UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
SCHEDULE 14A
Proxy Statement Pursuant to Section
14(a) of
the Securities Exchange Act of 1934
(Amendment No. _______)
Filed by the Registrant
þ
Filed by a Party other than the
Registrant
¨
Check the appropriate
box:
¨
Preliminary Proxy
Statement
¨
Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
þ
Definitive Proxy
Statement
¨
Definitive Additional
Materials
¨
Soliciting Material Pursuant to §
240.14a-11(c) or § 240.14a-12
PACIFIC
COAST NATIONAL 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):
þ
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
forth the amount on which the filing fee is calculated and state how it
was determined):
|
4)
|
Proposed maximum aggregate value
of transaction:
|
¨
Fee paid previously by written
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:
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2)
|
Form Schedule or Registration
Statement No.:
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905 Calle Amanecer, Suite
100
San Clemente, California
92673
(949) 361-4300
August 8, 2008
Dear Shareholder:
You are
cordially invited to attend the 2008 annual meeting of
shareholders
of Pacific Coast National Bancorp. The meeting
will be held on September 9, 2008 at 5:30 p.m., local time, at Irons in the
Fire, 150 E. Avenida Magdalena
,
San Clemente, CA 92672.
We are
pleased to enclose the proxy statement for the 2008 annual meeting. At the
meeting, you and the other shareholders will be asked to vote on the following
matters:
1. The
election of eleven directors to our board of directors for terms expiring at the
2009 annual meeting of shareholders or until their successors are duly elected
and qualified;
2. The
ratification of the appointment of McGladrey & Pullen, LLP as our
independent accountants for the year ending December 31, 2008; and
3. The
transaction of such other business as may properly come before the annual
meeting or at any adjournment or postponement thereof. Except with respect to
the procedural matters incident to the conduct of the meeting, we are not aware
of any other business to be brought before the meeting.
Our board
of directors believes that an affirmative vote for all nominees named in the
proxy statement to serve as the directors of Pacific Coast National Bancorp and
for the ratification of the appointment of our independent accountants is in the
best interests of our company and shareholders and has unanimously recommended
that our shareholders vote in favor of the proposals.
We hope
that you will be able to attend the annual meeting. Whether or not you expect to
attend the meeting in person, please complete, sign and date the enclosed proxy
as promptly as possible and return it in the enclosed envelope (to which no
postage need be affixed if mailed in the United States) or submit your proxy
over the Internet or by telephone. For further details, see “About the Annual
Meeting - How do I vote?”
In
addition to the proxy statement, a copy of our Annual Report on Form 10-KSB for
the year ended December 31, 2007, which is not part of the proxy soliciting
material, is enclosed.
We
encourage you to conserve natural resources, as well as significantly reduce
printing and mailing costs, by signing up for electronic delivery of our
shareholder communications. For more information, see “About the Annual Meeting
- How can I receive future shareholder communications
electronically?”
We
appreciate your interest and investment in Pacific Coast National Bancorp and
look forward to seeing you at the annual meeting.
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Sincerely,
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Michael S.
Hahn
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President and Chief Executive
Officer
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PACIFIC COAST NATIONAL
BANCORP
905 Calle Amanecer, Suite
100
San Clemente, California
92673
(949) 361-4300
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS
To be held on September 9,
2008
NOTICE IS
HEREBY GIVEN that the 2008 Annual Meeting of Shareholders of Pacific Coast
National Bancorp will be held at 5:30 p.m., local time, on September 9, 2008, at
Irons in the Fire, 150 E. Avenida Magdalena, San Clemente, CA, 92672, to
consider and act upon the following matters:
|
1.
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The election of eleven directors
to the board of directors of Pacific Coast National Bancorp for terms
expiring at the 2009 annual meeting of shareholders or until their
successors are duly elected and
qualified;
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2.
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The ratification of the
appointment of McGladrey & Pullen, LLP as the independent accountants
for Pacific Coast National Bancorp for the year ending December 31, 2008;
and
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3.
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The transaction of such other
business as may properly come before the annual meeting or at any
adjournment or postponement thereof. Except with respect to the procedural
matters incident to the conduct of the meeting, we are not aware of any
other business to be brought before the
meeting.
|
Only
shareholders of record as of the close of business on August 1, 2008 are
entitled to notice of, and to vote at, the annual meeting or any adjournments
thereof. A list of shareholders will be available for inspection for a period of
10 days prior to the annual meeting at the main office of Pacific Coast National
Bancorp at 905 Calle Amanecer, Suite 100, San Clemente, California 92673 and
will also be available for inspection at the meeting itself.
You are
cordially invited to attend the annual meeting in person. However, whether or
not you expect to attend the annual meeting in person, we urge you to complete,
sign and date the enclosed proxy as promptly as possible and return it in the
enclosed envelope (to which no postage need be affixed if mailed in the United
States) or submit your proxy over the internet or by telephone. This will ensure
the presence of a quorum at the annual meeting and that your shares are voted in
accordance with your wishes. For further details, see “About the Annual Meeting
- How do I vote?”
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By Order of the Board of
Directors
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|
|
|
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Michael S.
Hahn
President and Chief Executive
Officer
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San Clemente,
California
August 8, 2008
This notice of annual meeting and proxy
statement and form of proxy are first being distributed to shareholders on or
about August 8, 2008.
TABLE OF CONTENTS
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Page
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ABOUT THE ANNUAL MEETING
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1
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
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4
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PROPOSAL ONE: ELECTION OF
DIRECTORS
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6
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Nominees
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6
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Other Executive Officers
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9
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CORPORATE GOVERNANCE
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9
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Corporate Governance Principles and Board
Matters
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9
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Committees of Pacific Coast National
Bancorp
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10
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REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF
DIRECTORS
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12
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EXECUTIVE COMPENSATION
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13
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Compensation Philosophy
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13
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Compensation Structure
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14
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Annual Compensation
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14
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Stock Incentive Plan
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14
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Employment Agreements
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15
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Executive Compensation
Deductibility
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17
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Executive Compensation
Tables
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18
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Health and Insurance
Benefits
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19
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DIRECTOR COMPENSATION
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19
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CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
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20
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
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21
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PROPOSAL TWO: RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
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21
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Background
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21
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Vote required
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22
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Principal auditor fees and
services
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22
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SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
FOR
|
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THE NEXT ANNUAL MEETING OF
SHAREHOLDERS
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23
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ADDITIONAL INFORMATION
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24
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OTHER MATTERS
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24
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PACIFIC COAST NATIONAL
BANCORP
905 Calle Amanecer, Suite
100
San Clemente, California
92673
___________________________
PROXY STATEMENT
FOR
ANNUAL MEETING OF
SHAREHOLDERS
TO BE HELD ON SEPTEMBER 9,
2008
_______________________________
This
proxy statement contains information related to the annual meeting of
shareholders of Pacific Coast National Bancorp (sometimes referred to as the
“Company,” “we,” “us,” or “our”) to be held on September 9, 2008 beginning at
5:30 p.m., local time, at Irons in the Fire, 150 E. Avenida Magdalena, San
Clemente, CA, 92672, and at any postponements or adjournments
thereof. Certain of the information in this proxy statement relates
to our subsidiary, Pacific Coast National Bank (sometime referred to as the
“Bank”).
ABOUT
THE ANNUAL MEETING
Who
is soliciting my proxy?
Our board
of directors is sending you this proxy statement in connection with the
solicitation of proxies for use at the 2008 annual meeting. Certain of our
directors, officers, and employees may also solicit proxies on our behalf by
mail, telephone, facsimile or in person.
Who
will bear the costs of soliciting proxies for the annual meeting?
We will
bear the cost of soliciting proxies for the annual meeting. We have retained
Continental Stock Transfer and Trust Company, who acts as our transfer agent and
registrar, to assist us in the solicitation of proxies for the annual meeting. A
fee will be paid to this firm for these services in addition to the
reimbursement of all reasonable out-of-pocket expenses. We may also reimburse
brokerage firms and other custodians, nominees and fiduciaries for reasonable
out-of-pocket expenses incurred by them in sending proxy materials to the
beneficial owners of our shares of common stock. In addition to solicitations by
mail, our directors, officers and employees, including those of the Bank, may
solicit proxies personally, by telephone or otherwise, but will not receive any
additional compensation for their services.
What
is the purpose of the annual meeting?
At the
annual meeting, shareholders will act upon the matters outlined in the
accompanying notice of annual meeting, including:
·
|
Proposal
One: The election of eleven directors to the board of directors for terms
expiring at the 2009 annual meeting of shareholders or until their
successors are duly elected and
qualified;
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·
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Proposal
Two: The ratification of the appointment of McGladrey & Pullen, LLP as
our independent accountants for the fiscal year ending December 31,
2008.
|
In
addition, our management will report on our performance during 2007 and respond
to appropriate questions from shareholders. Except with respect to the
procedural matters incident to the conduct of the meeting, we are not aware of
any other business to be brought before the meeting.
Who
is entitled to vote at the annual meeting?
Only
shareholders of record as of the close of business on the record date, August 1,
2008, are entitled to receive notice of the annual meeting and to vote the
shares of common stock that they held on that date at the annual meeting or any
postponement or adjournment thereof. Each outstanding share of our common stock
entitles its holder to cast one vote on each matter to be voted upon at the
annual meeting. The total number of shares of our common stock outstanding on
the record date and eligible to cast votes at the annual meeting is
2,281,700.
Please
note that if you hold your shares in “street name” (that is, through a broker or
other nominee), you will need to bring appropriate documentation from your
broker or nominee to personally vote at the annual meeting.
How
many votes must be present to hold the annual meeting?
The
presence at the annual meeting, in person or by proxy, of the holders of a
majority of the shares of common stock outstanding on the record date, or
1,140,851 shares, will constitute a quorum at the annual meeting. For purposes
of determining a quorum, proxies received but marked as abstentions and broker
non-votes will be treated as shares that are present and entitled to vote. A
broker non-vote occurs when a broker or other nominee indicates on the proxy
card that it does not have discretionary authority to vote on a particular
matter.
How
do I vote?
You may
vote your shares either in person at the annual meeting or by proxy whether or
not you attend the annual meeting. Shares held in your name as the shareholder
of record may be voted in person at the annual meeting. Shares held beneficially
in street name may be voted in person at the annual meeting only if you obtain a
legal proxy from the broker, trustee or nominee that holds your shares giving
you the right to vote the shares.
Even if you plan to
attend the annual meeting, we recommend that you also submit your proxy or
voting instructions as described below so that your vote will be counted if you
later decide not to attend the meeting.
Shareholders
whose shares are registered in their own names may vote by submitting a proxy
via the Internet, by telephone or by mailing a completed proxy card as an
alternative to voting in person at the meeting. Instructions for voting via the
Internet or by telephone are set forth on the enclosed proxy card. To vote by
mailing a proxy card, sign and return the enclosed proxy card in the enclosed
prepaid and addressed envelope, and your shares will be voted at the meeting in
the manner you direct. Granting a proxy will not affect your right to vote your
shares if you attend the annual meeting and want to vote in person; by voting in
person you will revoke your proxy. You may also revoke your proxy at any time
before the vote at the meeting by providing our Corporate Secretary written
notice of your revocation or by submitting a proxy bearing a later date via
Internet, telephone or mail. If you submit your proxy but do not mark your
voting preferences, the proxy holders will vote your shares
FOR
the election
of each of the nominees for director and
FOR
the ratification of the
appointment of McGladrey & Pullen, LLP as our independent accountants for
2008.
If your
shares are registered in the name of a broker, trustee or nominee, you will
receive instructions from your holder of record that must be followed in order
for the record holder to vote the shares per your instructions. Many banks and
brokerage firms have a process for their beneficial holders to provide
instructions over the telephone or via the Internet. If Internet or telephone
voting is unavailable from your bank or brokerage firm, please complete and
return the enclosed voting instruction card in the addressed, postage paid
envelope provided.
Can
I change my vote?
Yes. Even
after you have submitted your proxy, you may change your vote at any time before
the proxy is exercised at the annual meeting. If you are the shareholder of
record, you may change your vote by granting via Internet, telephone or mail a
new proxy bearing a later date (which automatically revokes the earlier proxy),
by providing a written notice of revocation to our Corporate Secretary prior to
your shares being voted, or by attending the annual meeting and voting in
person. Attendance at the meeting will not cause your previously granted proxy
to
be
revoked unless you specifically so request. For shares you hold beneficially in
street name, you may change your vote by submitting new voting instructions to
your broker, trustee or nominee, or, if you have obtained a legal proxy from
your broker or nominee giving you the right to vote your shares, by attending
the meeting and voting in person.
How
are votes counted?
In the
election of directors, unless cumulative voting is triggered, you may vote “FOR”
all of the nominees or your vote may be withheld with respect to one or more of
the nominees. If your vote is withheld with respect to any nominee, your shares
will be counted for purposes of establishing a quorum, but will have no effect
on the election of that nominee.
Under
California law, no shareholder will be permitted to cumulate votes unless, prior
to the voting at the annual meeting, a shareholder has given notice of his or
her intention to cumulate votes at the meeting and the nominee for which he or
she intends to cumulate votes has properly been nominated. If any
shareholder gives notice of his or her intent to cumulate votes at the meeting,
all shareholders may cumulate their votes for candidates in nomination.
Cumulative voting enables a shareholder to multiply the number of votes that he
or she would be entitled to cast by the number of directors to be elected, which
is eleven, and cast the product for a single candidate or distribute the product
among two or more candidates. Our board of directors does not, at this time,
intend to give such notice or to cumulate the votes it may hold by authority of
the proxies solicited by the board unless the required notice by a shareholder
is given, in which event votes represented by proxies delivered pursuant to this
proxy statement may be cumulated in the discretion of the proxy holders, in
accordance with the recommendation of the board of directors. Therefore,
discretionary authority to cumulate votes in such event is solicited by this
proxy statement. The eleven candidates for election of directors receiving the
highest number of votes will be elected, whether or not votes are
cumulated.
With
respect to the proposal to ratify the appointment of McGladrey & Pullen, LLP
as our independent public accountants for 2008, you may vote “FOR,” “AGAINST” or
“ABSTAIN.”
If you
provide specific instructions with regard to certain items, your shares will be
voted as you instruct on such items. If you submit your proxy or voting
instructions without giving specific instructions, your shares will be voted in
accordance with the recommendations of our board of directors (“FOR” all of the
nominees to the board of directors, “FOR” the ratification of our independent
public accountants and in the discretion of the proxy holders on any other
matters that properly come before the annual meeting).
What
vote is required to approve each proposal?
Proposal
One: The affirmative vote of a plurality of the votes cast in person or by proxy
at the annual meeting is required for the election of directors. A properly
executed proxy marked “WITHHELD” with respect to the election of one or more
nominees will not be voted with respect to the nominee or nominees indicated,
although it will be counted for purposes of determining whether there is a
quorum. Abstentions and broker non-votes will have no legal effect on the
election of directors.
Proposal
Two: The affirmative vote of a majority of the shares of our common stock
present in person or by proxy and voting at the annual meeting is required to
ratify the appointment of McGladrey & Pullen, LLP as our independent public
accountants for 2008. Abstentions and broker non-votes will not be counted as a
vote “FOR” or “AGAINST” the proposal.
Can
I vote on other matters?
The
matters presented at an annual meeting are limited to those properly presented
by the board of directors and those properly presented by shareholders. We have
not received notice from any shareholder as to any matter to come before the
annual meeting. If any other matter is presented at the annual meeting, your
signed proxy gives Terry A. Stalk and David L. Adams, the proxy holders,
authority to vote your shares.
How
does the board of directors recommend I vote on the proposals?
Unless
you give other instructions on your proxy card, Terry A. Stalk and David L.
Adams, the proxy holders, will vote in accordance with the recommendations of
our board of directors. Our board of directors recommends a vote
FOR
the election of the
director nominees named in this proxy statement and
FOR
the ratification of the
appointment of McGladrey & Pullen, LLP as our independent public accountants
for 2008.
With
respect to any other matter that properly comes before the meeting, the proxy
holders will vote as recommended by our board of directors, or if no
recommendation is given, in their own discretion.
How
can I receive future shareholder communications electronically?
If you
received your annual meeting materials by mail, we encourage you to conserve
natural resources, as well as significantly reduce printing and mailing
costs,
by
signing up to receive your
shareholder communications via e-mail
. With electronic delivery, we will
notify you via e-mail as soon as the annual report and the proxy statement are
available on the Internet, and you can easily submit your shareholder votes
online. Electronic delivery can also help reduce the number of bulky documents
in your personal files and eliminate duplicate mailings. To sign up for
electronic delivery, follow the instructions on your proxy card.
Who
can help answer my questions?
If you
have any questions about the annual meeting or how to vote or revoke your proxy,
or if you should need additional copies of this proxy statement or voting
materials, please contact:
Terry A.
Stalk
Executive
Vice President and Chief Financial Officer
Pacific
Coast National Bancorp
905 Calle
Amanecer, Suite 100
San
Clemente, California 92673
(949)
361-4300
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This
following table sets forth information regarding the beneficial ownership of the
common stock of Pacific Coast National Bancorp as of August 1, 2008,
for:
·
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each
person known by us to own beneficially more than 5% of our common
stock;
|
·
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each
officer named in the summary compensation
table;
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·
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each
of our directors and director nominees;
and
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·
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all
of our directors and executive officers as a
group.
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Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and includes voting and investment power with respect to the
securities. Subject to applicable community property laws, the persons named in
the table have sole voting and investment power with respect to all shares of
common stock shown as beneficially owned by them. In addition, shares of common
stock issuable upon exercise of options and warrants beneficially owned that are
exercisable within sixty days of August 1, 2008, are deemed outstanding for the
purpose of computing the percentage ownership of the person holding those
options and other rights, and the group as a whole, but are not deemed
outstanding for computing the percentage ownership of any other
person.
Name and Address* of Beneficial
Owners
Greater Than 5%
Shareholders:
|
|
Number of
Shares
Beneficially
Owned
|
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Percent of Class
(14)
|
|
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Directors and Named Executive
Officers:
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Thomas J.
Applegate
|
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24,612(1)
|
|
|
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*
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|
Michael V.
Cummings
|
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8,
2
21(2)
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|
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*
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|
David E.
Davies
|
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6,
471(3)
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|
|
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*
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|
Fred A.
deBoom
|
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1
2
,651(4)
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|
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*
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Colin M.
Forkner
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10
9,542(5)
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|
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4.
60%
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|
Michael S.
Hahn
|
|
|
11
9,312(6)
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|
|
|
4.
99%
|
|
David
Johnson
|
|
|
1
7,
721(7)
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|
|
|
*
|
|
Dennis C.
Lindeman
|
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|
52,806(8)
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2.30%
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Denis H.
Morgan
|
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61,72
1(9)
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2.70%
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James M.
Morrison
|
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3,750
|
|
|
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*
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|
Charles T.
Owen
|
|
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0
|
|
|
|
*
|
|
John Vuona
|
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7,851(10)
|
|
|
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*
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David L.
Adams
|
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5,167(11)
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|
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*
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|
Stanley M.
Cruse
|
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5,367(12)
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|
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*
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|
Terry A.
Stalk
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69,919(13)
|
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2.98%
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|
|
|
|
|
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All directors and executive
officers as a
group
(15
persons)
|
|
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50
5
,
111(14)
|
|
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19.
26%
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_______________________
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*
|
The address of each of our
directors and named executives is c/o Pacific Coast National Bancorp, 905
Calle Amanecer, Suite 100, San Clemente, California
92673.
|
Notes to
beneficial ownership table:
(1)
|
Includes options to acquire 2,777
shares of common stock.
|
(2)
|
Includes options to acquire 2,221
shares of common stock and warrants to acquire 4,
0
00 shares of common
stock.
|
(3)
|
Includes options to acquire 2,221
shares of common stock and warrants to acquire 4,0
0
0 shares of common
stock.
|
(4)
|
Includes options to acquire 1,851
shares of common stock and warrants to acquire
4
,000 shares of common
stock.
|
(5)
|
Includes options to acquire
100,542
shares of common
stock.
|
(6)
|
Includes options to acquire
9
8
,
900
shares of common stock and
warrants to acquire 1
0
,000 shares of common
stock.
|
(7)
|
Includes options to acquire 2,221
shares of common stock and warrants to acquire
4
,000 shares of common
stock.
|
(8)
|
Includes options to acquire 2,406
shares of common stock and warrants to acquire 1
4,000
shares of common
stock.
|
(9)
|
Includes options to acquire 2,221
shares of common stock and warrants to acquire 1
0
,000 shares of common
stock.
|
(10)
|
Includes options to acquire 1,851
shares of common stock and warrants to acquire 4,
0
00 shares of common
stock.
|
(11)
|
Includes options to acquire 167
shares of common stock.
|
(12)
|
Includes options to acquire 4,167
shares of common stock.
|
(1
3
)
|
Includes options to acquire
64
,919 shares of common
stock.
|
(1
4
)
|
Includes options to acquire
286,464
shares of common stock and
warrants to acquire
54
,000 shares of common
stock.
|
(1
5
)
|
Calculated based on 2,
281,700
shares of common stock
outstanding as of
August 1
, 2008 plus options and warrants
exercisable within sixty days of
August 1
, 2008 for the individual or
the group, as applicable.
|
PROPOSAL
ONE: ELECTION OF DIRECTORS
Nominees
Our
bylaws authorize our board of directors to fix the number of directors at any
number not less than five. Our board of directors presently consists of twelve
members but will be reduced to eleven members at the time of the annual meeting
as a result of the retirement of Director David E. Davies. We
appreciate the dedication and guidance Director Davies has provided to us. The
board of directors has proposed the nominees listed below for election as
directors to serve until the 2009 annual meeting or until their successors are
duly elected and qualified. All of the nominees listed below currently serve on
our board of directors.
Unless
otherwise specified in the accompanying form of proxy, proxies solicited hereby
will be voted for the election of the nominees listed below. Each of the
nominees has agreed to serve. If any of them should become unable to serve as a
director, the board of directors may designate a substitute nominee. In that
case, the proxies shall be voted for the substitute nominee or nominees to be
designated by the board of directors. If no substitute nominees are available,
the size of the board of directors will be reduced.
There are
no arrangements or understandings between Pacific Coast National Bancorp and any
person pursuant to which such person has been elected or nominated as a
director.
Set forth
below is certain information with respect to each nominee for election as a
director:
Name
|
|
Age
|
|
Position(s) Held with Pacific
Coast National Bancorp
|
|
Position(s) Held
with
Pacific Coast National
Bank
|
|
Director
Since
|
|
|
|
|
|
|
|
|
|
Thomas J.
Applegate
|
|
55
|
|
Director
|
|
Director
|
|
2006
|
Michael
Cummings
|
|
66
|
|
Director
|
|
Director
|
|
2005
|
Fred A.
deBoom
|
|
72
|
|
Director
|
|
Director
|
|
2005
|
Colin
Forkner
|
|
64
|
|
Vice Chairman & Former Chief
Executive Officer
|
|
Vice Chairman & Former Chief
Executive Officer
|
|
2005
|
Michael
Hahn
|
|
49
|
|
Director, President and Chief
Executive Officer
|
|
Director, President and Chief
Executive Officer
|
|
2005
|
David
Johnson
|
|
61
|
|
Director
|
|
Director
|
|
2005
|
Dennis C.
Lindeman
|
|
60
|
|
Chairman &
Director
|
|
Chairman &
Director
|
|
2005
|
James M.
Morrison
|
|
38
|
|
Director
|
|
Director
|
|
2008
|
Denis Hugh
Morgan
|
|
55
|
|
Director
|
|
Director
|
|
2005
|
Charles T.
Owen
|
|
67
|
|
Director
|
|
Director
|
|
2008
|
John Vuona
|
|
49
|
|
Director
|
|
Director
|
|
2005
|
Thomas J.
Applegate
, is a Director of Pacific Coast National Bancorp and Pacific
Coast National Bank. He is a partner with the public accounting firm of CEA,
LLP, and has been actively engaged in the public accounting industry for the
past 29 years. He has been licensed as a certified public accountant by the
State of California since May 1981. A California native, Mr. Applegate is a
graduate of San Diego State University. He has served on the faculty of Palomar
College and National University and currently serves as an advisory director of
the boards of two large private companies. Mr. Applegate is active member of the
Chamber of Commerce, Rotary International, California Society of Certified
Public Accountants, the American Institute of Certified Public Accountants,
North County Estate Planning Group of San Diego and a founding member of ENDOW
CARLSBAD, a community foundation.
Michael
V. Cummings
, is a Director of Pacific Coast National Bancorp and Pacific
Coast National Bank. After serving over 35 years in the banking arena he retired
in 2000. He has been engaged in providing bank
consulting
services since that time. Prior to that, he served in various executive
management positions with Manufacturers Bank, Southern California Bank, Bank of
California and Security Pacific National Bank. Mr. Cummings earned his
Associates of Arts degree from El Camino College in 1963 and furthered his
studies at California State University at Fullerton, majoring in Business
Administration. Mr. Cummings has lived or worked in our primary service area for
more than twenty years.
Fred A.
deBoom
, is a Director of Pacific Coast National Bancorp and Pacific Coast
National Bank. He has been a director of Acacia Research (NASDAQ) and
Combimatrix (NASDAQ) for 10 years and has served as a managing partner in Sonfad
Associates, a merger and acquisition consulting firm for the past eight years.
Before joining Sonfad Associates, he served for five years as the vice president
and manager of Tokei Bank’s Pasadena office and in a similar capacity for Union
Bank during the nine-year period preceding his time with Tokei Bank. For the
seventeen years prior to that, he was a vice president and manager for First
Interstate Bank. Mr. deBoom received a Bachelor of Arts degree from Michigan
State University and a Master of Business Administration degree in finance from
the University of Southern California. Mr. deBoom has been a San Clemente
resident since 1995.
Colin M.
Forkner,
is a Director and retired as Chief Executive Officer of Pacific
Coast National Bancorp and Pacific Coast National Bank in May 2008. Before
joining us, Mr. Forkner had retired as President and Chief Executive Officer of
California First National Bank, an Irvine, California-based bank that he founded
in 1999. Before his retirement from California First National Bank, Mr. Forkner
had been actively engaged in banking for over forty years, during which time he
held numerous senior executive management positions with Security Pacific
Corporation, The Bank of California, Mitsubishi Bank of California, Northern
Trust Bank of California and California First National Bank. He began his
banking career in 1965 with Security Pacific Corporation where he served in
numerous management capacities, including Executive Vice President. He
left Security Pacific Corporation in 1986 to become Executive Vice President and
Director of Strategic Planning, Marketing & Acquisitions for the Bank of
California. Next he was appointed Chief Executive Officer of the affiliated
institution, Mitsubishi Bank of California where he remained until heading its
merger in 1989 with The Bank of California. Mr. Forkner then remained with The
Bank of California in several executive officer capacities, including Executive
Vice President and Chief Credit Officer, and Chairman and Chief Executive
Officer of the non-traditional investments affiliate. Mr. Forkner left The
Bank of California in 1991 to join Community Bank, where he served as Executive
Vice President and Chief Administrative Officer, before joining Northern Trust
Bank of California as Managing Director, where he served for four years.
He left Northern Trust Bank in 1997 to found California First National Bank and
serve as its President and Chief Executive Officer. Mr. Forkner is a
director and active alumnus of The Peter F. Drucker Graduate School of
Management, Claremont Graduate University. He also completed the Graduate
School of Financial Management, Stanford University Graduate School after
earning a degree in Economic Theory from Claremont Men’s College.
Michael
S. Hahn,
is a Director and
the President and Chief Executive Officer of Pacific Coast National Bancorp and
Pacific Coast National Bank. He served as Chief Operating Officer of the Bank
prior to his becoming Chief Executive Officer upon Mr. Forkner’s retirement in
May 2008. Mr. Hahn is a San Diego County native and has more than twenty-five
years of community banking experience in the Bank’s service areas. Mr. Hahn
began his banking career with California First Bank which became Union Bank of
California, where he served for nineteen years in various management and officer
capacities, including Coastal Business Banking Center Manager, where he managed
the bank’s business banking in South Orange County and North San Diego County
which supported the commercial lending for twenty-one branch offices. While at
Union Bank of California, Mr. Hahn also served for eighteen months as the
Chairman of Vice Chairman, Richard Hartnack’s advisory board. Mr. Hahn’s banking
career with Union Bank of California was briefly interrupted from 1998 to 2000
when he left to join Temecula Valley Bank, N.A. as Senior Vice President and
Manager to open their second de novo office in Fallbrook, California. Following
his time with Temecula Valley Bank, N.A., he rejoined Union Bank of California
to re-open and expand their business banking office in Oceanside, California
where he served until October 31, 2003 when he left the bank to organize Pacific
Coast National Bank. Mr. Hahn holds a Bachelor of Science degree in Business and
Management from the University of Redlands and Associates in Arts degree in Real
Estate from Palomar Community College. Mr. Hahn is also a graduate of the
prestigious leadership program, LEAD San Diego. He has also been actively
involved in numerous leadership positions with local non-profit organizations,
including the San Clemente Sunrise Rotary, the San Clemente Chamber of Commerce,
Fallbrook Village, Encinitas/La Costa and Shadowridge/Vista Rotary Clubs, the
Downtown Encinitas Mainstreet Association, the Vista Economic Development
Association and
various local chapters of the Boys and
Girls Club. Mr. Hahn was honored to be named Rotarian Businessman of the year
for 2007 for Rotary District 5320.
David
Johnson
,
is a Director of Pacific Coast National
Bank and a Director and Chairman of the Audit Committee of Pacific Coast
National Bancorp. He currently serves as Vice President-Finance and a major
stockholder of Affinity Medical Technologies, LLC, an Irvine-based manufacturer
of medical supplies. Prior to being a founder of Affinity
Medical Technologies, he served for six years as a senior executive officer of
First Plus Bank in Tustin, California, first as a Director and thereafter as
Chief Financial Officer and President. Mr. Johnson is a former
certified public accountant and partner with the accounting firm of McGladrey
& Pullen, LLP. During his eighteen years with the firm, he
had extensive experience auditing banks and financial institutions. Mr. Johnson
is a graduate of the University of Minnesota, where he earned a Bachelor of Arts
in Accounting and currently is a resident of Irvine,
California.
Dennis C.
Lindeman
,
is
Chairman of the Board of Pacific Coast National Bancorp and Pacific Coast
National Bank. He is a Certified Financial Planner and has spent the last
twenty years providing comprehensive business and financial planning services to
closely-held business owners, executives and their families throughout Southern
California. Mr. Lindeman is a veteran of the United States Marine Corps,
where he served for twenty years, primarily in operational planning and command
capacities, before retiring as a Lieutenant Colonel. Mr. Lindeman has been
actively involved in leadership capacities with numerous community
organizations. Mr. Lindeman received a Bachelor of Arts degree in Economics from
Luther College. He is also a graduate of the United States International
University, where he received a Master of Business Administration degree in
Finance. He has lived in Fallbrook for the past twenty-five
years.
James M.
Morrison
, is a Director of Pacific Coast National Bancorp and Pacific
Coast National Bank. He is the President of James M. Morrison
Insurance Services, Inc., a position he has held since founding that company in
2002. Mr. Morrison has been in the insurance brokerage business since
1989. Mr. Morrison has been actively involved in leadership positions
with a number of professional and community organizations. Mr.
Morrison is a graduate of the University of San Diego, where he earned a
Bachelor of Business Administration degree.
Denis H.
Morgan
,
is a
Director of Pacific Coast National Bancorp and Pacific Coast National Bank. He
is a registered civil engineer and a licensed general contractor in the states
of California, Florida and Nevada. He served as the President and Chief
Executive Officer of Pacific 17 until the business was acquired by Alcoa in
November 2001. He has been active in investing in real estate opportunities
since 1989 and is currently investing in and developing multi-family units in
California, Arizona and New York. Mr. Morgan has also been actively involved in
numerous community organizations. His volunteer activities include service as
Finance Chairperson for the United Negro College Fund (San Diego), as corporate
sponsor to the Urban League, Neighborhood House, National Association for the
Advancement of Colored People (NAACP) and several other organizations that
provide educational, housing, and financial support to the community. Mr. Morgan
is a graduate of the University of Guyana, where he earned an HTD in Civil
Engineering and a Bachelor of Engineering degree in Highway Engineering. He also
earned a Master of Science degree in Structural Engineering from the City
University of London.
Charles
T. Owen
, is a Director of Pacific Coast National Bancorp and Pacific
Coast National Bank. He is the President and Chief Executive Officer
of the Carlsbad (California) Chamber of Commerce, a position he has held since
2004. From 1987 to 1990 and from 1992 to 2004, he served as President and
Publisher of
The San
Diego Business Journal
, and from 1990 to 1992 he served as President of
TCS Publishing, a subsidiary of TCS Enterprises. After retiring from the U.S.
Marine Corps as a Captain in 1981, Mr. Owen served as Division Director and Vice
President of the Greater San Diego Chamber of Commerce. Mr. Owen has extensive
experience as a bank director and has served on numerous civic boards and
committees. Mr. Owen is a graduate of Vincennes University, Vincennes, Indiana,
where he earned an Associate of Science degree, Chapman University, Orange
California, where he earned a Bachelor of Arts degree, and National University,
San Diego, California, where he earned a Master of Business Administration
degree.
John
Vuona
,
is a Director of Pacific Coast
National Bancorp and Pacific Coast National Bank. He is a partner in the
accounting firm of Bentson & Vuona, LLP, which he founded in 1995. Prior to
forming the firm, he
s
erved as a senior manager with
McGladrey & Pullen, LLP and as a partner in the firm of Gillespie, Lefevie,
Lokietz & Vuona. Over his career, Mr. Vuona has worked extensively with
closely-held companies in the areas of financial, manufacturing, distribution,
service and construction industries. He is a certified public accountant and a
member of the American Institute of Certified Public Accountants and the
California Society of Certified Public Accountants. Mr. Vuona is a graduate of
Babson College, where he earned a Bachelor of Science degree in Accounting. He
also completed a Master of Science degree in Taxation at the University of
Southern California. Mr. Vuona currently resides in Rancho Santa Margarita,
California.
Other
Executive Officers
Terry A.
Stalk
, age 53, serves as Executive Vice President and Chief Financial
Officer of Pacific Coast National Bancorp and Pacific Coast National Bank. Ms.
Stalk is a California native and has been actively involved in banking for over
thirty years. Before joining the organizing team, Ms. Stalk was Senior Vice
President and Director of Strategic Planning for Hawthorne Savings, FSB, a $2.4
billion federal savings bank where she served from 1999 to 2004. Prior to
joining Hawthorne Savings, Ms. Stalk served as Chief Financial Officer for
American International Bank, Pacific Western National Bank and El Segundo First
National Bank. Ms. Stalk attended the University of California, San
Diego.
Stanley
M. Cruse
, age 58, serves as the Bank’s Executive Vice President and
Chief Credit Officer. Mr. Cruse joined the Bank on June 1, 2007. Mr. Cruse has
over 35 years of commercial banking experience. Prior to joining the Bank, he
served as Executive Vice President and Chief Credit Officer for Discovery
Bank/Discovery Bancorp in San Marcos, CA. Prior to joining Discovery Bank, he
was with Business Bank of California as well as several other financial
institutions. In addition to his banking activities, Mr. Cruse is actively
involved in various community and banking organizations. Mr. Cruse graduated on
September 1, 2006 from the Graduate School of Bank at Pacific Coast Banking
School on the campus of the University of Washington in Seattle,
WA.
David L.
Adams
, age 54, serves as the Bank's Executive Vice President and manager
of the Real Estate Industries Group. Mr. Adams joined the Bank in April
2008. Mr. Adams has over 37 years of experience with financial
institutions. Prior to joining the Bank, he served as Executive Vice
President at Vineyard Bank in Irvine, California. Prior to that, his
career included positions with Hawthorne Savings Bank, Downey Savings & Loan
and California First Bank. Throughout his career his emphasis has been in
real estate lending and development. Mr. Adams obtained his Bachelor of
Arts degree in economic and business administration from Point Loma Nazarene
University in San Diego, California.
CORPORATE
GOVERNANCE
Corporate
Governance Principles and Board Matters
We are
committed to having sound corporate governance principles, both at the holding
company level and at Pacific Coast National Bank. Such principles are essential
to running our business efficiently and to maintaining our integrity in the
marketplace. We have adopted a Code of Business Conduct and Ethics, which,
together with the policies referred to therein, is applicable to all of our
directors, officers and employees and complies with Item 406 of Regulation S-K
of the Securities and Exchange Commission. The Code of Business Conduct and
Ethics covers all areas of professional conduct, including conflicts of
interest, disclosure obligations, insider trading and confidential information,
as well as compliance with all laws, rules and regulations applicable to our
business. We encourage all employees, officers and directors to promptly report
any violations of any of our policies. Copies of our Code of Business Conduct
and Ethics may be obtained by any person, without charge, upon written request
to Pacific Coast National Bancorp, Attn: Corporate Secretary, 905 Calle
Amanecer, Suite 100, San Clemente, California 92673.
Board
independence
Our Board
of Directors has determined that each of our current directors, except Messrs.
Forkner and Hahn, is independent under the applicable NASDAQ rules. Mr. Forkner
recently retired as our and the Bank’s Chief Executive Officer. Mr. Hahn
currently serves as our and the Bank’s President and Chief Executive Officer,
and served as the Chief Operating Officer of the Bank prior to his becoming
Chief Executive Officer upon Mr. Forkner’s retirement.
Director
qualifications
We
believe that our directors should have the highest professional and personal
ethics and values. They should have broad experience at the policy-making level
in business, government or banking. They should be committed to enhancing
shareholder value and should have sufficient time to carry out their duties and
to provide insight and practical wisdom based on experience. Their service on
other boards of public companies should be limited to a number that permits
them, given their individual circumstances, to perform responsibly all director
duties for us. Each director must represent the interests of all shareholders.
When considering potential director candidates, the board also considers the
candidate’s character, judgment, diversity, age, skills, including financial
literacy and experience in the context of our needs and the needs of the board
of directors.
Shareholder
communications with our board of directors
Our board
of directors has established a process for shareholders to communicate with the
board of directors or with individual directors. Shareholders who wish to
communicate with our board of directors or with individual directors should
direct written correspondence to our Corporate Secretary at our principal
executive offices located at 905 Calle Amanecer, Suite 100, San Clemente,
California 92673. Any such communication must contain:
·
|
a
representation that the shareholder is a record or beneficial owner of our
capital stock; and
|
·
|
the
number of shares of our capital stock that is beneficially owned by such
shareholder.
|
The
Corporate Secretary will forward such communications to our board of directors
or the specified individual director to whom the communication is directed
unless such communication is unduly hostile, threatening, illegal or otherwise
inappropriate, in which case the Corporate Secretary has the authority to
discard the communication or to take appropriate legal action regarding such
communication.
Board
structure and committee composition
As of the
date of this proxy statement, our board of directors is composed of twelve
persons. We also have an Audit Committee, Compensation Committee and Nomination
and Governance Committee. The membership during the last fiscal year and the
function of each of the committees are described below.
Board of
directors’ meetings for Pacific Coast National Bancorp are held at least
quarterly. During the fiscal year 2007, our board held twelve (12)
meetings. Each director attended at least 75% of the total of all
Board and applicable committee meetings held while he was a director
.
Directors are
encouraged to attend annual meetings of our shareholders, although we have no
formal policy on director attendance at annual shareholders’
meetings. All twelve current directors attended the last annual
meeting of our shareholders.
Committees
of Pacific Coast National Bancorp
Audit
Committee
Our board
of directors has established an Audit Committee to assist the board in
fulfilling its responsibilities for general oversight of the integrity of our
consolidated financial statements, compliance with legal and regulatory
requirements, the independent auditors’ qualifications and independence, the
performance of independent auditors and our internal audit function, and risk
assessment and risk management. The duties of the Audit Committee
include:
·
|
appointing,
evaluating and determining the compensation of our independent
auditors;
|
·
|
reviewing
and approving the scope of the annual audit, the audit fee and the
financial statements;
|
·
|
reviewing
disclosure controls and procedures, internal control over financial
reporting, the internal audit function and corporate policies with respect
to financial information;
|
·
|
reviewing
other risks that may have a significant impact on our financial
statements;
|
·
|
preparing
the Audit Committee report for inclusion in the annual proxy statement;
and
|
·
|
establishing
procedures for the receipt, retention and treatment of complaints
regarding accounting and auditing
matters.
|
The Audit
Committee works closely with management as well as our independent auditors. The
Audit Committee has the authority to obtain advice and assistance from, and
receive appropriate funding from us for, outside legal, accounting or other
advisors as the Audit Committee deems necessary to carry out its
duties.
Our board
of directors has adopted a written charter for the Audit Committee. The members
of the Audit Committee are Dennis Lindeman, Thomas Applegate and David Johnson
(Chairman). The Audit Committee meets regularly and held ten (10) meetings
during fiscal year 2007. Our board of directors has determined that
each member of the Audit Committee satisfies the independence requirements of
the Securities and Exchange Commission and NASDAQ. Our Board has also determined
that Mr. Johnson qualifies as an “audit committee financial expert” under Item
407(d)(5) of Regulation S-K of the Securities and Exchange Commission and has
the requisite accounting or related financial expertise required by applicable
NASDAQ rules.
A copy of
our Audit Committee Charter was attached as Exhibit 1 to our definitive proxy
materials for our 2007 annual meeting of shareholders, which was filed with the
Securities and Exchange Commission on April 30, 2007.
Compensation
Committee
The
Compensation Committee recommends to the board of directors the salaries of
executive personnel, compensation paid to directors and the policies, terms and
conditions of employment of all employees of Pacific Coast National Bancorp and
Pacific Coast National Bank. The members of the Compensation
Committee are Denis Morgan (Chairman), David Johnson, Dennis C. Lindeman and
Michael Cummings. The Compensation Committee held six (6) meetings during the
fiscal year 2007.
A copy of
our Compensation Committee Charter was attached as Exhibit 2 to our definitive
proxy materials for our 2007 annual meeting of shareholders, which was filed
with the Securities and Exchange Commission on April 30, 2007.
Nomination
and Governance Committee
The
Nomination and Governance Committee reviews all board-recommended and
shareholder-recommended nominees, determining each nominee’s qualifications and
making a recommendation to the full board of directors as to which persons
should be our board’s nominees. The members of the Committee are Dennis C.
Lindeman (Chairman), Colin M. Forkner, Michael S. Hahn, Denis Morgan, Michael
Cummings, and David Johnson. The Committee met eight (8) times during
2007. The duties and responsibilities of the Committee
include:
·
|
identifying
and recommending to our board of directors individuals qualified to become
members of our board and to fill vacant board
positions;
|
·
|
recommending
to our board of directors the director nominees for the next annual
meeting of shareholders;
|
·
|
recommending
committee assignments to our board of
directors;
|
·
|
reviewing
and evaluating succession planning for our Chief Executive Officer and
other executive officers; and
|
·
|
monitoring
the continuing education program for our
directors.
|
A copy of
our Nomination and Governance Committee Charter was attached as Exhibit 3 to our
definitive proxy materials for our 2007 annual meeting of shareholders, which
was filed with the Securities and Exchange Commission on April 30,
2007.
Our board
of directors believes that it is necessary that the majority of our board of
directors be comprised of independent directors and that it is desirable to have
at least one audit committee financial expert serving on the Audit Committee.
The Nomination and Governance Committee considers these requirements when
recommending board nominees. The Committee utilizes a variety of methods for
identifying and evaluating nominees for director. It will regularly assess the
appropriate size of the board, and whether any vacancies on the board are
expected due to retirement or other circumstances. When considering potential
director candidates, the Committee also considers the candidate’s character,
judgment, age, skills, including financial literacy, and experience in the
context of our needs, the needs of Pacific Coast National Bank and the existing
directors.
Our board
of directors has established a procedure whereby our shareholders can nominate
potential director candidates. The Nomination and Governance Committee will
consider director candidates recommended by our shareholders in a similar manner
as those recommended by members of management or other directors, provided the
shareholder submitting such nomination has complied with procedures set forth in
our bylaws.
No
candidate for election to our board of directors has been recommended within the
preceding year by a beneficial owner of 5% or more of our common
stock.
REPORT
OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The
information contained in this Report of the Audit Committee shall not be deemed
to be “soliciting material” or to be “filed” or incorporated by reference in
future filings with the Securities and Exchange Commission, or to be subject to
the liabilities of Section 18 of the Securities Exchange Act of 1934, except to
the extent that we specifically incorporate it by reference into a document
filed under the Securities Act of 1933 or the Securities Exchange Act of
1934.
In
accordance with its written charter, the Audit Committee assists our board of
directors in, among other things, oversight of our financial reporting process,
including the effectiveness of our internal accounting and financial controls
and procedures, and controls over the accounting, auditing, and financial
reporting practices.
Our board
of directors has determined that the members of the Audit Committee satisfy the
independence requirements of the Securities and Exchange Commission and
NASDAQ.
Management
is responsible for the financial reporting process, the preparation of
consolidated financial statements in accordance with accounting principles
generally accepted in the United States of America, the system of internal
controls, and procedures designed to insure compliance with accounting standards
and applicable laws and regulations. Our independent auditors are responsible
for auditing the financial statements. The Audit Committee’s responsibility is
to monitor and review these processes and procedures. The Audit Committee
relies, without independent verification, on the information provided to us and
on the representations made by management that the financial statements have
been prepared with integrity and objectivity and on the representations of
management and the opinion of the independent auditors that such financial
statements have been prepared in conformity with accounting principles generally
accepted in the United States of America.
During
fiscal 2007, the Audit Committee had ten (10) meetings.
The Audit Committee’s
regular meetings were conducted so as to encourage communication among the
members of the Audit Committee, management, the internal auditors, and our
independent auditors for 2007, McGladrey & Pullen, LLP. Among other things,
the Audit Committee discussed with our internal and independent auditors the
overall scope and plans for their respective audits. The Audit Committee
separately met with each of the internal and independent auditors, with and
without management, to discuss the results of their examinations and their
observations and recommendations regarding our internal controls. The Audit
Committee also discussed with our independent auditors all matters required by
generally accepted auditing standards, including those described in Statement on
Auditing Standards No. 61, as amended, “Communication with Audit
Committees.”
The Audit
Committee reviewed and discussed our audited consolidated financial statements
as of and for the year ended December 31, 2007 with management, the
internal auditors, and our independent auditors. Management’s discussions with
the Audit Committee included a review of critical accounting
policies.
The Audit
Committee obtained from the independent auditors a formal written statement
describing all relationships between us and our auditors that might bear on the
auditors’ independence consistent with Independence Standards Board Standard
No. 1, “Independence Discussions with Audit Committees.” The Audit
Committee discussed with the auditors any relationships that may have an impact
on their objectivity and independence and satisfied itself as to the auditors’
independence. The Audit Committee has reviewed and approved the amount of fees
paid to McGladrey & Pullen, LLP, for audit and non-audit services. The Audit
Committee concluded that the provision of services by McGladrey & Pullen,
LLP is compatible with the maintenance of their independence.
Based on
the above-mentioned review and discussions with management, the internal
auditors, and the independent auditors, and subject to the limitations on our
role and responsibilities described above and in the Audit Committee Charter,
the Audit Committee recommended to the board of directors that our audited
consolidated financial statements be included in our Annual Report on
Form 10-KSB for the fiscal year ended December 31, 2007, for filing
with the Securities and Exchange Commission.
Audit
Committee of the Board of Directors
David
Johnson (Chairman)
Dennis
Lindeman
Thomas
Applegate
EXECUTIVE
COMPENSATION
Compensation
Philosophy
The duty
of the Compensation Committee of the Company’s board of directors is to evaluate
and make recommendations to the board of directors regarding the administration
of the executive compensation program for Pacific Coast National Bancorp and
Pacific Coast National Bank. The Compensation Committee is responsible for
recommending appropriate compensation goals for the executive officers of
Pacific Coast National Bancorp, evaluating the performance of such executive
officers in meeting such goals and making recommendations to the board with
regard to executive compensation. Pacific Coast National Bancorp’s compensation
philosophy is to ensure that executive compensation be directly linked to
continuous improvements in corporate performance, achievement of specific
operation, financial and strategic objectives, and increases in shareholder
value. The Compensation Committee regularly reviews the compensation packages of
Pacific Coast National Bancorp’s executive officers, taking into account factors
that it considers relevant, such as business conditions within and outside the
industry, Pacific Coast National Bancorp’s financial performance, the market
composition for executives of similar background and experience, and the
performance of the executive officer under consideration. The particular
elements of Pacific Coast National Bancorp’s compensation programs for executive
officers are described below.
Compensation
Structure
The base
compensation for the executive officers of Pacific Coast National Bancorp named
in the Summary Compensation Table is intended to be competitive with that paid
in comparable situated industries, taking into account the scope of
responsibilities. The goals of the Compensation Committee in establishing
Pacific Coast National Bancorp’s executive compensation program
are:
·
|
to
compensate the executive officers of Pacific Coast National Bancorp fairly
for their contributions to Pacific Coast National Bancorp’s short, medium
and long-term performance; and
|
·
|
to
allow Pacific Coast National Bancorp to attract, motivate and retain the
management personnel necessary to Pacific Coast National Bancorp’s success
by providing an executive compensation program comparable to that offered
by companies with which Pacific Coast National Bancorp competes for
management personnel.
|
Upon the
opening of the Bank, the Company entered into employment agreements with Mr.
Forkner, Mr. Hahn and Ms. Stalk. The Company entered into an employment
agreement with Mr. Cruse in June of 2007, contingent upon his approval as Chief
Credit Officer by the Office of the Comptroller of the Currency, which was
received on August 10, 2007. Each employment agreement provides for a set base
salary during the first year of the agreement, which may be increased upon
review by the Board at the end of each year. The base salary level for each
officer is determined by taking into account individual experience, individual
performance, individual potential, cost of living considerations and specific
issues particular to Pacific Coast National Bancorp. Base salary level for
executive officers of selected banks and bank holding companies of similar size
are also taken into consideration in setting an appropriate base salary for the
named executive officers. The base level established for each executive officer
is considered by the Compensation Committee to be competitive and
reasonable.
The
Compensation Committee monitors the base salary levels and the various
incentives of the executive officers of Pacific Coast National Bancorp to ensure
that overall compensation is consistent with Pacific Coast National Bancorp’s
objectives and remains competitive within the area of Pacific Coast National
Bancorp’s operations. In setting the goals and measuring an executive’s
performance against those goals, Pacific Coast National Bancorp considers the
performance of its competitors and general economic and market conditions. None
of the factors included in Pacific Coast National Bancorp’s strategic and
business goals are assigned a specific weight. Instead, the Compensation
Committee recognizes that the relative importance of these factors may change in
order to adapt Pacific Coast National Bancorp’s operations to specific business
challenges and to reflect changing economic and marketplace
conditions.
Annual
Compensation
The
annual compensation of the executive officers of Pacific Coast National Bank
consists of a base salary and an auto allowance or the use of a company-owned
auto. In the future, annual performance bonuses may be paid; however, as is
typically the case with de novo or “start-up” banks, they are prohibited under
an agreement with our primary banking regulators until such time as the Bank is
profitable.
Stock
Incentive Plan
The board
of directors and shareholders have approved the Pacific Coast National Bancorp
2005 Stock Incentive Plan. Stock options are currently the primary source of
long-term incentive compensation for the executive officers and directors of
Pacific Coast National Bancorp and Pacific Coast National Bank. Each of the
employees, executive officers, members of senior management and directors of
Pacific Coast National Bancorp and Pacific Coast National Bank is eligible to
participate in the 2005 Stock Incentive Plan. Pursuant to their respective
employment agreements, we issued to Colin M. Forkner, Michael S. Hahn, Stanley
M. Cruse and Terry A. Stalk options to purchase 91,200, 91,200, 12,500 and
57,000 stock options, respectively. In 2006, the Compensation Committee made a
discretionary award to each of Mr. Forkner, Mr. Hahn and Ms. Stalk of 4,416
stock options based on the successful completion of the first year of operations
at the Bank. In 2007, the Compensation Committee made a discretionary award to
Mr. Forkner and Mr. Hahn each of 4,926 stock options, and to Ms. Stalk of 14,926
stock options, based on the successful completion of the second year of
operations at the Bank.
Employment
Agreements
Mr.
Hahn
We have
entered into a new employment agreement with Michael S. Hahn regarding his
employment as President and Chief Executive Officer of Pacific Coast National
Bancorp and Pacific Coast National Bank, which superseded his prior employment
agreement regarding his employment as President and Chief Operating Officer of
Pacific Coast National Bancorp and Pacific Coast National Bank. The term of the
new agreement is for five (5) years ending on May 15, 2013 and will
automatically renew for successive one year terms following the end of the
initial five year term unless either party provides notice that it will not seek
to renew the agreement.
Under the
terms of the prior agreement, Mr. Hahn initially received a minimum base
salary of $135,000 per year. Following the first year of the prior agreement,
the annual base salary was reviewed by the board of directors and increased to
$141,750. Following the second year of the agreement, the annual base salary was
reviewed by the board of directors and increased to $160,000. The new
employment agreement increased Mr. Hahn’s minimum annual base salary to $190,000
and entitles him to an annual incentive bonus opportunity of up to 15% of annual
base salary. Mr. Hahn is eligible to participate in any benefit
programs applicable to executive officers of Pacific Coast National Bancorp and
Pacific Coast National Bank, receives life and long-term disability benefits,
membership at a club deemed beneficial to Pacific Coast National Bank’s presence
in the local community and an automobile allowance or use of a company-leased
vehicle.
As under
the prior employment agreement, the new employment agreement provides that if
Mr. Hahn’s employment is terminated by Pacific Coast National Bancorp and
Pacific Coast National Bank without cause, he will be entitled to a lump sum
severance payment equal to his then-current annual base salary. The
new employment agreement increases the lump sum payment Mr. Hahn would receive
in the event of a change in control from 199% of his base amount (as defined in
Section 280G of the Internal Revenue Code) to 299% of his base
amount.
Mr. Hahn’s
prior employment agreement provided for the issuance of options to purchase
91,200 shares of common stock at an exercise price of $10.00 per share,
exercisable within 10 years from the date of grant. 30,000 of the options
are being treated as incentive stock options, and 61,200 are being treated as
non-statutory stock options, all of which vest ratably over a period of three
years beginning on the date of grant.
In
reviewing the 2007 compensation of Mr. Hahn, the Compensation Committee and
board of directors undertook the same evaluation set forth above with respect to
executive officers. The Compensation Committee believes that Mr. Hahn’s total
compensation is reasonable and competitive based on the overall performance of
Pacific Coast National Bancorp.
Mr.
Forkner
We were
party to an employment agreement with Colin M. Forkner regarding his employment
as Chief Executive Officer of Pacific Coast National Bank. This agreement
expired upon Mr. Forkner’s retirement as Chief Executive Officer in May 2008.
Under the terms of the agreement, Mr. Forkner initially received an annual
base salary of $160,000 per year. Following the first year of the agreement, the
annual base salary was reviewed by the board of directors and increased to
$170,000. Following the second year of the agreement, the annual base
salary was reviewed by the board of directors and increased to $180,000.
Mr. Forkner was eligible to participate in any incentive compensation plan
and all other benefit programs adopted by the Bank and also received additional
life insurance plus other customary benefits such as health, dental and life
insurance, membership fees to banking and professional organizations and an
automobile allowance.
Mr. Forkner’s
employment agreement also provided for the issuance of options to purchase
91,200 shares of common stock at an exercise price of $10.00 per share,
exercisable within 10 years from the date of grant. 30,000 of the options
are being treated as incentive stock options, and 61,200 are being treated as
non-statutory stock options, all of which vest ratably over a period of three
years beginning on the date of grant. In addition, Mr. Forkner’s
employment agreement provided that if his employment were terminated by Pacific
Coast National Bank without cause, he would have been entitled to a lump sum
severance payment equal to his then-current annual base salary. The
employment agreement also provided that in the event of a change in control, he
would have received a lump sum payment equal to 199% of his base amount (as
defined in Section 280G of the Internal Revenue Code).
In
reviewing the 2007 compensation of Mr. Forkner, the Compensation Committee and
board of directors undertook the same evaluation set forth above with respect to
executive officers. The Compensation Committee believes that Mr. Forkner’s total
compensation is reasonable and competitive based on the overall performance of
Pacific Coast National Bancorp.
Ms.
Stalk
We have
entered into an employment agreement with Terry A. Stalk regarding her
employment as Chief Financial Officer of Pacific Coast National Bank. The
initial term of the agreement will end on December 31, 2009, and will
automatically renew for successive one year terms following the end of the
initial term unless either party provides notice that it will not seek to renew
the agreement.
Under the
terms of the agreement, Ms. Stalk initially received an annual base salary of
$125,000. Following the first year of the agreement, the annual base salary was
reviewed by the board of directors and increased to $131,250. Following the
second year of the agreement, the annual base salary was reviewed by the board
of directors and increased to $150,000. Following the third year of
the agreement, the annual base salary was reviewed by the board of directors and
increased to $165,000, effective June 1, 2008. Ms. Stalk is eligible
to participate in any incentive compensation plan and all other benefit programs
adopted by the Bank plus other customary benefits such as health, dental and
life insurance, membership fees to banking and professional organizations and an
automobile allowance.
Ms.
Stalk’s employment agreement also provided for the issuance of options to
purchase 57,000 shares of common stock at an exercise price of $10.00 per share,
exercisable within 10 years from the date of grant. Thirty thousand of the
options are being treated as incentive stock options, and 27,000 are being
treated as non-statutory stock options, all of which vest ratably over a period
of three years beginning on the date of grant. In addition, Ms.
Stalk’s employment agreement provides that if her employment is terminated by
Pacific Coast National Bank without cause, she will be entitled to a lump sum
severance payment equal to her then-current annual base salary. The
employment agreement also provides that in the event of a change in control, she
will receive a lump sum payment equal to 199% of her base amount (as defined in
Section 280G of the Internal Revenue Code).
In
reviewing the 2007 compensation of Ms. Stalk, the Compensation Committee and
board of directors undertook the same evaluation set forth above with respect to
executive officers. The Compensation Committee believes that Ms. Stalk’s total
compensation is reasonable and competitive based on the overall performance of
Pacific Coast National Bancorp.
Mr.
Cruse
In June
of 2007 we entered into an employment agreement with Stanley M. Cruse regarding
his employment as Executive Vice President and Chief Credit Officer of Pacific
Coast National Bank. The term of the agreement is for three (3) years
ending on May 31, 2010 and will automatically renew for successive one year
terms following the end of the initial three year term unless either party
provides notice that it will not seek to renew the agreement.
During
the first year of the agreement, Mr. Cruse received an annual base salary
of $140,000. In May 2008, the annual base salary was reviewed by the
board of directors and increased to $154,000, effective June 1,
2008. Mr. Cruse is eligible to participate in any incentive
compensation plan and all other benefit programs adopted by the Bank and also
receives customary benefits such as health, dental and life insurance,
membership fees to banking and professional organizations and an automobile
allowance.
Mr. Cruse’s
employment agreement also provided for the issuance of options to purchase
12,500 shares of common stock at an exercise price of $8.75 per share,
exercisable within 10 years from the date of grant. All of the options are
being treated as incentive stock options, which vest ratably over a period of
three years beginning on the date of grant. In addition, Mr. Cruse’s
employment agreement provides that if his employment is terminated by Pacific
Coast National Bank without cause, he will be entitled to a lump sum severance
payment equal to his then-current annual base salary. The employment
agreement also provides that in the event of a change in control, he will
receive a lump sum payment equal to 199% of his base amount (as defined in
Section 280G of the Internal Revenue Code).
In
reviewing the 2007 compensation of Mr. Cruse, the Compensation Committee and
board of directors undertook the same evaluation set forth above with respect to
executive officers. The Compensation Committee believed that Mr. Cruse’s total
compensation was reasonable and competitive based on the overall performance of
Pacific Coast National Bancorp.
Executive
Compensation Deductibility
Section
162(m) of the Internal Revenue Code generally disallows a tax deduction to
public companies for compensation in excess of $1,000,000 paid to a company’s
chief executive officer or any of the three other most highly compensated
officers. Section 162(m) specifically exempts certain performance-based
compensation from the deduction limit. The board of directors and Compensation
Committee generally intends to limit non-performance based compensation and
grant awards under the 2005 Stock Incentive Plan, consistent with terms of
Section 162(m) so that the awards will not be subject to the $1,000,000
deductibility limit.
Executive
Compensation Tables
Summary
Compensation Table
The
following table sets forth for each of our named executive officers for the
years ended December 31, 2007 and 2006: (i) the dollar value of base salary and
bonus earned; (ii) for options granted to each named executive officer, the
dollar amount recognized by the Company for such options in accordance with
Statement of Financial Accounting Standards No. 123(R) (“SFAS 123(R)”); (iii)
the dollar value of earnings for services pursuant to awards granted under
non-equity incentive plans; (iv) the change in pension value and non-qualified
deferred compensation earnings; (v) all other compensation; and, finally, (vi)
the dollar value of total compensation.
Name and
Principal
Position
|
|
Year
|
|
Salary
|
|
Bonus
($)
|
|
Stock
Awards
($)
|
|
Option
Awards(
3
)
($)
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
Change in
Pension Value
and Non-
qualified
Deferred
Compensation
Earnings
($)
|
|
All Other
Compensation
($)
|
|
|
Total ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Colin M.
Forkner
Former
Chief
Executive
Officer
(1)
|
|
2007
2006
|
|
175,769
165,769
|
|
-
-
|
|
-
-
|
|
206,301
384,394
|
|
-
-
|
|
-
-
|
|
32,954
27,011
|
(4)
|
|
415,025
577,174
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terry A. Stalk
Chief
Financial
Officer
|
|
2007
2006
|
|
142,067
128,606
|
|
-
-
|
|
-
-
|
|
146,879
243,404
|
|
-
-
|
|
-
-
|
|
38,900
29,668
|
(5)
|
|
327,847
401,678
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael S.
Hahn
President
and
Chief
Executive
Officer
(1)
|
|
2007
2006
|
|
152,279
138,894
|
|
-
-
|
|
-
-
|
|
198,767
384,394
|
|
-
-
|
|
-
-
|
|
24,484
11,068
|
(6)
|
|
375,530
534,356
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stanley M.
Cruse
Executive Vice
President
Chief Credit
Officer
(2)
|
|
2007
2006
|
|
78,616
N/A
|
|
-
N/A
|
|
-
N/A
|
|
9,669
N/A
|
|
-
N/A
|
|
-
N/A
|
|
15,606
N/A
|
(7)
|
|
103,891
N/A
|
|
|
______________________
|
|
(1)
|
Effective May 16, 2008, Mr.
Forkner retired as our Chief Executive Officer and Mr. Hahn, who was
serving as our President and Chief Operating Officer, became our President
and Chief Executive Officer.
|
|
(2)
|
Mr. Cruse was hired as Executive
Vice President and Chief Credit Officer effective June 1,
2007.
|
|
(3)
|
Reflects the dollar amounts
recognized for financial statement reporting purposes for the years ended
December 31, 2007 and 2006 in accordance with SFAS No. 123(R), of stock
options awarded to the named executive officers. The
assumptions used in the calculation of these amounts are included in Note
H of the Notes to Consolidated Financial Statements contained in Item 7 of
our Annual Report on
Form 10-KSB for the year ended December 31,
2007.
|
|
(4)
|
Includes an auto allowance of $750
per month, gasoline, auto insurance, and toll road charges reimbursements,
and annual life insurance premiums.
|
|
(5)
|
Includes an auto allowance of $500
per month, gasoline, auto insurance, and toll road charges reimbursements,
annual life insurance premiums, and the cost of lodging several nights per
week because Mrs. Stalk lives out of the area.
|
|
(6)
|
Includes use of a company-owned
car, auto maintenance, gasoline, auto insurance, and toll road charges
reimbursements, and annual life insurance
premiums.
|
|
(7)
|
Includes an auto allowance of $500
per month, gasoline, auto insurance, and toll road charges reimbursements,
annual life insurance premiums from June 1, 2007 through December 31,
2007.
|
Outstanding
Equity Awards at Fiscal Year End
The
following table sets forth information on outstanding option awards held by the
named executive officers at December 31, 2007, including the number of shares
underlying both exercisable and unexercisable portions of each stock option as
well as the exercise price and the expiration date of each outstanding option.
There were no stock awards outstanding as of December 31, 2007.
|
|
Option
Awards
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Colin M.
Forkner
|
|
60,800
|
|
30,400
|
|
-
|
|
$10.00
|
|
5/14/2015
|
|
|
|
|
2,208
|
|
2,208
|
|
-
|
|
$13.25
|
|
5/14/2016
|
|
|
|
|
-
|
|
4,926
|
|
-
|
|
$10.50
|
|
5/13/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terry A.
Stalk
|
|
38,000
|
|
19,000
|
|
-
|
|
$10.00
|
|
5/14/2015
|
|
|
|
|
1,472
|
|
2,944
|
|
-
|
|
$13.25
|
|
5/14/2017
|
|
|
|
|
- -
|
|
14,926
|
|
-
|
|
$10.50
|
|
5/13/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael S.
Hahn
|
|
60,800
|
|
30,400
|
|
-
|
|
$10.00
|
|
5/14/2015
|
|
|
|
|
1,472
|
|
2,944
|
|
-
|
|
$13.25
|
|
5/14/2016
|
|
|
|
|
-
|
|
4,926
|
|
-
|
|
$10.50
|
|
5/13/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stanley M.
Cruse
|
|
-
|
|
12,500
|
|
-
|
|
$8.75
|
|
8/10/2017
|
|
|
Health
and Insurance Benefits
Our
full-time officers and employees are provided hospitalization and major medical
insurance. We pay a substantial part of the premiums for these coverages. All
insurance coverage under these plans is provided under group plans on generally
the same basis to all full-time employees. In addition, we maintain term life
insurance, which provides benefits to all employees who have completed one month
of full-time employment with us.
DIRECTOR
COMPENSATION
Meetings
of our board of directors are held regularly each month. We do not currently
make cash payments to directors for any service provided as a director. Under
the 2005 Stock Incentive Plan, directors may be compensated for their service to
the Company with non-statutory stock options. We intend to begin compensating
our directors with cash payments for their service once Pacific Coast National
Bancorp and Pacific Coast National Bank become profitable. The table
below sets for the compensation for 2007 for our outside directors during
2007. Inside directors (Messrs. Forkner and Hahn) are not compensated
for their service as directors. For information regarding the
compensation paid to the inside directors, see “Executive Compensation
Tables-Summary Compensation Table.”
Name
|
|
Fees
Earned or
Paid in
Cash
($)
|
|
Stock
Awards
($)
|
|
Option
Awards
($)
(1)
|
|
Non-Equity
Incentive
Plan
Compensa-
tion
($)
|
|
Change in
Pension Value
and Non-
qualified
Deferred
Compensation
Earnings
($)
|
|
All
Other
Compen-
sation
($)
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael V. Cummings
(2)
|
|
-
|
|
-
|
|
7,605
|
|
-
|
|
-
|
|
78,406
|
|
86,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fred A.
deBoom
|
|
-
|
|
-
|
|
6,339
|
|
-
|
|
-
|
|
-
|
|
6,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis C.
Lindeman
|
|
-
|
|
-
|
|
8,239
|
|
-
|
|
-
|
|
-
|
|
8,239
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_______________________
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Reflects the dollar amounts
recognized for financial statement reporting purposes for the year ended
December 31, 2007 in accordance with SFAS No. 123(R), of stock options
awarded to the outside directors. The assumptions used in the calculation
of these amounts are included in Note H of the Notes to Consolidated
Financial Statements contained in Item 7 of
our Annual R
eport
on Form 10-KSB for the year ended
December 31, 2007
. As of December 31,
2007, total shares underlying stock options held by the outside directors
were as follows: Mr. Applegate - 3,611 shares; Mr. Cummings - 2,666
shares; Mr. Davies - 2,666 shares; Mr. deBoom - 2,222 shares; Mr. Johnson
- 2,666 shares; Mr. Lindeman - 2,888 shares; Mr. Morgan - 2,666 shares;
Mr. Vuona - 2,222 shares.
|
(2)
|
Mr. Cummings provided consulting
services to the Bank in regards to specific credit matters during the
first and second quarters of 2007. These services included an analysis of
the credit process, the Bank's credit reporting, and marketing structure.
He assisted management in the search for and transition of the Chief
Credit Officer's position. During this stage he relinquished his position
as chairman of the Directors' Credit Committee to the Vice Chairman to
avoid any conflicts of interest.
|
(3)
|
Mr. Shute resigned as a director
on November 28, 2007.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
General
Under
Section 402 of the Sarbanes-Oxley Act of 2002, it is unlawful for any issuer to
extend, renew or arrange for the extension of credit in the form of a personal
loan to or for any director or executive officer of that issuer. This
prohibition does not apply to loans that were made on or prior to July 30, 2002,
or certain types of loans described in Section 402 that are (i) made available
by the issuer in the ordinary course of the issuer’s consumer credit business;
(ii) of a type generally made available by such issuer to the public; and (iii)
made by the issuer on market terms, or terms that are no more favorable than
those offered by the issuer to the general public.
Section
402 also does not apply to loans by an insured depository institution, such as
Pacific Coast National Bank, if the loan is subject to the insider lending
restrictions of Section 22(h) of the Federal Reserve Act or the Federal
Reserve’s Regulation O. We believe that all related transactions comply with
Section 402 of the Sarbanes-Oxley Act or have been made pursuant to a valid
exception from Section 402 of the Sarbanes-Oxley Act.
Certain
of our officers, directors and principal shareholders and their affiliates have
had transactions with Pacific Coast National Bank, including borrowings and
investments in certificates of deposit. Except as noted below, our management
believes that all such loans and investments have been and will continue to be
made in the ordinary course of business of Pacific Coast National Bank on
substantially the same terms, including interest rates paid and collateral
required, as those prevailing at the time for comparable transactions with
unaffiliated persons, and do not involve more than the normal risk of
collectibles or present other unfavorable features.
James W.
Shute, Jr., who resigned as a director of the Company and the Bank on November
28, 2007, is a co-borrower, along with a limited liability company of which he
is the managing member, on a loan from the Bank which is currently in
default. This loan was placed on non-accrual status. The principal
balance outstanding on this loan was approximately $1.5 million from January 1,
2007 until March 31, 2008, when $475 thousand, representing the bulk-sale value
of the underlying collateral, was charged off against the allowance for loan
losses. On July 23, 2008, the Bank received a payment of $1.2
million, which paid off the remaining principal of the loan and recovered $174
thousand of the loss.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires the
Company’s officers and directors, and persons who own more than 10% of a
registered class of the Company’s equity securities (the “10% Shareholders”), to
file reports of ownership and changes of ownership with the Securities and
Exchange Commission. Officers, directors and 10% Shareholders of the Company are
required by the Securities and Exchange Commission regulation to furnish the
Company with copies of all Section 16(a) forms so filed.
To our
knowledge, based solely on a review of the copies of such reports furnished to
us and written representations that no other reports were required, during the
fiscal year ended December 31, 2007, all Section 16(a) filing requirements
applicable to its officers, directors and greater than 10% beneficial owners
were complied with except for the failure by Officer David L. Adams to timely
file a Form 3 upon becoming an officer and to timely file a Form 4 to report a
single transaction, the failure by Officer Stanley M. Cruse to timely file a
Form 4 to report a single transaction, the failure by Director Thomas J.
Applegate to timely file a Form 4 to report two transactions and the failure by
former Director James W. Shute, Jr. to timely file a Form 4 to report two
transactions.
PROPOSAL
TWO:
RATIFICATION
OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Background
The Audit
Committee has selected McGladrey & Pullen, LLP as our independent
accountants for the fiscal year ended December 31, 2008 and has further directed
that management submit the selection of independent accountants for ratification
by our shareholders at the annual meeting. Shareholder ratification
of the selection of McGladrey & Pullen, LLP as our independent accountants
is not required by our bylaws or otherwise. However, we are submitting the
selection of McGladrey & Pullen, LLP to our shareholders for ratification as
a matter of good corporate practice. If our shareholders fail to ratify the
selection, the Audit Committee will reconsider whether or not to retain
McGladrey & Pullen, LLP. Even if the selection is ratified, the Audit
Committee in its discretion may direct the appointment of a different
independent accounting firm at any time during the year if it is determined that
a change would be in the best interests of our company and
shareholders.
Effective
April 16, 2007, the Audit Committee dismissed Vavrinek, Trine, Day & Co.,
LLP, the Company’s previous independent registered public accounting firm, and
engaged McGladrey & Pullen, LLP to act as the new principal independent
registered public accounting firm for the Company and its subsidiaries. The
reports of Vavrinek, Trine, Day & Co., LLP on the consolidated financial
statements of the Company as of and for the years ended December 31, 2006 and
2005 did not contain an adverse opinion or a disclaimer of opinion and were not
qualified or modified as to uncertainty, audit scope or accounting principles,
except that Vavrinek, Trine, Day & Co., LLP’s audit report on the
consolidated financial statements of the Company as of and for the year ended
December 31, 2006 contained a paragraph that stated that the Company adopted new
accounting guidance which impacted the Company’s accounting for stock options.
In connection with the audits for the fiscal years ended December 31, 2006 and
2005 and through the date hereof, there were no disagreements with Vavrinek,
Trine, Day
&
Co., LLP on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedures, which disagreements, if
not resolved to the satisfaction of Vavrinek, Trine, Day & Co., LLP, would
have caused Vavrinek, Trine, Day & Co., LLP to make reference to the subject
matter of the disagreements in connection with its reports. Furthermore, there
were no “reportable events” as that term is defined in paragraph (a)(iv)(B) of
Item 304 of Regulation S-K with respect to the Company.
Vote
required
The
affirmative vote of a majority of the issued and outstanding shares of our
common stock present, in person or by proxy, and voting at the annual meeting is
required to approve this proposal. Abstentions and broker non-votes will each be
counted as present for determining the presence of a quorum but will not be
counted as a vote “FOR” or “AGAINST” the proposal.
Your
board of directors unanimously recommends a vote “FOR” the ratification of the
selection of McGladrey & Pullen, LLP as our independent accountants for
2008. If you return a signed proxy sheet without indicating your vote with
respect to this proposal, your shares will be voted “FOR” the
proposal.
Principal
auditor fees and services
The
following table shows the fees paid by us for the audit and other services
provided by McGladrey & Pullen for 2007 and Vavrinek, Trine &
Day, LLP for 2006.
|
|
|
2007
|
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
Audit
Fees
|
|
$
|
170,200
|
|
|
$
|
29,000
|
|
|
Audit-related
Fees
|
|
|
8,300
|
|
|
|
|
|
|
Tax
Fees
|
|
|
-
|
|
|
|
4,000
|
|
|
All
Other Fees
|
|
|
11,634
|
|
|
|
-
|
|
|
|
|
$
|
190,134
|
|
|
$
|
33,000
|
|
|
As
defined by the Securities and Exchange Commission, (i) “Audit Fees” are fees for
professional services rendered by the Company’s principal accountant for the
audit of the company’s annual financial statements and review of financial
statements included in the Company’s Form 10-QSB and Form 10-KSB, or for
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years; (ii)
“audit-related fees” are fees for assurance and related services by the
Company’s principal accountant that are reasonably related to the performance of
the audit or review of the company’s financial statements and are not reported
under “audit fees;” (iii) “tax fees” are fees for professional services rendered
by the Company’s principal accountant for tax compliance, tax advice, and tax
planning; and (iv) “all other fees” are fees for products and services provided
by the Company’s principal accountant, other than the services reported under
“audit fees,” “audit-related fees,” and “tax fees” primarily, discussions with
management relating to internal control assessment.
Under
applicable Securities and Exchange Commission rules, the Audit Committee is
required to pre-approve the audit and non-audit services performed by the
independent auditors in order to ensure that they do not impair the auditors’
independence. The Commission’s rules specify the types of non-audit services
that an independent auditor may not provide to its audit client and establish
the Audit Committee’s responsibility for administration of the engagement of the
independent auditors.
Consistent
with the Commission’s rules, the Audit Committee Charter requires that the Audit
Committee review and pre-approve all audit services and permitted non-audit
services provided by the independent auditors to us or any of our subsidiaries.
The Audit Committee may delegate pre-approval authority to a member of the Audit
Committee and if it does, the decisions of that member must be presented to the
full Audit Committee at its next scheduled meeting.
SHAREHOLDER
PROPOSALS AND DIRECTOR NOMINATIONS FOR THE NEXT ANNUAL MEETING OF
SHAREHOLDERS
Shareholder
Proposals
In order
to be eligible for inclusion in our proxy materials for our next annual meeting
of shareholders, any shareholder proposal for that meeting must be received by
our Corporate Secretary at our principal executive office, located at 905 Calle
Amanecer, Suite 100, San Clemente, California 92673 by April 10,
2009. Any such proposal will be subject to the requirements of the
proxy rules adopted under the Exchange Act.
In
addition to the deadline and other requirements referred to above for submitting
a shareholder proposal to be included in our proxy materials for our next annual
meeting of shareholders, our bylaws require a separate notification to be made
in order for a shareholder proposal to be eligible for presentation at the
meeting, regardless of whether the proposal is included in our proxy materials
for the meeting. In order to be eligible for presentation at the next
annual meeting of shareholders, written notice of a shareholder proposal must be
received by our Corporate Secretary:
·
|
not
less than 60 days nor more than 270 days prior to the 2008 annual meeting;
or
|
·
|
in
the event that less than 30 days’ notice or prior disclosure of the date
of the meeting is given to our shareholders, notice by the shareholder
must be received not later than the close of business on the tenth day
following the day on which such notice of the date of the meeting was
mailed or such disclosure was made.
|
·
|
The
notice must contain the following information, as specified in Article II,
Section 7 of our bylaws:
|
·
|
a
brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual
meeting;
|
·
|
the
name and address of the shareholder making the proposal as it appears on
our record books;
|
·
|
the
class and number of shares of our capital stock that are beneficially
owned by the shareholder making the proposal;
and
|
·
|
any
material interest of such shareholder in such
business.
|
Director
Nominations by Shareholders
A
shareholder seeking to nominate one or more persons for election as a director
at an annual meeting of shareholders must provide written notice of any such
nomination to our Corporate Secretary such that the notice is received by the
Corporate Secretary:
·
|
not
less than 60 days nor more than 270 days prior to the 2008 annual meeting;
or
|
·
|
in
the event that less than 30 days’ notice or prior disclosure of the date
of the meeting is given to our shareholders, notice by the shareholder
must be received not later than the close of business on the tenth day
following the day on which such notice of the date of the meeting was
mailed or such disclosure was made.
|
The
notice must contain the following information, as specified in Article II,
Section 6 of our bylaws:
·
|
the
name and address of the shareholder making the nomination and the persons
intended to be nominated;
|
·
|
the
class and number of shares of our capital stock that are beneficially
owned by the shareholder making the
nomination;
|
·
|
a
representation that the shareholder is a holder of record of shares of the
company entitled to vote at such meeting and intends to appear in person
or by proxy at the meeting to nominate the person or persons specified in
the notice;
|
·
|
a
description of all arrangements or understandings between the shareholder
and each nominee and any other person or persons (naming such person or
persons) pursuant to which the nomination or nominations are to be made by
the shareholder;
|
·
|
such
other information regarding each nominee proposed by such shareholder as
would have been required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission had
each nominee been nominated by the board of directors;
and
|
·
|
the
consent of each nominee to serve as a director, if so
elected.
|
ADDITIONAL
INFORMATION
A copy of
our 2007 Annual Report on Form 10-KSB is being mailed with this proxy statement
to each shareholder of record. Shareholders not receiving a copy of the annual
report may obtain one without charge. Requests and inquiries should be addressed
to: Pacific Coast National Bancorp, 905 Calle Amanecer, Suite 100, San Clemente,
California 92673, Attn: Corporate Secretary, (949) 361-4300.
OTHER
MATTERS
To the
best knowledge, information and belief of the directors, there are no matters
that are to be acted upon at the annual meeting other than as described in this
proxy statement. If such matters arise, the form of proxy provides that
discretionary authority is conferred on the designated persons in the enclosed
form of proxy to vote with respect to such matters.
Except
for reports of operations and activities by management, which are for
informational purposes only and require no action of approval or disapproval,
management neither knows of nor contemplates any other business that will be
presented for action by the shareholders at the annual meeting. If any further
business is properly presented at the annual meeting, the persons named as
proxies will act in their discretion on behalf of the shareholders they
represent.
|
By Order of the Board of
Directors,
|
|
|
|
|
|
Michael S.
Hahn
President and Chief Executive
Officer
|
San
Clemente, California
August 8,
2008
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