CAPITOL
BANCORP LIMITED
|
Capitol
Bancorp Center, 200 N. Washington Square
Lansing,
Michigan 48933
|
2777
E. Camelback Road, Suite 375
Phoenix,
Arizona 85016
|
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
To
be held on Wednesday, April 22, 2009
Under new
Securities and Exchange Commission (SEC) rules, you are receiving this Notice
that the proxy materials for the 2009 Annual Meeting of Shareholders (Annual
Meeting) of Capitol Bancorp Limited (Capitol) are available on the
Internet.
The
Annual Meeting will be held at Capitol's offices on the second floor of the
Capitol Bancorp Center, 200 N. Washington Square, Lansing, Michigan on
Wednesday, April 22, 2009 at 4:00 p.m., Eastern Standard Time.
The
Annual Meeting is for the purpose of considering and acting upon the following
proposals:
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1.
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To
elect a total of eight Class II directors to hold office for three years
until their successors are elected and qualified or upon their earlier
resignation or removal.
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2.
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To
ratify the appointment of BDO Seidman, LLP as independent auditors for the
year ending December 31, 2009.
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3.
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To
conduct such other business as may properly come before the Annual Meeting
or any adjournments thereof.
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Capitol's
Board of Directors is not aware of any other business to come before the Annual
Meeting.
Action
may be taken on the foregoing proposals at the Annual Meeting on the date
specified, or on any dates to which, by original or later adjournment, the
Annual Meeting may be adjourned. Shareholders of record at the close
of business on February 24, 2009 are entitled to vote at the Annual Meeting and
any adjournments thereof.
Capitol
is pleased to take advantage of SEC rules that allow public companies, like
Capitol, to furnish proxy materials to their shareholders via the
Internet. These new rules allow Capitol to provide its shareholders
with the information they need while reducing mailing and printing
costs.
Your vote
is important. Whether or not you are able to attend the Annual
Meeting in person, it is important that your shares be
represented. We urge you to vote your shares via the toll-free
telephone number or over the Internet as described in the enclosed
materials. If you received a copy of the proxy card by mail, you may
sign, date and mail the proxy card in the envelope provided. Your
vote can be changed if you attend the Annual Meeting, withdraw your proxy and
vote in person. Please vote as soon as possible.
March 13,
2009
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Important
Notice Regarding the Availability of Proxy Materials for the Annual
Meeting of Shareholders to Be Held on April 22,
2009:
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The
Proxy Statement, the 2008 Annual Report to Shareholders and the Form 10-K
of Capitol Bancorp Ltd. for 2008 are available at
http://www.capitolbancorp.com/AR2008
,
which
does not have “cookies” that identify visitors to the
site.
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The
Notice of Internet Availability was first mailed to shareholders on or
about March 13, 2009. The cost of solicitation of proxies will
be
borne
by Capitol.
The
prompt
voting
by shareholders will save the expense of further requests for proxies in
order to obtain a quorum.
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NO MATTER HOW MANY SHARES YOU OWNED ON
THE RECORD DATE, YOUR VOTE IS IMPORTANT.
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Capitol
Bancorp Center
200
N. Washington Square
Lansing,
Michigan 48933
|
|
2777
E. Camelback Road, Suite 375
Phoenix,
Arizona 85016
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ANNUAL
MEETING OF SHAREHOLDERS
PROXY
STATEMENT
INFORMATION ABOUT THE ANNUAL
MEETING
When
is the Annual Meeting?
Wednesday,
April 22, 2009 at 4:00 p.m., Eastern Standard Time.
Where
will the Annual Meeting be held?
At the
Capitol Bancorp Center, Second Floor, 200 N. Washington Square, Lansing,
Michigan.
Why
am I receiving these materials?
As
permitted by the SEC, Capitol is making this Proxy Statement, the proxy card and
the annual report to shareholders (proxy materials) available to you
electronically via the Internet. On March 13, 2009, Capitol mailed to
its shareholders a notice (Notice) containing instructions on how to access and
review the proxy materials and how to vote online. If you received a
Notice by mail, you will not receive a printed copy of the proxy materials in
the mail unless you request it. If you would like a printed copy of
the proxy materials, follow the instructions for requesting these materials that
are included in the Notice.
Shareholders
are invited to attend the Annual Meeting and are requested to vote on the
proposals described in this Proxy Statement.
What
is included in these materials?
These
materials include:
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·
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Capitol's
Proxy Statement for the Annual Meeting;
and
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·
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Capitol's
2008 Annual Report to Shareholders, which includes its audited
consolidated financial statements as of December 31, 2008 and 2007 and for
the years ended December 31, 2008, 2007 and
2006.
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If you
requested printed versions of these materials by mail, these materials also
include the proxy card
for the
Annual Meeting.
What
items will be voted upon at the Annual Meeting?
Shareholders
will be voting on the following matters:
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1.
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The
election of eight Class II directors to hold office for three years and
until their successors are elected and qualified or upon their earlier
resignation or removal.
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2.
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The
ratification of the appointment of BDO Seidman, LLP as independent
auditors for the year ending December 31, 2009.
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3.
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Other
business that may properly come before the Annual Meeting or any
adjournment of the Annual Meeting.
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Can
I vote my shares by filling out and returning the Notice of Internet
Availability?
No. The
Notice of Internet Availability will have instructions on how to request a paper
copy of the proxy card and related proxy materials by phone, e-mail or through
the Internet. If you request a paper copy, you will be sent the
materials by first class mail within three business days of your
request.
How
can I get electronic access to the proxy materials?
The
Notice provides instructions regarding how to:
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·
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View
the proxy materials for the Annual Meeting through the Internet
at
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http://www.capitolbancorp.com/AR2008
;
and
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·
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Instruct
Capitol to send its future proxy materials to you by
e-mail.
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Choosing
to receive future proxy materials by e-mail will provide you the convenience of
accessing materials from wherever you have Internet access, will save Capitol
the cost of printing and mailing documents to you and will reduce the
environmental impact of printed materials. If you choose to receive
future proxy materials by e-mail, you will receive an e-mail notification next
year with instructions and a link to those materials with a link to the proxy
voting site. Your election to receive proxy materials by e-mail will
remain in effect until you change those instructions.
Who
can vote?
You are
entitled to vote your common stock if Capitol's stock transfer agent's records
show that you held shares of Capitol's common stock as of the close of business
on February 24, 2009, the record date.
Each
shareholder is entitled to one vote for each share of common stock held on
February 24, 2009. On February 24, 2009, there were 17,290,623 shares
of common stock issued and outstanding. Common stock is Capitol's
only outstanding class of voting securities. Capitol's shareholders
authorized the issuance of 20,000,000 shares of preferred stock at a special
shareholders' meeting held on December 10, 2008. No shares of
preferred stock have been issued to date.
How
do I vote?
You can
vote on matters that are properly presented at the Annual Meeting in four
ways:
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By
Internet at
http://www.proxyvote.com
by following the instructions provided; or
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By
phone by calling toll-free 1-800-690-6903 and following the instructions;
or
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By
requesting and returning a proxy card by mail; or
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By
attending the Annual Meeting and casting your vote in
person.
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If you
vote by telephone or through the Internet, your electronic vote authorizes the
named proxies in the same manner as if you signed, dated and returned a proxy
card.
Unless
you instruct otherwise, your proxies will vote your shares FOR the election of
each of the eight Class II director nominees nominated by Capitol's Board of
Directors, FOR the ratification of the appointment of BDO Seidman, LLP as
independent auditors for 2009, and in their discretion on any other proposal
considered at the Annual Meeting.
How
do I vote if my shares of Capitol are held in "street name"?
If your
shares are held in an account at a brokerage firm, a bank, or other nominee,
then that party is considered the shareholder of record for voting purposes and
should give you instructions for voting your shares. As a beneficial
owner, you have the right to direct that organization on how to vote the shares
of Capitol held in your account.
How
do I change or revoke my proxy?
Shareholders
who execute proxies retain the right to revoke them at any time before they are
exercised. Unless revoked, the shares represented by such proxies
will be voted at the Annual Meeting and all adjournments
thereof. Proxies may be revoked by written notice to the Secretary or
by the filing of a later proxy prior to a vote being taken on a particular
proposal at the Annual Meeting. A proxy will not be voted if a
particular shareholder attends the Annual Meeting and revokes his/her proxy by
notifying the Secretary at the Annual Meeting. Any shareholder who
attends the Annual Meeting and revokes their proxy may vote in
person. However, your attendance at the Annual Meeting alone will not
revoke your proxy. If you instructed a broker, bank or other nominee
to vote your shares and you would like to revoke or change your vote, then you
must follow their instructions. Proxies solicited by Capitol's
Board of Directors will
be voted according to the directions given therein. Where no
instructions are indicated, proxies will be voted FOR the eight nominees for
Class II directors, FOR the ratification of the appointment of BDO Seidman, LLP
as independent auditors for 2009, and in their discretion on any other proposal
considered at the Annual Meeting.
If
I vote in advance can I still attend the Annual Meeting?
Yes. You
are encouraged to vote promptly by Internet or telephone, or request a proxy
card by mail, so your shares will be represented at the Annual
Meeting. However, voting your shares does not affect your right to
attend the Annual Meeting and vote your shares in person.
What
constitutes a quorum and how many votes are required for the
proposals?
Capitol
will have a quorum and will be able to conduct the business of the Annual
Meeting if the holders of a majority of the votes that shareholders are entitled
to cast are present at the Annual Meeting, either in person or by
proxy. There were 17,290,623 shares of Capitol's common stock issued
and outstanding on February 24, 2009, the record date. A majority of
the issued and outstanding shares, or 8,645,312 shares, present or represented
by proxy constitutes a quorum. A quorum must exist to conduct
business at the Annual Meeting.
Routine and
Non-Routine Proposals.
New York Stock Exchange (NYSE) rules
determine whether proposals presented at shareholder meetings are routine or not
routine. If a proposal is routine, a broker or other entity holding
shares for an owner in street name may vote on the proposal without receiving
voting instructions from the owner. If a proposal is not routine, the
broker or other entity may vote on the proposal only if the owner has provided
voting instructions. A broker non-vote occurs when the broker or
other entity is unable to vote on a proposal because the proposal is not routine
and the owner does not provide any instructions.
We have
been advised by the NYSE that the election of the Class II directors and the
ratification of the appointment of the independent auditors are routine items.
Broker
Vote.
If you hold your shares in a bank or brokerage account, you should
be aware that if you fail to instruct your bank or broker how to vote within 10
days of the Annual Meeting, the bank or broker is permitted to vote your shares
in its discretion on your behalf on routine items. While banks and brokers have
historically cast their votes on routine items in support of management in the
absence of instructions from their clients, some firms are now casting
uninstructed votes in the same proportion as their clients' instructed
votes. Thus, if you want to assure that your shares are voted in
accordance with your wishes on proposals 1 and 2, the routine matters in this
Proxy Statement, you should complete and return your voting instruction form
before April 12, 2009.
Votes Required
for the Election of Directors and Approval of the
Proposals.
To elect each of the nominees for Class II
directors and ratify the appointment of BDO Seidman, LLP as independent
auditors, the following proportion of votes is required:
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Impact
of Abstentions and
Broker Non-Votes,
if any
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Election
of eight Class II directors
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Plurality
of votes cast
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Not
considered as votes cast
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Ratification
of appointment of independent accounting firm
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Approval
of the majority of the votes cast
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Not
considered as votes
cast
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Capitol
'
s policy is to
keep confidential proxy cards, ballots and voting tabulations that identify
individual shareowners. However, exceptions to this policy may be
necessary in some instances to comply with legal requirements and, in the case
of any contested proxy solicitation, to verify the validity of proxies presented
by any person and the results of the voting. Inspectors of election and any
employees associated with processing proxy cards or ballots and tabulating the
vote must acknowledge their responsibility to comply with this policy of
confidentiality.
What
is the recommendation of Capitol's Board of Directors?
Capitol's
Board recommends that each shareholder vote FOR each of the nominees for Class
II directors and FOR the ratification of the appointment of BDO Seidman, LLP as
independent auditors for the year ending December 31, 2009.
Who
pays for the solicitation of proxies?
The
accompanying proxy is being solicited by Capitol's Board of
Directors. Capitol will bear the cost of soliciting the
proxies. Officers and other management employees of Capitol will
receive no additional compensation for the solicitation of proxies and may use
mail, e-mail, personal interview and/or telephone.
Does
Capitol send multiple proxy statements to two or more shareholders who share an
address?
Capitol
only sends one Notice of Internet Availability or set of proxy materials to
shareholders who share the same address and name unless Capitol has received
contrary instructions. If shareholders desire to have their own copy,
they may notify Capitol of that fact either orally or in
writing. Notifications can be directed to Capitol Bancorp Limited,
Capitol Bancorp Center, 200 N. Washington Square, Lansing, MI 48933 or by
telephone at (517) 487-6555. Similarly, shareholders may also contact
Capitol if they receive multiple copies of the Notice or proxy materials and
would prefer to receive a single copy in the future, which will help Capitol
reduce mailing and printing costs in the future.
When
are shareholders' proposals due for Capitol's 2010 Annual Meeting?
In order
for a shareholder proposal to be considered for inclusion in Capitol's proxy
statement for the 2010 Annual Meeting, the written proposal must be received at
Capitol's principal executive offices at Capitol Bancorp Limited, Capitol
Bancorp Center, 200 N. Washington Square, Lansing, MI 48933, Attention:
Secretary, on or before November 13, 2009. The use of certified mail,
return receipt requested, is advised if submitting such a
proposal. The proposal must comply with SEC regulations regarding the
inclusion of shareholder proposals in company-sponsored proxy
materials.
Capitol's
bylaws provide that a shareholder may nominate a director for election at the
annual meeting, or may present from the floor a proposal that is not included in
the proxy statement, if proper written notice is received by the Secretary of
Capitol at its principal executive offices in Lansing, Michigan at least 120
days and no more than 180 days in advance of the anniversary of the prior year's
annual meeting. For the 2010 Annual Meeting, director nominations and
shareholder proposals must be received no later than December 24, 2009 and no
earlier than October 25, 2009. The nomination or proposal must
contain the specific information required by Capitol's bylaws. You
may request a copy of Capitol's bylaws by contacting Capitol's Secretary,
Capitol Bancorp Limited, Capitol Bancorp Center, 200 N. Washington Square,
Lansing, MI 48933 or by telephone at (517) 487-6555. Shareholder
proposals that are received by Capitol after December 24, 2009, may not be
presented in any manner at the 2010 Annual Meeting.
PROPOSAL ONE: ELECTION OF
DIRECTORS
Capitol's
amended and restated bylaws establish that the number of directors shall not be
less than five nor more than twenty-five. Currently, Capitol's Board
has set the number of directors at twenty. The bylaws provide that
its Board of Directors be split into three classes, Class I, Class II and Class
III. Class I currently has six directors, Class II has eight
directors and Class III has six directors. Class II directors will be
elected for a term of three years at Capitol's 2009 Annual
Meeting. Accordingly, in 2010, shareholders will be electing only
Class III directors for a three-year term, and in 2011, shareholders will be
electing only Class I directors for a three-year term.
Unless
otherwise directed in the proxy, the persons named in the proxy intend to vote
the shares represented by each properly executed proxy for the election of the
directors for a three-year term and until their successors are duly elected and
qualified or until their earlier resignation or removal. If any
nominee at the time of election is unavailable or unwilling to serve, which is
not presently anticipated, it is intended that the persons named in the proxy
will vote for an alternate nominee, if designated by the
Board. Proxies may be voted only for the nominees named or such
alternates. The eight nominees receiving the highest number of votes
for Class II directors will be elected directors. All of the nominees
are currently directors of Capitol.
There are
no arrangements or understandings between any nominee or any of Capitol's
directors or executive officers and any other person pursuant to which that
nominee, director or executive officer was nominated or elected as a director or
an executive officer of Capitol or any of its subsidiaries.
No
director or executive officer of Capitol is a party to any material legal
proceedings or has a material interest in any such legal proceedings that is
adverse to Capitol or any of its subsidiaries.
The
following table sets forth the nominees for election at the 2009 Annual Meeting,
and information furnished by them regarding their age and principal occupation
shown for at least the past five years, as of February 2,
2009. Except as otherwise disclosed in the biographical information,
no director nominee, director or executive officer is related to any other
director nominee, director or executive officer by blood, marriage or
adoption. All nominees were nominated by the Nominating and
Governance Committee.
Class
II Directors
Nominees
for Election as Class II Directors for Terms expiring in 2012
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David
O'Leary
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Mr.
O’Leary is the Secretary of Capitol. He is Chairman of O'Leary
Paint Company. Mr. O'Leary was a founding Director of Capitol
and has served as a Director of Capitol and/or its first bank affiliate
since 1982 and is 78 years of age. He formerly served on the
Board of Directors of Capitol's affiliate, First California Northern
Bancorp, which was merged with and into Capitol. Mr. O'Leary
also serves as a Director of the Bank of San Francisco and Napa Community
Bank, affiliates of Capitol.
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Michael
J. Devine
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Mr.
Devine is an Attorney at Law and was previously a member of the Board of
Directors of Sun Community Bancorp Limited, which was merged with and into
Capitol. Mr. Devine is 67 years of age, has served as a
Director of Capitol since 2002 and has regularly served as a Director
and/or Chairman of several of Capitol's bank
affiliates. He currently serves as Chief of the Special
Assets Group of Capitol.
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Gary
A. Falkenberg, D.O.
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Dr.
Falkenberg specializes in osteopathic medicine. Dr. Falkenberg
was a founding Director of Capitol and has served as a Director of Capitol
and/or its first bank affiliate since 1982. Dr. Falkenberg is
70 years of age.
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Joel
I. Ferguson
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Mr.
Ferguson is Chairman of Ferguson Development, LLC and a Director of Maxco,
Inc. Mr. Ferguson formerly served as a member of the Board of
Directors of Capitol's affiliate, Nevada Community Bancorp Limited, which
was merged with and into Capitol. Mr. Ferguson joined the Board
of Capitol and/or its first bank affiliate in 1982 as a founding
Director. Mr. Ferguson is 70 years of age.
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H.
Nicholas Genova
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Mr.
Genova is Chairman and CEO of Washtenaw News Company, Inc. and President
of H. N. Genova Development Company and Delivery Unlimited. Mr.
Genova also serves on the Board of Directors of Ann Arbor Commerce Bank,
an affiliate of Capitol. Mr. Genova was elected to Capitol's
Board in 1992 and is 69 years of age.
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John
S. Lewis
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Mr.
Lewis is Capitol's President of Bank Performance and a
Director. From 1999 to 2001, Mr. Lewis was Vice Chairman,
President and a member of the Board of Capitol's affiliate, Sun Community
Bancorp Limited, which was merged with and into Capitol. Mr.
Lewis currently serves as a member of the board and/or chairman of several
of Capitol's affiliates. Mr. Lewis was elected to Capitol's
Board of Directors in 2002 and is 55 years of age.
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Steven
L. Maas
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Mr.
Maas is co-owner of River Valley Title, LLC and an attorney. He
is also Vice President and Treasurer of Maas Asset Management, Inc. and a
Member of T & S Maas Investment Group, LLC. He currently
serves as a member of the Board of Directors of Portage Commerce Bank, an
affiliate of Capitol. Mr. Maas was elected to the Board of
Capitol in 2009 and is 50 years of age.
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Myrl
D. Nofziger
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Mr.
Nofziger is President of Hoogenboom Nofziger and previously served as a
member of the Board of Directors of Capitol's affiliate, Indiana Community
Bancorp Limited, which was merged with and into Capitol. Mr.
Nofziger was elected to the Board of Capitol in 2003 and is 68 years of
age.
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THE
BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" THE ELECTION OF THE
NOMINEES
.
INFORMATION REGARDING
CAPITOL'S DIRECTORS NOT CURRENTLY UP FOR ELECTION
The
following tables set forth Class III and Class I directors and information
furnished by them regarding their age and principal occupation shown for at
least the past five years, as of February 2, 2009. Except as
otherwise disclosed in the biographical information, no director nominee,
director or executive officer is related to any other director nominee, director
or executive officer by blood, marriage or adoption.
Class III
directors have been elected for a term expiring at the 2010 Annual Meeting and
Class I directors have been elected for a term expiring at the 2011 Annual
Meeting.
Class
III Continuing Directors with Terms Expiring in 2010*
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Joseph
D. Reid
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Mr.
Reid is the Chairman of the Board and CEO and founder of Capitol. He
served as Chairman and CEO of Sun Community Bancorp Limited, which was
merged with and into Capitol. Mr. Reid also serves as the
Chairman of several of Capitol's bank affiliates. He has served
as a Director of Capitol and/or its first bank affiliate since inception
in 1982. Mr. Reid is 66 years of age.
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Michael
L. Kasten
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Mr.
Kasten is the Vice Chairman of the Board of Capitol. He is
Managing Partner of Kasten Investments, L.L.C. He formerly was
Vice Chairman and Director of Sun Community Bancorp Limited, which was
merged with and into Capitol, and currently serves as Director, Chairman
and/or Vice Chairman of several of Capitol's affiliates. Mr.
Kasten is 63 years of age and has served as a Director since
1990.
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David
L. Becker
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Mr.
Becker is the retired founder of Becker Insurance Agency,
P.C. Mr. Becker was elected to the Board of Capitol in 1990,
and serves as a charter member of the Board of Directors of Portage
Commerce Bank, an affiliate of Capitol. Mr. Becker is 73 years
of age.
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James
C. Epolito
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Mr.
Epolito is President and Chief Executive Officer of the Michigan Economic
Development Corporation, a position he has held since
2005. Prior to that, he was President and Chief Executive
Officer of the Accident Fund Company. Mr. Epolito was elected
to Capitol's Board in 1999 and is 53 years of age.
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Kathleen
A. Gaskin
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Ms.
Gaskin is an Associate Broker for Tomie Raines, Inc.
Realtors. Ms. Gaskin has been a member of the Board of
Directors of Capitol and/or its first bank affiliate since 1982 as a
founding Director. Ms. Gaskin is 67 years of age.
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Ronald
K. Sable
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Mr.
Sable is President of Concord Solutions Ltd. Mr. Sable serves
as a member of the board of directors of three of Capitol's affiliate
banks. Mr. Sable was elected to the Board of Capitol in 2002
and is 67 years of age. Mr. Sable is the brother-in-law of
Michael F. Hannley.
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* Douglas
E. Crist served as a member of Capitol's Board of Directors since inception
until his death in February 2009.
[The remainder of this page is
intentionally left blank.]
Class I Continuing Directors with Terms
Expiring in 2011
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Lyle
W. Miller
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Mr.
Miller is the Vice Chairman of the Board of Capitol. He is
President of L.W. Miller Holding Company. Mr. Miller is 65 years of age
and has served as a founding Director of Capitol and/or its first bank
affiliate since 1982. Mr. Miller also serves as a member of the
Board of Directors of Amera Mortgage Corporation, Capitol's mortgage
affiliate.
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Paul
R. Ballard
|
Mr.
Ballard is a retired Executive Vice President of Capitol and retired
President and Chief Executive Officer of Portage Commerce Bank, Capitol's
second bank affiliate. Mr. Ballard has been a Director of
Capitol since 1990. Mr. Ballard is 59 years of
age.
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Michael
F. Hannley
|
Mr.
Hannley is the President and Chief Executive Officer of Capitol's
affiliate, Bank of Tucson. He formerly served on the Board of
Directors of Capitol's affiliate, Nevada Community Bancorp Limited, which
merged with and into Capitol. He currently serves on the Board
of Directors of Bank of Santa Barbara, an affiliate of
Capitol. Mr. Hannley is 60 years of age and has served on
Capitol's Board since 2002. Mr. Hannley is the brother-in-law
of Ronald K. Sable.
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Richard
A. Henderson
|
Mr.
Henderson, a certified public accountant, is President of Henderson &
Associates, P.C. Mr. Henderson has served on the Board of Directors of
Capitol National Bank, an affiliate of Capitol, since 1992. Mr.
Henderson is 57 years of age and has served on Capitol's Board since
2006.
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Lewis
D. Johns
|
Mr.
Johns is the President of Mid-Michigan Investment Company. Mr.
Johns formerly served as a member of the Board of Directors of Capitol's
affiliate, Nevada Community Bancorp Limited, which was merged with and
into Capitol. He has served on the Board of Capitol and/or
Capitol's first bank affiliate since 1982 as a founding Director and is 65
years of age.
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Cristin
K. Reid
|
Ms.
Reid is the Corporate President of Capitol. She was previously
Chief Operating Officer, Chief Administrative Officer, Executive Vice
President, General Counsel and has served in other various executive
capacities at Capitol since 1997. Ms. Reid was appointed to
Capitol's Board of Directors in 2001. She formerly served on
the Board of Capitol's affiliates Nevada Community Bancorp Limited, which
was merged with and into Capitol, Camelback Community Bank, Portage
Commerce Bank and Ann Arbor Commerce Bank. She is currently
Chairman of Capitol's affiliate Capitol National Bank and the Chairman and
Chief Executive Officer of Capitol Development Bancorp Limited III, IV, V,
VI, VII and VIII. Ms. Reid is 40 years of age, is a daughter of
Joseph D. Reid, wife of Brian K. English, Capitol's General Counsel and
sister of Joseph D. Reid III, Capitol's Chief of Bank
Development.
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Role
of the Board of Directors
Pursuant
to Michigan law and Capitol's bylaws, Capitol's business, property and affairs
are managed under the direction of its Board of Directors. The Board
of Directors has responsibility for establishing broad corporate policies and
for Capitol's overall performance and direction, but is not involved in
Capitol's day-to-day operations. Members of the Board of Directors
are kept informed of the issues facing Capitol by participating in board and
committee meetings and by reviewing information provided to them on a periodic
basis. Board members also have discussions with Capitol's executive
officers to update them on matters relating to Capitol.
Independence
of Directors
Capitol's
Board of Directors currently consists of 20 members, a majority of whom are
"independent" as defined under the corporate governance standards of the
NYSE. The Board has adopted categorical standards for determining
whether a director is independent and has no material relationships with
Capitol. Under these standards adopted by the Board and defined by
NYSE, absent other material relationships with Capitol that the Board of
Directors believes to jeopardize a director's independence from management, a
director will be independent unless the director or any of his or her immediate
family members had any of the following relationships with Capitol: employment
during any of the past three years (as an executive officer in the case of
family members); the receipt of more than $120,000 per year in direct
compensation (other than director fees and pension or other forms of deferred
compensation for prior service not contingent upon continued service) during any
of the past three years; is now, or within the past three years was, a current
partner of the internal or external auditor or an employee of such a firm and
personally worked on Capitol's audit; employment with another company where any
executive officers of Capitol serve or have served on that company's
compensation committee during any of the past three years; being an executive
officer of a charitable organization to which Capitol contributed the greater of
$1 million or 2% of such charitable organization's consolidated gross
revenues in any single fiscal year during the preceding three years; or being an
executive officer of a company that makes payments to, or receives payments
from, Capitol for property or services in a fiscal year in an amount in excess
of the greater of $1 million or 2% of such other company's consolidated
gross revenues.
In
addition, if any business relationship described in the last clause of the
preceding paragraph is a lending relationship, deposit relationship, or other
banking or commercial relationship between Capitol, on the one hand, and an
entity with which the director or family member is affiliated by reason of being
a director, officer or a significant shareholder thereof, on the other hand,
such relationships must meet the following criteria: (1) it must be in the
ordinary course of business and on substantially the same terms as those
prevailing at the time for comparable transactions with non-affiliated persons;
and (2) with respect to extensions of credit by an affiliate or subsidiary
of Capitol to such entity: (a) such extensions of credit have been made in
compliance with applicable law, including Regulation O of the Board of
Governors of the Federal Reserve and Section 13(k) of the Exchange Act and
(b) no event of default has occurred and is continuing beyond any period of
cure.
Capitol's
Board of Directors considers all relevant facts and circumstances and the
application of the categorical standards and, based on its review of this
information, affirmatively determined that the directors identified below as
"independent" do not have any material relationships with
Capitol. There were not any transactions, relationships or
relationships not disclosed pursuant to Item 404(a) of Regulation S-K that were
considered by the Board of Directors under the applicable independence
definitions in determining that the director is independent.
Independent
Directors
Following
are the names of each current member of Capitol's Board of Directors for whom an
affirmative determination of independence has been made:
|
Paul
R. Ballard
|
David
L. Becker
|
James
C. Epolito
|
|
Gary
A. Falkenberg
|
Joel
I. Ferguson
|
Kathleen
A. Gaskin
|
|
H.
Nicholas Genova
|
Richard
A. Henderson
|
Lewis
D. Johns
|
|
Michael
L. Kasten
|
Steven
L. Maas
|
Lyle
W. Miller
|
|
Myrl
D. Nofziger
|
David
O’Leary
|
|
In
addition, Leonard Maas, who served as a Director until his retirement from the
Board in November 2008, and Douglas E. Crist, who served as a Director of
Capitol until his death in February 2009, both qualified as independent
directors during their tenure on Capitol's Board in 2008.
Non-Independent
Directors
In
addition, based on such standards, the Board of Directors determined that: (a)
Michael J. Devine is not independent because a significant portion of his income
is generated from his service to Capitol and its subsidiaries as a consultant;
(b) Michael F. Hannley is not independent because he is President and CEO of
Bank of Tucson, an affiliate of Capitol; (c) John S. Lewis is not independent
because he is President of Bank Performance of Capitol; (d) Joseph D. Reid is
not independent because he is the Chief Executive Officer and Chairman of
Capitol and holds more than 5% of the outstanding shares of Capitol's common
stock; (e) Cristin K. Reid is not independent because she is the Corporate
President of Capitol; and (f) Ronald K. Sable is not independent because he is
brother-in-law of Michael F. Hannley, who received compensation in excess of
$120,000 from Bank of Tucson, an affiliate of Capitol, over the past 12
months.
CORPORATE
GOVERNANCE
Corporate
Governance Guidelines and Code of Ethics
The Board
of Directors is committed to good corporate governance and believes that an
attentive, performing board is a tangible competitive advantage. With
that commitment, during the past year the Board has reviewed Capitol's corporate
governance policies and practices and has assured itself Capitol is adhering to
the rules of the SEC and the revised listing standards of the NYSE. In addition,
the Board has implemented other corporate governance practices and procedures on
a best-practices basis.
Capitol
has adopted corporate governance guidelines which are available at
www.capitolbancorp.com
by first clicking "GOVERNANCE" and then "Governance
Guidelines." These principles were adopted by the Board to best
ensure that the Board is generally independent from management, that the Board
adequately performs its function as the overseer of management and to help
ensure that Board and management interests align with the interests of the
shareholders.
Capitol
has adopted a Code of Ethics that applies to its senior financial officers,
including its principal executive officer and its principal financial
officer. Capitol's other corporate governance documents, including
its Code of Ethics, charters of committees of the Board and other important
policies, are also available on its website at
www.capitolbancorp.com
. Each
of these is also available in print to any shareholder, without charge, upon
request to the Secretary of Capitol at Capitol Bancorp Limited, Capitol Bancorp
Center, 200 N. Washington Square, Lansing, MI 48933. As permitted by
SEC rules, Capitol intends to post on its website any amendment to, or waiver
from, any provision in the Code of Ethics that applies to its chief executive
officer, chief financial officer, controller or persons performing similar
functions, and that relates to any element of the standards enumerated in the
rules of the SEC.
Nominations
for Directors
The
Nominating and Governance Committee will consider nominees for director
recommended by shareholders. A shareholder wishing to recommend a
director candidate for consideration by the Nominating and Governance Committee
should send such recommendation to the Secretary of Capitol at Capitol Bancorp
Limited, Capitol Bancorp Center, 200 N. Washington Square, Lansing, MI 48933,
who will then forward it to the Nominating and Governance
Committee. Any such recommendation should include a description of
the candidate's qualifications for board service, the candidate's written
consent to be considered for nomination and to serve if nominated and elected,
addresses and telephone numbers for contacting the shareholder and the candidate
for more information and any other information concerning such candidate that
must be disclosed as to nominees in proxy solicitations pursuant to Regulation
14A under
the
Securities Exchange Act of 1934, as amended. A shareholder who wishes
to nominate an individual as a director candidate at the annual meeting of
shareholders rather than recommend the individual to the Nominating and
Governance Committee as a nominee must comply with the advance notice
requirements set forth in Capitol's bylaws, as amended (see "Shareholder
Proposals" for more information on these procedures). The Nominating
and Governance Committee will evaluate shareholder-recommended director
candidates in the same manner it evaluates director candidates identified by
other means.
The Board
of Directors and the Nominating and Governance Committee periodically review the
size of the Board of Directors. In considering candidates for the
Board of Directors, the Nominating and Governance Committee considers the
entirety of each candidate's credentials and does not have any specific minimum
qualifications that must be met by a Nominating and Governance Committee
recommended nominee.
The
Nominating and Governance Committee considers the specific qualities and skills
of potential directors and is guided by the following basic selection criteria
for all nominees: independence; highest character and integrity; experience and
understanding of strategy and policy-setting; reputation for working
constructively with others; ability to represent the interests of Capitol's
shareholders, the communities it serves and its employees; and sufficient time
to devote to board matters. The Nominating and Governance Committee
also gives consideration to diversity, age, experience and specialized expertise
in the context of the needs of the Board of Directors as a whole, including
leadership positions in public companies, small or middle market businesses, or
not-for-profit, professional or educational organizations.
Each
nominee to be elected to the Board at this year's Annual Meeting is currently a
Director of Capitol standing for re-election. The Nominating and
Governance Committee and Capitol's Board of Directors believe that all of such
nominees satisfy the above described director standards. Accordingly,
all of such nominees were selected for re-election by the Board of
Directors. With respect to this year's Annual Meeting of
Shareholders, no nominations for director were received from
shareholders.
Communications
with the Board
You may
send communications to Capitol's Board of Directors as a group and to individual
directors. Such communications should be submitted in writing
addressed to Capitol's Board of Directors or to one or more named individual
directors in care of David O'Leary, Secretary, Capitol Bancorp Limited, Capitol
Bancorp Center, 200 N. Washington Square, Lansing, MI 48933. All such
communications will be forwarded promptly to Capitol's Board of Directors or
such named individual directors.
Under
NYSE corporate governance listing standards, Michael L. Kasten has been
designated as the presiding non-management director to lead non-management
director's meetings of the Board. Capitol's non-management directors
meet at regularly scheduled executive sessions without management
present. The directors hold these regularly scheduled meetings to
provide opportunity for open discussion regarding Capitol and its
management. Shareholders and other interested parties may communicate
with Capitol's presiding non-management director or non-management independent
directors as a group by writing to "Presiding Non-Management Director" (if the
intended recipient is the presiding non-management director or the
non-management directors as a whole), c/o Secretary, Capitol Bancorp Limited,
Capitol Bancorp Center, 200 N. Washington Square, Lansing, MI
48933. Inquiries sent by mail will be reviewed by Capitol's Secretary
and, if they pertain to the functions of the Board or Board committees or if the
Secretary otherwise determines that they should be brought to the intended
recipient's attention, they will be forwarded to the intended recipient.
Concerns relating to accounting, internal controls, auditing or compliance
matters will be brought to the attention of Capitol's Audit Committee and
handled in accordance with procedures established by the Audit Committee with
respect to such matters.
The
review of these communications by Capitol's Secretary will be performed with a
view that the integrity of this process be preserved. For example,
items that are unrelated to the duties and responsibilities
of the
Board, such as personal employee complaints, product inquiries, new product
suggestions, resumes and other forms of job inquiries, surveys, business
solicitations or advertisements will not be forwarded to those
individuals. In addition, material that is considered to be hostile,
threatening, illegal or similarly unsuitable will not be forwarded to
them. Except for these types of items, the Secretary will promptly
forward written communications to the intended recipient. Within the
above guidelines, the independent directors have granted the Secretary
discretion to decide what correspondence should be shared with Capitol
management and independent directors.
BOARD MEETING
INFORMATION
During
fiscal 2008, the Board of Directors met four times for regular
meetings. All board members attended at least 75% of the
meetings. Capitol's Directors are expected to attend the Annual
Meeting of Shareholders. All of the eight nominees standing for
election as directors at the 2009 Annual Meeting of Shareholders attended last
year's Annual Meeting of Shareholders.
COMMITTEE
STRUCTURE
Capitol's
bylaws, as amended and restated, specifically provide that the Board of
Directors may delegate responsibility to committees. During 2008,
Capitol's Board of Directors had seven standing committees: Executive, Audit,
Compensation, Nominating and Governance, Ethics, Technology and Risk Management.
The membership of the Audit, Compensation, Nominating and Governance and Ethics
Committees is composed entirely of independent directors.
Each of
the Executive, Audit, Compensation, Nominating and Governance, Ethics,
Technology and Risk Management Committees has a written charter approved by the
Board that is reviewed at least annually by the respective committee, which may
recommend appropriate changes for approval by the Board.
Capitol's
committee structure and related charters are available on Capitol's website at
www.capitolbancorp.com
. Each
is also available in print to any shareholder upon
request. Chairpersons of the committees are indicated in bold on the
following pages, with the names of all committee members. Each
committee member attended at least 75% of the meetings unless otherwise
noted.
[The
remainder of this page is intentionally left blank.]
|
Executive
Committee
|
|
Primary
Functions
|
|
Meetings
in
2008
|
|
|
|
|
|
|
|
Joseph
D. Reid
Joel
I. Ferguson
Lewis
D. Johns
Michael
L. Kasten
Lyle
W. Miller
David
O'Leary
|
·
|
may
exercise all the powers and authority of the Board, including the power to
declare dividends regarding Capitol's common stock, during intervals
between meetings of the entire Board of Directors
|
|
12
|
|
·
|
does
not have the power or authority to amend the articles of incorporation,
adopt an agreement of merger or consolidation, recommend to the
shareholders the sale, lease or exchange of all or substantially all of
Capitol's property and assets, recommend to the shareholders a dissolution
of Capitol or revocation of a dissolution, amend the bylaws of Capitol,
fill vacancies in the Board of Directors, or fix compensation of the
Directors serving on the Board or on a committee
|
|
|
·
|
review
and reassess the adequacy of its charter annually and recommend any
proposed changes to the Board for approval
|
|
|
|
Audit Committee
1
|
|
Primary
Functions
|
|
Meetings
in 2008
|
|
|
|
|
|
|
|
Gary
A. Falkenberg, D.O.
David
L. Becker
Richard
A. Henderson,
CPA
2
|
·
|
review
the qualifications, independence and performance of Capitol's independent
registered public accounting firm (independent auditors) and appoint the
independent auditors
|
|
9
|
|
·
|
review
general policies and procedures with respect to accounting and financial
matters and internal controls
|
|
·
|
review
and approve the cost and types of audit and non-audit services performed
by the independent auditors
|
|
·
|
meet
with independent auditors not less than once a year without Capitol's
personnel to discuss internal controls, accuracy and completeness of the
financial statements and other related matters
|
|
·
|
review
the scope and budget of the audits of Capitol's consolidated financial
statements and notify the Board of major problems or deficiencies
discovered with respect to its duties
|
|
|
·
|
review
and reassess the adequacy of its charter annually and recommend any
proposed changes to the Board for approval
|
|
|
|
1.
|
The
members of the Audit Committee meet the standards of independence for
audit committee members required by the SEC rules and the NYSE listing
standards. All members of the Audit Committee must be
financially literate and at least one member of the Audit Committee must
have accounting or related financial management
expertise.
|
|
2.
|
Mr.
Henderson is Capitol's "audit committee financial expert" for purposes of
Item 407(d)(5) of Regulation S-K promulgated by the SEC. The
identification of a person as an audit committee financial expert does not
impose any duties, obligations or liabilities that are greater than those
imposed on such person as a member of either the Audit Committee or the
Board in the absence of such identification. Moreover, the
identification of a person as an audit committee financial expert, for
purposes of the regulations of the SEC, does not affect the duties,
obligations or liability of any other member of the Audit Committee or the
Board. Finally, a person who is determined to be an audit
committee financial expert will not be deemed an "expert" for any purpose,
including without limitation for purposes of Section 11 of the Securities
Act of 1933.
|
|
Compensation
Committee
1
|
|
Primary
Functions
|
|
Meetings
in 2008
|
|
|
|
|
|
|
|
Kathleen
A. Gaskin
2
James
C. Epolito
Lewis
D. Johns
Leonard
Maas
4
|
·
|
at
least annually, review and approve corporate goals and objectives relevant
to the compensation of Capitol's CEO, evaluate the CEO's performance in
light of those goals and objectives, determine and approve the CEO's
compensation level based on this evaluation, and recommend the CEO's
compensation for ratification by the independent directors of the
Board
|
|
2
3
|
|
·
|
at
least annually, review the compensation levels for members of Capitol's
executive management team (senior executive officers of Capitol who report
directly to the CEO or the Executive Committee of the Board) and any
employee-directors of Capitol
|
|
·
|
make
recommendations to the Board with respect to incentive compensation plans
and equity-based plans
|
|
·
|
oversee
the administration of the compensation, incentive and equity-based benefit
plans of Capitol which have been, or may in the future be, adopted by the
Board and, in connection therewith, to approve grants, awards and payouts
under Capitol's stock option plans and Capitol's Management Incentive
Plan
|
|
·
|
review
periodically, and approve or recommend for Board approval (as applicable)
any changes to Capitol's incentive, equity-based and other compensation
plans
|
|
|
·
|
review
periodically, Director and Board committee compensation levels and
practices, and recommend to the Board changes in such compensation levels
and practices in accordance with the principles set forth in Capitol's
Corporate Governance Guidelines
|
|
|
|
|
·
|
review
and reassess the adequacy of its charter annually and recommend any
proposed changes to the Board for approval
|
|
|
|
1.
|
The
members of the Compensation Committee are independent under the standards
adopted by the Board of Directors and applicable NYSE listing standards
and SEC rules and regulations. The Compensation Committee
members were not at any time during 2008, or at any other time, employed
by Capitol and are not eligible to participate in any of Capitol's benefit
plans other than Capitol's stock option plans. The Compensation
Committee members receive compensation from Capitol solely for their
service as directors and committee members.
|
|
2.
|
Kathleen
Gaskin was appointed Chair of the Compensation Committee in January 2009
after Douglas E. Crist resigned from the Committee.
|
|
3.
|
Each
of the members of the Compensation Committee attended 100% of the
committee meetings in 2008, with the exception of Mr. Epolito, who
attended one meeting, and Mr. Maas, who resigned from the Committee in
November.
|
|
4.
|
Leonard
Maas resigned from the Compensation Committee in November 2008 upon his
retirement from the Board of Directors of
Capitol.
|
|
Ethics Committee
1
|
|
Primary
Functions
|
|
Meetings
in
2008
2
|
|
|
|
|
|
|
|
David
O'Leary
H.
Nicholas Genova
Michael
L. Kasten
|
·
|
assist
in monitoring the adequacy of Capitol's Code of Ethics to provide guidance
on all related-party transactions, including both review and approval on
behalf of the Board and to identify potential conflicts of interest,
including the establishment of safeguards, when necessary
|
|
0
|
|
|
·
|
review
and reassess the adequacy of its charter annually and recommend any
proposed changes to the Board for approval
|
|
|
|
1.
|
The
members of the Ethics Committee are independent under the standards
adopted by the Board of Directors and applicable NYSE listing standards
and SEC rules and regulations.
|
|
2.
|
The
Ethics Committee meets on an as-needed basis. There were no
meetings during 2008.
|
|
Nominating
and
Governance
Committee
1
|
|
Primary
Functions
|
|
Meetings
in 2008
|
|
|
|
|
|
|
|
Paul
R. Ballard
David
L. Becker
Myrl
D. Nofziger
|
·
|
periodically
review the appropriate size of the Board
|
|
2
|
|
·
|
seek
individuals qualified to become board members for recommendation to the
Board
|
|
·
|
receive
comments from all Directors and report annually to the Board with an
assessment of the Board's performance, to be discussed with the full Board
following the end of each year
|
|
·
|
review
and reassess the adequacy of the Corporate Governance Guidelines of
Capitol and recommend any proposed changes to the Board for
approval
|
|
·
|
review
and reassess the adequacy of its charter annually and recommend any
proposed changes to the Board for
approval
|
|
1.
|
The
Nominating and Governance Committee is composed entirely of independent
directors and each member of the Nominating and Governance Committee
satisfies the independence standards for such committee members
established by the NYSE.
|
The
Nominating and Governance Committee will consider director candidates
recommended by shareholders. Candidates recommended by shareholders
will be considered in the same manner as those nominated by the Board of
Directors. Pursuant to Capitol's amended and restated bylaws,
shareholders must give notice to the Nominating and Governance Committee not
less than 120 days nor more than 180 days prior to the anniversary date of the
immediately preceding Annual Meeting of Shareholders. Such notice
must contain as to each proposed nominee: (i) the name, date of birth, business
address and residence address of such nominee; (ii) the principal occupation or
employment of such nominee during the past five years; (iii) the number of
shares of common stock in Capitol beneficially owned by such nominee; and (iv)
any other information concerning such nominee that must be disclosed as to
nominees in proxy solicitations pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended. The notice must contain as to the
shareholder giving the notice: (i) the name and address of such shareholder as
they appear on Capitol's stock-record books; (ii) the class or classes and
number(s) of shares of Capitol beneficially owned by such shareholder; (iii) a
description of all arrangements or understandings between such shareholder and
each proposed nominee and any other person or persons pursuant to which the
nomination(s) are to be made by such shareholder; and (iv) any other information
concerning such shareholder that must be disclosed as to nominees in proxy
solicitations pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended.
|
Risk
Management
Committee
|
|
Primary
Functions
|
|
Meetings
in 2008
|
|
|
|
|
|
|
|
Paul
R. Ballard
Michael
J. Devine
Ronald
K. Sable
|
·
|
assist
the Board with oversight of management's compliance with Capitol's
regulatory obligations arising from applicable federal and state banking
laws, rules and regulations
|
|
4
|
|
·
|
monitor
and assist management's implementation and enforcement of Capitol's risk
management policies and procedures
|
|
|
·
|
review
and reassess the adequacy of its charter annually and recommend any
proposed changes to the Board for approval
|
|
|
|
Technology
Committee
|
|
Primary
Functions
|
|
Meetings
in 2008
|
|
|
|
|
|
|
|
Cristin
K. Reid
Paul
R. Ballard
Michael
J. Devine
James
C. Epolito
Ronald
K. Sable
|
·
|
oversee
and approve requests for hardware and software
|
|
4
|
|
·
|
oversee
and approve all requests for systems development
|
|
·
|
establish
technology project priorities
|
|
·
|
oversee
all information systems' performance
|
|
·
|
oversee
and recommend disposition of major information systems' capital
expenditures
|
|
|
·
|
oversee
implementation of new processes to ensure that Capitol's objectives are
met
|
|
|
|
|
·
|
review
and reassess the adequacy of its charter annually and recommend any
proposed changes to the Board for approval
|
|
|
AUDIT COMMITTEE
REPORT
The Audit
Committee's duties include reviewing the qualifications, independence and
performance of Capitol's independent registered public accounting firm
(independent auditors), appointing the firm to serve as Capitol's independent
auditors and recommending the firm's appointment for ratification by
shareholders; reviewing general policies and procedures with respect to
accounting and financial matters and internal controls; reviewing and approving
the fees and types of audit and non-audit services performed by the independent
auditors and other consultants as necessary; meeting with independent auditors
not less than once a year without Capitol's personnel present to discuss
internal controls, accuracy and completeness of Capitol's consolidated financial
statements and other related matters; and reviewing the scope and budget for the
audits of Capitol's consolidated financial statements and notifying Capitol's
Board of major problems or deficiencies identified in the course of its
duties.
During
fiscal 2008, the Audit Committee met nine times. The Audit Committee
fulfills its responsibilities through periodic meetings with Capitol's
independent auditors and management. The Audit Committee schedules
its meetings with a view to ensuring that it devotes appropriate attention to
all of its tasks. Prior to public release, the Audit Committee
discussed the interim 2008 financial information contained in each quarterly
earnings announcement with Capitol's chief financial officer and the independent
auditors.
The Audit
Committee discussed with the independent auditors all matters required by the
Standards of the Public Company Accounting Oversight Board (United States),
including those described in Statement on Auditing Standards No. 61,
"Communication with Audit Committees," as amended, as well as reviewed with both
the independent and the internal auditors their audit plans, audit scope and
identification of audit risks. With and without Capitol's management
present, the Audit Committee reviewed and discussed the results of the
independent auditors' audits of Capitol's consolidated financial statements and
internal control over financial reporting. The Audit Committee also
discussed with management, the internal auditors and Capitol's independent
auditors the quality and adequacy of Capitol's internal controls and the
internal audit function's management, organization, responsibilities, budget and
staffing.
Throughout
the year, the Audit Committee monitors matters related to the independence of
BDO Seidman, LLP, Capitol's independent registered public accounting firm, and
has discussed with the independent auditors their independence. The
Audit Committee received the written disclosures and a letter from BDO Seidman,
LLP, Capitol's independent registered public accounting firm, required by
applicable requirements of the Public Company Accounting Oversight Board
regarding BDO Seidman, LLP's communications with the Audit Committee concerning
independence and discussed with BDO Seidman, LLP, the independent registered
public accounting firm's independence.
The Audit
Committee reviewed and discussed the audited consolidated financial statements
of Capitol as of and for the year ended December 31, 2008, with management and
the independent auditors. It also reviewed reports prepared by Crowe
Horwath, consultants engaged to review and test the information security of
Capitol. Management has the responsibility for the preparation and
integrity of Capitol's consolidated financial statements and the independent
auditors have the responsibility for expressing an opinion on those financial
statements based on their independent audit. The Audit Committee also
reviewed and discussed management's assessment of Capitol's internal control
over financial reporting as of December 31, 2008, as well as the independent
auditors' evaluation of Capitol's internal control over financial
reporting. Based on the above-mentioned review and discussions with
management and the independent auditors, the Audit Committee recommended to the
Board of Directors that Capitol's audited consolidated financial statements be
included in its Annual Report on Form 10-K for the year ended December 31, 2008,
for filing with the SEC. The Audit Committee also reappointed BDO
Seidman, LLP as Capitol's independent registered public accounting firm for
2009.
As
specified in Capitol's Audit Committee Charter, it is not the duty of the Audit
Committee to plan or conduct audits or to determine that Capitol's consolidated
financial statements are complete and accurate and in accordance with accounting
principles generally accepted in the United States of America. It is
the responsibility of Capitol's management to prepare those consolidated
financial statements and the responsibility of the independent registered public
accounting firm to plan and perform an audit of those financial
statements. In giving its recommendation to the Board of Directors,
the Audit Committee has relied on (i) management's representation that such
consolidated financial statements have been prepared with integrity, objectivity
and in conformity with accounting principles generally accepted in the United
States of America, and (ii) the report of Capitol's independent auditors with
respect to such consolidated financial statements.
The
members of the Audit Committee are not employees of Capitol and are not
performing the functions of internal auditors or accountants. As
such, it is not the duty or responsibility of the Audit Committee or its members
to conduct "field work" or other types of auditing or accounting reviews or
procedures or to set auditor independence standards. Members of the
Audit Committee necessarily rely on the information provided to them by
management and Capitol's independent auditors. Accordingly, the Audit
Committee's considerations and discussions referred to above do not assure that
the audit of Capitol's consolidated financial statements has been carried out in
accordance with the Standards of the Public Company Accounting Oversight Board
(United States), that the financial statements are presented in accordance with
accounting principles generally accepted in the United States of America or that
Capitol's auditors are in fact "independent."
Each
member of the Audit Committee is independent as defined under the NYSE listing
standards. The Committee operates under a written charter which has
been approved by the Board of Directors and is posted on Capitol's
website.
|
Audit
Committee
|
|
Gary
A. Falkenberg, Chairman
|
|
David
L. Becker
|
|
Richard
A. Henderson, CPA
|
COMPENSATION DISCUSSION
& ANALYSIS
Capitol
is a banking company that specializes in small to medium sized banks that offer
personalized financial services in each banks' respective
communities. Each of Capitol's affiliate banks is a separately
chartered institution, located throughout the United
States. Currently, Capitol has executive offices in Lansing, Michigan
and Phoenix, Arizona that support the operations of its
affiliates. Capitol is believed to have more bank charters than any
company in the United States.
As a
result of the current economic climate in the nation, Capitol's management took
several steps in 2008 to strengthen the capital position of the Corporation and
reduce operating expenses. Management recommended, and the
Compensation Committee approved, the following actions:
|
·
|
The
suspension of employer matching contributions to Capitol's 401(k) plan for
2009.
|
|
·
|
The
suspension of employer contributions made to all participants in Capitol's
Employee Stock Ownership Plan for
2008.
|
|
·
|
A
10% voluntary salary reduction for Capitol's senior management
group.
|
Additionally,
2009 is the second consecutive year that senior management has declined bonus
compensation.
The
impact of these actions, among others, was a reduction in Capitol's operating
expenses from the third quarter of 2008 to the fourth quarter of 2008 of 18%,
and a decrease of 8% from the fourth quarter of 2007 compared to the fourth
quarter of 2008.
Because
of Capitol's unique structure, operating philosophy and national geographic
footprint, finding a comparable peer group is difficult. Capitol has
historically operated as a development company, placing considerable demands on
senior management due to extensive travel, management of all of its independent
bank charters and the strategic planning necessary to implement Capitol's
significant growth initiatives. To effectively execute and manage
Capitol's strategy, it is crucial that Capitol be able to attract, motivate and
retain highly talented individuals at all levels of the
organization.
Capitol's
Board and management believe compensation should be based on the level of job
responsibility, individual performance and Capitol's
performance. Compensation should also reflect the value of the
corresponding positions in the marketplace. To attract and retain its
personnel, Capitol competes with much larger financial
institutions. The challenging economy has resulted in greater demands
placed on Capitol's management group. The Compensation Committee is
cognizant of the balance between retention of key employees on whom Capitol
relies heavily in this difficult environment and expense
mitigation.
Executive
Compensation Components
Capitol's
compensation program consists of the following components:
|
·
|
Base
Salary;
|
|
·
|
Performance-Based
Incentive Compensation;
|
|
·
|
Long-Term
Equity Incentive Compensation; and
|
|
·
|
Perquisites
and Other Benefits
|
Base
Salary.
Base salaries for Capitol's executives are established
based upon the scope of their responsibilities, taking into account competitive
market compensation paid by other similarly situated companies for similar
positions. Compensation of the executives is set by the CEO (with the
exception of Brian K. English, Cristin K. Reid and Joseph D. Reid III which is
set by the Compensation Committee in its sole discretion) and reviewed by
Capitol's Compensation Committee. The Compensation Committee approves
Capitol's overall annual base salary increase. Allocations of that
increase to individual employees are the responsibility of the
CEO. Salary increases are approved based on company performance as
well as individual performance for 2008, planned performance for 2009 and
comparable financial institution data. The objective is to allow
salary increases to retain and motivate successful performance while maintaining
affordability within Capitol's business plan. The CEO's compensation
is set by the Compensation Committee and presented to the Board of Directors for
approval. The compensation of the CEO is set based on the
Compensation Committee's review of performance objectives for Capitol which
include: asset and revenue growth, development of additional banking
subsidiaries, asset quality, identification of strategic opportunities,
development and maturation of the existing subsidiaries core earnings
performance and execution of Capitol's strategy.
No
compensation increases were approved for 2009 and Capitol's senior management
group asked for a voluntary 10% salary reduction effective January
2009. The Compensation Committee reviewed and approved the
request.
Performance-Based
Incentive Compensation
.
No
performance-based incentive compensation was paid in 2008 to Messrs.
Hendrickson, Lewis and Thomas and Ms. Reid. Typically, annual
incentive bonuses are awarded by Capitol's Compensation Committee when warranted
by Capitol's financial performance. The annual bonus is intended to
reward Capitol's executives for the favorable performance of
Capitol. The Compensation Committee takes into consideration both
corporate and individual performance objectives in awarding the annual bonus,
which include: asset and revenue growth, development of new banks, asset
quality, identification of strategic opportunities, development and maturation
of the existing banks and core earnings performance. Capitol's bonus
policy is divided into two parts: one subjective, the other based strictly on
return-on-equity targets. One of the elements of the subjective
analysis evaluates executives based on their contribution to the safety and
soundness of the organization, including such factors as credit quality, capital
management, personnel management and regulatory compliance; a second subjective
factor is the contribution to long-term shareholder value.
The bonus
policy seeks to align the interests of the executives with those of the
shareholders by setting aggressive performance targets that enhance the value of
Capitol. This bonus policy was put in place at Capitol and all of its
affiliates to align the interests of all of the executives in the affiliates
with the shareholders of Capitol.
The
Capitol Bancorp Ltd. Management Incentive Plan (MIP) was approved by Capitol's
shareholders at the 2003 Annual Meeting of Shareholders. The MIP
provides the Compensation Committee the latitude to establish primarily
cash-based incentive compensation programs to promote high performance and
achievement of corporate goals by officers, encourage the growth of shareholder
value and allow officers to participate in the long-term growth and
profitability of Capitol.
Under the
MIP, the Compensation Committee may elect to pay out awards in the form of
shares of Capitol's common stock. In issuing such shares as payment
of awards under the MIP, the Compensation Committee may establish any conditions
or restrictions it deems appropriate. In 2008, Capitol did not pay
out any awards under the MIP.
Long-Term Equity
Incentive Program
.
Capitol's philosophy is that
long-term performance is achieved through aligning the interests of its
executives with its shareholders through the use of stock-based
awards. Capitol has used the discretionary award of stock options
primarily as a tool in its retention and recruitment of executive
officers. The Capitol Bancorp Limited 2007 Equity Incentive Plan
(2007 Incentive Plan) provides for the grant of the following types of incentive
awards: (i) stock options, (ii) stock appreciation rights,
(iii) restricted stock, (iv) restricted stock units,
(v) performance shares and performance units, and (vi) other stock
awards. Each of these is referred to individually as an Award.
Those who are eligible for Awards under the 2007 Incentive Plan include
employees, directors and consultants who provide services to Capitol and its
affiliates. The Board or other committee administering the 2007
Incentive Plan is referred to as the Administrator. All employees,
officers and directors are eligible to be selected by the Administrator of the
2007 Incentive Plan to receive Awards.
Stock
options align employee incentives with shareholders' interests because options
have value only if Capitol's common stock price increases over
time. Capitol has typically granted stock options that have a 7-year
duration. Stock options are granted at market price on the date of
the grant. Capitol does not reprice stock options. Capitol
does not have a formal program, plan or practice to time stock option grants to
its executives in coordination with the release of material nonpublic
information. However, most stock option grants have been granted at
the same general time each year following the completion of the annual audit or
are granted in connection with the hiring of new executives.
Some
restricted stock grants were made during 2008 pursuant to the
shareholder-approved 2007 Incentive Plan. Restricted stock grants
made pursuant to the 2007 Incentive Plan typically are subject to continued
performance requirements and typically have a vesting schedule of four years or
more.
Perquisites and
Other Personal Benefits.
Capitol does not provide significant
perquisites or personal benefits to its executive officers. The named
executive officers are provided with an automobile allowance and, in the case of
Mr. Reid, the use of a company automobile.
Employee Stock Ownership Plan
(ESOP).
In response to the financial performance of Capitol,
employer contributions to the ESOP have been suspended for 2008.
Long-term
incentives to align the interests of Capitol's employees with the shareholders
have been implemented through the development of an Employee Stock Ownership
Plan. The ESOP typically provides annual awards of Capitol stock
subject to vesting requirements. All of Capitol's employees, with the
exception of the CEO, are eligible to participate in the program after meeting
certain length of service and age qualifications.
401(K)
Plan.
Capitol has established a 401(k) plan which includes an
employer match as a percentage of employees' contributions to the
plan. Capitol has suspended the employer matching contributions for
2009.
Executive Supplemental Income
Program.
In an effort to retain the long-term services of
certain of its executives, Capitol has an executive supplemental income program
for some of its executives. Individual agreements call for the
payment to the subject employee or designated beneficiary of an annual benefit,
which is approximately equal to a percentage of the annual base salary of each
employee, when entered into, for a period up to fifteen years in the event of
either the employee's retirement or the death of the employee before attaining
retirement age. In the event of a change of control of Capitol (as
defined in the agreements),
which is
not approved by Capitol's Board of Directors, each employee can retire with full
benefits at any time after attaining the age of 55 without approval of the Board
of Directors. The benefit liabilities under the agreements are
covered by insurance contracts funded by Capitol and/or its
subsidiaries. Capitol has entered into executive supplemental income
agreements with two individuals listed in the Summary Compensation Table,
Messrs. Hendrickson and Thomas.
Other
Benefits.
Additionally, Capitol has health insurance and other
programs that are usual and customary to encourage retention of Capitol's
employees. Capitol does not maintain a defined benefit pension plan
and does not have any nonqualified deferred compensation plans.
Role
of the Compensation Committee
In
accordance with the NYSE listing rules, the Compensation Committee is composed
entirely of independent directors of the Board of Directors. No
Compensation Committee member participates in any of Capitol's employee
compensation programs. Each year, the Nominating and Governance
Committee reviews all direct and indirect relationships that each director has
with Capitol and the Board of Directors subsequently reviews its
findings. The Board of Directors has determined that none of the
Compensation Committee members have any material business relationships with
Capitol.
The
Compensation Committee has responsibility for establishing, implementing and
continually monitoring adherence with Capitol's compensation
philosophy. The Compensation Committee ensures that the total
compensation paid to senior management is fair, reasonable and
competitive. Generally, the types of compensation and benefits
provided to the named executive officers are similar to other executive officers
of Capitol. The Compensation Committee believes that the most
effective executive compensation program is one that is designed to reward the
achievement of annual, long-term and strategic goals by Capitol, and which
aligns executives' interests with those of the shareholders by rewarding
performance above established goals, with the ultimate goal of improving
shareholder value. Specifically, the Compensation Committee seeks to
reward performance as measured by financial metrics and successful execution of
Capitol's strategic plan.
The
Compensation Committee periodically reviews the compensation levels of the Board
of Directors. In its review, the Compensation Committee looks to
ensure that the compensation is fair and reasonably commensurate to the amount
of work required both from the individual directors as well as from the Board in
the aggregate.
The
Compensation Committee is responsible for the review and approval of corporate
goals and objectives relevant to the compensation of Capitol's CEO, to evaluate
the performance of the CEO in light of the goals and objectives and determine
and approve the CEO's compensation levels based on this
evaluation. Additionally, the Compensation Committee reviews
compensation levels for members of Capitol's executive management
group. To achieve these goals and objectives, the Compensation
Committee expects to maintain compensation plans that create an executive
compensation program that is set at competitive levels of comparable public
financial services institutions (to the extent comparable entities may be
identified) with comparable performance. The Compensation Committee
makes recommendations to the Board with respect to compensation plans and
equity-based plans and oversees the administration of the compensation,
incentive and equity-based benefit plans of Capitol. The Compensation
Committee periodically reviews director and Board committee compensation levels
and practices and recommends to the Board changes in such compensation levels
and practices.
The
Compensation Committee has followed certain fundamental objectives to ensure the
effectiveness of Capitol's compensation strategy. These objectives
include the following:
|
1.
|
Internal and external
fairness
– the Compensation Committee recognizes the importance of
perceived fairness both internally and externally of compensation
practices. The Compensation Committee has evaluated the overall
economic impact of Capitol's compensation practices, and when deemed
necessary, has consulted with independent outside advisors in the
evaluation of contractual obligations and compensation
levels.
|
|
2.
|
Performance based
incentives
– the establishment of financial incentives for senior
management who meet certain objectives which promote Capitol's ability to
meet its long-term growth and financial goals.
|
|
3.
|
Shareholder value and long-term
incentives
– the Compensation Committee believes that the long-term
success of Capitol and its ability to consistently increase shareholder
value is dependent on its ability to attract and retain skilled
executives. Capitol's compensation strategy encourages
equity-based compensation to align the interests of management and
shareholders.
|
|
4.
|
Full disclosure
– the
Compensation Committee seeks to provide full disclosure to the independent
members of the Board of Directors of Capitol's compensation practices and
issues to ensure that all directors understand the implications of
Compensation Committee decisions.
|
The
Compensation Committee has reviewed the compensation practices of other
companies in the financial services industry and considered management's
individual efforts for the benefit of Capitol, as well as reviewed various
subjective measures in determining the adequacy and appropriateness of the
compensation of executives at Capitol. The Compensation Committee
takes into account the performance of the executives as well as their longevity
with Capitol. The Compensation Committee takes such market
considerations into account to ensure that Capitol is providing appropriate
long-term incentives to enable it to continue to attract new senior management
executives and to retain the ones it already employs. The
Compensation Committee additionally considers the increase in the cost of living
that impacts its executive officers that are required to spend certain periods
of time at offices of its affiliates across the country. General
economic conditions and the past practice of Capitol are also factors that are
considered by the Compensation Committee.
The
Compensation Committee has established various processes to assist it in
ensuring Capitol's compensation program is achieving its
objectives. Among these are:
|
|
Assessment of C
apitol's
Performance.
The
Compensation Committee uses company performance measures in two ways. In
establishing total compensation ranges, the Compensation Committee
considers various measures of company and industry performance, asset
growth, operating results, return on assets, return on equity, total
shareholder return and the effective execution of Capitol's growth and
expansion strategy. The Compensation Committee does not apply a formula or
assign these performance measures relative weights. Instead, it makes a
subjective determination after considering such measures
collectively.
|
|
|
Assessment of Individual
Performance.
Individual performance has a strong impact on the
compensation of all employees, including the CEO and the other named
executive officers. The CEO's compensation is governed by his employment
contract, which is described below. For the other named
executive officers, the Compensation Committee receives a performance
assessment and compensation recommendation from the CEO and also exercises
its judgment based on the Board's interactions with the executive officer.
As with the CEO, the performance evaluation of these executives is based
on his or her contribution to the company's performance and other
leadership accomplishments.
|
|
|
Total Compensation Review.
The Compensation Committee reviews each executive's base pay, bonus
and equity incentives on an annual basis. In addition to these primary
compensation elements, the Compensation Committee reviews the perquisites
and other compensation and payments that would be required under various
severance and change-in-control scenarios. Following the 2008 review, the
Compensation Committee determined that these elements of compensation were
reasonable in the aggregate.
|
The
Compensation Committee typically approves a percentage increase in the amount of
total compensation available to be paid by Capitol. The CEO is then
responsible for individual allocations that fall within the limitations that are
established by the Compensation Committee. Due to family
relationships, the compensation of Brian K. English, Cristin K. Reid and Joseph
D. Reid III is set directly by the Compensation Committee itself without the
involvement or recommendation of the CEO.
Tax
Deductibility of Executive Compensation
Section
162(m) of the Internal Revenue Code generally disallows a tax deduction for
annual compensation paid to a chief executive officer and certain other highly
compensated officers in excess of $1 million unless the compensation qualifies
as “performance-based” or is otherwise exempt under the law. Both the
2007 Incentive Plan and the MIP are intended to meet the deductibility
requirements of the regulations promulgated under Section
162(m). However, the Compensation Committee may determine in any year
that it would be in Capitol's best interests for awards to be paid under the
2007 Incentive Plan and the MIP, or for other compensation to be paid, that
would not satisfy the requirements for deductibility under Section
162(m). In making such determination, the Compensation Committee
would consider the net cost to Capitol and its ability to effectively administer
executive compensation in the long-term interests of shareholders.
Cautionary
Statement
The
information appearing in this Compensation Discussion and Analysis, and
elsewhere in this Proxy Statement, as to performance metrics, objectives and
targets relates only to incentives established for the purpose of motivating
executives to achieve results that will help to enhance shareholder
value. This information is not related to Capitol's expectations of
future financial performance, and should not be mistaken for any guidance issued
by Capitol regarding its future earnings, free cash flow or other financial
measures.
COMPENSATION COMMITTEE
REPORT
The
Compensation Committee of Capitol has reviewed and discussed the Compensation
Discussion and Analysis required by Item 402(b) of Regulation S-K with
management and, based on such review and discussions, the Compensation Committee
recommended to the Board that it be included in this Proxy Statement and in
Capitol's Annual Report on Form 10-K for the year ended December 31,
2008.
|
Compensation
Committee
|
|
Kathleen
A. Gaskin, Chairman
|
|
James
C. Epolito
|
|
Lewis
D. Johns
|
Equity
Compensation Plan Information
The
following table summarizes information regarding Capitol's equity compensation
plans in effect as of December 31, 2008:
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
Plan
category
|
|
Number
of securities
to
be issued upon
exercise
of outstanding
options,
warrants
and
rights (1)
|
|
|
Weighted-average
exercise
price
of
outstanding
options,
warrants
and
rights (1)
|
|
|
Number
of securities
remaining
available for
future
issuance under
equity
compensation
plans
(excluding securities reflected in column (a))
|
|
|
|
|
|
|
|
|
|
|
|
Equity
compensation plans approved by security holders*
|
|
|
1,947,590
|
|
|
$
|
29.87
|
|
|
|
44,988
|
|
Equity
compensation plans not approved by security holders
(1)
|
|
|
44,830
|
|
|
|
20.95
|
|
|
|
- -
-
|
|
Equity
compensation plans resulting from share exchanges
|
|
|
381,739
|
|
|
|
21.04
|
|
|
|
- - -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,374,159
|
|
|
$
|
28.28
|
|
|
|
44,988
|
|
(1)
|
Options
issued pursuant to employment agreements with various officers of Capitol
and its subsidiaries.
|
|
|
|
* Does
not include shares that may be issued if Capitol elects to pay awards made under
the Capitol Bancorp Ltd. Management
Incentive
Plan in the form of shares of Capitol's common stock. Also does not
include shares that were approved to be issued
under
the 2007 Incentive Plan, which includes a provision increasing the shares
available for the plan in an amount equal to
2%
of the outstanding shares of common stock as of December 31 of each
year.
[The
remainder of this page is intentionally left blank.]
SUMMARY
COMPENSATION
The
following table sets forth all compensation paid to the named executive
officers.
|
Summary
Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
and Principal Position
|
|
Year
|
|
Salary($)
|
|
|
Bonus
($)(1)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity
Incentive
Plan
Compensation
($)
|
|
|
Change
in
Pension
Value
($)
|
|
|
All
Other
Compensation
($)
|
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph
D. Reid
|
|
2008
|
|
$
|
900,000
|
|
|
|
-0-
|
|
|
$
|
99,996
|
(3)
|
|
|
—
|
|
|
$
|
100,000
|
(2)
|
|
|
N/A
|
|
|
$
|
52,114
|
(6)
|
|
$
|
1,152,110
|
|
Chief
Executive Officer and
|
|
2007
|
|
|
960,769
|
|
|
|
-0-
|
|
|
|
—
|
|
|
$
|
236,423
|
(5)
|
|
|
|
(2)
|
|
|
N/A
|
|
|
|
21,915
|
(7)
|
|
|
1,219,107
|
|
Chairman
|
|
2006
|
|
|
1,000,000
|
|
|
|
-0-
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
N/A
|
|
|
|
7,839
|
(8)
|
|
|
1,007,839
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lee
W. Hendrickson
|
|
2008
|
|
|
426,400
|
|
|
|
-0-
|
|
|
|
17,824
|
(4)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
27,067
|
|
|
|
18,400
|
(9)
|
|
|
489,691
|
|
Chief
Financial Officer
|
|
2007
|
|
|
412,615
|
|
|
|
-0-
|
|
|
|
17,824
|
(4)
|
|
|
—
|
|
|
|
—
|
|
|
|
25,062
|
|
|
|
25,049
|
(10)
|
|
|
480,550
|
|
|
|
2006
|
|
|
394,000
|
|
|
$
|
75,000
|
|
|
|
17,824
|
(4)
|
|
|
—
|
|
|
|
—
|
|
|
|
23,205
|
|
|
|
22,954
|
(11)
|
|
|
532,983
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
S. Lewis
|
|
2008
|
|
|
435,625
|
|
|
|
-0-
|
|
|
|
17,824
|
(4)
|
|
|
—
|
|
|
|
—
|
|
|
|
N/A
|
|
|
|
16,244
|
(12)
|
|
|
469,693
|
|
President
of Bank
|
|
2007
|
|
|
417,308
|
|
|
|
-0-
|
|
|
|
17,824
|
(4)
|
|
|
—
|
|
|
|
—
|
|
|
|
N/A
|
|
|
|
22,729
|
(13)
|
|
|
457,861
|
|
Performance
|
|
2006
|
|
|
375,000
|
|
|
|
75,000
|
|
|
|
17,824
|
(4)
|
|
|
—
|
|
|
|
—
|
|
|
|
N/A
|
|
|
|
25,947
|
(14)
|
|
|
493,771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cristin
K. Reid
|
|
2008
|
|
|
410,000
|
|
|
|
-0-
|
|
|
|
17,824
|
(4)
|
|
|
—
|
|
|
|
—
|
|
|
|
N/A
|
|
|
|
18,400
|
(15)
|
|
|
446,224
|
|
Corporate
President
|
|
2007
|
|
|
384,615
|
|
|
|
-0-
|
|
|
|
17,824
|
(4)
|
|
|
—
|
|
|
|
—
|
|
|
|
N/A
|
|
|
|
25,049
|
(16)
|
|
|
427,488
|
|
|
|
2006
|
|
|
300,000
|
|
|
|
75,000
|
|
|
|
17,824
|
(4)
|
|
|
—
|
|
|
|
—
|
|
|
|
N/A
|
|
|
|
22,913
|
(17)
|
|
|
415,737
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce
A. Thomas
|
|
2008
|
|
|
348,500
|
|
|
|
-0-
|
|
|
|
17,824
|
(4)
|
|
|
—
|
|
|
|
—
|
|
|
|
23,758
|
|
|
|
18,400
|
(18)
|
|
|
408,482
|
|
President
of Bank Operations
|
|
2007
|
|
|
332,308
|
|
|
|
-0-
|
|
|
|
17,824
|
(4)
|
|
|
—
|
|
|
|
—
|
|
|
|
21,998
|
|
|
|
25,049
|
(19)
|
|
|
397,179
|
|
|
|
2006
|
|
|
290,000
|
|
|
|
75,000
|
|
|
|
17,824
|
(4)
|
|
|
—
|
|
|
|
—
|
|
|
|
20,369
|
|
|
|
22,919
|
(20)
|
|
|
426,112
|
|
(1)
|
The
named executive officers elected to forgo receiving a bonus in 2007 and
2008 due to the financial performance of Capitol
Bancorp.
|
|
(2)
|
In
2007, Mr. Reid elected to forgo $300,000 in non-equity incentive
compensation due to him under his agreement. Similarly, Mr.
Reid elected to forgo $100,000 in 2008.
|
|
(3)
|
Mr.
Reid received two restricted stock grants on February 6, 2008 totaling
9,812 shares, and two grants on August 7, 2008 totaling 13,478
shares. Such restricted shares vest on a graded basis on the
anniversary of the grant date each year. Mr. Reid will receive
25% of the grant amount at that time. The amount reported
represents 25% of the grant date fair value reflecting one year's service
of the four-year vesting period.
|
|
(4)
|
Mr.
Hendrickson, Mr. Lewis, Ms. Reid and Mr. Thomas each received a restricted
stock grant of 2,000 shares on April 21, 2006. Such restricted
shares vest on a cliff basis on April 21, 2011 at which time the award
becomes 100% vested. The amount reported is 20% of the grant
date fair value reflecting one year's service of the five-year vesting
period. Amount shown represents 2007 amortization of
total intrinsic value of the restricted stock award as of the grant
date.
|
|
(5)
|
Reflects
the vested portion of options awarded (valued by using the Black Scholes
valuation model at grant date) pursuant to Mr. Reid's employment
contract.
|
|
(6)
|
Includes
$6,600 contributed to Capitol's 401(k) plan, $1,192 in lease payments and
insurance for an automobile provided by the company that was used for
personal use, $16,650 for the economic value of a split-dollar life
insurance policy paid on his behalf and $27,672 received from dividends
received on unvested restricted stock.
|
|
(7)
|
Includes
$6,600 contributed to Capitol's 401(k) plan, $1,191 in lease payments and
insurance for an automobile provided by the company that was used for
personal use, $14,100 for the economic value of a split-dollar life
insurance policy paid on his behalf and $24 from supplemental spousal life
insurance premiums paid on his behalf.
|
|
(8)
|
Includes
$6,600 contributed to Capitol's 401(k) plan, $1,156 in lease payments for
an automobile provided by the company that was used for personal use and
$83 from supplemental spousal life insurance premiums paid on his
behalf.
|
|
(9)
|
Includes
$6,600 contributed to Capitol's 401(k) plan, a $10,800 automobile
allowance and $1,000 from dividends received on unvested restricted
stock.
|
|
(10)
|
Includes
$6,600 contributed to Capitol's 401(k) plan, $5,625 contributed to
Capitol's ESOP plan, a $10,800 automobile allowance, $24 relating to
supplemental spousal life insurance premiums paid on his behalf and $2,000
from dividends received on unvested restricted stock.
|
|
(11)
|
Includes
$6,600 contributed to Capitol's 401(k) plan, $5,500 contributed to
Capitol's ESOP plan, a $10,800 automobile allowance and $54 relating to
supplemental spousal life insurance premiums paid on his
behalf.
|
|
(12)
|
Includes
$4,444 contributed to Capitol's 401(k) plan, a $10,800 automobile
allowance and $1,000 from dividends received on unvested restricted
stock.
|
|
(13)
|
Includes
$4,280 contributed to Capitol's 401(k) plan, $5,625 contributed to
Capitol's ESOP plan, a $10,800 automobile allowance, $24 relating to
supplemental spousal life insurance premiums paid on his behalf and $2,000
from dividends received on unvested restricted stock.
|
|
(14)
|
Includes
$3,858 contributed to Capitol's 401(k) plan, $5,500 contributed to
Capitol's ESOP plan, a $10,800 automobile allowance, $13 relating to
supplemental spousal life insurance premiums paid on his behalf and $5,776
from dividends received on unvested restricted stock.
|
|
(15)
|
Includes
$6,600 contributed to Capitol's 401(k) plan, a $10,800 automobile
allowance and $1,000 from dividends received on unvested restricted
stock.
|
|
(16)
|
Includes
$6,600 contributed to Capitol's 401(k) plan, $5,625 contributed to
Capitol's ESOP plan, a $10,800 automobile allowance, $24 relating to
supplemental spousal life insurance premiums paid on her behalf and $2,000
from dividends received on unvested restricted stock.
|
|
(17)
|
Includes
$6,600 contributed to Capitol's 401(k) plan, $5,500 contributed to
Capitol's ESOP plan, a $10,800 automobile allowance and $13 relating to
supplemental spousal life insurance premiums paid on her
behalf.
|
|
(18)
|
Includes
$6,600 contributed to Capitol's 401(k) plan, a $10,800 automobile
allowance and $1,000 from dividends received on unvested restricted
stock.
|
|
(19)
|
Includes
$6,600 contributed to Capitol's 401(k) plan, $5,625 contributed to
Capitol's ESOP plan, a $10,800 automobile allowance, $24 relating to
supplemental spousal life insurance premiums paid on his behalf and $2,000
from dividends received on unvested restricted stock.
|
|
(20)
|
Includes
$6,600 contributed to Capitol's 401(k) plan, $5,500 contributed to
Capitol's ESOP plan, a $10,800 automobile allowance and $19 relating to
supplemental spousal life insurance premiums paid on his
behalf.
|
Employment
Agreements
Joseph
D. Reid
In March
2003, Capitol entered into an employment agreement with Mr. Reid. The
agreement had an initial term of three years, which was set to expire in March
2006. Pursuant to the terms of the agreement, its employment period
is automatically extended for a three-year term on each annual anniversary of
the agreement, unless Capitol provides Mr. Reid with notice sixty days prior to
such anniversary. The agreement permits Capitol to give Mr. Reid
notice of its intention to stop the automatic renewal, in which case the
agreement will expire two years and sixty days from the date of Capitol's notice
to him. Capitol has not provided notice of its intention to stop the
automatic renewal in 2008. Accordingly, the agreement will not expire
until at least March 13, 2010.
Capitol
is not permitted to reduce Mr. Reid's annual salary at any time during the term
of the agreement. However, Mr. Reid asked for a voluntary reduction
in his 2009 compensation of 10%. During the term of his employment,
Mr. Reid will be entitled to an annual cash bonus based on achieving targets for
both growth rates for earnings per share and consolidated assets. Mr.
Reid is also entitled to certain long-term incentive compensation consisting of
common stock and cash. Capitol will grant Mr. Reid options to
purchase shares of Capitol's common stock at an exercise price equal to the fair
market value of Capitol's common stock on the date of such grant based on
specific corporate development objectives during the term of the
agreement.
In 2006,
both Mr. Reid and the Compensation Committee began a review of Mr. Reid's
current compensation under the terms of his employment agreement. At
the time the agreement was entered into in 2003, neither Mr. Reid nor the
Compensation Committee anticipated the rate of growth of affiliate banks that
Capitol has been able to achieve. Under the terms of the agreement,
Mr. Reid was, in part, incentivized to develop new banks, being awarded stock
options based on the number of banks developed.
In August
2007, Mr. Reid and Capitol entered into an amendment to his employment agreement
which will reduce his total cash compensation and limit the equity incentives
paid to him based on the future development of Capitol. The amendment
amended the original agreement as follows:
|
·
|
reduce
Mr. Reid's salary to $900,000;
|
|
·
|
delete
references to Mr. Reid's right to defer his
compensation;
|
|
·
|
change
the date on which certain amounts are paid to Mr. Reid to avoid any
potential issues arising under Section 409A of the
Code;
|
|
·
|
revise
Mr. Reid's long-term stock award for each new bank or holding company
opened or acquired by Capitol (New Affiliate) from an option for 30,000
shares of Capitol's common stock to $50,000 in cash and a restricted stock
award for shares of Capitol's common stock having a fair market value of
$100,000; and
|
|
·
|
Mr.
Reid is not entitled to receive any compensation for more than ten New
Affiliates in each fiscal year.
|
[The
remainder of this page is intentionally left blank.]
Lee
W. Hendrickson, John S. Lewis, Cristin K. Reid and Bruce A. Thomas
Capitol
entered into employment agreements with Ms. Reid and Mr. Thomas in March 2006,
and Mr. Hendrickson and Mr. Lewis in March 2008. Ms. Reid and Messrs.
Thomas, Hendrickson and Lewis asked for a voluntary salary reduction of 10% for
2009. The employment agreements provide for a base salary,
discretionary bonus, certain fringe benefits and the right to receive their base
salary for a subsequent period of one year should Capitol choose to terminate
employment without cause. The agreements were for a period of five
years, with automatic renewal for periods of one year unless either Capitol or
the respective executive provided notice to terminate the
agreement. The agreements also include a change in control
provision. Under the terms of the agreements, a change of control is
defined as (i) the acquisition by any nonaffiliated entity acquiring Capitol
voting stock or irrevocable proxies or any combination of the two representing
25% or more of the voting securities of Capitol; (ii) the acquisition by any
nonaffiliated entity of Capitol of control in any manner of sufficient votes for
the election of a majority of the directors of Capitol; or (iii) the sale,
transfer or acquisition of all or substantially all of the assets of Capitol to
or by any other nonaffiliated entity. Upon the occurrence of a change
of control, if either the employee or Capitol terminates such employee's
employment, such executive would receive 299% of his/her base
salary. The change of control payment would be payable at the option
of Capitol either in a lump sum or in equal payments over the remaining term of
the employment agreement.
The
Compensation Committee, which is composed solely of independent directors as
defined by the listing standards of the NYSE, may elect to adopt plans or
programs providing for additional employee benefits if the Compensation
Committee determines that doing so is in Capitol's best interests.
GRANTS OF PLAN-BASED
AWARDS
The
following table shows all plan-based awards granted to the named executive
officers during 2008.
|
Grants
of Plan-Based Awards
|
|
|
|
Estimated
Future Payouts Under Equity Incentive Plan Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant
Date
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
All
Other
Stock
Awards:
Number
of
Shares
of Stock or Units
|
|
|
Grant
Date
Fair
Value of Stock and Option Awards ($)
|
|
|
All
Other
Option
Awards:
Number
of
Securities
Underlying
Options
(#)
|
|
|
Exercise
or Base
Price
of Option
Awards
($/Sh)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph
D. Reid (1)(2)
|
|
2/6/08
|
|
N/A
|
|
|
N/A
|
|
|
$
|
99,984
|
|
|
|
4,906
|
|
|
$
|
99,984
|
|
|
|
—
|
|
|
|
—
|
|
Joseph
D. Reid (1)
|
|
2/6/08
|
|
N/A
|
|
|
N/A
|
|
|
|
99,984
|
|
|
|
4,906
|
|
|
|
99,984
|
|
|
|
—
|
|
|
|
—
|
|
Joseph
D. Reid (1)
|
|
8/7/08
|
|
N/A
|
|
|
N/A
|
|
|
|
100,007
|
|
|
|
6,739
|
|
|
|
100,007
|
|
|
|
—
|
|
|
|
—
|
|
Joseph
D. Reid (1)
|
|
8/7/08
|
|
N/A
|
|
|
N/A
|
|
|
|
100,007
|
|
|
|
6,739
|
|
|
|
100,007
|
|
|
|
—
|
|
|
|
—
|
|
(1)
|
Pursuant
to the Second Amendment to Mr. Reid's Employment Agreement, Mr. Reid
receives a restricted stock award for shares of the Corporation's common
stock having a fair market value of $100,000 for each new bank opened for
business.
|
|
(2)
|
Pursuant
to his amended Employment Agreement approved in 2007, Mr. Reid is eligible
for a cash bonus of 2% of Capitol's net income upon certification of the
Compensation Committee that the growth of both Capitol's earnings per
share and total assets equals or exceeds 10% of the immediately preceding
fiscal year. No award was earned for
2008.
|
[The
remainder of this page is intentionally left blank.]
Capitol
Bancorp Limited 2007 Equity Incentive Plan
The 2007
Incentive Plan provides for the grant of the following types of incentive
awards: (i) stock options, (ii) stock appreciation rights,
(iii) restricted stock, (iv) restricted stock units,
(v) performance shares and performance units, and (vi) other stock
awards. Each of these is referred to individually as an
"Award."
Those who are eligible for Awards under the 2007 Incentive Plan include
employees, directors and consultants who provide services to Capitol and its
affiliates.
All employees, officers and directors
are eligible to be selected by the Administrator of the 2007 Incentive Plan to
receive Awards. The shareholders have approved up to 350,000 shares
of Capitol's common stock for issuance under the 2007 Incentive
Plan. The number of shares available for issuance under the 2007
Incentive Plan will be increased on January 1 of each year beginning with
January 1, 2008 in an amount up to a maximum of two percent (2%) of the
outstanding shares on December 31 of the immediately preceding
year.
Capitol
Bancorp Ltd. Management Incentive Plan
The
Capitol Bancorp Ltd. Management Incentive Plan (MIP) was approved by Capitol's
shareholders at the 2003 Annual Meeting of Shareholders. The MIP
provides the Compensation Committee the latitude to establish primarily
cash-based incentive compensation programs to promote high performance and
achievement of corporate goals by officers, encourage the growth of shareholder
value and allow officers to participate in the long-term growth and
profitability of Capitol.
Under the
MIP, the Compensation Committee may elect to pay out awards in the form of
shares of Capitol's common stock. In issuing such shares as payment
of awards under the MIP, the Compensation Committee may establish any conditions
or restrictions it deems appropriate. In 2008, Capitol did not pay
out any awards in the form of shares of restricted stock to the named executive
officers from the MIP.
[The
remainder of this page is intentionally left blank.]
2008
and 2009 Grants
The
Compensation Committee did not award stock options to the named executive
officers in 2008. The Compensation Committee has not established
guidelines for the grant of plan-based awards for 2009.
The
following table sets forth all outstanding equity awards at year-end 2008 for
the named executive officers. Prior to entering into Mr. Reid's
employment agreement in March of 2003, Mr. Reid and Capitol were operating under
a prior employment agreement which provided for automatic grants of stock
options based on the number of outstanding shares of Capitol. Such
provision of Mr. Reid's original employment agreement was eliminated by the 2003
employment agreement executed by Mr. Reid and Capitol. Many grants
listed below relate to grants made under Mr. Reid's prior employment
agreement.
|
Outstanding
Equity Awards at Fiscal Year-End 2008
|
|
|
|
|
|
Option
Awards(1)
|
|
Stock
Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Number
of Shares
or
Units of Stock
That
Have Not
Vested
(#)
|
|
Market
Value of
Shares
or Units
of
Stock That Have
Not
Vested ($)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph
D. Reid
|
|
975
|
|
$ 21.25
|
|
7/8/09
|
|
23,290
|
|
$ 181,662
|
|
|
|
51,910
|
|
21.48
|
|
9/3/09
|
|
—
|
|
—
|
|
|
|
2,373
|
|
16.08
|
|
10/1/09
|
|
—
|
|
—
|
|
|
|
333
|
|
17.81
|
|
10/9/09
|
|
—
|
|
—
|
|
|
|
116
|
|
16.55
|
|
10/10/09
|
|
—
|
|
—
|
|
|
|
103
|
|
20.80
|
|
11/05/09
|
|
—
|
|
—
|
|
|
|
99
|
|
20.75
|
|
11/08/09
|
|
—
|
|
—
|
|
|
|
1,432
|
|
19.47
|
|
11/22/09
|
|
—
|
|
—
|
|
|
|
211
|
|
20.00
|
|
12/3/09
|
|
—
|
|
—
|
|
|
|
11
|
|
21.28
|
|
12/17/09
|
|
—
|
|
—
|
|
|
|
249
|
|
21.23
|
|
12/27/09
|
|
—
|
|
—
|
|
|
|
6,107
|
|
21.84
|
|
12/31/09
|
|
—
|
|
—
|
|
|
|
711
|
|
22.28
|
|
1/7/10
|
|
—
|
|
—
|
|
|
|
576
|
|
23.20
|
|
1/8/10
|
|
—
|
|
—
|
|
|
|
42,524
|
|
21.95
|
|
1/17/10
|
|
—
|
|
—
|
|
|
|
553
|
|
22.28
|
|
1/20/10
|
|
—
|
|
—
|
|
|
|
94
|
|
22.50
|
|
1/22/10
|
|
—
|
|
—
|
|
|
|
20
|
|
23.00
|
|
1/22/10
|
|
—
|
|
—
|
|
|
|
60
|
|
21.49
|
|
2/3/10
|
|
—
|
|
—
|
|
|
|
227
|
|
23.37
|
|
2/11/10
|
|
—
|
|
—
|
|
|
|
1,736
|
|
20.36
|
|
2/12/10
|
|
—
|
|
—
|
|
|
|
3,910
|
|
17.42
|
|
2/15/10
|
|
—
|
|
—
|
|
|
|
907
|
|
21.49
|
|
2/19/10
|
|
—
|
|
—
|
|
|
|
398
|
|
21.03
|
|
3/4/10
|
|
—
|
|
—
|
|
|
|
205
|
|
21.48
|
|
3/6/10
|
|
—
|
|
—
|
|
|
|
241
|
|
20.85
|
|
3/7/10
|
|
—
|
|
—
|
|
|
|
33,056
|
|
21.04
|
|
3/10/10
|
|
—
|
|
—
|
|
|
|
11,800
|
|
16.40
|
|
6/1/10
|
|
—
|
|
—
|
|
|
|
116,136
|
|
20.92
|
|
7/31/10
|
|
—
|
|
—
|
|
|
|
132,816
|
|
32.98
|
|
9/23/10
|
|
—
|
|
—
|
|
|
|
60,000
|
|
27.04
|
|
11/6/10
|
|
—
|
|
—
|
|
|
|
70,285
|
|
27.23
|
|
12/31/10
|
|
—
|
|
—
|
|
|
|
60,000
|
|
25.27
|
|
5/25/11
|
|
—
|
|
—
|
|
|
|
10,875
|
|
16.40
|
|
7/9/11
|
|
—
|
|
—
|
|
|
|
30,000
|
|
25.86
|
|
8/5/11
|
|
—
|
|
—
|
|
|
|
55,927
|
|
16.40
|
|
9/30/11
|
|
—
|
|
—
|
|
|
|
30,000
|
|
34.31
|
|
1/10/12
|
|
—
|
|
—
|
|
|
|
77
|
|
16.40
|
|
3/15/12
|
|
—
|
|
—
|
|
|
|
30,000
|
|
31.86
|
|
5/5/12
|
|
—
|
|
—
|
|
|
|
270,000
|
|
32.03
|
|
6/29/12
|
|
—
|
|
—
|
|
|
|
258,000
|
|
37.48
|
|
12/30/12
|
|
—
|
|
—
|
|
|
|
150,000
|
|
22.46
|
|
8/1/14
|
|
—
|
|
—
|
|
Outstanding
Equity Awards at Fiscal Year-End 2008
|
|
|
|
|
|
Option
Awards(1)
|
|
Stock
Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Number
of Shares
or
Units of Stock
That
Have Not
Vested
(#)
|
|
Market
Value of
Shares
or Units
of
Stock That Have
Not
Vested ($)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lee
W. Hendrickson
|
|
6,517
|
|
$ 17.42
|
|
2/5/09
|
|
2,000
|
|
$ 15,600
|
|
|
|
5,253
|
|
20.90
|
|
5/21/09
|
|
—
|
|
—
|
|
|
|
480
|
|
20.89
|
|
12/31/09
|
|
—
|
|
—
|
|
|
|
1,303
|
|
17.42
|
|
2/15/10
|
|
—
|
|
—
|
|
|
|
50,000
|
|
27.05
|
|
3/22/10
|
|
—
|
|
—
|
|
|
|
1,050
|
|
20.90
|
|
8/1/10
|
|
—
|
|
—
|
|
|
|
20,000
|
|
30.21
|
|
5/16/11
|
|
—
|
|
—
|
|
John
S. Lewis
|
|
20,000
|
|
30.21
|
|
5/16/11
|
|
2,000
|
|
15,600
|
|
|
|
20,000(3)
|
|
10.00
|
|
8/1/09
|
|
—
|
|
—
|
|
Cristin
K. Reid
|
|
5,253
|
|
20.90
|
|
5/21/09
|
|
2,000
|
|
15,600
|
|
|
|
801
|
|
20.89
|
|
12/31/09
|
|
—
|
|
—
|
|
|
|
1,303
|
|
17.42
|
|
2/15/10
|
|
—
|
|
—
|
|
|
|
20,000
|
|
27.05
|
|
3/22/10
|
|
—
|
|
—
|
|
|
|
1,050
|
|
20.90
|
|
8/1/10
|
|
—
|
|
—
|
|
|
|
20,000
|
|
30.21
|
|
5/16/11
|
|
—
|
|
—
|
|
Bruce
A. Thomas
|
|
34,000
|
|
27.05
|
|
3/22/10
|
|
2,000
|
|
15,600
|
|
|
|
20,000
|
|
30.21
|
|
5/16/11
|
|
—
|
|
—
|
|
(1)
|
All
stock option awards are vested as of December 31, 2008.
|
|
(2)
|
Based
upon Capitol's common stock closing price as of December 31, 2008 of $7.80
per share as reported by the NYSE.
|
|
(3)
|
Stock
options in Capitol's subsidiary Bank of San
Francisco.
|
|
Option
Exercises and Stock Vested 2008
|
|
|
|
Option
Awards
|
|
Stock
Awards
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Number
of Shares
Acquired
on Exercise
(#)
|
|
Value
Realized on Exercise ($)
|
|
Number
of Shares
Acquired
on Vesting (#)
|
|
Value
Realized on
Vesting
($)
|
|
|
|
|
|
|
|
|
|
|
|
Joseph
D. Reid
|
|
10,762
|
|
$ 401,524
|
|
42,833
|
|
$ 861,800(1)
|
|
Lee
W. Hendrickson
|
|
734
|
|
3,134
|
|
—
|
|
—
|
|
John
S. Lewis
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Cristin
K. Reid
|
|
1,303
|
|
49,695
|
|
—
|
|
—
|
|
Bruce
A. Thomas
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1)
|
Value
based upon Capitol's common stock price per share as reported by the NYSE
on December 31, 2007 ($20.12), the most recently reported price at the
time of the vesting of the restricted stock award on January 1,
2008.
|
|
Pension
Benefits 2008
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Plan
Name
|
|
Number
of Years of
Credited
Service (#)(1)
|
|
Present
Value of
Accumulated
Benefits ($)
|
|
Payments
During Last
Fiscal
Year ($)
|
|
|
|
|
|
|
|
|
|
|
|
Joseph
D. Reid
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
Lee
W. Hendrickson
|
|
Executive
Supplemental
Income
Agreement
|
|
15
|
|
$ 189,646
|
|
—
|
|
John
S. Lewis
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
Cristin
K. Reid
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
Bruce
A. Thomas
|
|
Executive
Supplemental
Income
Agreement
|
|
10
|
|
N/A
|
|
—
|
|
(1)
|
Executives
become eligible for Executive Supplemental Income once they have reached
15 years of service and age 65. The benefit does not increase
with additional years of
service. Accordingly,
if an executive has more than 15 years of service, the table reflects 15
years.
|
Executive
Supplemental Income Plan
In an
effort to retain the long-term services of certain of its executives, Capitol
has an executive supplemental income program for some executives. The
individual agreements call for the payment of an annual benefit to the subject
employee or designated beneficiary, which is approximately equal to a percentage
of the annual base salary of each employee, when entered into, for a period up
to 15 years in the event of either the employee's retirement or the death of the
employee before attaining retirement age. Normal retirement age is 65
years of age. An employee may retire at age 55 with 15 years of
service and receive a partial benefit. The benefit is fixed at the
execution of the agreement and does not fluctuate over time. In the
event of a change of control of Capitol (as defined in the agreements), which is
not approved by Capitol's Board of Directors, each employee can retire with full
benefits at any time after attaining the age of 55 without approval of the Board
of Directors. The benefit liabilities under the agreements are
covered by insurance contracts funded by Capitol and/or its
subsidiaries.
In
calculating the present value of accumulated benefits, Capitol has assumed that
each employee would successfully meet the eligibility requirements (i.e., 15
years of continuous service and attainment of age 65). Capitol has
also assumed for such calculation that each employee would retire upon
attainment of age 65. Capitol took the lump sum amount needed to
satisfy the benefits for each executive and reduced it to present value using a
discount rate of 8%. Capitol then calculated the number of years
remaining until the employee reached age 65. Finally, Capitol then
accrued the cost accordingly to amass the amount needed to fund the annual
benefit.
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
During
the last completed fiscal year, the voting members of the Compensation Committee
were Douglas E. Crist, James C. Epolito, Kathleen A. Gaskin, Lewis D. Johns and
Leonard Maas. Except for Lewis D. Johns, none of these persons were,
during such fiscal year, an officer or employee of Capitol or any of its
subsidiaries, or was formerly an officer of Capitol or any of its subsidiaries,
or had any relationship requiring disclosure by Capitol under any paragraph of
Item 404 of Regulation S-K. Please see "Certain Relationships and
Related Transactions" on page 39 for information on Lewis D. Johns.
No
executive officer of Capitol served as a member of a compensation committee (or
other board committee performing equivalent functions or, in the absence of any
such committee, the entire Board of Directors) of another publicly-traded
entity, one of whose executive officers served on the Compensation Committee or
Board of Directors of Capitol. No executive officer of Capitol served
as a director of another publicly-traded entity, one of whose executive officers
served on the Compensation Committee of Capitol. No executive officer of Capitol
served as a member of the compensation committee (or other board committee
performing equivalent functions or, in the absence of any such committee, the
entire Board of Directors) of another publicly-traded entity, one of whose
executive officers served as a member of the Compensation Committee or as a
director of Capitol.
[The
remainder of this page is intentionally left blank.]
Director
Compensation
The
following table sets forth compensation paid to Capitol's non-employee directors
in 2008. Directors who are employees receive no additional
compensation for serving on the Board or its committees and are omitted from
this table.
|
Non-Employee
Director Compensation in 2008
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees
Earned or
Paid
in Cash ($)
|
|
Option
Awards
($)(1)
|
|
All
Other
Compensation
($)(2)
|
|
Total
($)
|
|
Paul
R. Ballard(3)
|
|
$ 25,800
|
|
$ 15,000
(8)
|
|
$ 2,000
|
|
$ 42,800
|
|
David
L. Becker(3)
|
|
27,300
|
|
15,000
(9)
|
|
2,000
|
|
44,300
|
|
Douglas
E. Crist
|
|
7,000
|
|
15,000
(10)
|
|
2,000
|
|
24,000
|
|
Michael
J. Devine(4)
|
|
165,000
|
|
15,000
(11)
|
|
14,000
|
|
194,000
|
|
James
C. Epolito
|
|
6,000
|
|
15,000
(12)
|
|
1,500
|
|
22,500
|
|
Gary
A. Falkenberg
|
|
23,000
|
|
15,000
(13)
|
|
2,000
|
|
40,000
|
|
Joel
I. Ferguson
|
|
11,500
|
|
15,000
(14)
|
|
2,000
|
|
28,500
|
|
Kathleen
A. Gaskin
|
|
6,000
|
|
15,000
(15)
|
|
2,000
|
|
23,000
|
|
H.
Nicholas Genova(3)
|
|
15,700
|
|
15,000
(16)
|
|
2,000
|
|
32,700
|
|
Richard
A. Henderson(3)
|
|
23,500
|
|
15,000
(17)
|
|
2,000
|
|
40,500
|
|
Lewis
D. Johns
|
|
15,100
|
|
15,000
(18)
|
|
2,000
|
|
32,100
|
|
Michael
L. Kasten(5)
|
|
168,500
|
|
15,000
(19)
|
|
14,000
|
|
197,500
|
|
Leonard
Maas(3)
|
|
5,200
|
|
15,000
(20)
|
|
1,000
|
|
21,200
|
|
Steven
L. Maas(3)
|
|
1,000
|
|
0
|
|
0
|
|
1,000
|
|
Lyle
W. Miller(6)
|
|
67,750
|
|
15,000
(21)
|
|
2,000
|
|
84,750
|
|
Myrl
D. Nofziger(3)
|
|
8,900
|
|
15,000
(22)
|
|
6,000
|
|
29,900
|
|
David
O'Leary(7)
|
|
59,000
|
|
15,000
(23)
|
|
14,000
|
|
88,000
|
|
Ronald
K. Sable(3)
|
|
31,500
|
|
15,000
(24)
|
|
18,000
|
|
64,500
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Capitol's
non-employee directors received a $15,000 retainer paid in the form of
stock options for service in 2008. All stock options
issued to directors in 2008 were issued under the 2007 Incentive
Plan.
|
|
(2)
|
All
non-employee directors receive a travel allowance per board meeting
attended. Non-employee directors are responsible for payment of
their own travel accommodations and do not receive reimbursement for such
costs.
|
|
(3)
|
Compensation
in 2008 included board fees for service on the board of directors of
affiliate(s) of Capitol in 2008.
|
|
(4)
|
Mr.
Devine's compensation in 2008 included a $50,000 consulting fee for credit
administration/loan portfolio assistance. Mr. Devine's
compensation also included board fees for service on various boards of
affiliates of Capitol in 2008. In addition, Mr. Devine received
a travel allowance in the amount of $14,000 to reimburse him for travel to
various bank boards of directors' meetings. Mr. Devine served
on the boards of directors of 11 affiliates in 2008.
|
|
(5)
|
Mr.
Kasten's compensation in 2008 included fees for service on various boards
of directors of affiliates of Capitol in 2008 as well as a fee of $80,000
for his service as Vice Chairman of Capitol's Board of
Directors. In addition, Mr. Kasten received a travel allowance
in the amount of $14,000 to reimburse him for travel to various bank board
of directors' meetings. As of December 31, 2008, Mr. Kasten
served on the boards of directors of 8 affiliates.
|
|
(6)
|
Mr.
Miller's compensation included a fee of $50,000 for his service as Vice
Chairman of Capitol's Board, as well as board fees for service on the
board of an affiliate of Capitol in 2008.
|
|
(7)
|
Mr.
O'Leary's compensation included board fees for service on the board of an
affiliate of Capitol in 2008, as well as a fee of $25,000 for his service
as Secretary of Capitol's Board. In addition, he received
travel allowances for his service on that affiliate
board.
|
|
(8)
|
As
of December 31, 2008, Mr. Ballard had 11,237 stock options outstanding,
all of which are vested.
|
|
(9)
|
As
of December 31, 2008, Mr. Becker had 6,346 stock options outstanding, all
of which are vested.
|
|
(10)
|
As
of December 31, 2008, Mr. Crist had 7,931 stock options outstanding, all
of which are vested. Mr. Crist served as a member of Capitol's
Board of Directors until his death in February 2009.
|
|
(11)
|
As
of December 31, 2008, Mr. Devine had 8,631 stock options outstanding, all
of which are vested.
|
|
(12)
|
As
of December 31, 2008, Mr. Epolito had 9,363 stock options outstanding, all
of which are vested.
|
|
(13)
|
As
of December 31, 2008, Dr. Falkenberg had 7,931 stock options outstanding,
all of which are vested.
|
|
(14)
|
As
of December 31, 2008, Mr. Ferguson had 5,431 stock options outstanding,
all of which are vested.
|
|
(15)
|
As
of December 31, 2008, Ms. Gaskin had 7,079 stock options outstanding, all
of which are vested.
|
|
(16)
|
As
of December 31, 2008, Mr. Genova had 6,346 stock options outstanding, all
of which are vested.
|
|
(17)
|
As
of December 31, 2008, Mr. Henderson had 4,671 stock options outstanding,
all of which are vested.
|
|
(18)
|
As
of December 31, 2008, Mr. Johns had 10,507 stock options outstanding, all
of which are vested.
|
|
(19)
|
As
of December 31, 2008, Mr. Kasten had 14,680 stock options outstanding, all
of which are vested.
|
|
(20)
|
As
of December 31, 2008, Mr. Maas had 6,346 stock options outstanding, all of
which are vested.
|
|
(21)
|
As
of December 31, 2008, Mr. Miller had 8,025 stock options outstanding, all
of which are vested.
|
|
(22)
|
As
of December 31, 2008, Mr. Nofziger had 6,346 stock options outstanding,
all of which are vested.
|
|
(23)
|
As
of December 31, 2008, Mr. O'Leary had 9,498 stock options outstanding, all
of which are vested.
|
|
(24)
|
As
of December 31, 2008, Mr. Sable had 6,346 stock options outstanding, all
of which are vested.
|
Cash
Compensation
Capitol
provides non-employee directors the following cash compensation:
|
·
|
$1,000
for each board meeting attended in person;
|
|
·
|
$1,000
per committee meeting;
|
|
·
|
$500
per board or committee meeting if participating by phone or electronic
means;
|
|
·
|
Chairperson
for each committee receives $2,000 per meeting; and
|
|
·
|
Travel
allowance of $500 for in-state board meetings and $1,500 for out-of-state
board meetings.
|
Stock
Compensation
|
·
|
Stock
options with a value of $15,000 are granted annually as a board fee
retainer using the Black-Scholes valuation
model.
|
POTENTIAL PAYMENTS UPON
TERMINATION OR CHANGE IN CONTROL
Capitol
has entered into certain agreements and maintains various plans that will
require Capitol to provide compensation to the named executive officers in the
event of a termination of employment or a termination following a change of
control of Capitol. Capitol grants stock options and restricted stock
under the 2007 Incentive Plan and the MIP.
Joseph
D. Reid
As
discussed previously, in March 2003, Capitol entered into an employment
agreement with Mr. Reid that provided for automatic renewal absent notification
to the contrary. Capitol is permitted to terminate Mr. Reid's
employment for two reasons: (1) Death or Disability or (2)
Cause. "Disability" is defined as "the absences of the executive from
the executive's duties with Capitol on a full-time basis for 180 consecutive
business days as a result of incapacity due to mental or physical illness which
is determined to be total and permanent by a physician selected by Capitol or
its insurers and acceptable to the executive or the executive's legal
representative." "Cause" is defined as "(i) the willful and continued
failure of the executive to perform substantially the executive's duties with
Capitol or one of its affiliated companies (other than any such failure
resulting from incapacity due to physical or mental illness), after a written
demand for substantial performance is delivered to the executive by the Board
which specifically identifies the manner in which the Board believes that the
executive has not substantially performed the executive's duties, or (ii) the
willful engaging by the executive in illegal conduct or gross misconduct which
is materially and demonstrably injurious to Capitol."
Mr. Reid
is permitted to terminate employment under the agreement for "Good
Reason." "Good Reason" is defined under the agreement as:
|
·
|
the
assignment to Mr. Reid of any duties inconsistent in any material respect
with Mr. Reid's position, authority, duties or responsibilities as
contemplated by Section 2(a) of the agreement, excluding for this purpose
an isolated, insubstantial and inadvertent action not taken in bad faith
and which is remedied by Capitol promptly after receipt of notice thereof
given by Mr. Reid;
|
|
·
|
failure
by Capitol to pay Mr. Reid his compensation under the terms of the
agreement, other than an isolated, insubstantial and inadvertent action
not taken in bad faith and which is remedied by Capitol promptly after
receipt of notice thereof given by Mr. Reid;
|
|
·
|
Capitol's
requiring Mr. Reid to reside at any specific location, it being understood
that Mr. Reid maintains multiple residences and offices, or Capitol's
requiring the executive to travel on Company business to a greater extent
than required immediately prior to the effective date of the agreement or
in the event of a change in control, the Company's requiring Mr. Reid to
travel in a manner inconsistent with current practice in effect
immediately preceding the date of Capitol's change of control;
|
|
·
|
failure
by Capitol to cause a successor to perform Capitol's obligations arising
under the agreement; or
|
|
·
|
upon
a change of control of Capitol.
|
Generally,
pursuant to Mr. Reid's employment agreement, a change of control is deemed to
occur:
(i) if
any person acquires 20% or more of Capitol's voting securities (other than
securities acquired directly from Capitol or its affiliates);
(ii) if
a majority of the directors as of the date of the agreement are replaced other
than in specific circumstances;
(iii)
upon the consummation of a merger of Capitol or any subsidiary of Capitol other
than (a) a merger which would result in the voting securities of Capitol
outstanding immediately prior to the merger continuing to represent at least 50%
of the voting power of the securities of Capitol outstanding immediately after
such merger, or (b) a merger effected to implement a recapitalization of
Capitol in which no person is or becomes the beneficial owner of securities of
Capitol representing 20% or more of the combined voting power of Capitol's
then-outstanding securities; or
(iv) upon
the liquidation or sale of Capitol's assets, other than a sale or disposition by
Capitol of Capitol's assets to an entity of which at least 50% of the voting
power is owned by shareholders of Capitol.
If
Capitol terminates Mr. Reid's employment for a reason other than Cause or
Disability, Capitol must pay Mr. Reid a lump sum within 75 days after
termination equal to: (A) the sum of (i) Mr. Reid's annual base salary through
the date of termination; and (ii) the product of (x) the higher of the most
recent annual bonus and the annual bonus paid or payable for the most recently
completed fiscal year and (y) a fraction, the numerator of which is the number
of days in the current fiscal year through the date of termination and the
denominator of which is 365 (the "Accrued Obligations"); and (B) three times
both Mr. Reid's annual base salary and Mr. Reid's highest annual
bonus. In addition, Capitol will maintain Mr. Reid's existing welfare
benefits at the time of termination for three years.
If
Capitol terminates Mr. Reid's employment for Cause or if Mr. Reid voluntarily
terminates employment during the Employment Period, except for Good Reason, the
agreement shall terminate and Capitol must pay Mr. Reid in a lump sum within 30
days of the date of termination: (A) his annual base salary through the date of
termination, and (B) other benefits, in each case to the extent theretofore
unpaid. If termination occurs as a result of Disability or Death,
Capitol is not responsible for any termination payments other than for payment
of Accrued Obligations, the timely payment or provision of Other Benefits and
Capitol's obligations under the Securities Repurchase Agreement.
If
Capitol terminates Mr. Reid's employment within two years of a Change of Control
for a reason other than Cause or Disability or Mr. Reid terminates the agreement
for Good Cause, Capitol must pay Mr. Reid in a lump sum within 30 days after
termination: (A) the Accrued Obligations; and (B) three times the sum of Mr.
Reid's annual base salary, the highest annual bonus and the aggregate amount of
employer contributions
to any
qualified defined contribution plans for the most recently completed plan
year. In addition, Capitol will maintain Mr. Reid's existing welfare
benefits at the time of termination for three years.
Lee
W. Hendrickson, John S. Lewis, Cristin K. Reid and Bruce A. Thomas
Capitol
entered into employment agreements with Ms. Reid and Mr. Thomas in March 2006,
and Mr. Hendrickson and Mr. Lewis in March 2008 that provided for automatic
renewal absent notification to the contrary. Capitol is permitted to
terminate any of the executives' employment at any time with or without
cause. If employment is terminated as a result of the executive's
death, Capitol is obligated to pay their respective estates his/her salary for
the remainder of the calendar month in which his/her death shall have
occurred. If Capitol terminates employment without cause, it must pay
the executive his/her base salary for a period of one (1) year.
These
employment agreements additionally have a change in control
provision. Upon the occurrence of a change of control, if the
executive or Capitol terminates the employment agreement, the employee would
receive 299% of his/her base salary. The change of control payment is
payable at the option of Capitol either in a lump sum or in equal payments over
the remaining term of the employment agreement.
The
following table summarizes the approximate value of the termination payments and
benefits that the named executive officers would have received if their
employment had been terminated on December 31, 2008 under the circumstances
shown. The table excludes (i) amounts accrued through December 31,
2008 that would be paid in the normal course of continued employment, such as
accrued but unpaid salary and bonus amounts and (ii) vested account balances
under Capitol’s 401(k) profit sharing plan.
Executive Benefits and
Payments Upon Termination
|
|
|
|
|
No
change of control
|
|
Following
a
change
of control*
|
|
|
|
|
Voluntary
termination
or
termination
for
cause
|
|
Involuntary
termination
not
for cause
|
|
Involuntary
or
voluntary
termination
|
|
|
|
Joseph
D. Reid
|
$
0
|
|
$2,719,534
|
|
$2,739,334
|
|
|
|
|
|
|
|
|
|
|
|
|
Lee
W. Hendrickson
|
N/A
|
|
426,400
|
|
1,274,936
|
|
|
|
|
|
|
|
|
|
|
|
|
John
S. Lewis
|
N/A
|
|
435,625
|
|
1,302,519
|
|
|
|
|
|
|
|
|
|
|
|
|
Cristin
K. Reid
|
N/A
|
|
410,000
|
|
1,225,900
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce
A. Thomas
|
N/A
|
|
348,500
|
|
1,042,015
|
|
*
Certain other executive officers of Capitol have entered into change of control
agreements.
[The
remainder of this page is intentionally left blank.]
STOCK
OWNERSHIP
The
following table sets forth information as of February 9, 2009 regarding each
person (including any group as that term is defined in Section 13(d)(3) of the
Securities Exchange Act of 1934) who was known to be the beneficial owner of
more than 5% of Capitol's common stock as of that date, each of the directors
(including each nominee for election as a director), the Chief Executive Officer
and the four other named executive officers, and all directors and executive
officers as a group including the named executive officers:
|
Name of Beneficial
Owner
|
|
Common
Stock(1)(2)(3)
|
|
|
Rights
to
Acquire(4)
|
|
|
Restricted
Stock(5)
|
|
|
Percent
of
Common Stock(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dimensional
Fund Advisors, LP*
Palisades
West, Building One
6300
Bee Cave Road
Austin,
TX 78746
|
|
|
1,182,394
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6.82
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph
D. Reid
Capitol
Bancorp Center
200
N. Washington Square
Lansing,
MI, 48933
|
|
|
1,064,520
|
|
|
|
1,435,053
|
|
|
|
23,290
|
|
|
|
13.47
|
%
|
|
Michael
L. Kasten(7)
|
|
|
255,629
|
|
|
|
19,025
|
|
|
|
—
|
|
|
|
1.59
|
%
|
|
Lyle
W. Miller(8)
|
|
|
111,792
|
|
|
|
12,370
|
|
|
|
—
|
|
|
|
|
**
|
|
David
O'Leary (9)
|
|
|
85,472
|
|
|
|
13,843
|
|
|
|
—
|
|
|
|
|
**
|
|
Paul
R. Ballard
|
|
|
103,242
|
|
|
|
15,582
|
|
|
|
—
|
|
|
|
|
**
|
|
David
L. Becker(10)
|
|
|
84,322
|
|
|
|
10,691
|
|
|
|
—
|
|
|
|
|
**
|
|
Michael
J. Devine
|
|
|
12,146
|
|
|
|
12,976
|
|
|
|
—
|
|
|
|
|
**
|
|
James
C. Epolito
|
|
|
4,200
|
|
|
|
13,708
|
|
|
|
—
|
|
|
|
|
**
|
|
Gary
A. Falkenberg
|
|
|
63,485
|
|
|
|
12,276
|
|
|
|
—
|
|
|
|
|
**
|
|
Joel
I. Ferguson(11)
|
|
|
58,014
|
|
|
|
9,776
|
|
|
|
—
|
|
|
|
|
**
|
|
Kathleen
A. Gaskin
|
|
|
29,566
|
|
|
|
11,424
|
|
|
|
—
|
|
|
|
|
**
|
|
H.
Nicholas Genova
|
|
|
14,369
|
|
|
|
10,691
|
|
|
|
—
|
|
|
|
|
**
|
|
Michael
F. Hannley
|
|
|
64,986
|
|
|
|
34,903
|
|
|
|
5,000
|
|
|
|
|
**
|
|
Richard
A. Henderson
|
|
|
4,244
|
|
|
|
9,016
|
|
|
|
—
|
|
|
|
|
**
|
|
Lewis
D. Johns
|
|
|
250,963
|
|
|
|
14,852
|
|
|
|
—
|
|
|
|
1.54
|
%
|
|
John
S. Lewis
|
|
|
47,392
|
|
|
|
20,000
|
|
|
|
2,000
|
|
|
|
|
**
|
|
Steven
L. Maas(12)
|
|
|
82,788
|
|
|
|
4,345
|
|
|
|
—
|
|
|
|
|
**
|
|
Myrl
D. Nofziger
|
|
|
46,072
|
|
|
|
10,691
|
|
|
|
—
|
|
|
|
|
**
|
|
Cristin
K. Reid(13)
|
|
|
49,511
|
|
|
|
48,407
|
|
|
|
2,000
|
|
|
|
|
**
|
|
Ronald
K. Sable
|
|
|
37,833
|
|
|
|
10,691
|
|
|
|
—
|
|
|
|
|
**
|
|
Lee
W. Hendrickson(14)
|
|
|
22,258
|
|
|
|
84,603
|
|
|
|
2,000
|
|
|
|
|
**
|
|
Bruce
A. Thomas
|
|
|
15,041
|
|
|
|
54,000
|
|
|
|
2,000
|
|
|
|
|
**
|
|
All
directors and executive officers as
a
group (48 Persons)(15)
|
|
|
3,013,582
|
|
|
|
2,112,413
|
|
|
|
68,790
|
|
|
|
26.77
|
%
|
*
Dimensional
Fund Advisors, LP is a nonaffiliated entity of Capitol. The number of
shares and percent of common stock reported above is based on Schedule 13G filed
by Dimensional Fund Advisors, LP as of December 31, 2008.
**
Less
than 1%
|
(1)
|
Represents
shares for which the named person (a) has sole voting and investment
power or (b) has shared voting and investment power. Excluded are
shares that (i) are restricted stock holdings or (ii) may be
acquired through stock option or warrant exercises.
|
|
(2)
|
Includes
shares held in Capitol's 401(k) plan: 24,561 for Mr. Reid; 674 for Mr.
Lewis; 9,058 for Ms. Reid; 11,462 for Mr. Hannley; and 542 for Mr.
Thomas.
|
|
(3)
|
Includes
shares allocated and held in Capitol's ESOP: 3,331 for Ms. Reid; 1,596 for
Mr. Hannley; 3,239 for Mr. Hendrickson; 1,635 for Mr. Lewis and 2,685 for
Mr. Thomas.
|
|
(4)
|
Represents
shares of common stock that can be acquired through stock options
exercisable within sixty days after February 9, 2009.
|
|
(5)
|
Represents
shares of common stock subject to a vesting schedule, achievement of
certain performance criteria, forfeiture risk and other restrictions.
Although these shares are subject to forfeiture provisions, the holder has
the right to vote the shares and receive dividends until they are
forfeited.
|
|
(6)
|
Assumes
shares that such person has rights to acquire are
outstanding.
|
|
(7)
|
Mr.
Kasten reported 80,000 shares pledged as security.
|
|
(8)
|
Mr.
Miller reported 35,300 shares pledged as security.
|
|
(9)
|
Mr.
O’Leary reported 43,126 shares pledged as security.
|
|
(10)
|
Mr.
Becker reported 18,786 shares pledged as security.
|
|
(11)
|
Mr.
Ferguson reported 3,000 shares pledged as security.
|
|
(12)
|
Mr.
Maas reported 19,893 shares pledged as security.
|
|
(13)
|
Ms.
Reid reported 1,461 shares pledged as security. Excludes 40,961
stock options and 2,000 shares of restricted stock held by Brian K.
English, Capitol's General Counsel and Ms. Reid's
husband.
|
|
(14)
|
Mr.
Hendrickson reported 4,394 shares pledged as security.
|
|
(15)
|
Includes
107,100 shares held in Capitol's 401(k) Plan, 69,674 shares allocated and
held in Capitol's ESOP, and 128,088 shares allocated and held in Capitol's
Directors' Deferred Compensation Plan. As a group, all
directors and executive officers have 224,974 shares pledged as
security.
|
SECTION 16(a) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
Rules and
regulations promulgated by the SEC require periodic reporting of the beneficial
ownership of and transactions involving Capitol's securities relating to
directors, officers and beneficial owners of 10% or more of Capitol's
securities. Under those rules and regulations, it is required that
certain acquisitions and divestitures of Capitol's securities be disclosed via
reports filed within prescribed time limits. Based on Capitol's
review of filings made during the year ended December 31, 2008, there were two
individuals who completed transactions which were not reported timely pursuant
to the filing requirements.
Stanley
E. Ricketts, President of the Midwest Region of Capitol, failed to timely report
a purchase of shares in April 2007 on a Form 4. John C. Smythe,
President of the Great Lakes Region of Capitol, failed to timely report a sale
of stock in September 2008 on a Form 4.
EXECUTIVE
OFFICERS
Capitol's
current executive officers are as follows:
|
Name
|
|
Age
|
|
Position
with Capitol
|
|
Officer
Since
|
|
|
|
|
|
|
|
|
|
Joseph
D. Reid
|
|
66
|
|
Chairman
of the Board and CEO
|
|
1988
|
|
Gregory
R. Bixby
|
|
43
|
|
Chief
Information Officer
|
|
2007
|
|
Brian
K. English
|
|
43
|
|
General
Counsel
|
|
2001
|
|
David
D. Fortune
|
|
49
|
|
Chief
Credit Officer
|
|
2004
|
|
Lee
W. Hendrickson
|
|
53
|
|
Chief
Financial Officer
|
|
1991
|
|
Robert
R. Hogan
|
|
49
|
|
President
& CEO of Capitol Wealth Advisors, an affiliate of
Capitol
|
|
2005
|
|
John
S. Lewis
|
|
55
|
|
President
of Bank Performance
|
|
2002
|
|
Michael
M. Moran
|
|
49
|
|
Chief
of Capital Markets
|
|
2000
|
|
Cristin
K. Reid
|
|
40
|
|
Corporate
President
|
|
1997
|
|
Joseph
D. Reid III
|
|
34
|
|
Chief
of Bank Development
|
|
2005
|
|
Jeffrey
D. Saunders
|
|
42
|
|
Chief
Accounting Officer
|
|
2007
|
|
Todd
C. Surline
|
|
50
|
|
Chief
of Human Capital Management
|
|
2007
|
|
Bruce
A. Thomas
|
|
51
|
|
President
of Bank Operations
|
|
1998
|
|
Stephen
D. Todd
|
|
58
|
|
Chief
of Bank Financial Analysis
|
|
2000
|
For more
information with respect to Messrs. Reid and Lewis, and Ms. Reid, see Nominees
for Election as a Director for Term Expiring in 2012 and Information Regarding
Capitol's Directors Not Currently Up For Election.
Gregory
R. Bixby – Mr. Bixby became Capitol's Chief Information Officer in January
2007. Prior to that time, he was Chief Information Officer for
Republic Bancorp, Inc.
Brian K.
English – Mr. English has served in his current capacity as General Counsel
since 2001.
David D.
Fortune – Mr. Fortune has served as Chief Credit Officer for Capitol since
2004. Prior to that time, he was a Senior Vice President/Credit
Administration for Capitol.
Lee W.
Hendrickson – Mr. Hendrickson has served as the Chief Financial Officer for
Capitol since 1991.
Robert R.
Hogan – Mr. Hogan joined Capitol in 2005 as the President and CEO of its wealth
management affiliate, Capitol Wealth Advisors. Prior to that time, he
served as Managing Director and Chief Operations Officer for Banc of America
Securities, LLC.
Michael
M. Moran – Mr. Moran joined Capitol in 2000 as the Executive Vice President of
Corporate Development and currently serves as Chief of Capital
Markets.
Joseph D.
Reid III – Mr. Reid joined Capitol in 1998 as Corporate Counsel. He
was appointed Director of Bank Development in 2005, and currently serves as
Chief of Bank Development.
Jeffrey
D. Saunders – Mr. Saunders joined Capitol in 2007 as Chief Accounting
Officer. Prior to joining Capitol, he served as Senior Vice President
and Chief Financial Officer of Republic Bank, which was later acquired by
Citizens Bank.
Todd C.
Surline – Mr. Surline joined Capitol in 2007 as Chief of Human Capital
Management. He previously served as Vice President of Human Resources
of Michigan State University Federal Credit Union.
Bruce A.
Thomas – Mr. Thomas joined Capitol in 1998 as Senior Vice President of Risk
Management. He has also served as Chief Operating Officer and
President of the Eastern Regions, and currently serves as President of Bank
Operations.
Stephen
D. Todd – Mr. Todd joined Capitol in 2000 as Director of Bank Performance, and
has also served as President of the Southwest Region of Capitol. He
currently serves as Chief of Bank Financial Analysis.
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
Transactions
Capitol's
banking subsidiaries have, in the normal course of business, made loans to
certain directors and officers of Capitol and its subsidiaries and to
organizations in which certain directors and officers have an
interest. In the opinion of management, such loans were made in the
ordinary course of business and were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with unrelated parties and did not involve more than the
normal risk of collectability or present other unfavorable
features.
Capitol's
subsidiary bank, Brighton Commerce Bank, leases its primary banking facility
from Tri-O Development. Three of David O'Leary's adult children are
members of the leasing entity. Rent paid by Brighton Commerce Bank to
the leasing entity amounted to $269,695 in 2008. Capitol's subsidiary bank, Ann
Arbor Commerce Bank, leases its primary banking facility from South State
Commerce Center L.L.C. Lyle W. Miller's Trust owns a 10% membership
interest, H. Nicholas Genova's IRA owns a 10% membership interest and Kathleen
A. Gaskin owns a 5% membership interest. Rent paid by Ann Arbor
Commerce Bank amounted to $488,655 in 2008, and maintenance fees amounted to
$171,389. Capitol and its subsidiary bank, Capitol National Bank,
paid rent of $831,497 in 2008 for their principal offices at the Capitol Bancorp
Center, 200 N. Washington Square, Lansing, Michigan and the adjacent Phoenix
Building to Business & Trade Center Limited, a Michigan limited partnership
of which Joseph D. Reid and Lewis D. Johns are
partners. Additionally, the cost of leasehold improvements and
routine maintenance made in 2008 was $318,834. The lease rates
represent what Capitol believes to be fair market value in the respective
markets. All leasing arrangements which involve insiders have been
approved by Capitol's Ethics Committee and reported to bank regulatory agencies
prior to their commencement.
Brian K.
English, Capitol's General Counsel, is licensed to practice law in Arizona,
Colorado, Michigan and Ohio. Mr. English is the son-in-law of Joseph
D. Reid and the husband of Cristin K. Reid. Mr. English was paid
$275,898 in 2008. Capitol employs Joseph D. Reid III, an attorney and
Capitol's Chief of Bank Development. He is the son of Joseph D. Reid and the
brother of Cristin K. Reid and was paid $223,515 in 2008. Capitol
also employs Kelly D. Miller, Vice President of Bank Performance, however, he is
not a policy-making officer of Capitol. He is the son of Lyle W.
Miller and was paid $171,039 in 2008.
Capitol
and its subsidiaries, on a consolidated basis, own approximately 30% of the
outstanding membership interests of Access BIDCO, LLC, with an aggregate
carrying value of $1,966,069 at December 31, 2008. Joseph D. Reid, Capitol's
Chairman and CEO, also serves as Chairman and Chief Executive
Officer
of Access BIDCO, LLC. Lee W. Hendrickson, Capitol's Chief Financial
Officer, serves as Access BIDCO, LLC's Chief Financial Officer, Secretary and
Treasurer and several other individuals who serve as directors of Access BIDCO,
LLC also serve as officers and/or directors of Capitol and/or its
affiliates.
Review
of Related Person Transactions
Capitol
has written procedures for reviewing transactions between Capitol and its
directors and executive officers, their immediate family members and entities
with which they have a position or relationship. These procedures are
intended to determine whether any such related person transaction impairs the
independence of a director or presents a conflict of interest on the part of a
director or executive officer.
Capitol
annually requires each of its directors and executive officers to complete a
questionnaire that elicits information about related person transactions.
Executive management reviews all transactions and relationships disclosed in the
director and officer questionnaires and brings to the attention of the Ethics
Committee and the Board of Directors any matters warranting their attention as
well as the availability of the questionnaires for their review. The
Board of Directors makes a formal determination regarding each director's
independence under Capitol's Corporate Governance Guidelines.
In
addition to the Ethics Committee's review, the Board of Directors is regularly
reminded to discuss any proposed transaction involving the director and Capitol
with its General Counsel's office prior to engaging in any such transaction.
Members of Capitol's legal department are also instructed to inform Capitol's
General Counsel of any transaction between a director and Capitol that comes to
their attention.
Upon
receiving any notice of a related person transaction involving a director,
Capitol's General Counsel will discuss the transaction with the Chair of
Capitol's Ethics Committee. If the transaction has not yet occurred and any
likelihood exists that the transaction could impair the director's independence
or would present a conflict of interest for the director, Capitol's General
Counsel will discuss the transaction and its ramifications with the director
before the transaction occurs.
If the
transaction has already occurred, Capitol's General Counsel and the Chair of
Capitol's Ethics Committee will review whether the transaction could affect the
director's independence and determine whether a special Board meeting should be
called to consider this issue. If a special Board meeting is called
and the director is determined to no longer be independent, such director, if
he/she serves on any of the Audit, Nominating and Governance or Compensation
committees, will be removed from such committee prior to (or otherwise will not
participate in) any future meeting of the applicable committee. If
the transaction presents a conflict of interest, the Board will determine the
appropriate response.
Upon
receiving notice of any transaction between Capitol and an executive officer
that may present a conflict of interest, Capitol's General Counsel will discuss
the transaction with Capitol's CEO (or, if the transaction involves the CEO, the
Chair of the Audit Committee) to determine whether the transaction could present
a conflict of interest. If the transaction has already occurred and a
determination is made that a conflict of interest exists, the General Counsel,
CEO and Chair of the Ethics Committee will determine the appropriate
response.
Capitol's
procedures for reviewing related person transactions do not require the approval
or ratification of such transactions. Accordingly, the related person
transactions described above were not approved or ratified by
Capitol.
PROPOSAL TWO: RATIFICATION
OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The Audit
Committee of Capitol Bancorp has selected BDO Seidman, LLP (BDO), independent
auditors, to audit Capitol's financial statements and internal control over
financial reporting for the year ending December 31, 2009, and recommends that
shareholders vote for ratification of such appointment.
BDO has
served as Capitol's independent auditors since 1994. Capitol's Audit
Committee and Board of Directors believe they are well qualified to act in that
capacity again this year. As a matter of good corporate governance,
the selection of BDO is being submitted to shareholders for
ratification. In the event of a negative vote on such ratification,
the Audit Committee will reconsider its selection. Even if BDO is
ratified as independent auditors by the shareholders, the Audit Committee, in
its discretion, may direct the appointment of different independent auditors at
any time during the year if it determines that such a change would be in the
best interests of Capitol and its shareholders.
CAPITOL
BANCORP'S BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THIS PROPOSAL TO RATIFY THE
APPOINTMENT OF
BDO
SEIDMAN, LLP AS INDEPENDENT AUDITORS.
RELATIONSHIP WITH
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Representatives
of BDO Seidman, LLP will be present at the Annual Meeting to respond to
appropriate questions and will have the opportunity to make a statement if they
desire to do so. The following is a summary of BDO Seidman, LLP's
fees for professional services rendered to Capitol during 2008 and 2007, which
fees totaled $830,678 and $697,844, respectively, and are categorized in
accordance with the SEC's rules on auditor independence:
Audit
Fees
BDO
Seidman, LLP's fees totaled $776,543 and $654,194 in connection with the audit
of Capitol's consolidated financial statements and internal control over
financial reporting and reviews of the financial statements included in
Capitol's quarterly reports on Form 10-Q for the years ended December 31, 2008
and 2007, respectively. In addition, audit fees incorporate BDO
Seidman, LLP’s audits of certain bank and bank-development subsidiaries of
Capitol. Audit fees also include fees for audit services related to
registration statements, including work relating to Capitol's public offering of
trust preferred securities for the year ended December 31, 2008.
Audit
Related Fees
Capitol
paid BDO Seidman, LLP $52,375 and $42,000 during 2008 and 2007, respectively,
for audit related services, including audits of employee benefit plans and other
attest services rendered to Capitol that are required by statute or
regulation. Charges for services relating to registration statements
are included in the fees for audit related services.
Tax Fees
BDO
Seidman, LLP was paid $1,760 and $1,650 during 2008 and 2007, respectively, for
federal tax return assistance related to employee benefit plans for Capitol and
its subsidiaries.
All
Other Fees
BDO
Seidman, LLP did not perform any other services during 2008 or 2007 for
Capitol.
The Audit
Committee has considered whether the provision of services described under the
headings "Tax Fees" and "All Other Fees" is compatible with maintaining BDO
Seidman, LLP's independence. Based on its consideration of the nature
of work performed and amount of the fees paid to BDO Seidman, LLP for those
services, Capitol's Audit Committee concluded the provision of such services is
compatible with maintaining BDO Seidman, LLP's independence.
Capitol's
Audit Committee's current policy requires pre-approval of all audit and
non-audit services provided by the independent registered public accounting firm
before such firm begins substantial performance of any
engagement. The Audit Committee may delegate authority to a member of
the Audit Committee to pre-approve the engagement of independent registered
public accounting firms when the entire committee is unable to do
so. All such pre-approvals must be reported to the entire committee
at the next committee meeting. The Audit Committee's pre-approval
policy prohibits BDO Seidman, LLP from providing any nonaudit services that are
prohibited by the SEC or the Public Company Accounting Oversight
Board. All fees paid to BDO Seidman, LLP for services performed in
2007 and 2008 were pre-approved pursuant to this policy.
OTHER
MATTERS
Capitol's
Board of Directors is not aware of any business to come before the Annual
Meeting other than those matters described in this Proxy
Statement. However, if any other matters should properly come before
the Annual Meeting, including matters relating to the conduct of the Annual
Meeting, it is intended that proxies in the accompanying form will be voted in
respect thereof in accordance with the judgment of those voting the
proxies.
MISCELLANEOUS
The cost
of solicitation of proxies will be borne by Capitol. In addition to
solicitations by mail, directors, officers and regular employees of Capitol may
solicit proxies personally or by telephone without additional
compensation.
ANNUAL REPORT ON FORM
10-K
Copies of
Capitol's Annual Report on Form 10-K, without exhibits, may be obtained without
charge from Capitol's Secretary, Capitol Bancorp Limited, Capitol Bancorp
Center, 200 N. Washington Square, Lansing, MI 48933 or by telephone at (517)
487-6555. You may also view a copy of the Form 10-K electronically by
accessing Capitol's website
www.capitolbancorp.com
. Additionally,
in accordance with new rules issued by the SEC, you may access Capitol's 2008
Annual Report at
http://www.capitolbancorp.com/AR2008
,
which does not have “cookies” that identify visitors to the site.
Form 10-K
and certain other periodic filings are filed electronically with the
SEC. The SEC's website address is
www.sec.gov
.
Capitol's filings with the SEC can also be accessed through Capitol's website,
www.capitolbancorp.com
.
NO INCORPORATION BY
REFERENCE
In
Capitol's filings with the SEC, information is sometimes "incorporated by
reference." This means that Capitol is referring you to information
that has previously been filed with the SEC and the information should be
considered as part of this filing. Based on SEC regulations, the
"Audit Committee Report" and the "Compensation Committee Report" specifically
are not incorporated by reference into any other filings with the
SEC. In addition, this Proxy Statement includes several website
addresses. Those website addresses are intended to provide inactive,
textual references only. The information on those websites is not
part of this Proxy Statement.
"HOUSEHOLDING" OF PROXY
MATERIALS
The SEC
has adopted rules that permit companies and intermediaries such as brokers
to satisfy delivery requirements for proxy statements and annual reports by
delivering a single Notice or set of proxy materials to one address shared by
two or more of Capitol’s shareholders. This process, which is
commonly referred to as "householding," potentially provides extra convenience
for shareholders and cost savings for companies. Capitol only sends
one proxy statement to shareholders who share the same address and name unless
Capitol has received contrary instructions. If each shareholder
desires to have their own copy, they may notify Capitol of that fact either
orally or in writing. Notifications can be directed to Capitol
Bancorp Limited, Capitol Bancorp Center, 200 N. Washington Square, Lansing, MI
48933 or by telephone at (517) 487-6555. Similarly, shareholders may
also contact Capitol if they receive multiple copies of the proxy materials and
would prefer to receive a single copy in the future.
ELECTRONIC ACCESS TO PROXY
MATERIALS AND ANNUAL REPORT
Shareholders
can elect to view future proxy statements and annual reports over the Internet
instead of receiving paper copies in the mail and thus can save Capitol the cost
of producing and mailing these documents. You will be responsible for
any costs normally associated with electronic access, such as usage and
telephonic charges.
Instructions
for registered shareholders who have access to the Internet and agree to receive
future annual reports and other proxy materials by accessing Capitol's website
(
www.capitolbancorp.com
)
can be found at
www.proxyvote.com
. If
you hold your common stock in nominee name (such as through a broker), check the
information provided by your nominee for instructions on how to elect to view
future proxy statements and annual reports over the
Internet. Shareholders who choose to view future proxy statements and
annual reports over the Internet will receive instructions containing the
Internet address of those materials, as well as voting instructions,
approximately four weeks before future meetings. Additionally, in
accordance with new rules issued by the Securities and Exchange Commission, you
may access Capitol's 2008 Annual Report and this Proxy Statement at
www.capitolbancorp.com/AR2008
,
which does not have “cookies” that identify visitors to the site.
If you
enroll to view Capitol's future annual report and proxy statement electronically
and vote your shares over the Internet, your enrollment will remain in effect
for all future shareholders' meetings until you cancel it. To cancel,
registered shareholders should access
www.proxyvote.com
and follow the instructions to cancel your enrollment. If you hold
your stock in nominee name, check the information provided by your nominee
holder for instructions on how to cancel your enrollment.
If at any
time you would like to receive a paper copy of the annual report or this Proxy
Statement, please write to
Capitol's Secretary, Capitol Bancorp
Limited, Capitol Bancorp Center, 200 N. Washington Square, Lansing, Michigan
48933 or by telephone at (517) 487-6555
.
FORWARD-LOOKING
STATEMENTS
This
Proxy Statement contains statements and estimates relating to future
compensation of the named executive officers that are “forward-looking
statements” as defined in the Private Securities Litigation Reform Act of
1995. Actual compensation may differ materially from that projected
as a result of certain facts and uncertainties, including but not limited to
timing of and reason for termination of employment; compensation levels and
outstanding equity and incentive awards at the time of termination; and age and
length of service at the time of termination; as well as other facts and
uncertainties, including but not limited to those detailed herein and from time
to time in other filings of Capitol with the SEC. These forward-looking
statements are made only as of the date hereof, and the company undertakes no
obligation to update
or revise
the forward-looking statements, whether as a result of new information, future
events or otherwise, except as otherwise required by law.
SHAREHOLDER
PROPOSALS
Shareholder
Proposals for Inclusion in 2010 Proxy Statement
In order
for a shareholder proposal to be considered for inclusion in Capitol's Proxy
Statement for the 2010 Annual Meeting, the written proposal must be received at
Capitol's main office at Capitol Bancorp Center, 200 N. Washington Square,
Lansing, MI 48933, Attention: Secretary, on or before November 13,
2009. The use of certified mail, return receipt requested is advised
if submitting such a proposal. The proposal must comply with SEC
regulations regarding the inclusion of shareholder proposals in
company-sponsored proxy materials.
Other
Shareholder Proposals for Presentation at 2010 Annual Meeting
Capitol's
bylaws provide that a shareholder may nominate a director for election at the
annual meeting or may present from the floor a proposal that is not included in
the proxy statement if proper written notice is received by the Secretary of
Capitol at its principal executive offices in Lansing, Michigan, at least 120
days but no more than 180 days in advance of the anniversary of the prior year's
annual meeting. For the 2010 Annual Meeting, director nominations and
shareholder proposals must be received no later than December 24, 2009 and no
earlier than October 25, 2009. The nomination or proposal must
contain the specific information required by Capitol's bylaws. You
may request a copy of Capitol's bylaws by contacting Capitol's Secretary,
Capitol Bancorp Limited, Capitol Bancorp Center, 200 N. Washington Square,
Lansing, Michigan 48933, or by telephone at
(517) 487-6555. Shareholder proposals that are received by
Capitol after December 24, 2009, may not be presented in any manner at the 2010
Annual Meeting.
BY ORDER
OF THE BOARD OF DIRECTORS,
JOSEPH D. REID
Chairman of the
Board
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200
N. WASHINGTON SQUARE
LANSING,
MI 48933
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VOTE
BY INTERNET -
www.proxyvote.com
Use
the Internet to transmit your voting instructions and for electronic
delivery of
information
up until 11:59 P.M. Eastern Standard Time the day before the
cut-off
date
or meeting date. Have your proxy card in hand when you access the
web
site and follow the instructions to obtain your records and to create an
electronic
voting instruction form.
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ELECTRONIC
DELIVERY OF FUTURE SHAREHOLDER COMMUNICATIONS
If
you would like to reduce the costs incurred by Capitol Bancorp Limited
in
mailing
proxy materials, you can consent to receiving all future proxy
statements,
proxy
cards and annual reports electronically via e-mail or the Internet. To
sign
up
for electronic delivery, please follow the instructions above to vote
using
the Internet and, when prompted, indicate that you agree to receive or
access
shareholder communications electronically in future years.
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VOTE
BY PHONE - 1-800-690-6903
Use
any touch-tone telephone to transmit your voting instructions up
until
11:59
P.M. Eastern Standard Time the day before the cut-off date or
meeting
date.
Have your proxy card in hand when you call and then follow
the
instructions.
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VOTE
BY MAIL OR FAX
Mark, sign and date your proxy card and return it in the postage-paid
envelope we have provided or return it to Capitol Bancorp Limited, c/o
Broadridge,
51 Mercedes Way, Edgewood, NY 11717.
If you are concerned that your proxy will not
reach New York in time you may
fax your vote to: (517)
374-2576.
If you have not voted via the Internet or
telephone fold along the perforation,
detach and return the bottom portion in the
enclosed envelope.
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TO VOTE,
MARK BLOCKS BELOW IN BLUE OR BLACK INK AS
FOLLOWS:
CPTLB1
KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD
IS VALID ONLY WHEN SIGNED AND DATED.
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CAPITOL
BANCORP LIMITED
The Board of Directors recommends a vote FOR the
following proposals:
1.
Election of Directors
Class
II Directors (to serve until the annual
meeting
in
2012):
01) David
O'Leary
05) H. Nicholas Genova
02) Michael J.
Devine
06) John S. Lewis
03) Gary A.
Falkenberg 07)
Steven L. Maas
04) Joel I.
Ferguson
08) Myrl D. Nofziger
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Fo
r
Withhol
d
F
o
r
All
A
l
l
A
l
l
Excep
t
o
o
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To
withhold authority to vote for any individual
nominee(s),
mark “For All Except” and write the
number(s)
of the nominee(s) on the line below.
_____________________________________
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For Against Abstain
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2.
Ratification
of the appointment of BDO Seidman, LLP as independent auditors for the
year ending December 31, 2009.
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o
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In
their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting.
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Yes
No
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Please
indicate if you plan to attend this meeting.
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o
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Please sign exactly as name(s) appear hereon. Joint owners
should each sign. When signing as attorney, executor,
administrator,
corporate officer, trustee, guardian or custodian,
please
give full title.
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Signature
[PLEASE SIGN WITHIN BOX]
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Date
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Signature
(Joint Owners)
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Date
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Important
Notice Regarding the Availability of Proxy Materials for the Annual
Meting:
The
Notice and Proxy Statement and Annual Report are available at
www.proxyvote.com
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PROXY SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
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FOR THE
ANNUAL MEETING OF SHAREHOLDERS ON WEDNESDAY, APRIL 22,
2009
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The undersigned,
having received the Notice Regarding the Availability of Proxy Materials
for the Annual
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Meeting of
Shareholders to be held on April 22, 2009, the Notice of Annual Meeting of
Shareholders and
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Proxy Statement,
revoking any proxy previously given, hereby appoint(s) Joseph D. Reid and
David O'Leary,
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and each of them,
with power to appoint his substitute and hereby authorizes them to vote as
directed all
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shares the
undersigned is (are) entitled to vote at the Capitol Bancorp Limited 2009
Annual Meeting of
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Shareholders to be
held on April 22, 2009 and authorize(s) each to vote in his discretion
upon other business
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as may properly come before the meeting or an adjournment or postponement thereof.
If
this
signed
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proxy card contains no specific
voting instructions, my (our) shares will be voted "FOR" all
nominees
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for director, "FOR" the
ratification of the appointment of BDO Seidman, LLP as independent
auditors,
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and in the discretion of the named proxies on all other
matters.
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