to perform during periods of both short-term and prolonged crises; understands and possesses empowerment skills and has a history of motivating high-performing talent; |
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• | possesses skills and the capacity to provide strategic insight and direction; | |
• | diversity of experience, skills, qualifications, occupations, education and backgrounds; | |
• | availability to attend Board meetings; | |
• | availability to participate in additional committee meetings which may or may not be held on the date of Board meetings; | |
• | availability (by telephone or in person) to participate in special meetings of the Board on an as needed basis; | |
• | availability to rigorously prepare prior to a Board and committee meeting (especially by critically reading all materials provided); | |
• | capacity to give undivided attention at each Board and committee meeting; and | |
• | availability to participate in ongoing director education. |
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JOSEPH P. CAMPANELLI. Age 50. Mr. Campanelli is President and Chief Executive Officer of Sovereign and Sovereign Bank. Mr. Campanelli joined Sovereign Bank in 1997 when it acquired Fleet Financial Group’s indirect auto lending business, which he had headed. He became President and Chief Operating Officer of our New England Division in 1999 when Sovereign acquired 268 branches that Fleet had to divest after its merger with BankBoston Corp. Mr. Campanelli played an active role in the branches’ acquisition and integration, which at the time was the largest branch divestiture in U.S. history. | ||
Prior to establishing our presence in New England, Mr. Campanelli spent nearly 20 years serving in a variety of executive positions with both Fleet and Shawmut Bank. He began his banking career in Hartford, Connecticut. in 1979. | ||
Recognized as an innovative leader, Mr. Campanelli has been instrumental in establishing key economic development programs with a variety of agencies and industry groups. As a member of the Massachusetts Job Growth Task Force, he introduced two programs in conjunction with State Treasurer Timothy Cahill designed to encourage job growth and home ownership in the Commonwealth: The Sovereign Bank Job Foundation Loan Program for small businesses and the Massachusetts Educator Home Loan Program. | ||
Mr. Campanelli is Chairman of the Massachusetts Business Roundtable, a non-profit, nonpartisan, statewide public affairs organization of CEOs representing Massachusetts’ leading industry and business enterprises. Mr. Campanelli also serves as Chairman of the board of trustees for Tufts-New England Medical Center. In addition, he plays a leadership role with the United Ways of New England and serves as chairman for the organization’s 2006 fund drive. He is also a director of the Boys and Girls Club of Boston and serves on the board of trustees at Suffield Academy in Suffield, Connecticut. | ||
Mr. Campanelli was appointed to the Board, as a Class III director, effective on January 16, 2007. | ||
GONZALO DE LAS HERAS. Age 67. Mr. Gonzalo de las Heras joined Banco Santander in 1990. He is Executive Vice President of Grupo Santander, supervising its U.S. business. He is Chairman of Santander Bancorp, Puerto Rico; Banco Santander International, Miami; Santander Trust & Bank (Bahamas) Limited, and Banco Santander (Suisse). Prior to that, Mr. de las Heras held various positions at J.P. Morgan, lastly as Senior Vice President and Managing Director heading its Latin American division. He served as a Director of First Fidelity Bancorporation until its merger with First Union. | ||
Mr. de las Heras has a law degree from the University of Madrid and as a Del Amo Scholar pursued postgraduate studies in Business Administration and Economics at the University of Southern California. | ||
From 1993 to 1997, Mr. de las Heras served on the New York State Banking Board. He is chairman of the Foreign Policy Association, a Trustee and past chairman of the Institute of International Bankers, and a Director of both The Spanish Institute and the Spain-US Chamber of Commerce. Mr. de las Heras was elected to Sovereign Bancorp’s Board in September of 2006. | ||
Mr. de las Heras was appointed to the Board as a Class I director, effective on October 6, 2006, pursuant to the terms of the Investment Agreement. Mr. de las Heras serves on our Compensation, Executive, Nominating, Mergers and Acquisition and Retirement Savings Plan Committees. |
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P. MICHAEL EHLERMAN. Age 68. Mr. Ehlerman has served as Chairman of Yuasa Battery, Inc. (a leading manufacturer of motorcycle and sportscraft batteries) since 2000, as Chairman and CEO from October 2000 until October 2003; as Vice Chairman and CEO of Yuasa Inc. from 1998 until 2000, and as President and COO of Yuasa’s predecessor company from 1991 until 1998. He also served as a director of Yuasa Corporation (Japan) from June 1998 to June 2005. Yuasa Corporation (Japan) is a subsidiary of GS Yuasa Corporation, a publicly held corporation which is headquartered in Japan and listed on the Tokyo Stock Exchange and the Osaka Stock Exchange. Mr. Ehlerman also served as Executive Vice President of Finance of Exide Corporation, one of the world’s largest publicly owned automotive and industrial battery manufacturers, and held other senior executive financial and accounting positions with Exide’s predecessor entities from 1977 to 1991. During his long career in finance and accounting, Mr. Ehlerman also served on the internal audit staff at General Electric Company and as assistant controller at United States Gypsum Company. | ||
Mr. Ehlerman was elected to the Board in September 2002, and has served as a director of Sovereign Bank since January 2001. In January 2007, Mr. Ehlerman was elected Chairman of the Board of Sovereign and Sovereign Bank. Mr. Ehlerman served as Co-Lead Director of the Board between October 2006 and January 2007. Mr. Ehlerman has served on our Audit Committee since 2002. Mr. Ehlerman also serves on our Nominating and Retirement Savings Plan Committees and as Chairperson of our Compensation Committee. He also serves as a member of Sovereign Bank’s Executive, Audit, Risk Management and CRA Committees and as Chairperson of the Asset Liability Committee. | ||
BRIAN HARD. Age 60. Mr. Hard has been a director of Penske Corporation, a $17 billion closely held and diversified transportation services holding company, since 2001. Penske Corporation’s subsidiaries operate globally in a variety of segments, including retail automotive, truck leasing, transportation logistics, transportation component manufacturing, and high-performance racing. Mr. Hard became a director and President of Penske Truck Leasing Co., LP, a $4 billion global company, in 1988. Penske Truck Leasing Co., LP is a joint venture of Penske Corporation and General Electric Company and is one of the leading global transportation services companies, employing approximately 20,000 people, operating more than 200,000 vehicles and serving customers from nearly 1,000 locations in the U.S., Canada, Mexico, South America, Europe and Asia. As President of Penske Truck Leasing Co., LP, Mr. Hard is responsible for its overall business operations, including its financial condition and results of its operations. In addition to his many other duties as President of Penske Truck Leasing Co., LP, Mr. Hard is responsible for oversight of its Chief Financial Officer and other senior accounting and financial officers, including indirect oversight of the preparation, analysis and evaluation of its financial statements. Mr. Hard has also served as a director of the Reading Hospital and Medical Center since 1988 and as a Trustee of Franklin & Marshall College since July 2004. | ||
Mr. Hard was elected to the Board in November 1999, and has served as a director of Sovereign Bank since 1996. Mr. Hard has served as a member of our Audit Committee and as Chairperson of the Audit Committee since 2000. Mr. Hard also serves on our Executive, Compensation, Ethics and Corporate Governance, Nominating, Mergers and Acquisition and Retirement Savings Plan Committees. He also serves as a member of Sovereign Bank’s Executive Committee and as Chairperson of the Audit Committee. |
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MARIAN L. HEARD. Age 66. Mrs. Heard is currently the President and Chief Executive Officer of Oxen Hill Partners, specialists in leadership development programs. On June 2, 2006, Mrs. Heard was elected to the board of BioSphere Medical, Inc., a publicly-traded company specializing in the development and commercialization of bioengineered microspheres for use in embolization. Mrs. Heard has served as a director of CVS Corporation (“CVS”) since 1999. CVS is a publicly held corporation listed on the NYSE and is the largest retail pharmacy in the United States with more than 6,200 retail and specialty pharmacy stores in 43 states and the District of Columbia. She has served on the Audit, Nominating and Corporate Governance Committees of CVS since 2000 and recently joined the Management Planning Committee. She has served as a director of Liberty Mutual Holding Company, Inc. (“Liberty Mutual Group”), a holding company for the family of Liberty Mutual Group insurance companies since 1994. Liberty Mutual Group is a leading global insurer and the sixth largest property and casualty insurer in the United States. In 2006, Liberty Mutual Group ranked 102nd on the Fortune 500 list of largest companies in the U.S. based on 2006 revenue. Mrs. Heard has served as a director of Blue Cross and Blue Shield of Massachusetts since 1992. Mrs. Heard served as a director of Fleet Bank of Massachusetts from 1992 to 1998 and subsequently Fleet Financial Corporation (“Fleet”) from 1998 until it was acquired by Bank of America in 2004. Fleet was the seventh largest banking institution in the U.S. and listed on the NYSE when it announced its merger with Bank of America. Mrs. Heard was appointed President and Chief Executive Officer of the United Way of Massachusetts Bay and Chief Executive Officer of the United Way of New England in February 1992. Mrs. Heard retired from the United Way in July 2004. During the last two years of her tenure, the United Way of Massachusetts Bay was number one among United Ways in America in the leadership giving category. | ||
Mrs. Heard joined Sovereign Bank’s Board of Directors in 2004 and was elected to the Board in 2005. She serves as a member of our Ethics and Corporate Governance and Retirement Savings Plan Committees. She also serves as a member of Sovereign Bank’s Asset Liability and CRA Committees. | ||
ANDREW C. HOVE, JR. Age 72. Before joining Sovereign, Mr. Hove served as the Vice Chairman and then as the Acting Chairman of the Federal Deposit Insurance Corporation, Washington, D.C. from 1990 until his retirement in January 2001. Prior to 1990, he served as Chairman and Chief Executive Officer of Minden Exchange Bank & Trust Co., headquartered in Nebraska. Mr. Hove also served as President of the Nebraska Bankers Association and acted as Vice President, American Bankers Association, representing Nebraska. Since March 15, 2002, Mr. Hove has served as a director of Great Western Bancorporation, Inc. (“Great Western”), a bank holding company headquartered in Omaha, Nebraska (formerly known as Spectrum Bancorporation, Inc.). Great Western operates banking locations in Nebraska, South Dakota, Iowa, Missouri and Kansas. Mr. Hove also serves as a director of Wilber Co., a bank holding company located in Wilber, Nebraska. Wilber Co. is the parent company of, among others, Saline State Bank, which operates seven branch locations in Nebraska. Due to geographic location and size considerations, neither Great Western nor Wilber Co. competes with Sovereign in any material respect. | ||
Mr. Hove joined Sovereign Bank’s Board as a director in 2001 and became a director of Sovereign in February 2002. Mr. Hove serves on our Executive, Compensation, Audit and Nominating Committees and as Chairman of the Ethics and Corporate Governance Committee. He also serves as a member of Sovereign Bank’s Executive, Audit and Asset Liability Committees and as Chairperson of Sovereign Bank’s Risk Management Committee. |
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No photo available. | WILLIAM J. MORAN. Age 65. Mr. Moran retired from JPMorganChase in June 2005 as Executive Vice President and General Auditor. | |
Mr. Moran became Executive Vice President and General Auditor of J.P. Morgan Chase & Co. on January 1, 2001. Prior to the merger with J.P. Morgan Incorporated, he was General Auditor of the Chase Manhattan Corporation, a position he held since 1992. He was named Executive Vice President in 1997. Prior to becoming General Auditor, Mr. Moran held various positions in Auditing, including Director of Electronic Data Processing (EDP) Audit and Systems Review Executive; Director of Corporate, Subsidiary and MIS Audit and 1985 he was named the Director of the Western Hemisphere Audit Group. In that capacity he had responsibility for Chase’s Special Investigations unit and audits of various head office areas, subsidiaries of the Corporation and businesses in the Caribbean and South America. | ||
Mr. Moran is a Certified Public Accountant and a Certified Bank Auditor. Prior to joining the Chase Manhattan Bank in 1975, he was with the accounting firm of Peat, Marwick, Mitchell & Co. (KPMG) for nine years, and was responsible for audits of companies in several industries. His specialty was audits of financial institutions. | ||
Mr. Moran was appointed to our Board, as a Class III director, and as a director of Sovereign Bank, effective September 20, 2006, pursuant to the terms of the Settlement Agreement. He also serves on our Audit, Compensation, and Ethics and Corporate Governance Committees. On January 16, 2007, the Board designated Mr. Moran as our Audit Committee’s financial expert. | ||
MARIA FIORINI RAMIREZ. Age 59. Mrs. Ramirez is President and Chief Executive Officer of Maria Fiorini Ramirez, Inc., an independent global economic and financial consulting firm formed in August 1992. Prior to our acquisition of Independence, Mrs. Ramirez served on the Board of Directors of Independence for six years. Since April 2000, Mrs. Ramirez has served as a director of the Independence Community Foundation. In February 2006, Mrs. Ramirez was appointed to the Board of Directors of Security Mutual Life located in Binghamton, New York. In April 2005, she was appointed a director of AMF Funds Chicago, a family of fixed income funds, and, in February 2004, she was appointed a director of Schroder Hedge Funds based in Bermuda. Mrs. Ramirez was appointed a trustee of Pace University in May 2002. In February 1996, she was appointed to the Investment Policy and Product Review Committees of Edward Jones & Co., an investment firm based in St. Louis. | ||
Mrs. Ramirez served as a director of Arlington Capital, London, a private equity firm, from 1991 to 2000. From 1996 to 1998, she served as a director of the mutual funds group of Security Benefit Life Insurance Company in Topeka, Kansas. From 1989 to 2000, Mrs. Ramirez served as a director of Statewide Savings Bank, S.L.A. in New Jersey. In 1974, Mrs. Ramirez joined Merrill Lynch where during her10-year tenure she was appointed First Vice President and Senior Money Market Economist. Mrs. Ramirez became a Senior Vice President and Senior Money Market Economist at Becker Paribas in 1984 when the firm was acquired by Merrill Lynch. From 1984 to 1990, she was a Managing Director and Money Market Economist for Drexel Burnham Lambert. | ||
Mrs. Ramirez was elected to our Board, as a Class III director, effective June 1, 2006, pursuant to the terms of the Independence merger agreement. She also serves on our Audit and Mergers and Acquisition Committees. |
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JUAN RODRIGUEZ-INCIARTE. Age 54. Mr. Rodriguez-Inciarte is the Executive Vice President for Consumer Finance and General Director for Strategic Investments of Grupo Santander. He is currently a director of the oil company Cepsa SA of Spain and is Vice-Chairman of the Board of Abbey National PLC of the U.K., a fully owned unit of Santander. Mr. Rodriguez-Inciarte also holds a seat on the board of directors of NIBC, a merchant bank based in The Netherlands. Mr. Rodriguez-Inciarte first joined Santander in 1985 and has served as head of retail banking and wholesale corporate banking. Mr. Rodriguez-Inciarte was a member of the Santander Board of Directors from 1991 to 1999. He was a Director of The Royal Bank of Scotland Group PLC from 1988 to 2004 and was a Director of First Fidelity Bancorp and First Union Corp.(now Wachovia Corp.), as well as San Paolo-IMI of Italy. Mr. Rodriguez-Inciarte is a member of the US-Spain Council and Fellow of The Chartered Institute of Bankers in Scotland. | ||
Mr. Rodriguez-Inciarte was appointed to the Board, as a Class II director, and as a Director of Sovereign Bank, effective May 31, 2006, pursuant to the terms of the Investment Agreement. In the absence of Mr. de las Heras, Mr. Rodriguez-Inciarte serves on our Compensation, Executive, Ethics and Corporate Governance, Nominating, Mergers and Acquisition and Retirement Savings Plan Committees. He also served as a Co-Lead Director of our Board between October 2006 and January 2007. | ||
ALBERTO SANCHEZ. Age 43. Mr. Sanchez is President and Chief Executive Officer of Santander Investment Securities Inc., an affiliate of Santander, and heads the corporate development group of Santander Consumer Finance. Since 1997, Mr. Sanchez has held the following positions within the Santander organization: Head of Equity Research; Head of Latin American Equities; and Head of Spanish Equities and Macroeconomics Research. Mr. Sanchez serves as a Director of Santander Consumer USA. He also serves as a Director of the Greenwich Village Orchestra. | ||
Mr. Sanchez was appointed to our Board, as a Class III director, effective March 16, 2007, pursuant to the terms of the Investment Agreement. | ||
CAMERON C. TROILO, SR. Age 68. Mr. Troilo is the President and Chief Executive Officer of Cameron C. Troilo, Inc., a holding company for various entities engaged in commercial real estate development, construction, leasing and management businesses. Mr. Troilo previously served as Vice Chairman of Yardley Savings & Loan Association, which was acquired by Sovereign Bank in 1989. | ||
Mr. Troilo was elected to the Board in 1997, and has served continuously as a director of Sovereign Bank and a predecessor since 1974. Mr. Troilo serves on our Executive and Mergers and Acquisition Committees and as Chairperson of our Retirement Savings Plan Committee. Mr. Troilo also serves on Sovereign Bank’s Executive, Asset Liability and Risk Management Committees. |
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RALPH V. WHITWORTH. Age 51. Since 1996, Mr. Whitworth has been a principal of Relational, a private investment firm with approximately 40 employees and approximately $6.5 billion assets under management. Since 2000, Mr. Whitworth has been a member ofE-celerator fund, LLC, a private investment firm with approximately three employees and $7.5 million assets under management. He is a former principal of Relational Advisors LLC (1997-2005; approximately 35 employees), a NASD registered broker dealer and investment bank. He is the former chairman of the board of Apria Healthcare Group Inc. (1998-2005), former chairman of the board of Waste Management, Inc. (1999; director 1998-2004), and a former director of Mattel, Inc. (2000-2003), Tektronix, Inc. (1999-2002) and Sirius Satellite Radio, Inc. (1994-2001). Mr. Whitworth is also a director of privately-held Titan Investment Partners, LLC, an investment fund which focuses on emerging companies. | ||
From 1988 to 1996, Mr. Whitworth served as president of Whitworth and Associates, a Washington, D.C.-based advisory firm, which advised major corporations and investors on investments, acquisitions, and corporate governance matters. He was also President of Development at United Thermal Corporation from 1989 to 1992, and was a member of its board of directors. | ||
Previous experience includes four years as assistant to the general partner at Mesa Limited Partnership, which during his tenure was the nation’s largest independent oil and gas exploration and production company. Mr. Whitworth also held the pro bono position of President of the United Shareholders Association, and while doing so, authored the petition for rulemaking which culminated in a major overhaul in 1992 of the Commission’s shareholder communication and compensation disclosure rules. In addition, he served on the U.S. Senate Judiciary Committee staff of Senator Paul Laxalt from 1981 to 1984. | ||
Mr. Whitworth was appointed to the Board as a Class I director, effective on March 22, 2006, pursuant to the terms of the Settlement Agreement. As required by the Settlement Agreement, Mr. Whitworth serves on our Executive, Audit and Compensation Committees. He also serves on our Nominating Committee. Mr. Whitworth was appointed to the Board of Sovereign Bank, effective May 31, 2006. |
• | to adopt and review an executive compensation philosophy that reflects our mission, vision, values, and long-term strategic objectives; |
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• | to administer our executive compensation programs in a manner that furthers our strategic goals and serves the interests of our shareholders; | |
• | to establish compensation-related performance objectives for executive officers that support our strategic goals; | |
• | to evaluate the job performance of the Chief Executive Officer in light of the established goals and objectives; | |
• | to determine the total compensation levels of the senior executive officers and to allocate total compensation among the various components pursuant to the executive compensation philosophy; | |
• | to administer our equity compensation and other incentive compensation plans; | |
• | to make recommendations to the board regarding equity-based and incentive compensation plans; | |
• | to make recommendations regarding succession plans for senior executive officers; and | |
• | to recommend to the Board the compensation arrangements with respect to Sovereign’s and Sovereign Bank’s non-employee directors. |
• | financial reports on year to date performance versus budget and comparison to prior year performance; | |
• | calculations and reports on levels of achievement of individual and corporate performance objectives; | |
• | reports on our strategic objectives and budget for future periods; | |
• | reports on both current and past performance versus a peer group of companies; | |
• | information on the senior executive officers’ stock ownership holdings; | |
• | information with respect to equity compensation awards; | |
• | estimated value of equity awards (using a Black-Scholes evaluation methodology); | |
• | tally sheets setting forth the total compensation of the senior executive officers which includes, base salary, cash incentives, equity awards, perquisites, and other compensation as well as amounts payable to the executives upon voluntary or involuntary termination, early or normal retirement, or following a change in control; and | |
• | information regarding compensation programs and compensation levels at peer companies identified by our compensation consultant. |
• | evaluating team member performance; | |
• | establishing business performance targets and objectives; and |
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• | recommending salary levels, and equity and incentive awards. |
• | background information regarding our strategic goals; | |
• | evaluation of the performance of senior executive officers; and | |
• | compensation recommendations for the senior executive officers (other than himself). |
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• | The Compensation Committee examines our business plan and strategic objectives in order to ensure that its compensation decisions attract and retain leaders and reward them for achieving our strategic objectives. | |
• | At the core of our compensation philosophy is our belief that we should link pay directly to performance. This philosophy guides our compensation-related decisions: |
• | A substantial portion of executive officer compensation is contingent and variable on achievement of objective corporateand/or individual performance objectives. | |
• | Our equity compensation plans do not permit discounted stock options, reload stock options, or re-pricing of stock options. | |
• | The Compensation Committee believes that compensation should generally increase with position and responsibility. | |
• | Total compensation is higher for individuals with greater responsibility and greater ability to influence our achievement of targeted results and strategic initiatives. | |
• | As position and responsibility increases, a greater portion of the executive officer’s total compensation becomes performance-based and contingent on the achievement of performance objectives. | |
• | Equity-based compensation is higher for persons with higher levels of responsibility, making a significant portion of their total compensation dependent on long-term appreciation in the value of our common stock. |
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• | Attracting and retaining quality executive leadership; | |
• | Ensuring the alignment of the interests of executives and shareholders; | |
• | Motivating executives through competitive total compensation opportunities based on job scope and sustained individual and company performance; and | |
• | Using long-term equity compensation tied to our common stock and financial performance. |
• SunTrust Banks, Inc. | • Popular, Inc. | |
• National City Corporation | • Marshall & Ilsley Corporation | |
• BB&T Corp. | • Huntington Bancshares Incorporated | |
• Fifth Third Bancorp | • Zions Bancorporation | |
• KeyCorp | • Commerce Bancorp, Inc. | |
• Regions Financial Corporation | • First Horizon National Corporation | |
• The PNC Financial Services Group, Inc. | • Compass Bancshares, Inc. | |
• M&T Bank Corporation | • Synovus Financial Corporation | |
• Comerica Incorporated | • New York Community Bancorp, Inc. | |
• UnionBanCal Corporation | • Astoria Financial Corporation | |
• Northern Trust Corporation | • Hudson City Bancorp, Inc. |
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• | the overall job scope and responsibilities; | |
• | the executive’s qualifications, including education and experience level; | |
• | the goals and objectives established for the executive; | |
• | individual performance versus objectives; | |
• | the executive’s past performance; | |
• | competitive salary practices at peer companies; | |
• | internal pay equity; and | |
• | the tax deductibility of base salary. |
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• | we believe that stock options align the interests of executives with those of the shareholders, support a pay-forward performance culture, facilitate executive stock ownership and focus the executive management team on increasing value for our shareholders; | |
• | stock options are performance-based. All the value received by the recipient from a stock option is based upon the increase in the value of a share of our common stock above the option exercise price; | |
• | stock options help to provide a balance to the overall compensation program; and | |
• | the vesting period and performance criteria encourage executive retention and, we believe, the preservation of shareholder value. |
• | the term of grants does not exceed 10 years (in the case of incentive stock options) and 10 years and one month (in the case of non-qualified stock options); | |
• | the grant price is not less than the closing price of a share of our common stock on the date of grant; | |
• | grants do not include “re-load provisions”; and | |
• | re-pricing of options is prohibited. |
• | restricted stock provides an equally motivating form of incentive compensation as stock options; and | |
• | awarding restricted stock permits us to use fewer shares than options to deliver the same value to the executive, which reduces the potential dilution to our shareholders. |
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• | Our senior executive officers will receive shares of restricted stock using a performance-vesting grid incorporating return on asset-related performance metrics. The shares will have a five-year cliff-vesting schedule, which schedule may be reduced to three years if we meet certain performance criteria for the three-year cycle. | |
• | All other executives will receive shares of restricted stock that vest ratably over five years. |
• | an award of $1,318,553 in the form of 51,932 shares of restricted stock (based on the $25.39 closing price of our common stock on December 29, 2006). The 2001 Plan governs the terms and conditions of this award. Subject to certain events provided for in the 2004 Plan, which will cause vesting of the restricted shares to accelerate, the restricted shares cliff vest in three years. | |
• | an award of $1,020,442 in the form of 42,160 shares of restricted stock (based on the $25.39 closing price of our common stock). The 2004 Plan governs the terms and conditions of the award. Subject to certain events provided for in the 2004 Plan, which will cause vesting of the restricted shares to accelerate, the shares cliff vest in five years unless the performance criteria that the Compensation Committee will set are satisfied, in which case the shares cliff vest in three years. | |
• | an award of $929,553 in the form of 36,611 performance units (based on the $25.39 closing price of our common stock), which will provide, upon vesting, cash payment to Mr. Campanelli equal to the value of 36,111 shares of our common stock on such vesting date. Subject to certain events, which will cause vesting of the performance units to accelerate, the performance units cliff vest in five years unless the performance criteria are satisfied, in which case the performance units cliff vest in three years. |
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Change in | ||||||||||||||||||||||||||||||||||||
Pension | ||||||||||||||||||||||||||||||||||||
Value | ||||||||||||||||||||||||||||||||||||
and | ||||||||||||||||||||||||||||||||||||
Non-Equity | Nonqualified | |||||||||||||||||||||||||||||||||||
Incentive | Deferred | All | ||||||||||||||||||||||||||||||||||
Stock | Option | Plan | Compensation | Other | ||||||||||||||||||||||||||||||||
Salary | Bonus | Awards | Awards | Compensation | Earnings | Compensation | Total | |||||||||||||||||||||||||||||
Name and Principal Position | Year | ($)(2) | ($)(3) | ($)(4) | ($)(4) | ($) | ($)(5) | ($)(6) | ($) | |||||||||||||||||||||||||||
Joseph P. Campanelli | 2006 | $ | 565,000 | $ | 36,500 | $ | 261,413 | $ | 37,715 | $ | 0 | $ | 2,682,951 | $ | 38,019 | $ | 3,621,598 | |||||||||||||||||||
President and Chief Executive Officer(1) | ||||||||||||||||||||||||||||||||||||
Mark McCollom | 2006 | $ | 477,885 | $ | 55,000 | $ | 91,460 | $ | 37,715 | $ | 0 | $ | 38,808 | $ | 39,270 | $ | 740,138 | |||||||||||||||||||
Chief Financial Officer | ||||||||||||||||||||||||||||||||||||
James J. Lynch | 2006 | $ | 518,269 | $ | 0 | $ | 305,043 | $ | 37,715 | $ | 0 | $ | 183,820 | $ | 46,579 | $ | 1,091,426 | |||||||||||||||||||
Vice Chairman, Sovereign, and Chairman and Chief Executive Officer of Sovereign Bank — Mid-Atlantic Division | ||||||||||||||||||||||||||||||||||||
Lawrence M. Thompson | 2006 | $ | 518,269 | $ | 0 | $ | 82,918 | $ | 0 | $ | 0 | $ | 1,000,731 | $ | 35,133 | $ | 1,637,051 | |||||||||||||||||||
Vice Chairman and Chief Administrative Officer | ||||||||||||||||||||||||||||||||||||
M. Robert Rose | 2006 | $ | 241,808 | $ | 22,000 | $ | 70,694 | $ | 15,753 | $ | 0 | $ | 19,599 | $ | 19,187 | $ | 389,041 | |||||||||||||||||||
Managing Director of Credit Risk Management | ||||||||||||||||||||||||||||||||||||
Jay S. Sidhu | 2006 | $ | 646,154 | $ | 0 | $ | 6,632,054 | $ | 491,328 | $ | 0 | $ | 10,333,553 | $ | 15,451,033 | $ | 33,611,688 | |||||||||||||||||||
Chairman and Former President and CEO |
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(1) | On January 16, 2007, our Board appointed Mr. Campanelli as our permanent President and Chief Executive Officer and, pending regulatory approval, as President and Chief Executive Officer of Sovereign Bank. From October 10, 2006, through January 15, 2007, Mr. Campanelli served as our interim President and Chief Executive Officer and President of Sovereign Bank. Before October 10, 2006, Mr. Campanelli served as President and Chief Executive Officer of Sovereign Bank, New England Division. | |
(2) | Base salary is based on actual compensation paid through December 31, 2006. Effective April 1, 2006, we set each of Messrs. Campanelli, McCollom, Lynch, and Thompson’s annual base salaries at $525,000. Mr. Rose’s base salary in 2006 was $248,000. Effective October 10, 2006, in connection with Mr. Campanelli’s appointment as interim President and Chief Executive Officer, we increased his annual base salary to $750,000. The base salary set forth for Mr. Sidhu reflects the actual salary that we paid before his termination of employment. For 2007, the named executive officers have pro-rated annual base salaries as follows: |
Joseph P. Campanelli | $ | 850,000 | * | |
Mark McCollom | $ | 550,000 | ** | |
James J. Lynch | $ | 525,000 | *** | |
M. Robert Rose | $ | 260,000 | ** |
* | Effective January 16, 2007. We set Mr. Campanelli’s 2007 base salary pursuant to the terms of his new employment agreement, which we describe in the section entitled “Description of Employment Agreements.” | |
** | Effective March 31, 2007. | |
*** | We did not adjust Mr. Lynch’s salary for 2007. |
(3) | The amounts in this column reflect actual cash bonus that we paid in 2007 for 2006 performance. For 2006 performance, we paid a bonus of $225,000 to Mr. Campanelli pursuant to the terms of his employment agreement, of which one-third we paid in cash and two thirds we paid in restricted stock. Messrs. McCollom and Rose received a bonus of $200,000 and $80,000, respectively, of which we paid 55% in cash and 45% we paid in restricted stock. Each of Messrs. Campanelli, McCollom, and Rose elected to defer 50% of his respective cash bonus to the Bonus Deferral Program, which we describe under “Bonus Deferral Program,” and which are not reflected in this column. Messrs. Thompson and Lynch did not receive cash bonuses for 2006 performance. | |
(4) | The amounts in this column reflect the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2006, in accordance with SFAS 123(R), of awards pursuant to our equity compensation plans (each of which is more fully described under the caption “Our Compensation Plans”) and thus may include amounts from awards granted in and before 2006. Assumptions used in the calculation of this amount are included in footnotes to our audited financial statements for the fiscal year ended December 31, 2006, included in our Annual Report onForm 10-K filed with the SEC on March 1, 2007. | |
(5) | Includes the aggregate change in the accumulated pension value of the named executive officer’s benefit under our Supplemental Retirement Plan and the Enhanced Retirement Plan, which are described following the “Pension Benefits” table, and the above-market or preferential earnings on compensation deferred under our nonqualified deferred compensation plans, which we describe following the “Nonqualified Deferred Compensation” table. The separate amounts are as follows: |
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Earnings on Deferred | ||||||||
Name | Change in Pension Value | Compensation | ||||||
Joseph P. Campanelli | $ | 2,459,423 | $ | 223,528 | ||||
Mark McCollom | $ | 0 | $ | 38,808 | ||||
James J. Lynch | $ | 0 | $ | 183,820 | ||||
Lawrence M. Thompson | $ | 854,014 | $ | 146,717 | ||||
M. Robert Rose | $ | 0 | $ | 19,599 | ||||
Jay S. Sidhu | $ | 8,491,363 | $ | 1,842,190 |
(6) | Includes the following payments that we paid to or on behalf of the named executive officers: |
Joseph P. | Mark | James J. | Lawrence M. | M. Robert | Jay S. | |||||||||||||||||||
Campanelli | McCollom | Lynch | Thompson | Rose | Sidhu | |||||||||||||||||||
Car Allowance or Personal Use of Company Car(*) | $ | 7,139 | $ | 6,000 | $ | 2,308 | $ | 2,700 | $ | 6,000 | $ | 0 | ||||||||||||
Club Membership | $ | 7,280 | $ | 11,051 | $ | 14,357 | $ | 0 | $ | 0 | $ | 5,067 | ||||||||||||
Personal Use of Company Aircraft(*) | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 554 | ||||||||||||
Financial Consulting Services(*) | $ | 0 | $ | 0 | $ | 7,267 | $ | 7,267 | $ | 0 | $ | 16,017 | ||||||||||||
Physical Exam | $ | 0 | $ | 0 | $ | 0 | $ | 1,468 | $ | 0 | $ | 0 | ||||||||||||
Company Contribution to Sovereign Retirement Plan(**) | $ | 20,536 | $ | 20,536 | $ | 20,536 | $ | 20,536 | $ | 11,736 | $ | 8,800 | ||||||||||||
Independence Community Investment Corp. REIT Award | $ | 1,074 | $ | 1,088 | $ | 1,118 | $ | 1,098 | $ | 1,058 | $ | 1,059 | ||||||||||||
Dividends Paid on Vesting of Restricted Stock | $ | 1,990 | $ | 595 | $ | 993 | $ | 2,064 | $ | 393 | $ | 26,069 | ||||||||||||
Post-Termination Payments(***) | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 15,451,033 | ||||||||||||
Total | $ | 38,019 | $ | 39,270 | $ | 46,579 | $ | 35,133 | $ | 19,187 | $ | 15,492,582 |
(*) | The value that we attribute to the personal use of Sovereign-provided automobiles and corporate aircraft (each as calculated in accordance with Internal Revenue Service guidelines) and the cost of financial consulting services that we reimburse are included as compensation on theW-2 forms of the named executive officers who receive such benefits. Each such named executive officer is responsible for paying income tax on such amount. We determined the aggregate incremental cost of any personal use of corporate aircraft or cars in accordance with the requirements of the U.S. Treasury Regulation§ 1.61-21. | |
(**) | Includes our matching contribution to each named executive officer’s 401(k) account and the value (as of December 29, 2006) of the shares of our common stock allocated to each named executive officer’s ESOP account. | |
(***) | In connection with his termination of employment, Mr. Sidhu also received the following amounts in 2006: |
Payment | Amount | |||
Severance Payment | $ | 10,544,008 | ||
Bonus — Consideration for Release | $ | 1,000,000 | ||
Value of Cash Payment for Vested Performance Units | $ | 3,791,025 | ||
Consulting Fees | $ | 80,000 | ||
Director’s Fees | $ | 36,000 | ||
Total | $ | 15,451,033 |
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Estimated | ||||||||||||||||||||||||
Future | All Other Option | Grant Date | ||||||||||||||||||||||
Payouts under | All Other Stock | Awards Number of | Exercise or | Fair Value | ||||||||||||||||||||
Equity Incentive | Awards: Number of | Securities | Base Price of | of Stock and | ||||||||||||||||||||
Plan Awards | Shares of Stock or | Underlying | Option | Option | ||||||||||||||||||||
Name | Grant Date | Target (#) | Units(#)(1) | Options(#) | Awards($/Sh) | Awards($) | ||||||||||||||||||
Joseph P. Campanelli | 2/15/2006(2 | ) | 33,673 | $ | 19.98 | $ | 220,000 | |||||||||||||||||
2/15/2006(2 | ) | 6,071 | $ | 125,000 | ||||||||||||||||||||
2/15/2006(2 | ) | 6,071 | $ | 125,000 | ||||||||||||||||||||
2/15/2006(2 | ) | 6,071 | $ | 125,000 | ||||||||||||||||||||
Mark McCollom | 2/15/2006(2 | ) | 33,673 | $ | 19.98 | $ | 220,000 | |||||||||||||||||
2/15/2006(2 | ) | 4,250 | $ | 87,500 | ||||||||||||||||||||
2/15/2006(2 | ) | 4,250 | $ | 87,500 | ||||||||||||||||||||
2/15/2006(2 | ) | 4,250 | $ | 87,500 | ||||||||||||||||||||
James J. Lynch | 2/15/2006(2 | ) | 33,673 | $ | 19.98 | $ | 220,000 | |||||||||||||||||
2/15/2006(2 | ) | 6,071 | $ | 125,000 | ||||||||||||||||||||
2/15/2006(2 | ) | 6,071 | $ | 125,000 | ||||||||||||||||||||
2/15/2006(2 | ) | 6,071 | $ | 125,000 | ||||||||||||||||||||
Lawrence M. Thompson | 2/15/2006(3 | ) | 10,684 | $ | 220,000 | |||||||||||||||||||
2/15/2006(2 | ) | 6,071 | $ | 125,000 | ||||||||||||||||||||
2/15/2006(2 | ) | 6,071 | $ | 125,000 | ||||||||||||||||||||
M. Robert Rose | 2/15/2006(3 | ) | 1,092 | $ | 22,500 | |||||||||||||||||||
2/15/2006(3 | ) | 6,557 | $ | 135,000 | ||||||||||||||||||||
Jay S. Sidhu | 2/15/2006(2 | ) | 91,837 | $ | 19.98 | $ | 600,000 | |||||||||||||||||
2/15/2006(2 | ) | 27,318 | $ | 562,500 | ||||||||||||||||||||
2/15/2006(3 | ) | 9,713 | $ | 200,000 | ||||||||||||||||||||
2/15/2006(2 | ) | 27,318 | $ | 562,500 | ||||||||||||||||||||
2/15/2006(2 | ) | 27,318 | $ | 562,500 | ||||||||||||||||||||
3/15/2006(4 | ) | 157,500 | $ | 3,243,000 |
(1) | The amounts shown in this column reflect the number of shares of common stock granted to each named executive officer pursuant to one of our equity compensation plans (each of which we more fully describe under the caption “Our Compensation Plans”). | |
(2) | Awarded under the terms of the 2001 Plan. | |
(3) | Awarded under the terms of the 2004 Plan. | |
(4) | Performance units awarded as we describe below under “2006 Plan-Based Awards; Long Term Incentive Compensation.” |
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Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||||||||||
Equity | Incentive | |||||||||||||||||||||||||||||||||||
Incentive | Plan | |||||||||||||||||||||||||||||||||||
Plan | Awards: | |||||||||||||||||||||||||||||||||||
Equity | Awards: | Market | ||||||||||||||||||||||||||||||||||
Incentive | Number | or Payout | ||||||||||||||||||||||||||||||||||
Plan | Number of | Market | of Unearned | Value of | ||||||||||||||||||||||||||||||||
Awards: | Shares | Value of | Shares, | Unearned | ||||||||||||||||||||||||||||||||
Number of | Number of | Number | or Units | Shares or | Units or | Shares, | ||||||||||||||||||||||||||||||
Securities | Securities | of Securities | of Stock | Units of | Other | Units or | ||||||||||||||||||||||||||||||
Underlying | Underlying | Underlying | that | Stock | Rights | Other | ||||||||||||||||||||||||||||||
Unexercised | Unexercised | Unexercised | Option | Option | have | that | that have | Rights | ||||||||||||||||||||||||||||
Options(#) | Options(#) | Unearned | Exercise | Expiration | not | have not | not | that have | ||||||||||||||||||||||||||||
Name | Exercisable | Unexercisable | Options(#) | Price($) | Date | Vested(#) | Vested($) | Vested(#) | not Vested($) | |||||||||||||||||||||||||||
Joseph P. Campanelli | 22,180 | $ | 12.70 | 09/19/2007 | 1,965(1 | ) | $ | 49,891 | ||||||||||||||||||||||||||||
18,771 | $ | 12.70 | 10/19/2007 | 3,040(2 | ) | $ | 77,186 | |||||||||||||||||||||||||||||
6,300 | $ | 15.57 | 03/18/2008 | 4,139(1 | ) | $ | 105,089 | |||||||||||||||||||||||||||||
15,750 | $ | 12.74 | 10/17/2008 | 9,313(2 | ) | $ | 236,457 | |||||||||||||||||||||||||||||
10,148 | $ | 11.67 | 02/18/2009 | 6,071(1 | ) | $ | 154,143 | |||||||||||||||||||||||||||||
7,179 | $ | 11.67 | 03/18/2009 | 6,071(3 | ) | $ | 154,143 | |||||||||||||||||||||||||||||
131,250 | $ | 6.67 | 02/20/2010 | 6,071(3 | ) | $ | 154,143 | |||||||||||||||||||||||||||||
12,728 | $ | 7.86 | 01/18/2011 | 28,117(4 | ) | $ | 713,891 | |||||||||||||||||||||||||||||
66,023 | $ | 7.86 | 02/18/2011 | |||||||||||||||||||||||||||||||||
26,250 | $ | 11.73 | 07/21/2011 | |||||||||||||||||||||||||||||||||
52,500 | $ | 12.16 | 02/23/2012 | |||||||||||||||||||||||||||||||||
52,500(5 | ) | $ | 12.48 | 03/18/2013 | ||||||||||||||||||||||||||||||||
24,526(2 | ) | $ | 21.64 | 03/18/2014 | ||||||||||||||||||||||||||||||||
33,673(6 | ) | $ | 19.98 | 03/15/2016 | ||||||||||||||||||||||||||||||||
Mark McCollom | 1,512 | $ | 8.93 | 01/16/2007 | 869(3 | ) | $ | 22,064 | ||||||||||||||||||||||||||||
6,839 | $ | 12.65 | 07/17/2007 | 486(1 | ) | $ | 12,340 | |||||||||||||||||||||||||||||
3,780 | $ | 15.57 | 02/18/2008 | 2,212(3 | ) | $ | 56,163 | |||||||||||||||||||||||||||||
3,229 | $ | 12.74 | 09/17/2008 | 1,552(1 | ) | $ | 39,405 | |||||||||||||||||||||||||||||
9,734 | $ | 11.67 | 02/18/2009 | 4,250(1 | ) | $ | 107,908 | |||||||||||||||||||||||||||||
10,500 | $ | 6.40 | 01/28/2010 | 4,250(3 | ) | $ | 107,908 | |||||||||||||||||||||||||||||
9,877 | $ | 7.86 | 01/18/2011 | 4,250(3 | ) | $ | 107,908 | |||||||||||||||||||||||||||||
6,380 | $ | 12.16 | 01/23/2012 | 5,033(4 | ) | $ | 127,788 | |||||||||||||||||||||||||||||
722 | $ | 12.65 | 07/17/2007 | |||||||||||||||||||||||||||||||||
11,132 | $ | 12.74 | 10/17/2008 | |||||||||||||||||||||||||||||||||
1,391 | $ | 12.74 | 09/17/2008 | |||||||||||||||||||||||||||||||||
12,429 | $ | 11.67 | 03/18/2009 | |||||||||||||||||||||||||||||||||
52,500 | $ | 6.67 | 02/20/2010 | |||||||||||||||||||||||||||||||||
13,523 | $ | 7.86 | 02/18/2011 | |||||||||||||||||||||||||||||||||
2,851 | $ | 7.86 | 01/18/2011 | |||||||||||||||||||||||||||||||||
14,621 | $ | 12.16 | 02/23/2012 | |||||||||||||||||||||||||||||||||
21,000(3 | ) | $ | 12.48 | 03/18/2013 | ||||||||||||||||||||||||||||||||
5,250(3 | ) | $ | 13.21 | 04/18/2013 | ||||||||||||||||||||||||||||||||
7,011(3 | ) | $ | 21.64 | 03/18/2014 | ||||||||||||||||||||||||||||||||
18,919(3 | ) | $ | 22.32 | 03/16/2015 | ||||||||||||||||||||||||||||||||
33,673(6 | ) | $ | 19.98 | 03/15/2016 | ||||||||||||||||||||||||||||||||
James J. Lynch | 63,000 | $ | 12.76 | 10/18/2012 | 1,965(1 | ) | $ | 49,891 | ||||||||||||||||||||||||||||
52,500(2 | ) | $ | 12.48 | 03/18/2013 | 12,158(5 | ) | $ | 308,692 | ||||||||||||||||||||||||||||
33,673(2 | ) | $ | 19.98 | 03/15/2016 | 9,313(6 | ) | $ | 236,457 | ||||||||||||||||||||||||||||
4,139(1 | ) | $ | 105,089 | |||||||||||||||||||||||||||||||||
6,071(1 | ) | $ | 154,143 | |||||||||||||||||||||||||||||||||
6,071(3 | ) | $ | 154,143 | |||||||||||||||||||||||||||||||||
6,071(3 | ) | $ | 154,143 | |||||||||||||||||||||||||||||||||
23,843(4 | ) | $ | 605,374 | |||||||||||||||||||||||||||||||||
Lawrence M. Thompson | 94,500 | $ | 12.65 | 08/17/2007 | 2,211(1 | ) | $ | 56,137 | ||||||||||||||||||||||||||||
31,500 | $ | 15.57 | 03/18/2008 | 13,264(2 | ) | $ | 336,773 | |||||||||||||||||||||||||||||
7,847 | $ | 12.74 | 09/17/2008 | 4,139(1 | ) | $ | 105,089 | |||||||||||||||||||||||||||||
23,654 | $ | 12.74 | 10/17/2008 | 9,313(2 | ) | $ | 236,457 | |||||||||||||||||||||||||||||
8,572 | $ | 11.67 | 02/18/2009 | 6,071(1 | ) | $ | 154,143 | |||||||||||||||||||||||||||||
8,572 | $ | 11.67 | 02/18/2009 | 6,071(3 | ) | $ | 154,143 |
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Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||||||||||
Equity | Incentive | |||||||||||||||||||||||||||||||||||
Incentive | Plan | |||||||||||||||||||||||||||||||||||
Plan | Awards: | |||||||||||||||||||||||||||||||||||
Equity | Awards: | Market | ||||||||||||||||||||||||||||||||||
Incentive | Number | or Payout | ||||||||||||||||||||||||||||||||||
Plan | Number of | Market | of Unearned | Value of | ||||||||||||||||||||||||||||||||
Awards: | Shares | Value of | Shares, | Unearned | ||||||||||||||||||||||||||||||||
Number of | Number of | Number | or Units | Shares or | Units or | Shares, | ||||||||||||||||||||||||||||||
Securities | Securities | of Securities | of Stock | Units of | Other | Units or | ||||||||||||||||||||||||||||||
Underlying | Underlying | Underlying | that | Stock | Rights | Other | ||||||||||||||||||||||||||||||
Unexercised | Unexercised | Unexercised | Option | Option | have | that | that have | Rights | ||||||||||||||||||||||||||||
Options(#) | Options(#) | Unearned | Exercise | Expiration | not | have not | not | that have | ||||||||||||||||||||||||||||
Name | Exercisable | Unexercisable | Options(#) | Price($) | Date | Vested(#) | Vested($) | Vested(#) | not Vested($) | |||||||||||||||||||||||||||
1,000 | $ | 11.67 | 03/18/2009 | 10,684(6 | ) | $ | 271,267 | |||||||||||||||||||||||||||||
33,429 | $ | 11.67 | 03/18/2009 | |||||||||||||||||||||||||||||||||
78,750 | $ | 7.89 | 12/18/2009 | |||||||||||||||||||||||||||||||||
2,838 | $ | 6.67 | 01/20/2010 | |||||||||||||||||||||||||||||||||
39,163 | $ | 6.67 | 02/20/2010 | |||||||||||||||||||||||||||||||||
3,938 | $ | 6.40 | 01/28/2010 | |||||||||||||||||||||||||||||||||
26,250 | $ | 6.40 | 01/28/2010 | |||||||||||||||||||||||||||||||||
5,601 | $ | 7.86 | 01/18/2011 | |||||||||||||||||||||||||||||||||
66,023 | $ | 7.86 | 02/18/2011 | |||||||||||||||||||||||||||||||||
7,127 | $ | 7.86 | 01/18/2011 | |||||||||||||||||||||||||||||||||
31,500 | $ | 11.73 | 07/21/2011 | |||||||||||||||||||||||||||||||||
78,750 | $ | 12.16 | 02/23/2012 | |||||||||||||||||||||||||||||||||
78,750(5 | ) | $ | 12.48 | 03/18/2013 | ||||||||||||||||||||||||||||||||
M. Robert Rose | 10,783 | $ | 7.44 | 02/17/2010 | 324(1 | ) | $ | 8,226 | ||||||||||||||||||||||||||||
12,728 | $ | 7.86 | 01/18/2011 | 3,096(3 | ) | $ | 78,607 | |||||||||||||||||||||||||||||
4,208 | $ | 12.16 | 01/23/2012 | 1,397(1 | ) | $ | 35,470 | |||||||||||||||||||||||||||||
4,068 | $ | 12.16 | 02/23/2012 | 1,630(3 | ) | $ | 41,386 | |||||||||||||||||||||||||||||
9,450(3 | ) | $ | 12.48 | 03/18/2013 | 1,092(1 | ) | $ | 27,726 | ||||||||||||||||||||||||||||
4,731(3 | ) | $ | 22.32 | 03/16/2015 | 6,557(3 | ) | $ | 166,482 | ||||||||||||||||||||||||||||
2,564(4 | ) | $ | 65,100 | |||||||||||||||||||||||||||||||||
Jay S. Sidhu | 28,497 | $ | 8.93 | 02/16/2007 | ||||||||||||||||||||||||||||||||
189,000 | $ | 12.65 | 08/17/2007 | |||||||||||||||||||||||||||||||||
79,380 | $ | 15.57 | 03/18/2008 | |||||||||||||||||||||||||||||||||
55,154 | $ | 12.74 | 10/10/2008 | |||||||||||||||||||||||||||||||||
122,679 | $ | 11.67 | 10/10/2008 | |||||||||||||||||||||||||||||||||
236,250 | $ | 7.89 | 10/10/2008 | |||||||||||||||||||||||||||||||||
116,251 | $ | 6.67 | 10/10/2008 | |||||||||||||||||||||||||||||||||
52,500 | $ | 6.40 | 10/10/2008 | |||||||||||||||||||||||||||||||||
144,773 | $ | 7.86 | 10/10/2008 | |||||||||||||||||||||||||||||||||
52,500 | $ | 11.73 | 10/10/2008 | |||||||||||||||||||||||||||||||||
157,500 | $ | 12.16 | 10/10/2008 | |||||||||||||||||||||||||||||||||
157,500 | $ | 12.48 | 10/10/2008 | |||||||||||||||||||||||||||||||||
72,240 | $ | 21.64 | 10/10/2008 | |||||||||||||||||||||||||||||||||
49,257 | $ | 22.32 | 10/10/2008 | |||||||||||||||||||||||||||||||||
91,837 | $ | 19.98 | 10/10/2008 |
(1) | We awarded these shares of restricted stock on February 18, 2004, February 16, 2005, or February 16, 2006, as part of our annual-short term equity incentive compensation award. These restricted shares vest ratably over a three-year period from the date of the award. | |
(2) | We awarded these restricted shares as part of our long-term equity incentive compensation awards on February 18, 2004, and February 16, 2005. These restricted shares do not vest unless the price of a share of our common stock trades at or above $28.57 per share for at least 20 consecutive trading days. In addition, the restricted shares do not vest unless, at the end of the fiscal quarter coincident with or immediately proceeding the later of the attainment of the $28.57 per share price requirement or five years having elapsed from the date of grant, Sovereign Bank is “well capitalized” under the regulations of the Office of Thrift Supervision in effect as of the date of the awards. We granted these nonqualified stock options on |
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February 18, 2004, which are subject to the same performance and vesting criteria as the shares of restricted stock we describe above. | ||
(3) | We awarded these restricted shares or nonqualified stock options as part of our long-term equity incentive compensation award on February 19, 2003, February 18, 2004, February 16, 2005, or February 15, 2006. These shares of restricted stock and options vest after five years has elapsed from the date of the award or grant. | |
(4) | These shares of our common stock represent our 100% matching contribution on the amount of cash bonus elected deferred under our Bonus Deferral Program. | |
(5) | We granted these nonqualified stock options as part of our long-term incentive compensation award on February 19, 2003, and do not vest unless the price of a share of our common stock trades at or above $19.05 per share for at least 20 consecutive trading days. In addition, the options do not vest unless, at the end of the fiscal quarter coincident with or immediately proceeding the later of the attainment of the $19.05 per share price requirement or five years having elapsed from the date of grant, Sovereign Bank is “well capitalized” under regulations of the Office of Thrift Supervision in effect as of the date of grant. | |
(6) | We granted these nonqualified stock options as part of our long-term incentive compensation award on February 15, 2006. These options do not vest unless five years have elapsed from the date of grant and then only if Sovereign Bank is “well capitalized” and has a Tier 1 leverage of 6% or higher (as those terms are defined under applicable Office of Thrift Supervision Regulations on February 15, 2006). |
Option Awards | Stock Awards | |||||||||||||||
Number of Shares | Number of Shares | Value | ||||||||||||||
Acquired on | Value Realized | Acquired on | Realized on | |||||||||||||
Name | Exercise(#) | on Exercise($) | Vesting(#) | Vesting($) | ||||||||||||
Joseph P. Campanelli | 2,100 | $ | 30,555 | 6,526 | $ | 129,468 | ||||||||||
Mark McCollom | 0 | $ | 0 | 2,009 | $ | 39,913 | ||||||||||
James J. Lynch | 0 | $ | 0 | 4,035 | $ | 80,275 | ||||||||||
Lawrence M. Thompson | 19,782 | $ | 289,837 | 6,771 | $ | 134,318 | ||||||||||
M. Robert Rose | 4,850 | $ | 40,449 | 1,426 | $ | 28,364 | ||||||||||
Jay S. Sidhu | 32,184 | $ | 413,364 | 116,598 | $ | 2,746,709 |
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Name | Sidhu | Campanelli | Lynch | McCollom | Thompson | Rose | ||||||||||||||||||
2005 CEO and Leaders Incentive Plan Awards(1) | 27,318 | 6,071 | 6,071 | 4,250 | 6,071 | 1,092 | ||||||||||||||||||
2005 CEO and Long-term Leaders Incentive Plan Awards(2) | 54,636 | 12,142 | 12,142 | 8,500 | 6,071 | 0 |
(1) | Awarded on February 15, 2006, and vests ratably over a three-year period from the date of the award. We agreed to accelerate vesting of Mr. Sidhu’s and Mr. Thompson’s awards in connection with their respective terminations of employment. | |
(2) | Awarded on February 15, 2006, and vests after five years have elapsed from such date. We agreed to accelerate vesting of Mr. Sidhu’s and Mr. Thompson’s awards in connection with their respective terminations of employment. |
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Number of | ||||||||||||
Securities | ||||||||||||
Remaining | ||||||||||||
Number of | Available | |||||||||||
Securities to | Weighted-Average | for Future | ||||||||||
be Issued | Exercise Price of | Issuance Under | ||||||||||
Upon Exercise | Outstanding | Plans (Excluding | ||||||||||
of Outstanding | Options, | Securities Reflected | ||||||||||
Options, Warrants, | Warrants, | in the First | ||||||||||
Category | and Rights(1) | and Rights ($)(1) | Column) | |||||||||
Equity compensation plans approved by shareholders | 12,088,191(2 | )(3) | $ | 13.50 | 17,970,975 | (4)(5) | ||||||
Equity compensation plans not approved by shareholders | 36,750(6 | ) | $ | 8.00 | 0 | |||||||
Total | 12,124,941 | $ | 13.48 | 17,970,975 |
(1) | The information relates exclusively to shares issuable pursuant to the exercise of options as of December 31, 2006; we have not granted any warrants or rights under any of our equity compensation plans. | |
(2) | Consists of shares issuable pursuant to the exercise of options under the following shareholder-approved plans: the 2004 Plan and the 2001 Plan; and the following shareholder-approved plans that have been discontinued: the Sovereign Bancorp, Inc., 1997 Non-Employee Directors’ Stock Option Plan (which we describe below in the section entitled “Director Compensation in Fiscal Year 2006”), and the 1996 Plan, and the 1993 Plan. | |
(3) | Excludes shares issuable under the Sovereign Bancorp, Inc. Employee Stock Purchase Plan, which we refer to as the Purchase Plan, under which 3,150,000 shares were initially reserved to be issued, subject to automatic increase by a number of shares equal to one percent of Sovereign’s total outstanding shares each year to a maximum of 21,000,000 shares. | |
(4) | Includes 2,328,616 and 992,276 shares available for future issuance under the Purchase Plan and the 2006 Non-Employee Director Compensation Plan, respectively, as of December 31, 2006. Also includes 13,481,178 and 549,107 shares that were issuable under the 2004 Plan and the 2001 Plan, respectively, as of December 31, 2006. | |
(5) | By its terms, the number of shares issuable under the shareholder-approved Bonus Deferral Program depends on the amount of any cash bonus deferred by a participant and the price per share of our common stock on the date both the participant’s deferral and our matching contribution are deposited in the grantor trust. Therefore, we cannot determine the number of securities remaining available for future issuance under the Bonus Deferral Program. As described in the text following the table entitled “Nonqualified Deferred Compensation — 2006,” in 2006, we amended the Bonus Deferral Program to make it more like a traditional deferred compensation plan. | |
(6) | Consists of the remaining shares issuable pursuant to the exercise of the total 52,500 options granted to James D. Hogan, Sovereign’s former Chief Financial Officer, on April 17, 2001, which was prior to his beginning employment with Sovereign. Mr. Hogan began employment with Sovereign approximately two weeks later, at which time, when the Board approved the options, our stock price had increased by |
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$1.73 per share. Since no shareholder-approved plans permit the issuance of shares pursuant to the exercise of stock options whose exercise price is less than the fair market value as of the date of grant, we granted these options outside of the plans approved by shareholders. Mr. Hogan exercised these options in February 2007. |
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• | his annual base salary as of the date of termination (or for either of the two prior years, if higher); plus | |
• | one-half the sum of his actual bonus for the year prior to termination and the target bonus (calculated at 133% of base salary) for the year of termination. |
• | the amount set forth in the preceding sentence (relating to a termination for constructive discharge prior to a change in control); or | |
• | his continued base salary and bonus compensation for the then remaining term of his employment agreement. |
• | his annual base salary as of the date of termination (or for any of the three prior years, if higher); plus | |
• | one-third the sum of his actual bonuses for the two years prior to termination and the target bonus (calculated at 133% of base salary) for the year of termination. |
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• | any person’s or group’s acquisition of beneficial ownership of securities representing 19.9% or more of our total voting power (except for certain acquisitions by Santander in accordance with the Investment Agreement); | |
• | a contested proxy solicitation that results in the contesting party obtaining the ability to vote securities representing 19.9% or more of our total voting power; | |
• | a plan of liquidation or dissolution of Sovereign, other than pursuant to bankruptcy or insolvency laws, is adopted; | |
• | during any period of two consecutive years, individuals, who at the beginning of such period, constituted our Board cease for any reason to constitute at least a majority of our Board unless the election (or nomination) of each new director was approved by a vote of at least two thirds of the directors then still in office who were directors at the beginning of the period; | |
• | the approval by our shareholders of a merger, consolidation, or other reorganization in which we would not be the surviving entity; or | |
• | a triggering event under our shareholder rights plan. |
• | a reduction in title, a change in reporting structure such that Mr. Campanelli no longer reports directly to our board of directors, or a material reduction in responsibilities or authority; | |
• | any relocation which requires Mr. Campanelli to move his personal residence from the Boston metropolitan area; | |
• | a reduction in Mr. Campanelli’s base salary or any reduction in bonus opportunities (prior to a change in control, only to the extent such reduction is not imposed on our senior executive officers generally); | |
• | exclusion from full participation in equity incentive plans or employee benefit programs to the extent such exclusion is not generally applicable to our senior executive officers; | |
• | a delivery of notice of nonrenewal of the employment agreement at any time following a change in control; or | |
• | our material breach of the employment agreement. |
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• | receive a bonus to be awarded by the Board of up to a maximum of the greater of 100% of base salary at the relevant year end or $500,000 per annum, if targeted goals are attained; | |
• | annually be awarded options to purchase up to 52,500 shares of our common stock at an exercise price determined in accordance with the terms of our existing stock option plans; | |
• | participate in our fringe benefit programs, including the use of a corporate-provided or paid-for automobile, the payment of dues at two country clubs and one social club, and the reimbursement of business-related expenses incurred in connection with his employment; and | |
• | participate in the Bonus Deferral Program at a level similar to that which our executives of similar stature are entitled. |
• | payment, for three years, of the sum of his highest base salary as of the date of termination (or prior to a reduction thereof which constituted good reason) and the three immediately preceding calendar years, and his highest bonus for the three immediately preceding calendar years, payable monthly; and | |
• | continuation, for three years, of certain welfare benefits in effect during the immediately preceding two calendar years, or tax-effected payments in lieu thereof, if continued participation in such benefits is not permitted. |
• | payment, for the greater of one year or the then remaining term of the agreement, of the sum of his highest base salary as of the date of termination (or prior to a reduction thereof preceding termination) and the average of his bonuses for the three immediately preceding calendar years, payable monthly; and | |
• | continuation, for the greater of one year or the then remaining term of the agreement, of all life, disability and medical insurance benefits (and other normal welfare benefits) in effect during the immediately preceding two calendar years, or tax-effected payments in lieu thereof, if plan participation is not permitted. |
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• | participate in one or more bonus programs as maintained for our executive officers of similar rank; | |
• | participate in our fringe benefit programs, including the provision of an automobile allowance, the payment of dues at one country club, and the reimbursement of business-related expenses incurred in connection with his employment; and | |
• | participate in our executive benefit programs at benefit levels comparable to his peer executive officers. |
• | payment, for three years, of the sum of his highest base salary as of the date of termination (or prior to a reduction thereof which constituted good reason) and the three immediately preceding calendar years, and his highest bonus for the three immediately preceding calendar years, payable monthly; and | |
• | continuation, for three years, of certain welfare benefits in effect during the immediately preceding two calendar years, or tax-effected payments in lieu thereof, if continued participation in such benefits is not permitted — less such amount as he was paying for such benefits at the time of his termination. |
• | payment, for the greater of one year or the then-remaining term of the agreement, of the sum of his highest base salary as of the date of termination (or prior to a reduction thereof preceding termination) and the average of his bonuses for the three immediately preceding ca lendar years, payable monthly; and | |
• | continuation, for the greater of one year or the then-remaining term of the agreement, of all welfare benefits in effect during the immediately preceding two calendar years, or tax-effected payments in lieu thereof, if plan participation is not permitted. |
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• | a lump-sum cash payment of approximately $2.4 million representing the present value of payments due under his employment agreement; | |
• | continuation of certain welfare benefits for 36 months; and | |
• | a lump-sum payment of approximately $4.1 million in cash, which represents the present value, computed using actuarial assumptions consistent with the supplemental retirement plans, of amounts earned by and due Mr. Thompson under the terms of the Enhanced Retirement Plan and the Supplemental Retirement Plan, which are described in more under the caption “Our Compensation Plans.” |
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M. | Robert Rose |
• | a lump sum payment equal to two times the sum of his highest base salary as of the date of termination and the two immediately preceding calendar years, and the greater of his target bonus in the year of termination or the highest bonus for the two immediately preceding calendar years; and | |
• | continuation, for a period of two years, of all health and medical insurance benefits in effect during the immediately preceding two calendar years, or tax-effected payments in lieu thereof, if plan participation is not permitted. |
• | Mr. Sidhu resigned as President and Chief Executive Officer of Sovereign and Sovereign Bank effective on October 10, 2006; | |
• | Mr. Sidhu continued to serve as Chairman, with Board-related responsibilities, and as a director of Sovereign and Sovereign Bank through December 31, 2006; and | |
• | Mr. Sidhu will provide consulting services as special advisor to our Board for three years from October 10, 2006. |
• | a lump-sum cash payment of approximately $10.5 million, representing the present value of payments due under his employment agreement; | |
• | continuation, for 60 months from October 10, 2006, of life, disability, and medical insurance, also due under his employment agreement; and | |
• | a lump-sum payment of $22,448,671 in cash, which represents the present value of amounts earned by and due to him under the terms of the Enhanced Retirement Plan and the Supplemental Retirement |
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Plan. In 2006, we paid the amounts under the plans that vested before January 1, 2005 (approximately $3.4 million) and we will pay the balance in April 2007. |
Payments | ||||||||||||||
Number of | Present | During | ||||||||||||
Years of | Value of | Last | ||||||||||||
Credited | Accumulated | Fiscal | ||||||||||||
Service | Benefit | Year | ||||||||||||
Name | Plan Name | (#) | ($) (1) | ($) | ||||||||||
Joseph P. Campanelli | Enhanced Retirement Plan | 9 | $ | 2,459,423 | $ | 0 | ||||||||
Lawrence M. Thompson | Enhanced Retirement Plan | 22 | $ | 2,458,864 | $ | 0 | ||||||||
Lawrence M. Thompson | Supplemental Retirement Plan | 22 | $ | 1,581,045 | $ | 0 | ||||||||
Jay S. Sidhu | Enhanced Retirement Plan | 21 | $ | 12,918,834 | $ | 0 | ||||||||
Jay S. Sidhu | Supplemental Retirement Plan | 21 | $ | 6,118,837 | $ | 3,411,000 |
(1) | The present values of the accumulated benefit were calculated using the following actuarial assumptions: |
Interest Rate: | 5.50% | |
Mortality Table: | RP2000 Proj. 2006 | |
Normal Retirement Age: | Supplemental Retirement Plan — Age 65 | |
Enhanced Retirement Plan — Age 55 and five years of service |
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• | pension under the terminated qualified defined benefit retirement plan (determined as of March 31, 1999, the date benefit accruals ceased under such plan); | |
• | calculated Social Security benefit; and | |
• | retirement benefit, if any, under the Supplemental Retirement Plan described above. |
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Aggregate | ||||||||||||||||||||
Executive | Registrant | Aggregate | Balance | |||||||||||||||||
Contributions | Contributions | Earnings | Aggregate | At Last Fiscal | ||||||||||||||||
in Last | in Last | in Last Fiscal | Withdrawals/ | Year | ||||||||||||||||
Fiscal Year | Fiscal Year | Year | Distributions | End | ||||||||||||||||
Name | ($)(1) | ($) | ($)(1) | ($) | ($) | |||||||||||||||
Joseph P. Campanelli | $ | 0 | $ | 0 | $ | 294,196 | $ | 0 | $ | 1,472,586 | ||||||||||
Mark McCollom | $ | 0 | $ | 0 | $ | 51,075 | $ | 0 | $ | 255,624 | ||||||||||
James J. Lynch | $ | 0 | $ | 0 | $ | 241,923 | $ | 0 | $ | 1,210,790 | ||||||||||
Lawrence M. Thompson | $ | 0 | $ | 0 | $ | 193,093 | $ | 0 | $ | 966,405 | ||||||||||
M. Robert Rose | $ | 6,750 | $ | 6,750 | $ | 25,698 | $ | 0 | $ | 130,242 | ||||||||||
Jay S. Sidhu | $ | 0 | $ | 0 | $ | 2,449,566 | $ | 545,348 | $ | 12,092,638 |
(1) | Includes the following amounts included in the Summary Compensation Table under the column entitled “Change in Pension Value and Nonqualified Deferred Compensation Earnings”: |
Joseph P. Campanelli | $ | 223,528 | ||
Mark McCollom | $ | 38,808 | ||
James J. Lynch | $ | 183,820 | ||
Lawrence M. Thompson | $ | 146,717 | ||
M. Robert Rose | $ | 19,599 | ||
Jay S. Sidhu | $ | 1,842,190 |
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• | We will permit participants to defer up to 100% of their cash bonus and choose among various 401(k)-type investment options upon which the rate of return of amounts deferred will be based. We will adjust participant’s accounts periodically to reflect the deemed gains and losses attributable to the deferred amounts. We will determine the specific investment options in the near future. | |
• | We will distribute all account balances in cash. | |
• | We will no longer be matching deferred amounts. | |
• | Distribution events will be as permitted under Section 409A of the Internal Revenue Code. | |
• | Participants will always be 100% vested in the amounts deferred. Amounts deferred prior to fiscal year 2008 and Sovereign’s matching contributions thereto, however, will continue to be governed by a five-year cliff-vesting schedule. | |
• | We will permit directors of Sovereign and Sovereign Bank to defer receipt of cash fees received for board service. |
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Termination Not Following a Change | Termination Following a Change | |||||||||||||||||||||||
in Control | in Control | |||||||||||||||||||||||
Voluntary | Involuntary | Involuntary | ||||||||||||||||||||||
Termination | Termination | Termination | Termination | Termination | ||||||||||||||||||||
Change in | or Termination for | not for | for Good | not for | for Good | |||||||||||||||||||
Control | Cause | Cause | Reason | Cause | Reason | |||||||||||||||||||
Joseph P. Campanelli Severance payment | $ | — | $ | — | $ | 7,106,098.56 | $ | 5,211,000.00 | $ | 7,191,500.00 | $ | 7,191,500.00 | ||||||||||||
Benefits continuation | $ | — | $ | — | $ | 44,353.18 | $ | 30,000.00 | $ | 45,000.00 | $ | 45,000.00 | ||||||||||||
Value of Bonus Deferral Program | $ | 1,423,311.75 | $ | — | $ | 1,423,311.75 | $ | 711,655.87 | $ | 1,423,311.75 | $ | 1,423,311.75 | ||||||||||||
Value of Senior Officers Program | $ | 676,500.00 | $ | — | $ | — | $ | — | $ | 676,500.00 | $ | 676,500.00 | ||||||||||||
Value of Enhanced Retirement Plan increase | $ | — | $ | — | $ | 2,764,782.00 | $ | 2,764,782.00 | $ | 8,670,266.00 | $ | 8,670,266.00 | ||||||||||||
Value of accelerated stock options | $ | 943,062.51 | $ | — | $ | 943,062.51 | $ | 943,062.51 | $ | 943,062.51 | $ | 943,062.51 | ||||||||||||
Value of accelerated restricted stock | $ | 928,143.01 | $ | — | $ | 928,143.01 | $ | 928,143.01 | $ | 928,143.01 | $ | 928,143.01 | ||||||||||||
Potential excise taxgross-up | $ | 689,289.31 | $ | — | $ | — | $ | — | $ | 7,348,465.12 | $ | 7,348,465.12 | ||||||||||||
$ | 4,660,306.58 | $ | — | $ | 13,209,751.01 | $ | 10,588,643.39 | $ | 27,226,248.39 | $ | 27,226,248.39 | |||||||||||||
James J. Lynch | ||||||||||||||||||||||||
Severance payment | $ | — | $ | — | $ | 1,784,083.33 | $ | — | $ | 2,775,000.00 | $ | 2,775,000.00 | ||||||||||||
Benefits continuation | $ | — | $ | — | $ | 40,650.00 | $ | — | $ | 45,000.00 | $ | 45,000.00 | ||||||||||||
Value of Bonus Deferral Program | $ | 1,206,975.01 | $ | — | $ | 1,206,975.01 | $ | — | $ | 1,206,975.01 | $ | 1,206,975.01 | ||||||||||||
Value of Senior Officers Program | $ | 676,500.00 | $ | — | $ | — | $ | — | $ | 676,500.00 | $ | 676,500.00 | ||||||||||||
Value of accelerated stock options | $ | 853,052.09 | $ | — | $ | — | $ | — | $ | 853,052.09 | $ | 853,052.09 | ||||||||||||
Value of accelerated restricted stock | $ | 1,158,919.59 | $ | — | $ | — | $ | — | $ | 1,158,919.59 | $ | 1,158,919.59 | ||||||||||||
Potential excise taxgross-up | $ | 792,400.20 | $ | — | $ | — | $ | — | $ | 2,220,971.63 | $ | 2,220,971.63 | ||||||||||||
$ | 4,687,846.89 | $ | — | $ | 3,031,708.34 | $ | — | $ | 8,936,418.32 | $ | 8,936,418.32 | |||||||||||||
Mark R. McCollom Severance payment | $ | — | $ | — | $ | 1,328,833.33 | $ | — | $ | 1,875,000.00 | $ | 1,875,000.00 | ||||||||||||
Benefits continuation | $ | — | $ | — | $ | 35,700.00 | $ | — | $ | 45,000.00 | $ | 45,000.00 | ||||||||||||
Value of Bonus Deferral Program | $ | 254,818.81 | $ | — | $ | 254,818.81 | $ | — | $ | 254,818.81 | $ | 254,818.81 | ||||||||||||
Value of Senior Officers Program | $ | 676,500.00 | $ | — | $ | — | $ | — | $ | 676,500.00 | $ | 676,500.00 | ||||||||||||
Value of accelerated stock options | $ | 594,730.27 | $ | — | $ | — | $ | — | $ | 594,730.27 | $ | 594,730.27 | ||||||||||||
Value of accelerated restricted stock | $ | 452,264.39 | $ | — | $ | — | $ | — | $ | 452,264.39 | $ | 452,264.39 | ||||||||||||
Potential excise taxgross-up | $ | — | $ | — | $ | — | $ | — | $ | 1,175,278.17 | $ | 1,175,278.17 | ||||||||||||
$ | 1,978,313.47 | $ | — | $ | 1,619,352.14 | $ | — | $ | 5,073,591.64 | $ | 5,073,591.64 | |||||||||||||
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Termination Not Following a Change | Termination Following a Change | |||||||||||||||||||||||
in Control | in Control | |||||||||||||||||||||||
Voluntary | Involuntary | Involuntary | ||||||||||||||||||||||
Termination | Termination | Termination | Termination | Termination | ||||||||||||||||||||
Change in | or Termination for | not for | for Good | not for | for Good | |||||||||||||||||||
Control | Cause | Cause | Reason | Cause | Reason | |||||||||||||||||||
M. Robert Rose | ||||||||||||||||||||||||
Severance payment | $ | — | $ | — | $ | — | $ | — | $ | 483,616.00 | $ | 483,616.00 | ||||||||||||
Benefits continuation | $ | — | $ | — | $ | — | $ | — | $ | 30,000.00 | $ | 30,000.00 | ||||||||||||
Value of Bonus Deferral Program | $ | 129,831.21 | $ | — | $ | 129,831.21 | $ | — | $ | 129,831.21 | $ | 129,831.21 | ||||||||||||
Value of accelerated stock options | $ | 135,389.19 | $ | — | $ | — | $ | — | $ | 135,389.19 | $ | 135,389.19 | ||||||||||||
Value of accelerated restricted stock | $ | 193,596.19 | $ | — | $ | — | $ | — | $ | 193,596.19 | $ | 193,596.19 | ||||||||||||
Potential excise tax cut-back | $ | — | $ | — | $ | — | $ | — | $ | (105,803.18 | ) | $ | (105,803.18 | ) | ||||||||||
$ | 458,816.59 | $ | — | $ | 129,831.21 | $ | — | $ | 866,629.42 | $ | 866,629.42 | |||||||||||||
Change | ||||||||||||||||||||||||||||
in Pension | ||||||||||||||||||||||||||||
Value and | ||||||||||||||||||||||||||||
Fees | Non-Equity | Nonqualified | ||||||||||||||||||||||||||
Earned | Incentive | Deferred | All | |||||||||||||||||||||||||
or Paid | Stock | Option | Plan | Compensation | Other | |||||||||||||||||||||||
in Cash | Awards | Awards ($) | Compensation | Earnings | Compensation | Total | ||||||||||||||||||||||
Name (1) | ($) | ($) | (2) | ($) | ($) | ($) | ($) | |||||||||||||||||||||
Emilio Botin(3) | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||
Gonzalo de las Heras | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||
P. Michael Ehlerman(4) | $ | 90,000 | $ | 24,985 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 114,985 | ||||||||||||||
Brian Hard | $ | 100,000 | $ | 24,985 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 124,985 | ||||||||||||||
Marian L. Heard | $ | 75,000 | $ | 24,985 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 99,985 | ||||||||||||||
Andrew C. Hove, Jr. | $ | 90,000 | $ | 24,985 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 114,985 | ||||||||||||||
William J. Moran | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||
Maria Fiorini Ramirez | $ | 33,333 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 33,333 | ||||||||||||||
Juan Rodriguez-Inciarte | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||
Daniel K. Rothermel | $ | 130,000 | $ | 24,985 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 154,985 | ||||||||||||||
Cameron C. Troilo, Sr. | $ | 90,000 | $ | 24,985 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 114,985 | ||||||||||||||
Ralph V. Whitworth | $ | 50,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 50,000 |
(1) | Payments to Jay S. Sidhu for his service on the Board following his termination of employment are reflected in the Summary Compensation Table. | |
(2) | On December 31, 2006, Messrs. Rothermel, Troilo, and Hard had outstanding 126,000, 126,000, and 75,600 unexercised, vested options to purchase shares of our common stock, respectively. We granted these options under the Sovereign Bancorp, Inc. 1997 Non-Employee Directors’ Stock Option Plan, which we |
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terminated on February 20, 2002. We currently have no equity compensation plans that permit the grant of stock options to our non-employee directors. |
(3) | Mr. Botin resigned from the Board effective March 8, 2007. Pursuant to the terms of the Investment Agreement, the Board, by unanimous written consent, appointed Mr. Alberto Sanchez to replace Mr. Botin as a Class III director effective March 16, 2007. You can find more details about Mr. Sanchez above under “Directors of Sovereign.” | |
(4) | In January 2007, we named Mr. Ehlerman as our non-executive chairman of the Board. |
• | $50,000 in cash; plus | |
• | $50,000 in shares of our common stock; plus | |
• | $25,000 in cash if such director served as chairperson of the Audit Committee or as “Lead Director”; plus | |
• | $15,000 in cash for each Board committee (other than the Audit Committee) for which the director serves as chairperson. |
• | $21,000 in cash; plus | |
• | $21,000 in shares of common stock. |
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Name | Amount | |||
Emilio Botin | $ | 0 | ||
Gonzalo de las Heras | $ | 0 | ||
P. Michael Ehlerman | $ | 169,030 | ||
Brian Hard | $ | 495,623 | ||
Marian L. Heard | $ | 3,027 | ||
Andrew C. Hove, Jr. | $ | 155,035 | ||
William J. Moran | $ | 0 | ||
Maria Fiorini Ramirez | $ | 0 | ||
Juan Rodriguez-Inciarte | $ | 0 | ||
Daniel K. Rothermel | $ | 1,022,478 | ||
Jay S. Sidhu | $ | 0 | ||
Cameron C. Troilo, Sr. | $ | 894,432 | ||
Ralph V. Whitworth | $ | 0 |
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Regulation O prohibits Sovereign Bank from making loans to an Insider unless the loan (i) is made on substantially the same terms (including interest rates and collateral) as, and following credit underwriting procedures that are not less stringent than, those prevailing at the time for comparable transactions by Sovereign Bank with other persons who are not subject to Regulation O and who are not employed by Sovereign Bank; and (ii) does not involve more than the normal risk of repayment or present other unfavorable features. Regulation O does not prohibit Sovereign Bank from making loans to Insiders pursuant to a benefit or compensation program (i) that is widely available to employees of Sovereign Bank and, in the case of extensions of credit to an Insider of its affiliates, is widely available to employees of the affiliates at which that person is an Insider; and (ii) that does not give preference to any Insider of Sovereign Bank over other employees of Sovereign Bank and, in the case of extension of credit to an Insider of its affiliates, does not give preference to any Insider of its affiliates over other employees of the affiliates at which that person is an Insider.
The Bank is examined periodically by the Office of Thrift Supervision for compliance with Regulation O and internal controls exist within Sovereign Bank to ensure that compliance with Regulation O is maintained on an ongoing basis after such loans are made.
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Daniel K. Rothermel, Vice Chairman
P. Michael Ehlerman
Maria Fiorini-Ramirez
William J. Moran
Andrew C. Hove, Jr.
Ralph V. Whitworth
December 31, 2006 | ||||
Audit Fees | $ | 4,625,991 | ||
Audit-Related Fees | 531,719 | |||
Tax Fees | 128,631 | |||
All Other Fees | 0 | |||
Total Fees | $ | 5,286,341 | ||
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December 31, 2005 | ||||
Audit Fees | $ | 4,408,687 | ||
Audit-Related Fees | 489,800 | |||
Tax Fees | 216,169 | |||
All Other Fees | 0 | |||
Total Fees | $ | 5,114,656 | ||
APPOINTMENT OF INDEPENDENT AUDITOR
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INCORPORATION TO “OPT OUT” OF COVERAGE OF SUBCHAPTER E OF
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• | That the Pennsylvania Statute does not permit either the Board or the shareholders to take action to make the Pennsylvania Statute inapplicable to any person on a case by case basis, even if the Board believes that a transaction is in the best interest of the Company and its shareholders. | |
• | That many other corporations incorporated in Pennsylvania have elected to “opt out” of the Pennsylvania Statute. | |
• | That the Pennsylvania Statute may have a potential chilling effect on takeover activity due to the uncertainty and unpredictability that may arise for a prospective bidder with respect to acquisition cost. | |
• | That Article Sixteenth of the Articles of Incorporation (the “Charter Control Share Provision”) already contains provisions (as discussed more fully below) which provide similar protections to that provided by the Pennsylvania Statute but which also provide the Board with the flexibility to exempt transactions on a case by case basis. The Board also considered, however, that the Board has previously taken action under the Charter Control Share Provision to exempt Santander from the application of the Charter Control Share Provision with respect to acquisitions by Santander of Sovereign common stock made in accordance with the Investment Agreement. | |
• | That under the Investment Agreement, other than in connection with an offer to purchase all of the outstanding Sovereign shares made in accordance with specified procedures, Santander is not permitted, absent certain breaches by Sovereign of the Investment Agreement, to increase its beneficial ownership of shares to more than 24.99% of the total voting power prior to the expiration of the standstill restrictions. These provisions can only be amended or waived if approved by Sovereign and Santander. | |
• | That even if Santander makes a proposal to acquire all of the outstanding Sovereign shares following the procedures outlined in the Investment Agreement, including permitting the price competition or price appraisal procedures set forth in the agreement, Santander is not permitted to complete an acquisition of Sovereign during the standstill periods presented in the Investment Agreement unless a majority of the non-Santander shareholders present and voting at a shareholders meeting approve the transaction. These provisions can only be amended or waived if approved by Sovereign and Santander. | |
• | That the Investment Agreement requires the Board to recommend that shareholders adopt the Charter Amendment. |
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• | any acquisition that is approved in advance by directors representing 80% or more of the members of the Board; or | |
• | future acquisitions of voting shares by Santander made in accordance with the Investment Agreement (although the Charter Control Share Provision will apply to acquisitions of voting shares by any other person or group, regardless of whether the Charter Amendment is adopted). Under the Investment Agreement, Santander is not permitted, absent certain breaches by Sovereign of the Investment Agreement, to increase its beneficial ownership of shares to more than 24.99% of the total voting powerpriorto the expiration of the standstill restrictions; however, Santander is permitted, under certain circumstances, to make an offer to purchase, and to purchase, all of the outstanding Sovereign common stock in the manner specified in the Investment Agreement (which would require, among other things, that any such acquisition by Santander be approved by a majority of our shareholders other than Santander that are present and voting at a shareholders’ meeting). |
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Categorical Standards for Independence
A-1
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A-2
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B-1
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Pennsylvania Business Corporation Law of 1988, as amended
TITLE 15. CORPORATIONS AND UNINCORPORATED ASSOCIATIONS
PART II. CORPORATIONS
SUBPART B. BUSINESS CORPORATIONS
ARTICLE C. DOMESTIC BUSINESS CORPORATION ANCILLARIES
CHAPTER 25. REGISTERED CORPORATIONS
SUBCHAPTER E. CONTROL TRANSACTIONS
C-1
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C-2
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C-3
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C-4
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C-5
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C-6
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1130 BERKSHIRE BLVD. MC11900IR5 WYOMISSING, PA 19610 | VOTE BY INTERNET —www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. | |
VOTE BY MAIL | ||
Mark, sign and date your proxy card and return it in the postage-paid envelope we’ve provided or return to Sovereign Bancorp, Inc., c/o ADP, 51 Mercedes Way, Edgewood, NY 11717. | ||
If you are a shareholder planning to attend the Annual Meeting, please: | ||
- retain the admission ticket mailed with the proxy statement and present it at the Annual Meeting; and | ||
- promptly complete and return the attendance card mailed with the proxy statement as soon as possible. | ||
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | SVERN1 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY | |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
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SOVEREIGN BANCORP, INC. THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” MATTER NO. 1, NO. 2 AND NO. 3. | ||||||||
For All | Withhold All | For All Except | To withhold authority to vote for any individual nominee, mark “For All Except” and write the nominee’s number on the line below. | |||||
MATTER NO. 1: | ||||||||
ELECTION OF CLASS II DIRECTORS TO SERVE UNTIL 2010 | ||||||||
01) P. Michael Ehlerman | o | o | o | |||||
02) Andrew C. Hove, Jr. | ||||||||
03) Juan Rodriguez-Inciarte |
For | Against | Abstain | ||||||||||
MATTER NO. 2: | ||||||||||||
TO RATIFY THE APPOINTMENT BY THE AUDIT COMMITTEE OF SOVEREIGN’S BOARD OF DIRECTORS OF ERNST & YOUNG LLP AS SOVEREIGN’S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2007; AND | o | o | o | |||||||||
MATTER NO. 3 | ||||||||||||
TO APPROVE THE AMENDMENT TO SOVEREIGN’S ARTICLES OF INCORPORATION | o | o | o | |||||||||
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. | ||||||||||||
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
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1130 BERKSHIRE BLVD. MC11900IR5 WYOMISSING, PA 19610 | VOTE BY INTERNET —www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 5:00 P.M. Eastern Time on April 28, 2007. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 5:00 P.M. Eastern Time on April 30, 2007. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL | |
Mark, sign and date your proxy card and return it in the postage-paid envelope we’ve provided or return to Sovereign Bancorp, Inc., c/o ADP, 51 Mercedes Way, Edgewood, NY 11717. | ||
If you are a shareholder planning to attend the Annual Meeting, please: | ||
- retain the admission ticket mailed with the proxy statement and present it at the Annual Meeting; and | ||
- promptly complete and return the attendance card mailed with the proxy statement as soon as possible. | ||
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | SVERN3 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY | |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
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SOVEREIGN BANCORP, INC. THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” MATTER NO. 1, NO. 2 AND NO. 3. | ||||||||
For All | Withhold All | For All Except | To withhold authority to vote for any individual nominee, mark “For All Except” and write the nominee’s number on the line below. | |||||
MATTER NO. 1: | ||||||||
ELECTION OF CLASS II DIRECTORS TO SERVE UNTIL 2010 | ||||||||
01) P. Michael Ehlerman | o | o | o | |||||
02) Andrew C. Hove, Jr. | ||||||||
03) Juan Rodriguez-Inciarte |
For | Against | Abstain | ||||||||||
MATTER NO. 2: | ||||||||||||
TO RATIFY THE APPOINTMENT BY THE AUDIT COMMITTEE OF SOVEREIGN’S BOARD OF DIRECTORS OF ERNST & YOUNG LLP AS SOVEREIGN’S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2007; AND | o | o | o | |||||||||
MATTER NO. 3 | ||||||||||||
TO APPROVE THE AMENDMENT TO SOVEREIGN’S ARTICLES OF INCORPORATION | o | o | o | |||||||||
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. | ||||||||||||
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |