SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN 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 the Commission Only
(as permitted by Rule
[X] Definitive Proxy Statement 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
FEDERAL TRUST CORPORATION
-------------------------
(Name of Registrant as Specified in its Charter)
NOT APPLICABLE
--------------
(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)(1) and 0-11.
[ ] 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: ___________________________________________________________
April 21, 2003
Dear Fellow Shareholders:
It is my pleasure to invite you to attend Federal Trust Corporation's 2003
Annual Meeting of Shareholders. The Annual Meeting is being held just two miles
north of our corporate headquarters, at the Springhill Suites, 201 North Towne
Road, Sanford, Florida 32771, on May 23, 2003, at 10:00 a.m. Hopefully following
the Annual Meeting you will have an opportunity to visit our headquarters and
meet some of our terrific employees.
The attached Notice of the Annual Meeting of Shareholders and Proxy
Statement describe the formal business that will be transacted at the Annual
Meeting, primarily the election of directors and the ratification of the
selection of our independent auditors.
At the Annual Meeting, we will discuss the results of 2002, as well as our
plans for 2003. Directors and officers of Federal Trust Corporation, as well as
a representative of the accounting firm, Hacker, Johnson & Smith, P.A., will be
present to respond to your questions.
YOUR VOTE IS IMPORTANT, so please sign and date the enclosed Proxy Card or
voting instruction card promptly and return it in the enclosed postage-paid
envelope. Should you attend the Annual Meeting and prefer to vote in person, you
will be given that opportunity.
On behalf of the Board of Directors and all of our employees, we look
forward to seeing you at the Annual Meeting.
Sincerely,
James V. Suskiewich
Chairman of the Board
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FEDERAL TRUST CORPORATION
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NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 23, 2003
The 2003 Annual Meeting of Shareholders of Federal Trust Corporation will
be held at Springhill Suites, 201 North Towne Road, Sanford, Florida 32771, on
May 23, 2003, at 10:00 a.m. At the Annual Meeting, the following items will be
presented and voted upon:
I The election of one Class I member of our Board of Directors;
II The ratification of the appointment of Hacker, Johnson &
Smith, P.A., as our independent auditors for 2003;
III The adjournment of the Annual Meeting to solicit additional
proxies in the event there are not sufficient votes to approve
the foregoing items; and
IV The transaction of any other business that properly comes
before the Annual Meeting, or any adjournment thereof.
Our Board of Directors has fixed the close of business on March 31, 2003,
as the record date for the determination of shareholders entitled to notice of,
and to vote at, the Annual Meeting. You are encouraged to complete the enclosed
Proxy Card or voting instruction form and return it in the postage prepaid,
pre-addressed envelope which is enclosed. If you would like to vote in person,
you will be permitted to revoke your proxy by attending the Annual Meeting and
voting at that time.
By Order of the Board of Directors,
James V. Suskiewich
Chairman of the Board
Sanford, Florida
April 21, 2003
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FEDERAL TRUST CORPORATION
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PROXY STATEMENT
2003 ANNUAL MEETING OF SHAREHOLDERS
GENERAL INFORMATION
Date, Time and Place
o Friday, May 23, 2003
o 10:00 a.m.
o The Springhill Suites
201 North Towne Road
Sanford, Florida 32771
Solicitation and Voting of Proxies
This Proxy Statement is being furnished to Federal Trust Corporation's
("Federal Trust") shareholders of record as of March 31, 2003. By this mailing,
our Board of Directors is soliciting proxies for use at the Annual Meeting. Our
2002 Annual Report is enclosed with this Proxy Statement. These documents
provide important information about our business, including audited financial
statements, and are first being mailed to shareholders on or about April 21,
2003.
It is important that your shares be represented by proxy or that you be
present at the Annual Meeting. If you wish to vote by proxy, please complete the
enclosed Proxy Card or voting instruction form and return it, signed and dated,
in the enclosed postage-paid envelope. Even if you presently intend to attend
the Annual Meeting, we would ask that you also submit a proxy or instruction
form. This will ensure that your shares are voted if you later cannot attend the
Annual Meeting. Proxies solicited by the Board of Directors will be voted in
accordance with the directions given therein. The Board recommends that you
vote:
"FOR" the election of one Class I director nominees;
"FOR" the ratification of the appointment of Hacker, Johnson & Smith,
P.A., as our independent auditors for 2003; and
"FOR" the adjournment of the Annual Meeting to solicit additional
proxies if there are not sufficient votes to approve any proposals.
If you do not indicate a preference, the proxy holders will vote in
accordance with the Board's recommendations. Although the Board of Directors
knows of no additional business that will be presented for consideration at the
Annual meeting, execution of the enclosed Proxy Card confers discretionary
authority on the proxy holders to vote your shares in accordance with their best
judgment on any other business that may properly come before the Annual Meeting,
on any adjournment thereof.
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FEDERAL TRUST CORPORATION PROXY STATEMENT
312 West First Street, Suite 400 o
Sanford, Florida 32771
Voting Procedures
Only holders of record of our common stock at the close of business on
March 31, 2003, the shareholder record date, will be entitled to vote at the
Annual Meeting. Record holders representing a majority of our outstanding common
stock present in person or represented by proxies, constitutes a quorum. The
number of shares of our common stock outstanding as of the record date was
6,591,338, held by approximately 1,182 shareholders. Each share of common stock
entitles its owner to one vote upon each matter to come before the Annual
Meeting.
In accordance with Florida law and our Bylaws, the director will be elected
at the Annual Meeting by a plurality of the votes cast. Any other matter on
which shareholders vote at the Annual Meeting will be determined by the
affirmative vote of a majority of the votes cast.
A shareholder may abstain or withhold a vote with respect to any item
submitted for shareholder approval. Abstentions and withheld votes will be
counted as being present for purposes of determining the existence of a quorum,
but will be counted as not voting in favor of any proposal brought before the
Annual Meeting. Since the proposals to be considered at the Annual Meeting will
be determined by the total votes cast, abstentions and withheld votes will not
affect such matters.
The manner in which your shares may be voted depends on how your shares are
held. If you own shares of record, meaning that your shares of common stock are
represented by certificates or book entries in your name so that you appear as a
shareholder on the records of our stock transfer agent, a Proxy Card for voting
those shares will be included with this Proxy Statement. You may vote those
shares by completing, signing and returning the Proxy Card in the enclosed
postage pre-paid, pre-addressed envelope.
If you own shares through a brokerage firm (e.g., shares held in "street
name"), you may instead receive a voting instruction form with this Proxy
Statement that you may use to instruct how your shares are to be voted. As with
a Proxy Card, you may vote your shares by completing, signing and returning the
voting instruction form in the envelope provided. Many brokerage firms have
arranged for internet or telephonic voting of shares and provide instructions
for using those services on the voting instruction form.
If your shares are held by a brokerage firm, under certain circumstances,
the brokerage firm may vote your shares. Such entities have authority to vote
their customers' shares on certain routine matters, including the election of
directors. When a firm votes its customers' shares on routine matters, these
shares are also counted for purposes of establishing a quorum to conduct
business at the meeting. A brokerage firm cannot vote its customers' shares on
non-routine matters. Accordingly, these shares are not counted as votes against
a non-routine matter, but rather not counted at all for these matters. There are
no non-routine matters being considered at this Annual Meeting.
Attendance and Voting at the Annual Meeting
If you own common stock of record, you may attend the Annual Meeting and
vote in person, regardless of whether you have previously voted by Proxy Card.
If you own common stock through a brokerage account, you may attend the Annual
Meeting, but in order to vote your shares at the Annual Meeting, you must obtain
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FEDERAL TRUST CORPORATION PROXY STATEMENT
312 West First Street, Suite 400 o
Sanford, Florida 32771
3
a "legal proxy" from the brokerage firm that holds your shares. You should
contact your brokerage account representative to learn how to obtain a legal
proxy. We encourage you to vote your shares in advance of the Annual Meeting by
one of the methods described above, even if you plan on attending the Annual
Meeting, so we will be able to determine if a quorum is present. You may change
or revoke your proxy at the Annual Meeting in the manner described below even if
you have already voted.
Revocation of Proxy
Any shareholder holding common stock of record may revoke a previously
granted proxy at any time before it is voted, by delivering to us a written
notice of revocation, or a duly executed Proxy Card bearing a later date, or by
attending the Annual Meeting and voting in person. Any shareholder holding
common stock through a brokerage firm may change or revoke previously given
voting instructions by contacting the brokerage firm, or by obtaining a legal
proxy from the brokerage firm and voting in person at the Annual Meeting.
PROPOSAL I
ELECTION OF DIRECTORS
The Board of Directors is presently comprised of five members. Our Articles
of Incorporation provide that directors are divided into three classes, which
serve for staggered three-year terms. This year, one Class I is to be elected.
To the best of our knowledge, the director nominee being proposed for
election is not subject to any agreement between that person and any other
person. The nominee has indicated that he is willing to stand for election and
to serve as a director, if elected. Should the nominee become unable or
unwilling to serve, proxies will be voted for the election of such other person
as the Board of Directors may choose to nominate.
The affirmative vote of a plurality of the votes cast at the Annual Meeting
is needed to elect a director. Abstentions and withheld votes will have the same
effect as votes against the director nominee.
Information relating to the business experience, age, and beneficial
ownership of our common stock of the director nominee and the continuing
directors is described below.
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FEDERAL TRUST CORPORATION PROXY STATEMENT
312 West First Street, Suite 400 o
Sanford, Florida 32771
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DIRECTOR NOMINEES
CLASS I DIRECTOR
TERM TO EXPIRE IN 2006
Kenneth W. Hill, age 70, has been a director of 54,000 shares of common stock (1)
Federal Trust since 1997 and a director of the 27,250 options to purchase common stock
Bank since 1995. Mr. Hill was the Vice President 1.16% of the outstanding common stock
and Trust Officer of SunBank, N.A., Orlando,
Florida from 1983 through 1995. Mr. Hill resides
in Orlando, Florida.
CONTINUING DIRECTORS
CLASS II DIRECTORS
TERMS EXPIRE IN 2004
George W. Foster, age 74, is a retired banker 13,612 shares of common stock (1)
and has been a director of Federal Trust since 25,567 options to purchase common stock
1997 and a director of the Bank since 1990. From Less than 1% of the outstanding common stock
1990 through 1993, he served as President and
Chief Executive Officer of the Bank. Mr. Foster
resides in Longwood, Florida.
A. George Igler, age 51, was elected to the 22,786 shares of common stock (1)(2)
Board in October, 2001. Since 1992, he has been 12,144 options to purchase common stock
a principal in the law firm of Igler & Less than 1% of the outstanding common stock
Dougherty, P.A., which specializes in banking,
corporate and securities law. Igler &
Dougherty, P.A., has served as the Federal
Trust's corporate counsel since 1993. Mr. Igler
resides in Tallahassee, Florida.
CLASS III DIRECTORS
TERMS EXPIRING IN 2005
Dr. Samuel C. Certo, age 56, has been a director 56,400 shares of common stock (1)
of Federal Trust since 1997 and a director of 27,350 options to purchase common stock
the Bank since 1996. He is the former Dean and a 1.19% of the outstanding common stock
Professor of Management in the Crummer Graduate
School of Business at Rollins College in Winter
Park. Sine 1986, Dr. Certo has served as a
business consultant and has published textbooks
in the areas of management and strategic
management. Dr. Certo resides in Longwood,
Florida.
James V. Suskiewich, age 55, has been a director 902,049 shares of common stock(1)(3)
of Federal Trust since 1994 and is currently 130,587 options to purchase common stock
Chairman of the Board. He has served as 15.36% of the outstanding common stock
President and Chief Executive Officer of Federal
Trust since July 1996. Since January 1993, he
has been President, Chief Executive Officer and
a director of the Bank. Mr. Suskiewich resides
in Lake Mary, Florida.
Directors and executive officers as a group (11 persons) 1,203,351shares of common stock (1)(2)(3)(4)
424,825 options to purchase common stock
23.21% of the outstanding common stock(4)(5)
___________________
(1) Includes shares for which the named person:
o has sole voting and investment power;
o has shared voting and investment power with a spouse, or
o holds in an IRA or other retirement plan program, unless otherwise
indicated in these footnotes.
(2) Includes 5,478 shares held as trustee under Igler & Dougherty, P.A.
401(K) Profit Sharing Plan, with respect to which Mr. Igler shares
voting and investment power.
(3) Includes 154,043 shares held as trustee under Federal Trust's ESOP with
respect to which Mr. Suskiewich exercises sole voting and investment
power, 112,533 shares held as Trustee under Federal Trust's 401(k) with
respect to which Mr. Suskiewich shares voting and investment power, and
506,538 shares held as Voting Trustee.
(4) Includes stock and options owned by:
Number of Shares Shares Covered
Name Position with the Bank by Options
Jennifer B. Brodnax Vice President/Operations 37,972(6) 16,355
Stephen C. Green Executive Vice President and Chief Operating Officer 4,400 70,920
Dennis J. Harward Director 38,000 10,750
Thomas J. Punzak Treasurer 13,607 15,427
Daniel C. Roberts Senior Vice President and Chief Credit Officer 19,258 16,209
Aubrey H. Wright, Jr. Director, Senior Vice President and Chief Financial 51,367 72,266
Officer of the Bank and Chief Financial Officer of
Federal Trust
(5) Percentage based on 7,016,163 shares, of which 6,591,338 shares were
outstanding as of the record date and 424,825 shares covered under stock
options.
(6) Includes 10,100 shares in Federal Trust's Stock Bonus Plan, over which
Ms. Brodnax has sole voting and investment power.
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FEDERAL TRUST CORPORATION PROXY STATEMENT
312 West First Street, Suite 400 o
Sanford, Florida 32771
5
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The Board of Directors Recommends that Shareholders Vote "FOR"
the Election of the Class I Director Nominee.
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BOARD OF DIRECTORS AND COMMITTEE MEETINGS
The Board of Directors of Federal Trust conducts its business through
meetings of the full Board. During 2002, the Board of Directors held six
meetings. All of Federal Trust's directors attended at least 75% of the total
meetings of the Board of Directors and, if they were a member, of the Audit
Committee.
COMMITTEES OF THE BOARD OF DIRECTORS
In 2002, Federal Trust's Board had only one standing committee, the Audit
Committee. This Committee reviews our auditing, accounting, financial reporting
and internal control functions pursuant to a Charter adopted by the Board of
Directors on July 28, 2000. The Audit Committee recommends to the Board our
independent auditors and reviews their services. The Audit Committee is
comprised of only non-employee directors, who are all considered independent
under the National Association of Securities Dealers' rules.
As part of its duties, the Audit Committee reviewed and discussed with our
management and independent auditors:
o our audited financial statements for the fiscal year ended December 31,
2002;
o those matters required to be discussed by Statement on Auditing
Standards 61; and
o the written disclosures and letter from the independent auditors
regarding its independence as required by Independence Standards Board
Standard No. 1.
Based upon these reviews and discussions, the Audit Committee recommended
that the Company's audited financial statements be included in our Form 10-KSB
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FEDERAL TRUST CORPORATION PROXY STATEMENT
312 West First Street, Suite 400 o
Sanford, Florida 32771
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for the fiscal year ended December 31, 2002. Members of the Audit Committee are
Dr. Samuel C. Certo, George W. Foster and Kenneth W. Hill (Chairman).
DIRECTOR COMPENSATION
In 2002, we paid each Federal Trust director a $1,250 per quarter retainer.
Directors do not receive per meeting or committee fees. We also paid each Bank
director a $1,250 per quarter retainer, and, for each such meeting they
attended, $500 per Board meeting and $250 per committee meeting.
Our 1998 Directors' Stock Option Plan ("Directors' Plan") was approved by
shareholders at the 1998 Annual Meeting. Additional shares were reserved for
issuance at the 2002 Annual Meeting. The Directors' Plan authorizes the granting
of only compensatory options. Under the terms of the Directors Plan, 140,000
shares of common stock have been reserved for issuance upon the exercise of
options.
Under the terms of the Directors' Plan, the per share exercise price of any
option must be equal to the fair market value of a share of common stock as of
the date of grant. For the purposes of Directors' Plan, the fair market value of
a share of common stock is the closing sales price of a share of common stock on
the date the option granted (or, if such day is not a trading day, on the last
trading day before the grant), as reported by the markets or exchanges where our
shares are traded. If no such closing prices are reported, the fair market value
is the average of the closing high bid and low ask prices of a share of common
stock, or if no such quotations are available, the price furnished by a
professional securities dealer making a market in our shares, as selected by our
Board. An option may be exercised any time after six months form the date of
grant up until ten years after the date of grant. Unless terminated, the
Directors' Plan shall remain in effect until the tenth anniversary of its
effective date.
The following table reflects the amount of options which have been granted
to non-employee directors.
Number of Shares
Subject to Exercise
Name Title Options Granted Price
---- ----- --------------- -----
Dr. Samuel C. Certo Federal Trust and Bank Director 27,350 $4.00
George W. Foster Federal Trust and Bank Director 25,567 4.00
Dennis J. Harward Bank Director 10,750 4.00
Kenneth W. Hill Federal Trust and Bank Director 27,250 4.00
A. George Igler Federal Trust Director 12,144 4.00
------
All directors as a group 103,061
=======
EXECUTIVE COMPENSATION
General
Compensation for our executive officers is determined by the respective
Boards of Directors, excluding any director who is also an executive officer.
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FEDERAL TRUST CORPORATION PROXY STATEMENT
312 West First Street, Suite 400 o
Sanford, Florida 32771
7
Current directors who are not executive officers are: Dr. Samuel C. Certo,
George W. Foster, Dennis J. Harward (Bank director only), Kenneth W. Hill, and
A. George Igler (Federal Trust director only). Initially, the Bank's Chief
Executive Officer and President, James V. Suskiewich, determines the salary
range recommendations for all employees, including the other executives. The CEO
and President then presents his recommendations to the respective Boards of
Directors, which review and analyze the information. The Boards then determine
the compensation of their executive officers, including the compensation of the
CEO and President.
Executive Compensation Policies and Program
Our executive compensation program is designed to:
o attract and retain qualified management;
o meet short-term financial goals; and
o enhance long-term shareholder value.
We strive to pay each executive officer the base salary that would be paid
on the open market for a fully qualified officer of that position. The
respective Boards of Directors determine the level of base salary and any
incentive bonus plan for our executive officers, based upon industry standards,
determined from annual surveys published by the Florida Bankers' Association and
private companies specializing in executive compensation analysis for financial
institutions. Such surveys provide compensation information based on institution
size and geographic location and serve as a benchmark for determining executive
salaries. Changes to individual base salaries and discretionary bonus awards are
based upon an evaluation of the officer's responsibilities and individual
performance standards, along with our overall performance for the year. Each
officer is given the opportunity to earn an annual bonus, generally in the range
of 10-40% of his or her base salary. In fiscal year 2002, bonuses were paid to
executive officers for: (i) our overall performance; (ii) the progress made in
implementing our corporate strategy; and (iii) our achieving our twentieth
through twenty-third consecutive profitable quarters.
Compensation of the Chief Executive Officer
Federal Trust's CEO and President, James V. Suskiewich, does not receive
compensation, but is compensated in his position as CEO and President of the
Bank. Federal Trust reimburses the Bank for the time that Mr. Suskiewich spends
on holding company matters.
Insider Participation in Compensation Decisions
James V. Suskiewich, Federal Trust's and the Bank's CEO and President,
along with Aubrey H. Wright, Jr., Chief Financial Officer of Federal Trust and
Senior Vice President and CFO of the Bank, are both members of the Board of
Directors of the Bank. Mr. Suskiewich is also the Chairman of the Board of
Federal Trust. Mr. Suskiewich and Mr. Wright participated in deliberations of
the respective Boards regarding executive compensation. Neither, however,
participated in any deliberations regarding their individual compensation.
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FEDERAL TRUST CORPORATION PROXY STATEMENT
312 West First Street, Suite 400 o
Sanford, Florida 32771
8
Summary Compensation Table
The following Summary Compensation Table shows compensation information
regarding executive officers James V. Suskiewich, Aubrey H. Wright, Jr., Stephen
C. Green and Daniel C. Roberts. In 2002, no other executive officer received
compensation in excess of $100,000, which is the level required to be reported
in this table by Securities and Exchange Commission regulations.
Annual Compensation (1) Long-Term Compensation
----------------------- ----------------------
Name and Other Annual Restricted Stock
Principal Position(1) Year Salary Bonus Directors' Fees Compensation(2) Awards(3) Options(4)
--------------------- ---- ------ ----- --------------- --------------- --------- ----------
James V. Suskiewich 2002 $165,000 $100,800 $ 22,000 $ 74,625 $ 30,457 10,587
CEO and President of 2001 156,000 81,000 17,000 61,457 37,627 -
Federal Trust 2000 156,000 41,000 17,000 47,936 24,221 -
CEO and President of the Bank
Aubrey H. Wright, Jr 2002 102,000 33,500 11,000 45,633 25,510 2,266
CFO of Federal Trust 2001 98,000 27,700 10,000 37,122 27,350 -
Senior Vice President and 2000 98,000 14,029 10,000 29,091 11,351 -
CFO of the Bank
Stephen C. Green 2002 110,000 25,000 - 16,157 - 920
Executive Vice President 2001 105,000 1,000 - 12,073 - 70,000
and Chief Operating Officer 2000 19,173 1,000 - 739 - -
of the Bank
Daniel C. Roberts 2002 94,000 12,000 - 5,494 - 1,209
Chief Credit Officer of 2001 72,000 - - 3,948 - 15,000
the Bank
(Footnotes to follow this page)
_____________________
(1) Includes all compensation in the year earned whether received or
deferred at the election of the executive.
(2) Includes the estimated value of:
James V. Suskiewich 2002 2001 2000
------------------- ---- ---- ----
Health & life insurance premiums $10,666 $ 4,371 $ 3,637
Social/country club dues 4,835 4,957 4,995
Vested 401(k) plan contributions 6,092 5,240 5,000
Supplemental retirement plan 48,014 42,337 37,404
Use of company automobile 4,987 4,542 4,900
------- ------- ---------
Total: $74,625 $61,447 $ 55,936
======= ======= ========
Aubrey H. Wright, Jr. 2002 2001 2000
--------------------- ---- ---- ----
Health & life insurance premiums $ 9,009 $ 4,756 $ 4,241
Social/country club dues 282 282 -
Vested 401(k) plan contributions 4,402 3,952 3,180
Supplemental retirement plan 31,939 28,132 24,850
------- ------- ---------
Total: $45,633 $37,122 $ 32,271
======= ======= =========
Stephen C. Green 2002 2001 2000
---------------- ---- ---- ----
Health & life insurance premiums $12,562 $ 6,849 $ 739
Social/country club dues 3,595 5,224 -
------- ------- ---------
Total: $16,157 $12,073 $ 739
======= ======= =========
Daniel C. Roberts 2002 2001
----------------- ---- ----
Health & life insurance premiums $ 5,494 $ 3,948
------- -------
Total: $ 5,494 $ 3,948
======= =======
(3) Includes value of fully vested participation in our Employee Stock
Ownership Plan, which is described elsewhere in the Executive
Compensation section of this Proxy Statement.
(4) Options granted under our 1998 Key Employee Stock Compensation Program,
which is described elsewhere in the Executive Compensation section of
this Proxy Statement.
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FEDERAL TRUST CORPORATION PROXY STATEMENT
312 West First Street, Suite 400 o
Sanford, Florida 32771
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Employment Contracts
Federal Trust and the Bank have entered into joint employment agreements
with two of our executive officers, James V. Suskiewich, CEO and President and
Aubrey H. Wright, Jr., CFO of Federal Trust and Senior Vice President and CFO of
the Bank. The Bank has also entered into employment agreements with Stephen C.
Green, Chief Operating Officer and Executive Vice President and Daniel C.
Roberts, Chief Credit Officer and Senior Vice President. With the exception of
the President and CEO, it is the Board's intent that the term of each executive
officer's employment agreement be limited to two years or less. The following is
a summary of the four employment agreements.
James V. Suskiewich's employment agreement was significantly amended and
re-executed on December 18, 1998. Pursuant to its terms, Mr. Suskiewich is to
receive a base salary, plus reimbursement of reasonable business expenses. In
addition, for any quarter in which the Bank's after-tax earnings are at least
0.50% of its average quarterly assets on an annualized basis, Mr. Suskiewich is
to receive a bonus equal to 3% of the Bank's quarterly net, pre-tax income. Mr.
Suskiewich is also entitled to discretionary performance bonuses to be paid
annually for the duration of the agreement. For the year ended December 31,
2002, Mr. Suskiewich received bonuses of $100,800.
The original term of Mr. Suskiewich's employment agreement was three years.
Each day during the term of the agreement, the agreement automatically renews
for one additional day. Therefore, at all times, Mr. Suskiewich's agreement has
a three-year term. The respective Boards of Directors review the agreement
annually to determine whether the agreement should continue to be extended. Any
party to the agreement may cease the automatic renewals by notifying the other
parties of its intent to not renew. In addition, any party may terminate the
agreement by delivering to the other parties a notice of termination. The date
of termination is either 60 or 90 days after delivery of the notice (depending
on the reason for termination).
Mr. Suskiewich's employment agreement provides for termination by the
Company for reasons other than for "cause" and by Mr. Suskiewich for "good
reason," as those terms are defined in the agreement. In the event the
employment agreement is terminated by the Company for reasons other than for
"cause" or by Mr. Suskiewich for "good reason," he shall be entitled to a
severance payment. The severance payment would be paid in a lump sum equal to
the total annual compensation due for the remainder of the term of the
employment agreement, the performance bonus due for the quarter of termination,
an annualized portion of any long term incentives to later come due, and the
amount of annual club dues for the year of termination, all multiplied by the
number of years remaining on the term of his employment agreement.
In the event of a change in control of Federal Trust or the Bank, Mr.
Suskiewich will be entitled to a special incentive bonus equal to three times
his annual compensation multiplied by the price-to-book-value ratio at which
Federal Trust or the Bank is acquired. The employment agreement also includes a
"gross up" payment clause, should the severance payments received be subject to
federal excise taxes. Under this provision, Federal Trust or the Bank would
increase Mr. Suskiewich's severance payment so that the net proceeds from such
payments would equal the amount of severance payments due under the terms of the
employment agreement.
The employment agreement also permits Mr. Suskiewich to terminate his
employment voluntarily. In the event of voluntary termination, except as
previously described, all rights and benefits under the contract shall
immediately terminate upon the effective date of such termination.
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FEDERAL TRUST CORPORATION PROXY STATEMENT
312 West First Street, Suite 400 o
Sanford, Florida 32771
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Aubrey H. Wright, Jr.'s employment agreement became effective on September
1, 1995, and will expire on December 31, 2004. By December 1, 2003 and on each
subsequent anniversary, Federal Trust and the Bank are to review Mr. Wright's
performance to determine whether the term of the agreement should be extended
for an additional year. Under the employment agreement, Mr. Wright is entitled
to receive a base salary, plus reimbursement of reasonable business expenses. In
addition, for any quarter in which the Bank is "well capitalized" under federal
banking regulations and its quarterly after-tax earnings are at least 0.50% of
its average quarterly net, pre-tax income. Mr. Wright is to receive a bonus
equal to 1% of the Bank's quarterly net income. He is also entitled to
discretionary performance bonuses payable annually for the duration of the
employment agreement. For the year ended December 31, 2002, Mr. Wright received
bonuses of $33,500.
In the event Mr. Wright's employment is terminated for reasons other than
for "just cause" or he terminates his employment for "good reason," as those
terms are defined in his employment agreement, he shall receive as a severance
payment, the total annual compensation due for the remainder of the term of his
employment agreement plus any incentive bonus to which he would then be
entitled. In the event of a change in control of Federal Trust or the Bank, Mr.
Wright will be entitled to a special incentive bonus equal to two times his
current annual compensation, multiplied by the price-to-book-value ratio at
which Federal Trust or the Bank is acquired. However, if he accepts employment
with the acquiror, he shall instead receive a bonus of 50% of his then current
salary, multiplied by the same ratio.
The employment agreement permits Mr. Wright to terminate his employment
voluntarily. In the event of voluntary termination, except as previously
described, all rights and benefits under the contract shall immediately
terminate upon the effective date of such termination.
Stephen C. Green's employment agreement became effective on November 1,
2000, and will expire on December 31, 2004. By December 1, 2003, and each
succeeding anniversary until Mr. Green's 65th birthday, Federal Trust and the
Bank are to review Mr. Green's performance to determine whether the term of the
employment agreement should be extended for an additional year. Under the terms
of the employment agreement, Mr. Green is entitled to receive a base salary,
plus reimbursement of reasonable business expenses. He is also entitled to
performance bonuses payable annually at the discretion of the Bank's CEO and
President and to participate in any bonus and incentive programs adopted by the
Bank. For the year ended December 31, 2002, Mr. Green received a $25,000 bonus.
Mr. Green's employment agreement provides for termination by the Bank for
reasons other than for "cause," as well as by Mr. Green for "good reason," as
those terms are defined in the employment agreement. In the event his employment
agreement is terminated by the Bank for reasons other than for "cause" or by Mr.
Green for "good reason," he would be entitled to severance payments equal to his
base salary for the remaining term of the agreement. In the event of termination
due to a change in control, he will be entitled to a sum equal to two times his
annual base salary. In either instance, Mr. Green will receive these sums in
semi-monthly installments. In addition, the Bank is also to permit Mr. Green's
continued participation in any applicable benefit plans for the shorter of: (i)
the remaining term of the agreement; (ii) one year; or (iii) the period of time
ending on the date Mr. Green is eligible to participate in a comparable plan
with another employer.
In addition, the employment agreement permits Mr. Green to terminate his
employment voluntarily. In the event of voluntary termination, except as
previously described, all rights and benefits under the contract shall
immediately terminate upon the effective date of such termination.
Daniel C. Roberts, Jr.'s employment agreement became effective on March 1,
2001, and, except for the base salary, is identical to Mr. Green's employment
agreement in all material respects. Mr. Roberts received a $12,000 bonus in
2002.
________________________
FEDERAL TRUST CORPORATION PROXY STATEMENT
312 West First Street, Suite 400 o
Sanford, Florida 32771
11
Employee Stock Ownership Plan
All of our full-time salaried employees are participants in the Employee
Stock Ownership Plan ("ESOP"). Executive officers are eligible to participate in
the ESOP, but directors are not eligible unless they are also full-time salaried
employees. A participant's interest in the ESOP becomes vested upon the
participant's fifth anniversary of employment. As of December 31, 2002, 24
employees (including nine former employees) had vested interests in the ESOP.
ESOP contributions are determined annually by the respective Boards of
Directors, taking into consideration prevailing financial conditions, our fiscal
requirements and other factors deemed relevant by the Boards. In general,
contributions of up to 15% of total compensation paid to employees during the
year can be made to the ESOP. The contribution made on behalf of each
participant equals the proportion that each participant's compensation for the
year bears to the total compensation of all participants for the year. In 2002
and 2001, cash contributions of $238,500 and $100,000, respectively, were made
to the ESOP. The ESOP currently holds 154,043 shares of Federal Trust common
stock, or 2.34% of the outstanding shares.
1998 Key Employee Stock Compensation Program
The 1998 Key Employee Stock Compensation Program ("Employee Program") was
approved by our shareholders at the 1998 Annual Meeting. Additional shares were
reserved for issuance at our 2002 Annual Meeting. The Employee Program is for
the benefit of our officers and other key employees and is comprised of four
parts: an Incentive Stock Option Plan, a Compensatory Stock Option Plan, a Stock
Appreciation Rights Plan and a Performance Plan.
The Employee Program provides for the issuance of options to purchase our
common stock. Stock appreciation rights, which enable the recipient to elect
payment wholly or partially in cash, based upon increases in the market value of
the stock since the date of the grant, may also be awarded under the Employee
Program, as may outright awards of Federal Trust common stock.
________________________
FEDERAL TRUST CORPORATION PROXY STATEMENT
312 West First Street, Suite 400 o
Sanford, Florida 32771
12
A committee consisting of not less than three directors of Federal Trust
(none of whom may be an employee of Federal Trust or the Bank) has been given
authority to administer the Employee Program and to grant options, stock
appreciation rights and share awards. The current Program Administrators are:
George W. Foster, Kenneth W. Hill and Dr. Samuel C. Certo. The Program
Administrators may make grants under the Employee Program at their discretion to
any full-time employee, including those who are directors and officers.
Directors who are not full-time salaried employees are not eligible to
participate in the Employee Program.
Options granted under the Employee Program are exercisable in one or more
installments and may be exercisable on a cumulative basis. Options are
exercisable for a term no longer than ten years. Options are not transferable
and will terminate within a period of time following termination of employment.
In the event of a change in control or a threatened change in control, all
options granted before such event shall become immediately exercisable;
provided, however, that no options shall be exercisable for a period of six
months from the date of grant. The term "control" generally means the
acquisition of 10% or more of the voting securities of Federal Trust by any
person or group. This provision may have the effect of deterring hostile changes
in control by increasing the costs of acquiring control.
Options granted under the Employee Program may be "incentive stock options"
within the meaning of the Internal Revenue Code of 1986, as amended, which are
designed to result in beneficial tax treatment to the employee, but no tax
deduction for Federal Trust. Options may also be "compensatory stock options"
which do not give the employee certain benefits of an incentive stock option,
but entitle us to a tax deduction when the options are exercised. The exercise
price of incentive stock options may not be less than the fair market value of
common stock on the date the option is granted. Compensatory stock options may
be exercisable at a price equal to or less than the fair market value of a share
of common stock at the time of the grant of the option. At December 31, 2002, no
compensatory stock options had been granted.
No consideration is received by Federal Trust in return for the grant of
options, although consideration would be received upon exercise of the options.
For financial reporting purposes, there is no charge to the income of Federal
Trust in connection with the grant or exercise of an option.
The grant of stock appreciation rights would require charges to the income
of Federal Trust based on the estimated costs which would be incurred upon their
exercise. In the event of a decline in the market price of our common stock
subsequent to such a charge against earnings, a reversal of prior charges is
typically made in the amount of such decline. Share awards also require a charge
to income equal to the amount of the award at the time it becomes likely that
the shares will be awarded, with subsequent increases or decreases based on
market price fluctuations prior to the actual awarding of the shares. No stock
appreciation rights or share awards have been granted or are presently intended
to be granted under the Employee Program.
The terms of the Employee Program may be amended by the Program
Administrators except that no amendment may increase the maximum number of
shares included in the Employee Program, change the exercise price of incentive
stock options, increase the maximum term established for any option, stock
appreciation right or share award, or permit any grant to a person who is not a
full-time employee of the Company.
________________________
FEDERAL TRUST CORPORATION PROXY STATEMENT
312 West First Street, Suite 400 o
Sanford, Florida 32771
13
Under the terms of the Employee Program, 475,000 shares of common stock
have been reserved for issuance upon the exercise of options. As of March 31,
2003, incentive stock options to purchase 322,444 shares of common stock had
been granted to our officers and key employees. The following table reflects the
amount of options which have been granted to our employees.
Number of Shares
Subject to Exercise
Name Title Options Granted Price
---- ----- --------------- -----
James V. Suskiewich President/CEO 130,587 $ 4.00
Aubrey H. Wright, Jr. Senior Vice President/CFO 72,266 4.00
Stephen C. Green Executive Vice President/COO 70,920 4.00
Daniel C. Roberts, Jr. Senior Vice President/CCO 16,209 4.00
Jennifer B. Brodnax Vice President/Operations 16,355 4.00
Thomas J. Punzak Treasurer 15,427 4.00
All other employees
680 4.00
---
All employees as a group 322,444
=======
The following table shows information regarding options granted in 2002 to
our three executive officers listed in the above Summary Compensation Table.
Number of % of Total Options
Securities Granted to
Underlying Options Employees Exercise Expiration
Name Granted in 2002 in 2002 Price Date
---- --------------- -- ---- ----- ----
James V. Suskiewich 10,587 60.69% $4.00 9/30/12
Aubrey H. Wright, Jr. 2,266 12.99 4.00 9/30/12
Stephen C. Green 920 5.27 4.00 9/30/12
Daniel L. Roberts 1,204 6.90 4.00 9/30/12
Key Employee Stock Bonus Plan
In April 2002, we adopted the Key Employee Stock Bonus Plan ("Bonus Plan").
Under the Bonus Plan, a trust has been formed to purchase shares up to 2% of the
outstanding shares of our common stock on the open market. The Compensation
Committee of our Board of Directors has the right to award such shares of stock
to our non-executive officer employees. Any such award may contain conditions
which must be met, or a vesting schedule which must be followed, prior to the
shares being earned by and distributed pursuant to an employee's award. The
termination of employment of any award recipient for reasons other than normal
retirement, death, or disability shall constitute revocation of the recipient's
unearned award. If the termination of a recipient's employment is caused by
retirement, death, or disability, all unearned award shall be deemed fully
earned, unless it is later discovered that the employee engaged in misconduct
which warranted revocation of the award. As of the record date, there were
10,100 shares held by the Bonus Plan, and awards of 2,950 shares had been made.
________________________
FEDERAL TRUST CORPORATION PROXY STATEMENT
312 West First Street, Suite 400 o
Sanford, Florida 32771
14
TRANSACTIONS WITH MANAGEMENT OR OTHER AFFILIATES
Indebtedness of Management
In 1999, the Boards of Directors of Federal Trust and the Bank amended
their loan policies to allow limited types of loans to be made to directors,
officers and employees. Loans made by the Bank are also subject to the
provisions of Section 22(h) of the Federal Reserve Act, which request any credit
extended by the Bank to our directors, executive officers and principal
shareholders, or any of their affiliates must:
o be on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions
by the Bank with non-affiliated parties; and
o not involve more than the normal risk of repayment or present other
unfavorable features.
In February 2000, Federal Trust loaned five of our directors and officers
funds to purchase Federal Trust common stock in the open market. The aggregate
amount loaned was $222,477. The largest single loan was $50,440. All five loans
are at 8% interest and require only interest payments for three years, at which
time the principal will come due. Each of these loans is secured by the Federal
Trust common stock purchased with the loan's proceeds. As of December 31, 2002,
these loans represented approximately $143,592, or less than one-tenth of one
percent of our total loan portfolio and are all current and performing according
to their terms.
Other Transactions with Related Persons
When a transaction involves the Company and an officer, director, principal
shareholder or affiliate, it is our policy that the transaction must be on terms
no less favorable to us than could be obtained from an unaffiliated party. All
such transactions must be approved in advance by a majority of Federal Trust's
or the Bank's independent and disinterested directors. During 2002, we did not
have any transactions with related persons other than the loans described above.
PROPOSAL II
RATIFICATION OF THE APPOINTMENT OF AUDITORS
FOR THE FISCAL YEAR ENDING DECEMBER 31, 2003
The independent auditors for Federal Trust for the fiscal-year ended
December 31, 2002, were Hacker, Johnson & Smith, P.A.. The Board of Directors
presently intends to renew our arrangements with Hacker, Johnson & Smith, P.A.
to be our auditors for the fiscal year ending December 31, 2003, subject to
shareholder approval. A representative of the firm is expected to be present at
the Annual Meeting. He or she will be given an opportunity to make a statement
and will be available to answer appropriate shareholder questions.
During 2002, Hacker, Johnson & Smith, P.A. billed us $59,500 for audit
services and financial statement reviews and $6,000 for tax preparation
services. The Audit Committee does not believe that our payment for tax services
impairs Hacker, Johnson & Smith, P.A's independence in conducting its audits.
In order to be adopted, this proposal must be approved by the holders of a
majority of the outstanding shares of our common stock voting at the Annual
Meeting. If the shareholders do not vote in favor of the appointment of Hacker,
Johnson & Smith, P.A., the Board of Directors will consider the selection of
other auditors.
--------------------------------------------------------------------------------
The Board of Directors Recommends that Shareholders Vote "FOR"
the Ratification of the Appointment of Hacker, Johnson & Smith, P.A., as the
Independent Auditors for the Fiscal Year Ending December 31, 2003.
--------------------------------------------------------------------------------
________________________
FEDERAL TRUST CORPORATION PROXY STATEMENT
312 West First Street, Suite 400 o
Sanford, Florida 32771
15
PROPOSAL III
ADJOURNMENT OF ANNUAL MEETING
The Board of Directors seeks your approval to adjourn the Annual Meeting in
the event that there are not a sufficient number of votes at the Annual Meeting
to approve any of Proposals I or II. In order to permit proxies that have been
timely received to be voted for an adjournment, we are submitting this proposal
as a separate matter for your consideration. If it is necessary to adjourn the
Annual Meeting and the adjournment is for a period of less than 30 days, no
notice of the time or place of the reconvened meeting will be given to
shareholders, other than an announcement made at the Annual Meeting.
--------------------------------------------------------------------------------
The Board of Directors Recommends that Shareholders Vote "FOR"
the Approval of the Adjournment of the Annual Meeting.
--------------------------------------------------------------------------------
SHAREHOLDER PROPOSALS
In order to be eligible for inclusion in our proxy materials for our 2004
Annual Meeting, a shareholder's proposal to take action at such meeting must be
received at our main office at 312 West First Street, Suite 400, Sanford,
Florida 32771, on or before December 22, 2003. Proposals must comply with the
Securities and Exchange Commission's proxy rules as provided in 17 C.F.R.
Section 240.14a-8 in order to be included in our proxy materials.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires our officers,
directors and any person who beneficially owns more than 10% of our common
stock, to file reports of ownership and changes in ownership with the Securities
and Exchange Commission. Executive officers, directors and more than 10%
shareholders are required by regulation to furnish us with copies of all Section
16(a) forms which they file. During 2002, all of our directors and executive
officers who own our stock filed Form 3s, Form 4s or Form 5s with the Securities
and Exchange Commission. The information on these filings reflects the current
ownership position of all such individuals. Based solely on the review of copies
of the filings we have received or written representations from such reporting
persons, it is our belief that during 2002, all such filings applicable to our
officers, directors or 10% shareholders were made timely.
SOLICITATION
The cost of soliciting proxies on behalf of the Board of Directors for the
Annual Meeting will be borne by Federal Trust. Proxies may be solicited by
directors, officers or our regular employees, in person or by telephone, e-mail
or mail. We are requesting persons and entities holding shares in their names,
or in the names of their nominees, to send proxy materials to, and obtain
proxies from, such beneficial owners. Those persons and entities will be
reimbursed for their reasonable out-of-pocket expenses. Because of the number of
our shares that are held in street name, this year, as in past years, we have
retained Regan & Associates, Inc., to aid in the solicitation of shareholders,
brokers, banks and other institutional investors for an estimated fee of $2,500.
________________________
FEDERAL TRUST CORPORATION PROXY STATEMENT
312 West First Street, Suite 400 o
Sanford, Florida 32771
16
AVAILABILITY OF OTHER INFORMATION
Accompanying this Proxy Statement is our 2002 Annual Report, which includes
our audited financial statements. Additional copies of the Annual Report are
available to shareholders at no charge. Any shareholder who would like an
additional copy may contact Marcia Zdanys, Corporate Secretary, Federal Trust
Corporation, 312 West First Street, Sanford, Florida 32771, telephone number
(407) 323-1833.
We currently file periodic reports (including Form 10-KSBs and Form
10-QSBs) with the Securities and Exchange Commission. These periodic reports are
filed electronically via EDGAR and can be inspected and copied at the public
reference facilities maintained by the Securities and Exchange Commission at its
Public Reference Section, 450 Fifth Street, NW, Washington, DC 20549. The
Securities and Exchange Commission maintains a website that contains
registration statements, reports, proxy and information statements and other
information regarding registrants that file electronically with the Securities
and Exchange Commission. Information filed by Federal Trust is also available
for review on this website at www.sec.gov.
Federal Trust Corporation
April 21, 2003
________________________
FEDERAL TRUST CORPORATION PROXY STATEMENT
312 West First Street, Suite 400 o
Sanford, Florida 32771
17
FEDERAL TRUST CORPORATION - REVOCABLE PROXY
2003 ANNUAL MEETING OF SHAREHOLDERS
This Proxy is being solicited on behalf of the Board of Directors.
The undersigned hereby appoints James V. Suskiewich and George W. Foster, and
each of them with full powers of substitution, to act as proxy for, and
attorney-in-fact, to vote all shares of Federal Trust Corporation common stock
which the undersigned is entitled to vote at the Annual Meeting of Shareholders
to be held at Springhill Suites, 201 North Towne Road, Sanford, Florida 32771 on
May 23, 2003, at 10:00 a.m., and at any and all adjournments.
The undersigned may revoke this Proxy at any time before it is voted by either
delivering a written notice of revocation or duly executed Proxy bearing a later
date to Federal Trust or by attending the Annual Meeting and voting in person.
INSTRUCTION: Indicate your voting instructions by marking the appropriate
boxes.
WITHHOLD
FOR AUTHORITY
--- ---------
PROPOSAL I: The election of one Class I director, Kenneth W. Hill [ ] [ ]
FOR AGAINST ABSTAIN
--- ------- -------
PROPOSAL II: The ratification of Hacker, Johnson & Smith,
P.A., as the independent auditors for Federal Trust [ ] [ ] [ ]
Corporation for the fiscal year ending December 31, 2003.
FOR AGAINST ABSTAIN
--- ------- -------
PROPOSAL III: The adjournment of the Annual Meeting to
solicit additional proxies in the event there are not [ ] [ ] [ ]
sufficient votes to approve any of Proposals I or II.
IN THEIR DISCRETION THE PROXY HOLDER(S) ARE AUTHORIZED TO TRANSACT AND TO VOTE
UPON SUCH OTHER BUSINESS as may properly come before this Annual Meeting or at
any adjournment.
NOTE: When properly executed, this Proxy will be voted in the manner directed by
the undersigned shareholder. Unless contrary direction is given, this proxy will
be voted FOR the proposals listed.
------------------------
| | X______________________ ______________________
| | Signature Date
| [Label] |
| | X______________________ ______________________
| | Signature if held jointly Date
------------------------
When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, agent, trustee or guardian, please give full
title. If shareholder is a corporation, please sign in full corporate name by
president or other authorized officer. If shareholder is a partnership, please
sign in partnership name by authorized person. The undersigned acknowledges
receipt from Federal Trust Corporation, prior to the execution of this Proxy, of
a Notice of the Annual Meeting, a Proxy Statement dated April 21, 2003, and the
2002 Annual Report.