-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BRWm1glDwBJpEFfexgjWyqtFaT/Q6HjOh7cN3dqTnRaVmFp0C37PsMLwcvqLXarF H33tdm/XwqelWtAp3W0nfg== 0000910117-00-000048.txt : 20000331 0000910117-00-000048.hdr.sgml : 20000331 ACCESSION NUMBER: 0000910117-00-000048 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000426 FILED AS OF DATE: 20000330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTENNIAL BANCORP CENTRAL INDEX KEY: 0000702430 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 930792841 STATE OF INCORPORATION: OR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 000-10489 FILM NUMBER: 584484 BUSINESS ADDRESS: STREET 1: BENJAMIN FRANKLIN PLZ STREET 2: ONE SW COLUMBIA ST SUITE 900 CITY: PORTLAND STATE: OR ZIP: 97258 BUSINESS PHONE: 5039735556 MAIL ADDRESS: STREET 1: BENJAMIN FRANKLIN PLZ STREET 2: ONE SW COLUMBIA ST SUITE 900 CITY: PORTLAND STATE: OR ZIP: 97258 FORMER COMPANY: FORMER CONFORMED NAME: VALLEY WEST BANCORP DATE OF NAME CHANGE: 19900812 DEF 14A 1 ANNUAL MEETING OF SHAREHOLDERS PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Section 240.14a-12 CENTENNIAL BANCORP ------------------------------------------------------------ (Name of Registrant as Specified In Its Charter) ----------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: --------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: --------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set for the amount on which the filing fee is calculated and state how it was determined): --------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: --------------------------------------------------------------- (5) Total fee paid: --------------------------------------------------------------- [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: --------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: --------------------------------------------------------------- (3) Filing Party: --------------------------------------------------------------- (4) Date Filed: --------------------------------------------------------------- CENTENNIAL BANCORP NOTICE OF ANNUAL MEETING AND PROXY STATEMENT APRIL 26, 2000 CENTENNIAL BANCORP NOTICE OF ANNUAL MEETING OF SHAREHOLDERS APRIL 26, 2000 NOTICE IS HEREBY GIVEN that the annual meeting of the shareholders of Centennial Bancorp, an Oregon corporation (the "Company"), will be held at 3:00 p.m. on April 26, 2000, in the Colonel Lindbergh Ballroom of the Embassy Suites Hotel, 319 SW Pine Street, Portland, Oregon, for the following purposes: 1. To consider and act upon the election of six directors of the Company. 2. To transact such other business as may properly come before the meeting or any adjournment or adjournments thereof. Only shareholders of record at the close of business on March 15, 2000 are entitled to notice of, and to vote at, the meeting or any adjournment or adjournments thereof. Further information regarding voting rights and the business to be transacted at the annual meeting of shareholders is given in the accompanying Proxy Statement. Shareholders are invited to attend the meeting personally. If you are not able to do so and want your shares to be voted, it is important that you complete, sign, date and promptly return the accompanying proxy in the enclosed postage-paid envelope. We hope that you will be able to attend the meeting. It is always a pleasure to meet and become better acquainted with shareholders of the Company. By order of the Board of Directors. March 27, 2000 Cordy H. Jensen Secretary - -------------------------------------------------------------------------------- YOUR VOTE IS IMPORTANT. PLEASE RETURN YOUR PROXY SO YOUR VOTE CAN BE COUNTED. - -------------------------------------------------------------------------------- CENTENNIAL BANCORP One S.W. Columbia Blvd, Suite 900 Portland, Oregon 97258 (503) 973-5556 PROXY STATEMENT This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of Centennial Bancorp (the "Company") to be used at the annual meeting of the Company's shareholders to be held on April 26, 2000. The approximate date of mailing this Proxy Statement and the accompanying form of proxy is March 27, 2000. The Company's 1999 Annual Report to Shareholders is being mailed to shareholders of the Company with this Proxy Statement. PROXIES AND VOTING AT THE MEETING Unless otherwise noted, all share and per-share information included in this Proxy Statement has been retroactively adjusted to reflect all stock dividends and stock splits effected by the Company prior to the date hereof. The only class of outstanding stock of the Company is its Common Stock, no par value. At March 15, 2000, the record date for determining shareholders entitled to vote at the meeting, there were 19,684,373 shares of Common Stock outstanding. Each holder of record of Common Stock on the record date is entitled to one vote for each share held on every matter submitted at the meeting. A majority of the outstanding Common Stock must be represented at the meeting in person or by proxy in order to constitute a quorum for the transaction of business. Brokers are permitted to vote the shares held by them in "street name" on routine matters without receiving specific directions from the beneficial owners of the shares, but brokers must receive specific directions from beneficial owners before they may vote on nonroutine matters. Thus, brokers enter a "broker nonvote" on nonroutine matters with respect to shares where the broker has not received direction from the beneficial owner. These broker non-votes, as well as "abstentions" and "withheld" votes, are counted in determining whether a quorum is present, but are not counted for or against the proposal at issue. If a proxy in the accompanying form is executed and returned, the shares represented thereby will be voted at the meeting in accordance with the instructions given in the proxy. If no instructions are given, the proxyholders will vote for management's nominees for director. They will vote in their discretion as to any other matters that may be properly brought before the meeting. Any proxy may be revoked prior to its exercise by giving written notice of revocation to the Secretary of the Company or by submitting to the Secretary a duly executed proxy bearing a later date. The attendance of a shareholder at the meeting will not revoke a proxy. Ballots and proxies will be counted by personnel of the Company. 1 The cost of this proxy solicitation will be borne by the Company. The Company does not expect to pay any compensation for the solicitation of proxies but may reimburse brokers, banks and other nominees for their expenses in sending proxy material to principals and obtaining their proxies. The Company expects to solicit proxies primarily by mail. The Company may also use officers and employees of the Company and Centennial Bank to solicit proxies, either in person or by telephone or letter. Such persons will not be specifically compensated for these activities. PRINCIPAL SHAREHOLDERS AND MANAGEMENT OWNERSHIP The following table sets forth certain information regarding beneficial ownership of the Company's Common Stock at March 15, 2000 by: (i) each person who is known by the Company to own beneficially more than 5% of the Common Stock; (ii) each director; (iii) the executive officers named in the Summary Compensation Table below; and (iv) all executive officers and directors as a group. Each named beneficial owner has sole voting and investment power with respect to the shares listed unless otherwise indicated.
Amount and Nature of Beneficial Name of Beneficial Owners Ownership Percent of Class - ----------------------------------------------------- ---------------------- ---------------- Brian B. Obie 408,463(1) 2.1 Robert L. Newburn 342,482(2) 1.7 Cordy H. Jensen 620,928(3) 3.2 Dan Giustina 156,814(4) * Richard C. Williams 836,080(5) 4.2 Ted R. Winnowski 117,163(6) * David M. Gazeley 262,644(7) 1.3 Dennis M. Carlson 110,768(8) * Dennis P. Huserik 12,918(9) * Key Trust Company of the Northwest 1,144,924(10) 5.8 All executive officers and directors as a group (12 persons) 2,981,712(11) 14.7 - -----------------------------------
* Less than 1% of the Company's outstanding Common Stock 2 (1) Includes 54,637 shares held by Mr. Obie's wife, 181,427 shares held by Obie Industries Incorporated, of which Mr. Obie is President and owns a controlling interest, and 36,741 shares which could be acquired within 60 days by exercise of stock options. (2) Includes 259,818 shares held by The Newburn Joint Trust, of which Mr. Newburn is a trustee, 46,956 shares held by the Newburn Supporting Organization, of which Mr. Newburn is a trustee, 676 shares held by Mr. Newburn's wife, 23,149 shares held by Mr. Newburn as custodian for minors, and 11,883 shares which could be acquired within 60 days by exercise of stock options. (3) Includes 249,645 shares jointly held with Mr. Jensen's wife, 167,967 shares held by the Adams Children Irrevocable Trust, of which Mr. Jensen's wife is a trustee, 50,150 shares held by the Adams Grandchildren's Trust, of which Mr. Jensen's wife is a trustee, 1,083 shares held by Mr. Jensen as custodian for a minor, 3,330 shares held jointly with CAC Investments, a partnership of which Mr. Jensen is the Managing Partner, 62,063 shares held by Mr. Jensen as trustee for his mother, and 36,741 shares which could be acquired within 60 days by exercise of stock options. (4) Includes 61,109 shares which could be acquired within 60 days by exercise of stock options. (5) Includes 323,199 shares which could be acquired within 60 days by exercise of stock options. Also includes 247,744 shares which are held for Mr. Williams' account by Key Trust Company of the Northwest ("Key Trust") as trustee of Centennial Bank's Employee Savings and Profit Sharing Plan (the "Employee Savings Plan"); Key Trust has sole voting power over such shares. (6) Includes 944 shares held for Mr. Winnowski's account by Key Trust as trustee of the Employee Savings Plan; Key Trust has sole voting power over such shares. Also includes 98,716 shares which could be acquired within 60 days by exercise of stock options. (7) Includes 3,058 shares held by Mr. Gazeley's wife, 142,092 shares held jointly by Mr. Gazeley and his wife as trustees of the Gazeley Family Trust, 292 shares held by Mr. Gazeley as custodian for a minor, and 117,202 shares held for Mr. Gazeley's account by Key Trust as trustee of the Employee Savings Plan; Key Trust has sole voting power over such shares. (8) Includes 45,520 shares held by Mr. Carlson's wife, 952 shares held in trust for Mr. Carlson's son, and 48,440 shares held for Mr. Carlson's account by Key Trust as trustee of the Employee Savings Plan; Key Trust has sole voting power over such shares. Also includes 15,856 shares which could be acquired within 60 days by exercise of stock options. (9) Includes 4,841 shares held jointly with Mr. Huserik's wife, and 2,291 shares held for Mr. Huserik's account by Key Trust as trustee of the Employee Savings Plan; Key Trust has sole voting power over such shares. Also includes 5,786 shares which could be acquired within 60 days by exercise of stock options. (10) Key Trust is the trustee of the Employee Savings Plan and as such is the record holder of, and has sole voting power over, these shares; sole investment power over these shares is held by the respective beneficiaries of the individual accounts maintained under such plan. Key Trust's address is 1211 S.W. Fifth Avenue, Suite 300, Portland, Oregon 97204. (11) Includes 626,626 shares which could be acquired within 60 days by exercise of stock options. Also includes 484,252 shares held for the accounts of the Company's executive officers by Key Trust as trustee of the Employee Savings Plan; Key Trust has sole voting power over such shares. 3 PROPOSAL 1 ELECTION OF DIRECTORS Members of the Board of Directors are elected annually. The current members of the Board have been nominated to continue in office until the next annual meeting of shareholders, and until their successors have been elected and qualified. Although the Company knows of no reason why any of the nominees may be unable or unwilling to serve, if any nominee becomes unable or unwilling to serve, it is the intention of the persons named in the proxy to vote for any substitute nominee the Board of Directors of the Company may recommend. The Board does not have a standing nomination committee nor does it have a formal procedure to receive shareholder nominations, but it will consider any written recommendations sent to the attention of the Board at the Company's administrative offices at One SW Columbia Street, Suite 900, Portland, Oregon 97258. Directors are elected by a plurality of votes cast at the meeting, which means that the six nominees receiving the most votes at the meeting will be elected. Accordingly, a vote withheld from a particular nominee will not affect the outcome of an uncontested election. Shareholders are not entitled to cumulate votes for election of officers. NOMINEES FOR DIRECTOR - --------------------- The following table gives certain information about each nominee for director, as of March 15, 2000. Three nominees (Messrs. Obie, Newburn and Williams) have served as directors of the Company since the Company's organization in 1981. Mr. Jensen has been a director since 1994; Mr. Giustina has been a director since 1995; and Mr. Winnowski has been a director since January 1998. All of the nominees (together with other people) are directors of the Company's subsidiary, Centennial Bank (sometimes referred to herein as the "Bank"). Mr. Williams is Chairman of the Board of Centennial Mortgage Co. ("Centennial Mortgage"), another subsidiary of the Company. Mr. Winnowski is a director of Centennial Mortgage.
Name (Age) and Principal Occupation Position with Company (During the last five years) - --------------------- ---------------------------- Brian B. Obie (58) Chairman, President and Chief Executive Officer of Obie Media Chairman of the Board Corporation (transit and outdoor advertising); President and Chief Executive Officer of Obie Industries Incorporated (real estate development); former mayor of Eugene, Oregon Robert L. Newburn (68) President and Chief Executive Officer of Pacific Petroleum Vice Chairman of the Board Company (retail distribution of petroleum products); Chairman of the Board of Centennial Bank 4 Richard C. Williams (60) President and Chief Executive Officer of the Company; Vice President, Chief Executive Officer Chairman of the Board of Directors of Centennial Bank; Director and Director of Obie Media Corporation; Director of Elmer's Restaurants, Inc. Ted R. Winnowski (58) President and Chief Executive Officer of Centennial Bank since Director January 1998; Executive Vice President of KeyCorp from 1995 to 1997; Chairman, President and Chief Executive Officer of KeyBank of Washington from 1996 to 1997; Chairman of KeyBank of Oregon from 1985 to 1997 Cordy H. Jensen (57) President and owner of Station Masters Inc. (restaurant and Director and Secretary lounge); Managing Partner of McKenzie Brewing Co.; Managing Partner of CAC Investments (real estate rentals); Managing Partner of Bev's Investment Co. (real estate holdings) Dan Giustina (50) Managing Partner of Giustina Resources (owns and manages timber Director and timberland); member/manager of G Group LLC (owns and manages residential and commercial real estate)
The Board of Directors held 12 meetings during 1999. Each director attended more than 75% of the meetings of the Board of Directors and all committees of the Board on which the director served. BOARD COMMITTEES - ---------------- The Board of Directors has two committees. The Audit Committee consists of all members of the Board of Directors. It reviews the scope of internal and external audit activities and the results of the Company's annual audit. The Audit Committee met once in 1999 to review the scope and results of the Company's financial statement audit. The Compensation Committee administers the Company's stock option plans and determines management compensation. The members of the Compensation Committee are Messrs. Obie, Newburn, Giustina and Jensen. The Compensation Committee held four meetings in 1999. In addition, Centennial Bank has an Audit and Personnel Committee of its Board of Directors consisting of Mr. Giustina and three nonemployee members of Centennial Bank's Board of Directors who are not also members of the Company's Board of Directors. The Audit and Personnel Committee meets monthly with management to ensure that appropriate audits of Centennial Bank's affairs are being conducted. The Audit and Personnel Committee also reviews the reports of examinations of Centennial Bank conducted by the Federal Deposit Insurance 5 Corporation and the Oregon Department of Consumer and Business Services. Centennial Bank also has an Asset/Liability Committee, which has seven members, four of whom (Messrs. Newburn, Jensen, Williams and Winnowski) are directors of the Company. The Asset/Liability Committee meets weekly. The Board of Directors of the Company approves the independent auditors selected by the Company's management. The independent auditors have direct access to the Company's Board of Directors, and the employees responsible for conducting internal reviews have direct access to the Bank's Audit and Personnel Committee to discuss the results of their examinations, the adequacy of internal accounting controls and the integrity of financial reporting. COMPENSATION OF DIRECTORS - ------------------------- Executive officers receive no compensation for serving as directors of the Company. All other directors of the Company receive $1,000 per month, except that the Chairman of the Board receives an additional $500 per quarter. The directors of the Company also serve as directors of Centennial Bank. Executive officers receive no compensation for serving as directors of Centennial Bank. All other directors of Centennial Bank receive $750 per month, except that the Chairman of the Board receives an additional $500 per quarter. Centennial Bank's Asset/Liability Committee meets weekly; nonemployee directors who serve on that committee receive $75 for each meeting attended, except that the Chairman of that Committee receives $100 per meeting attended. The Chairman of the Audit and Personnel Committee receives $100 per month. Each nonemployee director of the Company or any of its subsidiaries who is first elected to such position after December 1993 may, in the discretion of the Compensation Committee, receive a 10-year option to purchase up to 21,523 shares of Common Stock at the fair market value on the date of grant. However, to date the Compensation Committee has never granted options to purchase more than 5,000 shares of Common Stock to any new director. In addition to these initial stock option grants, the Company's Board of Directors adopted a stock option program in September 1996 for nonemployee directors of the Company and its subsidiaries. The program provides for options to purchase 1,000 shares to be granted under the 1995 Stock Incentive Plan annually to each nonemployee director, with the grants commencing generally during the director's second year of service. Options are granted on the first business day of each calendar year, vest over a three-year period and have a term of 10 years. The exercise price for the options is the fair market value of the Company's Common Stock on the date of grant. Options that vested on the date a director ceases to serve as a director will remain exercisable for one year from the date of termination. These options are transferable, under specified circumstances, to members of the director's immediate family, to family trusts and to family partnerships. Options covering 11,430 shares with an exercise price of $14.57 per share were granted to nonemployee directors in 1999 for service in 1998. Options covering 6 12,100 shares with an exercise price of $9.77 were granted to nonemployee directors in 2000 for service in 1999. INFORMATION REGARDING MANAGEMENT EXECUTIVE OFFICERS - ------------------ The following information identifies the executive officers of the Company as of the date of this Proxy Statement. Subject to certain obligations of the Company described below under "Employment Agreements," all executive officers serve at the discretion of the Board of Directors.
Name of Individual Age Positions and Offices Held - ------------------ --- -------------------------- Richard C. Williams 60 President, Chief Executive Officer and a director of the Company since 1981; Vice Chairman of Centennial Bank since 1992; Chief Executive Officer of Centennial Bank from 1977 to 1998; President of Centennial Bank from 1977 to 1992; a director of Centennial Bank since 1977; a director of Centennial Mortgage since 1987. Ted R. Winnowski 58 President and Chief Executive Officer of Centennial Bank since January 1998; a director of the Company since January 1998; a director of Centennial Bank since January 1998, a director of Centennial Mortgage since January 1999. Dennis M. Carlson 54 President and Chief Executive Officer of Centennial Mortgage since 1988; Executive Vice President of Centennial Mortgage from 1987 to 1988; a director of Centennial Mortgage since 1987; Senior Vice President of Centennial Bank since 1990; Vice President of Centennial Bank from 1982 to 1990. David A. Dahlstrom 49 Executive Vice President and Manager, Community Banking Division of Centennial Bank since January 2000; Vice President and Manager, Small Business Lending Center of Centennial Bank from July 1999 to 2000; private consulting from 1996 to 1999; Senior Vice President, Business Banking Group, First Interstate Bank from 1994 to 1996. 7 Dennis P. Huserik 57 Executive Vice President and Senior Credit Officer of Centennial Bank since February 1999; Senior Vice President and Region Credit Administrator of Centennial Bank from 1996 to February 1999. Michael J. Nysingh 47 Chief Financial Officer of the Company since 1985; Acting Chief Financial Officer of the Company from 1982 to 1985; Senior Vice President of Centennial Bank since January 1995; Vice President of Centennial Bank from 1982 through 1994; Cashier of Centennial Bank since 1982; a director of Centennial Mortgage since 1990; Chief Financial Officer of Centennial Mortgage since 1988. Michael V. Paul 44 Executive Vice President and Senior Lending Officer of Centennial Bank since July 1999; Senior Vice President and Manager, Downtown Portland Commercial Banking Center of Centennial Bank from January 1999 to July 1999; Senior Vice President and Team Leader, Corporate Banking and Finance Division of Key Bank, N.A., from 1994 through 1999.
8 EXECUTIVE COMPENSATION - ---------------------- The following table sets forth certain information regarding compensation paid by the Company during 1999, 1998 and 1997 to Mr. Williams as the Company's Chief Executive Officer and the four other most highly compensated executive officers in 1999:
SUMMARY COMPENSATION TABLE -------------------------- Long-term compensation Annual compensation awards awards -------------------------- -------------- Number of securities underlying All other Name and principal Salary Bonus options compensation position Year ($)(1) ($)(1)(2) (#) ($)(3) - -------------------------------- ------- ----------- ---------- -------------- ----------------- Richard C. Williams 1999 $325,000 $100,000 -- $ 9,412 President and Chief 1998 300,000 200,000 -- 11,047 Executive Officer of the 1997 256,090 150,000 -- 17,662 Company Ted R. Winnowski 1999 250,000 55,000 93,381 9,412 President and Chief 1998 214,903 100,000 173,250 -- Executive Officer of Centennial Bank David M. Gazeley (4) 1999 111,465 17,200 2,200 7,310 Executive Vice President 1998 100,000 36,800 -- 9,804 and Manager of 1997 92,000 30,000 -- 9,227 Community Banking Division of Centennial Bank Dennis M. Carlson 1999 105,000 25,000 2,475 8,733 President and Chief 1998 92,000 40,000 16,500 7,903 Executive Officer of 1997 82,000 22,500 -- 6,743 Centennial Mortgage Dennis P. Huserik 1999 100,340 17,200 2,475 6,293 Executive Vice President 1998 88,895 18,600 -- 7,438 and Senior Credit Officer 1997 80,000 15,000 14,674 -- of Centennial Bank - -------------------------------- (1) Includes amounts contributed by the named executive to the Deferred Compensation Plan. (2) Includes bonuses paid or to be paid during the subsequent year but attributable to the year indicated. (3) Consists of the Company's contributions to the Employee Savings Plan for the benefit of the named executive officers. (4) Mr. Gazeley retired from active employment during December 1999.
9 The following table sets forth certain information regarding options granted in 1999 to the executive officers named in the Summary Compensation Table:
1999 OPTION GRANTS ------------------ Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Individual Grants Option Term ------------------------------------------------------------------ ------------------------ % of Total Options Per-Share Market Granted to Exercise Price on Options Employees in Price Grant Expiration Name Granted 1999 Date Date 5% ($) 10% ($) - ---- ------- ---- ---- ---- ---- ------ -------- Richard C. Williams -- -- -- -- -- -- -- Ted R. Winnowski 93,381 (1) 47.9% $13.48 $13.48 1/20/11 $1,001,734 $2,691,613 David M. Gazeley 2,200 (2) 1.1% 9.32 9.32 12/21/09 12,892 32,672 Dennis M. Carlson 2,475 (2) 1.3% 9.32 9.32 12/21/09 14,504 36,756 Dennis P. Huserik 2,475 (2) 1.3% 9.32 9.32 12/21/09 14,504 36,756 - ----------------------- ------------ (1) These options vest ratably over the three-year period from January 20, 1999, the date of grant. (2) These options vest ratably over the five-year period from December 21, 1999, the date of grant.
The following table sets forth information regarding option exercises during 1999 and option holdings at December 31, 1999 by each executive officer named in the Summary Compensation Table:
1999 OPTION EXERCISES AND YEAR-END OPTION VALUES ------------------------------------------------ Value of unexercised in-the- Shares Number of unexercised money options at acquired options at December 31, 1999(#) December 31, 1999($)(1) on Value -------------------------------- -------------------------------- exercise realized Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable - ---------------------- ------------ ------------ ------------- --------------- ------------- --------------- Richard C. Williams -- -- 323,199 -- $3,241,404 -- Ted R. Winnowski -- -- 66,700 226,783 -- -- David M. Gazleey 15,225 $144,948 -- 1,760 795 Dennis M. Carlson 7,405 63,994 15,856 20,454 87,667 1,182 Dennis P. Huserik -- -- 6,364 10,785 5,189 13,569 - --------------------------------------- (1) On December 31, 1999, the closing price of the Company's Common Stock was $9.77. For purposes of the foregoing table, stock options with an exercise price less than that amount are considered to be "in-the-money" and are considered to have a value equal to the difference between that amount and the exercise price of the stock option multiplied by the number of shares covered by the stock option.
10 EMPLOYMENT AGREEMENTS - --------------------- The Company has an employment agreement with Mr. Williams (as amended, the "Williams Agreement"). Centennial Bank has an employment agreement with Mr. Winnowski (the "Winnowski Agreement"). RICHARD C. WILLIAMS The Williams Agreement commenced on October 1, 1995 and terminates on December 31, 2001. It was amended on December 1, 1997 to add certain provisions regarding salary and payments upon a change of control, as described below. The Williams Agreement provides for a base salary of not less than $300,000 for each 12-month period after September 30, 1998, as established by the Compensation Committee. In addition to the base salary for Mr. Williams described above, the Williams Agreement provides for a cash bonus for each calendar year if the Company and/or Mr. Williams reach certain objectives determined by the Board of Directors before the beginning of that year. Any cash bonus is payable 20% on the 15th day of April, July and October and 40% on the 15th day of the following January. As provided in the Williams Agreement, Mr. Williams was paid bonuses of $150,000 and $200,000 for 1997 and 1998, respectively, after meeting all the specified objectives for each year. Certain of the specified objectives were met in 1999, and Mr. Williams was paid a bonus of $100,000 for 1999. Assuming future objectives are met, his cash bonus for subsequent years will be determined by the Compensation Committee, but may not be less than $25,000 per calendar quarter. The Williams Agreement also provides for disability income benefits in the event Mr. Williams should become disabled. The Williams Agreement provides that, commencing January 20, 1998, Mr. Williams is deemed to have fulfilled his full-time service obligation if he devotes time equivalent to three-fourths of a full-time schedule to his duties with the Company. The Williams Agreement also acknowledges the grant to Mr. Williams of an option to purchase 223,723 shares of the Company's Common Stock. The exercise price for Mr. Williams' nonstatutory stock option is $3.12 per share, the fair market value of the Company's Common Stock on the date the option was granted. The option expires on November 21, 2015 and is fully vested. The option may be transferred, under certain specified circumstances, to members of Mr. Williams' immediate family, to family trusts and to family partnerships. In the event of termination of employment by the Company for "cause" or by Mr. Williams without "good reason," as such terms are defined in the Williams Agreement, Mr. Williams is entitled to the payment of base salary, cash bonus and benefits only through his termination date, plus vested deferred compensation. In the event of termination of employment by the Company without cause or by Mr. Williams for good reason, Mr. Williams is entitled to the payment of his base salary, cash bonus, and benefits through the end of the term of the Williams Agreement, plus all deferred compensation. 11 The Williams Agreement provides for deferred compensation in an amount equal to $2,100,000. The deferred compensation is fully vested. The deferred compensation is payable in installments beginning at the earliest to occur of the following: (1) December 31, 2001; (2) the date of Mr. Williams' death; (3) the termination of his employment unless terminated by reason of disability; or (4) the date of the last payment to be made under a disability income insurance policy. The Williams Agreement further provides that, in the event of his termination upon any change in control, both the Company and Mr. Williams have the right to terminate the Williams Agreement. If either elects to terminate, Mr. Williams will receive a lump-sum cash payment equal to 2 1/2 times his "final compensation." Final compensation is the greater of: (a) his base salary and cash bonus for the most recently ended fiscal year; or (b) his base salary for the current fiscal year. If Mr. Williams continues employment following a change in control and is subsequently terminated before December 31, 2002, the Company will pay him a lump-sum cash payment equal to 2 1/2 times his final compensation. Change of control is defined for this purpose as (i) the acquisition by any person, other than the Company, Centennial Bank or a trustee holding securities under an employee benefit plan of either company, of 30% or more of the combined voting power of the Bank's or the Company's then outstanding securities; (ii) a merger, consolidation, share exchange or other corporate reorganization other than (A) a transaction in which the voting securities of the Bank or the Company before the transaction continue to represent more than 70% of the combined voting securities immediately following the transaction, or (B) a transaction in which no person acquires more than 30% of the combined voting power of Centennial Bank's or the Company's then outstanding securities; or (iii) the complete liquidation, or sale or disposition of all or substantially all, of the Bank's or the Company's assets. In any event, the payment made to Mr. Williams under the change-of-control provision of the Williams Agreement will be reduced until Section 280G of the Internal Revenue Code does not limit the deductibility by the Company of the payment. For a period of three years following Mr. Williams' termination of employment, unless such termination is by the Company without cause, or by Mr. Williams for good reason, or as a result of any change of control of the Company or Centennial Bank, Mr. Williams cannot, without the consent of the Board of Directors, engage in or enter into any business or perform services for another business that is in substantial competition with the Company. TED WINNOWSKI The Winnowski Agreement commenced on January 20, 1998 and terminates on December 31, 2002. The Winnowski Agreement provides for a base salary of at least $225,000 for each 12-month period after December 31, 1998, as established by the Compensation Committee. In addition to Mr. Winnowski's base salary, the Winnowski Agreement provides for a cash bonus for each calendar year if Centennial Bank attains certain objectives determined by the Bank's Board of Directors before the beginning of that year. Any cash bonus is payable 20% on the 15th of April, July and October of that year and 40% on January 15th of the 12 following year. Mr. Winnowski received a cash bonus of $100,000 for 1998 after meeting all the specified objectives for that year. Certain of the specified objectives were met in 1999, and the Company paid Mr. Winnowski a cash bonus of $55,000 for that year. Assuming future annual objectives are met, his cash bonus for 2000 and subsequent years will be determined by the Compensation Committee, but may not be less than $100,000 per year, plus an additional amount of not less than $25,000 if 110% of the year's financial objectives are achieved. The Winnowski Agreement also acknowledges the grant to Mr. Winnowski of an option to purchase 200,102 shares of the Company's Common Stock under the Restated 1995 Stock Incentive Plan at an exercise price of $11.15 per share. One-third of the option (the incentive stock option portion) expires in 2008 and the remaining two-thirds of the option expires in 2023. The option is exercisable as to two-thirds of the option; the remaining one-third will become exercisable on January 20, 2001. Pursuant to the Winnowski Agreement, in January 1999, the Company granted Mr. Winnowski an option to purchase 93,381 shares of Common Stock at an exercise price of $13.48 per share, in recognition of achieving all the 1998 performance goals. In addition, upon achieving the performance goals established by the Board for each subsequent year, the Winnowski Agreement requires the Company to grant to Mr. Winnowski annually an additional option to purchase 26,680 shares, plus another option to purchase 13,340 shares if the Bank achieves 110% of its prior year's after-tax profitability goal. Upon satisfying certain of the performance goals for 1999, the Company granted to Mr. Winnowski an option to purchase 26,680 shares at a purchase price of $9.72 per share. Exercisability of options granted to Mr. Winnowski will be accelerated if the Company is acquired by another corporation, upon Mr. Winnowski's death or disability or upon termination of his employment by the Bank without cause or by Mr. Winnowski with good reason, as such terms are defined in the Winnowski Agreement. Upon termination of Mr. Winnowski's employment with the Bank for any reason, including termination for cause by the Bank or by Mr. Winnowski without good reason, Mr. Winnowski will have the right to exercise his options for one year after termination but only to the extent the options were vested at the time of termination. Pursuant to the Winnowski Agreement, if Mr. Winnowski's interest in the Company's Employee Savings Plan is not fully vested at the time his employment terminates (if such termination is on or after December 31, 2002), the Company will make a cash payment to Mr. Winnowski equal to the unvested portion of his account. In the event of termination of employment by the Bank for cause or by Mr. Winnowski without good reason, Mr. Winnowski is entitled to the payment of his base salary and benefits only through his termination date. In the event of termination of employment by the Bank without cause or by Mr. Winnowski for good reason, Mr. Winnowski is entitled to payment of his base salary and benefits through December 31, 2002. If the Winnowski Agreement is terminated by either party because of Mr. Winnowski's disability, the Bank will pay his benefits and base salary until disability insurance benefits commence; if the agreement is terminated due to death, the Bank will continue payments for six months. The Winnowski Agreement further provides that, in the event of his termination upon any change in control (defined the same as in the Williams Agreement), both the Company 13 and Mr. Winnowski have the right to terminate the Winnowski Agreement. If either elects to terminate, Mr. Winnowski will receive a lump-sum cash payment equal to 2 1/2 times his "final compensation." "Final compensation" is the greater of: (a) his base salary and cash bonus for the most recently ended fiscal year; or (b) his base salary for the current fiscal year. If Mr. Winnowski continues employment following a change in control and is subsequently terminated before December 31, 2002, the Company will pay him a lump-sum cash payment equal to 2 1/2 times his final compensation. For a period of six months following Mr. Winnowski's termination of employment, he has agreed that he shall not engage in or enter into business or perform services for another business that is of the same or similar type as the Bank. REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION - -------------------------------------------------------------- With the exception of Mr. Williams, who retired as Chief Executive Officer and President of Centennial Bank in January 1998, all of the Company's executives also hold positions with Centennial Bank. All of the Company's executives, including Mr. Williams, receive all of their compensation from the Bank. The Bank has entered into intercompany agreements with the Company and Centennial Mortgage for reimbursement of certain executive officer compensation expenses. Although compensation is paid by Centennial Bank, the Compensation Committee of the Company establishes the compensation to be paid to the Company's executive officers. The Company and its subsidiaries are engaged in a highly competitive industry. In order to succeed, the Company must be able to attract and maintain qualified executives. To achieve this objective, the Compensation Committee has structured executive compensation systems which include both a fixed, base salary component and a contingent component tied to operating performance. The Committee believes this compensation structure enables the Company to attract and retain key executives. In 1995, as the Board of Directors reviewed the Company's strategic plans for the future, the Board determined that it would be in the best interests of the Company to renegotiate Mr. Williams' employment contract to extend its term. Central to the Board's interests were the long-term operation of the Company and succession of management. The Williams Agreement is described at pages 11-12 of this Proxy Statement. The base salary and bonus paid to Mr. Williams for 1999 were determined pursuant to the terms of the Williams Agreement. After extensive consideration of candidates, the Board determined to hire Mr. Winnowski pursuant to an agreement described at pages 12-14 of this Proxy Statement. Mr. Winnowski commenced employment with the Bank on January 20, 1998. In setting base compensation, the Compensation Committee considers the overall performance of each executive with respect to the duties and responsibilities assigned him or her. Further, periodic surveys are taken of compensation levels and benefit programs offered by other community banks and bank holding companies, which provide the Committee with information on which to evaluate salary and compensation programs. 14 The Compensation Committee maintains a philosophy that a significant element of compensation of executive officers, including Mr. Williams, Mr. Winnowski and the other executive officers named in the Summary Compensation Table, must be directly and materially linked to both operating and stock price performance. The benefit plans provided to the executive officers are designed to accomplish that goal. In particular, cash bonuses are heavily dependent on the Company meeting or exceeding budgeted net income. Executive officers are eligible to earn cash bonuses in specified amounts per executive, upon the achievement of specific performance measurements by the Company each quarter. In 1999, the performance measurements were: return on average assets; return on average equity; net interest margin; efficiency ratio; and growth objectives for total loans, total deposits and total assets. If earned, cash bonuses are payable 20% on the 15th day of April, July and October and 40% on January 15 of the following year. Because all the specified performance goals were met for 1997 and 1998, full bonuses were paid to all executive officers for those years. Not all of the goals were satisfied for 1999, and each executive officer received only a portion of his potential bonus for 1999. The Company's stock incentive plans are an important component of the Company's compensation program for executive officers and other employees. The plans are intended to advance the interests of the Company and its shareholders by encouraging and enabling executive officers and other employees to acquire and retain a proprietary interest in the Company. Through stock option grants, the long-range interests of management and employees are aligned with those of shareholders as the optionees accumulate (through the vesting of their stock options) meaningful stakes in the Company. The Compensation Committee makes all decisions concerning the granting of stock options, including the individuals to whom options are granted and the respective exercise prices and vesting periods. These decisions are made on a subjective basis and generally do not bear a specific relationship to any particular measure of the Company's performance. In 1999, the Company adopted a stock option program intended to increase stock ownership among a broader group of employees. It is anticipated that all executive officers (except Mr. Williams and Mr. Winnowski) will receive a greater number of options under the new program than they have historically received. The program specifies a range of option shares that are available to each employee within a given grade, as well as providing for discretionary options beyond the specified range. The Compensation Committee believes that the enhanced program will be a valuable tool in recruiting, retaining and motivating employees, including executive officers. Stock options totaling 111,558 shares were granted to six executive officers during 1999. The value of these stock options and the other stock options held by the executive officers is entirely dependent on the market value of the Company's shares. See the stock option tables included in "Executive Compensation." The Company maintains a 401(k) retirement savings plan applicable to all eligible employees, including executive officers. Under the plan, the Company typically matches a portion of employee contributions (for 1999, 48% of employee contributions were matched up to a maximum of 6% of compensation). At December 31, 1999, all employer contributions made on behalf of executive officers were vested in accordance with the vesting schedule of the plan, generally five years from commencement of employment, on the basis of the officers' past service with the Company and Centennial Bank, except that contributions made on behalf of Mr. Winnowski, Mr. Huserik and Mr. Paul are not fully vested. In addition, the Company has a 15 deferred compensation plan, which also is applicable to all eligible employees, including executive officers. Although the Company may match a portion of the compensation deferred by employees, no Company contributions were made under this plan for 1999. The Compensation Committee believes that the base salary compensation provided to the executive officers of the Company, including those named in the Summary Compensation Table, is appropriate and reasonable in light of such executives' duties, performance and responsibilities and that the contingent forms of compensation provided through bonuses and stock options provide additional, continuing incentives to executives in appropriate circumstances and are consistent with the benefits derived by shareholders of the Company. This report is submitted by the members of the Company's Compensation Committee: COMPENSATION COMMITTEE ---------------------- Brian B. Obie Robert L. Newburn Cordy H. Jensen Dan Giustina 16 STOCK PERFORMANCE GRAPH The graph below compares the yearly percentage change in the cumulative shareholder return on the Company's Common Stock during the five years ended December 31, 1999, with: (i) the All Nasdaq U.S. Stocks Index, as reported by the Center for Research in Security Prices; and (ii) the Nasdaq Bank Index, as reported by the Center for Research in Security Prices. This comparison assumes $100 was invested on December 31, 1994, in the Company's Common Stock and in the comparison groups, and assumes the reinvestment of all cash dividends prior to any tax effect and retention of all shares issued pursuant to stock dividends and stock splits.
Edgar Representation of Data Points Used In Printed Graphics ------------------------------------------------------------ Period Ending ------------------------------------------------------------------------------------- Index 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 - -------------------------------- -------------- ------------- ------------- -------------- ------------- ------------- Centennial Bancorp 100.00 165.35 230.66 499.30 686.81 454.81 NASDAQ - Total US 100.00 141.33 173.89 213.07 300.25 542.43 NASDAQ Bank Index 100.00 149.00 196.73 329.39 327.11 314.42 THE STOCK PERFORMANCE SHOWN ON THE GRAPH ABOVE IS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE. THE COMPANY WILL NOT MAKE NOR ENDORSE ANY PREDICTIONS AS TO FUTURE STOCK PERFORMANCE.
17 CERTAIN TRANSACTIONS COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION - ----------------------------------------------------------- The members of the Compensation Committee are Messrs. Obie, Newburn, Jensen and Giustina. None of them is or has been an officer or employee of the Company or any of its subsidiaries. Mr. Williams, the Company's President and Chief Executive Officer, serves as a director and is on the Compensation Committee of Obie Media Corporation. Mr. Obie, the Company's Chairman of the Board and a member of the Company's Compensation Committee, is the Chairman of the Board and an executive officer of Obie Media Corporation. BANKING RELATIONSHIPS - --------------------- Certain directors (including each member of the Compensation Committee) and executive officers of the Company and its subsidiaries, members of their immediate families, and certain companies with which such individuals are associated are customers of and have banking transactions with Centennial Bank in the ordinary course of business. The Bank expects to have such banking transactions in the future. All credit transactions with these parties in excess of $25,000 must be approved by Centennial Bank's Asset/Liability Committee and ratified by its Board of Directors. All outstanding loans and commitments to loan to those parties were made in compliance with applicable laws and on substantially the same terms (including interest rates and collateral) as those prevailing for Centennial Bank at the time for comparable transactions with other persons and, in the opinion of management, did not involve more than the normal risk of collectibility or present other unfavorable features. Loans to directors and executive officers of the Company and of Centennial Bank must comply with federal and state laws, which generally prohibit any preferential terms or rates. COMPLIANCE WITH SECTION 16 FILING REQUIREMENTS Section 16 of the Securities Exchange Act of 1934, as amended (the "1934 Act"), requires that all executive officers and directors of the Company and all persons who beneficially own more than 10% of the Company's Common Stock file an initial report of their ownership of the Company's securities on Form 3 and report changes in their ownership of the Company's securities on Form 4 or Form 5. These filings must be made with the Securities and Exchange Commission with a copy sent to the Company. Based solely upon the Company's review of the copies of the filings that it received with respect to the year ended December 31, 1999, and written representations from certain reporting persons, the Company believes that all reporting persons made all required Section 16 filings with respect to 1999 on a timely basis. 18 OTHER BUSINESS The Company's management knows of no other matters to be brought before the meeting for a vote. However, if other matters are presented for a vote at the meeting, the proxy holders will vote the shares represented by properly executed proxies according to their judgment on those matters. At the meeting, management will report on the Company's business, and shareholders will have an opportunity to ask questions. INFORMATION AVAILABLE TO SHAREHOLDERS THE COMPANY'S 1999 ANNUAL REPORT IS BEING MAILED TO SHAREHOLDERS WITH THIS PROXY STATEMENT. ADDITIONAL COPIES OF THE ANNUAL REPORT AND THE COMPANY'S FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION MAY BE OBTAINED WITHOUT CHARGE FROM MICHAEL J. NYSINGH, CHIEF FINANCIAL OFFICER, CENTENNIAL BANCORP, 675 OAK STREET, POST OFFICE BOX 1560, EUGENE, OREGON 97440. The Company welcomes the views of its shareholders on its activities and performance. Shareholders who cannot attend the annual meeting personally may use the enclosed proxy card to ask questions or make comments. AUDITORS Symonds, Evans & Larson, P.C., independent auditors, were selected by the Board of Directors to conduct an audit of the Company's financial statements for the year ended December 31, 1999. Representatives of Symonds, Evans & Larson, P.C. will be at the annual meeting and will have an opportunity to make a statement if they desire to do so and answer any appropriate questions. However, management has been advised that the representatives of Symonds, Evans & Larson, P.C. do not plan to make a statement. The Company will appoint at a later date independent auditors to audit the Company's financial statements for 2000. The Board of Directors will review the scope of any such audit and other assignments given to the auditors to assess whether such assignments would affect their independence. Effective October 30, 1998, the Company dismissed its prior independent accountant, PricewaterhouseCoopers LLP, and engaged Symonds, Evans & Larson, P.C. as its principal accountant. The decision to change accountants was approved by the Company's Board of Directors. For additional information about the change of accountants, please review the discussion on page 37 of the Company's 1999 Annual Report to Shareholders, which accompanies this Proxy Statement. That discussion is incorporated herein by reference. 19 PROPOSALS OF SHAREHOLDERS Shareholders wishing to present proposals for action at the Company's 2001 annual meeting of shareholders must submit the proposals for inclusion in the Company's proxy statement not later than November 27, 2000. March 27, 2000. 20 CENTENNIAL BANCORP EMBASSY SUITES HOTEL, COLONEL LINDBERGH BALLROOM, 319 SW PINE STREET, PORTLAND, OREGON 97204 ANNUAL MEETING OF SHAREHOLDERS, APRIL 26, 2000 PROXY - SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned shareholder of Centennial Bancorp hereby appoints Brian B. Obie and Richard C. Williams, and each of them, as proxies with full power of substitution, and authorizes them to represent and to vote on behalf of the undersigned shareholder all shares of the common stock of Centennial Bancorp that the undersigned is entitled to vote at the annual meeting of shareholders of Centennial Bancorp to be held on April 26, 2000, and any adjournment or adjournments thereof, with respect to the following: 1. ELECTION OF DIRECTORS: NOMINEES: Brian B. Obie, Robert L. Newburn, Dan Giustina, Cordy H. Jensen, Richard C. Williams and Ted R. Winnowski _____ FOR all nominees listed (except as marked to the contrary) _____ WITHHOLD AUTHORITY to vote for all nominees listed INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN ACCORDANCE WITH THE SPECIFIC INSTRUCTIONS OF THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEES LISTED FOR DIRECTOR. PROXIES MAY VOTE IN THEIR DISCRETION AS TO SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. Please sign exactly as your name appears. When shares are held jointly, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person. - ---------------------------------- Signature(s) - ---------------------------------- Signature(s) - ---------------------------------- Date - -------------------------------------------------------------------------------- FOLD AND DETACH HERE -----END PRIVACY-ENHANCED MESSAGE-----