UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. ___)
Filed by the Registrant
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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CommerceFirst Bancorp, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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TABLE OF CONTENTS
COMMERCEFIRST BANCORP, INC.
1804 West Street, Suite 200
Annapolis, Maryland 21401
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held May 4, 2011
TO THE SHAREHOLDERS OF COMMERCEFIRST BANCORP, INC.:
The Annual Meeting of Shareholders of CommerceFirst Bancorp, Inc. (the Company), will be
held at
CommerceFirst Bank
1804 West Street, Suite 200
Annapolis, Maryland
on Wednesday, May 4, 2011 at 2:00 P.M. for the following purposes:
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To elect three (3) directors to serve until the 2014 Annual Meeting of
Shareholders and until their successors are duly elected and qualified;
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2.
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To ratify the appointment of TGM Group LLC as the Companys independent
registered public accountants for the year ended December 31, 2011; and
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To transact any other business that may properly come before the meeting or any
adjournment or postponement of the meeting.
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Shareholders of record as of the close of business on March 15, 2011 are entitled to notice of
and to vote at the meeting or any adjournment or postponement of the meeting.
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By Order of the Board of Directors
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Candace M. Springmann, Corporate Secretary
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March 30, 2011
Please sign, date and return your proxy promptly, whether or not you plan to attend
the meeting in person. No postage is required if mailed in the United States in the
enclosed envelope. If you attend the meeting, you may, if you desire, revoke your
proxy and vote in person. If your shares are not registered in your name, you will
need additional documentation from your record holder in order to vote in person at
the meeting.
COMMERCEFIRST BANCORP, INC.
1804 West Street, Suite 200
Annapolis, Maryland 21401
ANNUAL MEETING OF SHAREHOLDERS
Proxy Statement
INTRODUCTION
This Proxy Statement is being sent to shareholders of CommerceFirst Bancorp, Inc., a Maryland
corporation (the Company), in connection with the solicitation of proxies by the Board of
Directors of the Company for use at the Annual Meeting of Shareholders, to be held at 2:00 P.M. on
May 4, 2011, and at any adjournment or postponement of the meeting. The purposes of the meeting
are:
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To elect three (3) directors to serve until the 2014 Annual Meeting of Shareholders and
until their successors are duly elected and qualified;
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2.
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To ratify the appointment of TGM Group LLC as the Companys independent registered
public accountants for the year ended December 31, 2011; and
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3.
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To transact any other business that may properly come before the meeting or any
adjournment or postponement of the meeting.
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The meeting will be held at:
CommerceFirst Bank
1804 West Street, Suite 200
Annapolis, Maryland
This proxy statement and proxy card are being sent to shareholders of the Company on or about
March 30, 2011. A copy of the Companys Annual Report to Shareholders for the year ended December
31, 2010, which includes our audited financial statements, also accompanies this proxy statement.
The cost of this proxy solicitation is being paid by the Company. In addition to the use of
the mail, proxies may be solicited personally or by telephone by officers, regular employees or
directors of the Company or its subsidiary, CommerceFirst Bank (the Bank), who will not receive
any special compensation for their services. The Company may also reimburse brokers, custodians,
nominees and other fiduciaries for their reasonable out-of-pocket and clerical costs for forwarding
proxy materials to their principals.
VOTING RIGHTS AND PROXIES
Voting Rights
Only shareholders of record at the close of business on March 15, 2011 (the Record Date),
will be entitled to notice of and to vote at the meeting or any adjournment or postponement of the
meeting. On that date, the Company had 1,820,548 shares of common stock, par value $.01 per share
(the common stock) outstanding, held by approximately 300 shareholders of record. The common
stock is the only class of the Companys stock of which shares are outstanding. Each share of
common stock is entitled to one vote on all matters submitted to a vote of the shareholders.
Shareholders do not have the right to cumulate votes in the election of directors. The presence,
in person or by proxy, of not less than a majority of the total number of outstanding shares of
common stock is necessary to constitute a quorum at the meeting.
Proxies
Properly executed proxies received by the Company in time to be voted at the meeting will be
voted as specified by shareholders. In the absence of specific instructions, proxies received will
be voted
FOR
the election of the nominees for election as directors, and
FOR
the ratification of
the appointment of TGM Group LLC. Management does not know of any matters that will be brought
before the meeting, other than as described in this proxy statement. If other matters are properly
brought before the meeting, the persons named in the proxy intend to vote the shares to which the
proxies relate in accordance with their best judgment.
The judges of election appointed by the Board of Directors for the meeting will determine the
presence of a quorum and will tabulate the votes cast at the meeting. Abstentions will be treated
as present for purposes of determining a quorum, but as unvoted for purposes of determining the
approval of any matter submitted to the vote of shareholders. If a broker indicates that he or she
does not have discretionary authority to vote any shares of common stock on a particular matter,
such shares will be treated as present for general quorum purposes, but will not be considered as
present or voted with respect to that matter. Under the rules of the New York Stock Exchange
applicable to its member firms, we expect that banks and brokers will not vote shares on the
election of directors unless they receive instructions from the beneficial owners of the shares
they hold.
If you hold your shares through a bank or broker, it is extremely important that you
instruct your record holder how to vote your shares.
Please sign, date, mark and return promptly the enclosed proxy in the postage paid envelope
provided for this purpose in order to assure that your shares are voted. You may revoke your proxy
at any time before it is voted at the meeting:
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by granting a later proxy with respect to the same shares;
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by sending written notice to Candace M. Springmann, Corporate Secretary of the
Company, at the address noted above, at any time prior to the proxy being voted; or
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by voting in person at the meeting.
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Attendance at the meeting will not, in itself, revoke a proxy. If your shares are held in the
name of your bank or broker, you will need additional documentation from your record holder to vote
in person at the meeting. Please see the voting form provided by your bank or broker for additional
information regarding the voting of your shares.
Many shareholders whose shares are held in an account at a brokerage firm or bank will have
the option to submit their proxies or voting instructions electronically through the Internet or by
telephone. Shareholders should check the voting form or instructions provided by their bank or
broker to see which options are available. Shareholders submitting proxies or voting instructions
electronically should understand that there may be costs associated with electronic access, such as
usage charges from Internet access providers and telephone companies, which would be borne by the
shareholder. To revoke a proxy previously submitted electronically, a shareholder may simply submit
a new proxy at a later date before the taking of the vote at the meeting, in which case, the later
submitted proxy will be recorded and the earlier proxy will be revoked.
2
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
Securities Ownership of Directors, Officers and Certain Beneficial Owners
The following table sets forth certain information concerning the number and percentage of
whole shares of the Companys common stock beneficially owned by its directors, executive officers
whose compensation is disclosed, and by its directors and all executive officers as a group, as of
March 15, 2011, as well as information regarding each other person known by the Company to own in
excess of five percent of the outstanding common stock. Except as set forth below, the Company
knows of no other person or persons who beneficially own in excess of five percent of the Companys
common stock. Further, the Company is not aware of any arrangement which at a subsequent date may
result in a change of control of the Company. Except as otherwise indicated with respect to
directors and executive officers, all shares are owned directly, the named person possesses sole
voting and sole investment power with respect to all such shares, and none of such shares are
pledged as security.
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Total Number of
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Shares of Common
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Stock
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Percentage
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Beneficially
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of
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Name
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Owned
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Ownership
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Edward B. Howlin, Jr (1)
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203,666
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11.19
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%
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2880 Dunkirk Way
Dunkirk, MD 20754
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Charles L. Hurtt, Jr.
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20,076
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1.10
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Milton D. Jernigan, II (2)
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35,350
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1.94
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Robert R. Mitchell
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24,800
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1.36
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Richard J. Morgan
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11,143
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0.61
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%
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John A. Richardson, Sr.
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40,000
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2.20
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%
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George C. Shenk, Jr.
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14,200
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0.78
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%
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Michael T. Storm (3)
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400
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0.02
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Lamont Thomas
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23,000
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1.26
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Jerome A. Watts
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24,266
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1.33
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%
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Directors, Officers as a Group (10 people)
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396,901
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21.80
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%
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Estate of Alvin Maier
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101,892
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5.60
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c/o Ellis J. Koch, Esq., 5904 Hubbard
Drive, Rockville, MD 20852
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(1)
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Includes 151,160 shares held individually, 49,306 shares held jointly with spouse and
3,200 shares held in a family partnership.
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Includes 25,950 shares held in IRA accounts and 9,400 shares held jointly with spouse.
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(3)
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Shares held jointly with spouse.
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3
PROPOSAL 1 ELECTION OF DIRECTORS
The size of the Companys Board of Directors is currently set at nine (9) directors, divided
into three classes, one of which is elected each year. The Board of Directors has nominated three
(3) persons for election as director at the meeting, for a three year term until the 2014 Annual
Meeting of Shareholders and until their successors have been elected and qualified. Each of the
nominees for election as a director currently serves as a member of the Board of Directors. Unless
authority is withheld, all proxies in response to this solicitation will be voted for the election
of the nominees listed below. Each nominee has indicated a willingness to serve if elected.
However, if any nominee becomes unable to serve, the proxies received in response to this
solicitation will be voted for a replacement nominee selected in accordance with the best judgment
of the persons named as proxies.
The Board of Directors has determined that each director other than Mr. Jernigan II, Mr.
Morgan, and Mr. Thomas is an independent director as that term is defined in Rule 5605(a)(2) of
The NASDAQ Stock Market (the NASDAQ). In making this determination, the Board of Directors was
aware of and considered the loan and deposit relationships with directors and their related
interests which the Company enters into in the ordinary course of its business, and the service
arrangements which are disclosed under Certain Relationships and Related Transactions in this
proxy statement, as well as the employment and consulting arrangements described under Directors
Compensation and Executive Compensation Employment Agreements.
Vote Required and Board Recommendation.
Nominees receiving a plurality of the votes cast at
the meeting in the election of directors will be elected as director, in the order of the number of
votes received. Members of the Board of Directors of the Company having the power to vote or direct
the voting of 394,481 shares of common stock, or approximately 22% of the shares of common stock
outstanding on March 15, 2011, have indicated their intention to vote FOR the election of all of
the nominees for election as director.
Nominees for Election as Directors
Set forth below is certain information as of March 15, 2011 concerning the nominees for
election as director of the Company. Except as otherwise indicated, the occupation listed has been
such persons principal occupation for at least the last five years. Each of the nominees has
served as a director of the Bank since its organization.
Milton D. Jernigan, II
. Mr. Jernigan, 56, is an attorney engaged in private practice since
1982, is a co-founder and co-managing principal of the law firm of McNamee, Hosea, Jernigan, Kim,
Greenan & Lynch, P.A. He is the Resident Principal-in-Charge of the firms Annapolis office where
his practice concentrates on business, real estate, tax and other matters including work with
federal and state bank regulatory agencies. Mr. Jernigan was one of the founding organizers and a
member of the Board of Directors of the former Commerce Bank in College Park, Maryland where he
served as General Counsel from its organization in 1989 until its acquisition by Main Street Bank
Group (now a part of BB&T Corporation) in December 1997. Mr. Jernigan is a resident of Annapolis,
Maryland and is active in local bar associations, chambers of commerce, service and civic
organizations, including the Maryland State and Anne Arundel County Bar Associations, the
Annapolitan Club and service on the Board of Directors of the Annapolis and Anne Arundel County
Chamber of Commerce. Mr. Jernigan was one of the founding organizers of CommerceFirst Bank in
2000 and has been a director of the Company since its organization.
John A. Richardson, Sr.
Mr. Richardson, 67, until his retirement in April 2000 was President
of Branch Electric Supply Company, a position he had held since 1968. Mr. Richardson is also the
President of Crofton Bowling Center, is a partner in numerous real estate investment partnerships
located throughout Anne Arundel and Prince Georges Counties, continues to work as a consultant,
and manages real estate. Mr. Richardson is a member of the National Bowling Proprietors
Association. Mr. Richardson is a resident of Anne Arundel County. Mr. Richardson has been a
director of the Company since October 2003. Mr. Richardson provides the Company with knowledge of
local business conditions as well experience in managing small to medium size companies. Mr.
Richardson has served as a director of the Company for over seven years.
Jerome A. Watts.
Mr. Watts, 68, until his retirement in 2006 was the owner of Plan
Management, a supplier of insurance and employee benefits plans. Mr. Watts was appointed to the
Board of Directors of the Company in September 2005 to fill a vacancy in the class of 2008 and was
confirmed at the 2006 Annual Meeting of Shareholders.
Mr. Watts was one of the original organizers and directors of Commerce Bank. Mr. Watts is a
resident of Washington, DC. Mr. Watts served as a director of another banking organization prior to
his appointment as a director of the Company. Mr. Watts provides insurance expertise to the
Company.
4
Continuing Directors of the Company
Set forth below is certain information as of the Record Date concerning the continuing
directors of the Company. Except as otherwise indicated, the occupation listed has been such
persons principal occupation for at least the last five years. Each of the continuing directors
of the Company has served as a director of the Bank since its organization.
Edward B. Howlin, Jr
. Mr. Howlin, 74, is the Chairman and Chief Executive Officer of Howlin
Realty Management, Inc., a real estate holding, management and development firm, and of Edward B.
Howlin, Inc., a management and holding company, and of its subsidiary companies, Dunkirk Supply,
Inc. and Howlin Concrete, Inc. In addition to real estate management and development, the Howlin
companies construct residential subdivisions and design, manufacture and sell construction
components, systems and supplies to various commercial, residential and government projects,
primarily in Southern Maryland. Mr. Howlin is a resident of Anne Arundel County. Mr. Howlin has
been a director of the Company since its organization. Mr. Howlin provides the Company with, among
other things, knowledge of the local real estate market conditions, introductions to potential
customers, his experience in managing medium size companies as well as his experience as a director
of the Company for over nine years. Mr. Howlins current term expires in 2013.
Charles L. Hurtt, Jr., CPA.
Mr. Hurtt, 64, is the founder and President of Charles L. Hurtt,
Jr., P.A., a certified public accounting firm located in Pasadena, Maryland. Mr. Hurtt has been
involved in several charitable and civic organizations, including organizations involved in youth
programs in Prince Georges County. Mr. Hurtt has also been active in several professional
associations, including past or present memberships in the Maryland Society of Accountants, the
National Society of Accountants and the Maryland Association of Certified Public Accountants. Mr.
Hurtt is a resident of Anne Arundel County. Mr. Hurtt has been a director of the Company since
October 2003. Mr. Hurtt brings his financial expertise to the Company and as such serves as the
Audit Committee Chairman. Mr. Hurtts current term expires in 2013.
Robert R. Mitchell.
Mr. Mitchell, 68, is currently retired. He was the President of Mitchell
Business Equipment, Inc., with which he served for over 20 years until its sale in 1988. Mr.
Mitchell was one of the original organizers and directors of Commerce Bank. Mr. Mitchell is active
in local service and civic organizations, including membership in Rotary International, service on
the Prince Georges Salvation Army Local Board and membership in the Anne Arundel Junior Golf
Association. Mr. Mitchell is a resident of Anne Arundel County. Mr. Mitchell has been a director of
the Company since October 2003. Mr. Mitchell provides the Company with knowledge of community
affairs, local business conditions as well experience in managing small to medium size companies.
Mr. Mitchell has served as a director of the Company for over seven years and was a director of
another banking organization prior to his experience with the Company. Mr. Mitchells current
term expires in 2012.
Richard J. Morgan
. Mr. Morgan, 63, is President and Chief Executive Officer of the Bank and
the Company. From 1997 until July 1999, he was a cabinet level advisor to the Anne Arundel County
Executive on issues relating to the economy and economic development, and was President and Chief
Executive Officer of Anne Arundel Economic Development Corporation. From 1990 to 1997, Mr. Morgan
served as President and Chief Executive Officer of Annapolis National Bank. He has over 35 years
of banking and financial management experience. He held leadership roles in commercial lending at
Marine Midland Bank (now HSBC) from 1970 through 1977 and with Maryland National Bank (now Bank of
America) from 1977 to 1982. He has served on numerous community boards, commissions and community
service groups, including as Board member and Assistant Treasurer of the Anne Arundel Medical
Center; Board member and past Chair of United Way of Anne Arundel County; Board and Executive
Committee as well as 2004 and 2005 Chair of the Annapolis and Anne Arundel Chamber of Commerce;
Chair of the Chambers Economic Development Committee; Treasurer and member of the Executive
Committee of the Maryland Economic Development Association; and Board and Executive Committee
member of Leadership Anne Arundel and Chair for the Executive Leadership Program. Mr. Morgan is a
resident of Anne Arundel County. Mr. Morgan was elected for a term of three years to be a member
of the Board of Directors
of the Federal Reserve Bank of Richmond, effective in January 2010. Mr. Morgan has been a director
of the Company since its organization. Mr. Morgans current term expires in 2012.
5
George C. Shenk, Jr.
Mr. Shenk, 58, is the President of Whitmore Group, a communications
company headquartered in Annapolis, Maryland. Mr. Shenk is a resident of Anne Arundel County and
has been a director of the Company since 2006. Mr. Shenk provides the Company with knowledge of
local business conditions, local businessmen/women contacts as well experience in managing small to
medium size companies. Mr. Shenks current term expires in 2012.
Lamont Thoma
s. Mr. Thomas, 70, was the Executive Vice President and Chief Operating Officer of
the Bank and Company until his retirement as of December 31, 2007 and was Chief Financial Officer
until September 10, 2007. Mr. Thomas was one of the founding organizers and members of the Board
of Directors of the former Commerce Bank in College Park, Maryland from its organization in 1989
until its acquisition by Main Street Bank Group (now a part of BB&T Corporation) in December 1997,
serving as Executive Vice President and Treasurer (chief operating and financial officer) of
Commerce Bank. Mr. Thomas is a resident of Howard County. Mr. Thomas has been a director of the
Company since its organization. Mr. Thomas experience as the former Executive Vice President,
Chief Operating Officer and Chief Financial Officer of the Company, prior banking experience and
experience as a director of the Company and Bank for over nine years, provides the Company with
detailed knowledge of the Companys operations. He is an experienced banking director as a director
of the Company and other banking companies. Mr. Thomas current term expires in 2013.
Election of Directors of the Bank
If elected, the nominees for election as directors intend to vote for each of the directors of
the Company and the following persons to serve as directors of the Bank, each of whom currently
serves as a director of the Bank.
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Name
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Age
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Principal Occupation and Experience
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William F. Chesley
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67
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President of William F. Chesley Real Estate, Inc., Dee
Corporation, Enterprise Office Park, Inc., and Ridgley
Builders, Inc., and managing member of Builders Advantage,
LLC. These companies are engaged in residential and
commercial real estate sales, management and development.
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Charles F. Delavan
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64
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Attorney with the firm of Blumenthal, Delavan & Williams, P.A.
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Nicholas J. Marino
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57
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President of Marino Transportation Services, LLC, a
transportation and shipping logistics company.
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Michael J. Miller
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53
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Vice President of Concrete General, Inc. and Tri M Leasing
Corp., Managing Member of Airpark North, LLC and a partner of
Tri M Properties. These companies are engaged in road
construction, equipment leasing, and real estate development
and ownership.
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Don E. Riddle, Jr.
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62
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Chairman and Chief Executive Officer of Homestead Gardens,
Inc., the largest enclosed garden center in the Baltimore and
Washington, D.C. metropolitan areas.
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Stephen C. Samaras
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58
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Owner of Zymotic, Inc. since 1992, a jewelry store operating
under the name Zacharys Jewelers located in Annapolis,
Maryland.
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Dale R. Watson
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56
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President of Alpha Engineering Associates, Inc., a computer
consulting company.
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J. Scott Wimbrow
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49
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Senior Vice President, MacKenzie Commercial Real Estate
Services LLC, a commercial real estate brokerage.
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6
Committees, Meetings and Procedures of the Board of Directors
Meetings.
The Board of Directors of the Company met five (5) times during 2010. All members
of the Board of Directors attended at least 75% of the meetings held by the Board of Directors and
by all committees on which such member served during the 2010 fiscal year or any portion thereof.
Audit Committee.
The Board of Directors has a standing Audit Committee. The Audit Committee is
responsible for the selection, review and oversight of the Companys independent accountants, the
approval of all audit, review and attest services provided by the independent accountants, the
integrity of the Companys reporting practices and the evaluation of the Companys internal
controls and accounting procedures. It also periodically reviews audit reports with the Companys
independent auditors. The Audit Committee is currently comprised of Mr. Hurtt (Chairman) and
Messrs. Mitchell and Richardson. Each of the members of the Audit Committee is independent, as
determined under the definition of independence adopted by the NASDAQ for audit committee members
in Rule 5605(c(2)(A). The Board of Directors has adopted a written charter for the Audit
Committee, a copy of which is included as Appendix A to this definitive proxy statement. During
2010, the Audit Committee met five (5) times. The Board of Directors has determined that Mr. Hurtt
is an audit committee financial expert as defined under regulations of the Securities and
Exchange Commission.
The Audit Committee is also responsible for the pre-approval of all non-audit services
provided by its independent auditors. Non-audit services are only provided by the Companys
auditors to the extent permitted by law. Pre-approval is required unless a
de minimus
exception
is met. To qualify for the
de minimus
exception, the aggregate amount of all such non-audit
services provided to the Company must constitute not more than five percent of the total amount of
revenues paid by the Company to its independent auditors during the fiscal year in which the
non-audit services are provided; such services were not recognized by the Company at the time of
the engagement to be non-audit services; and the non-audit services are promptly brought to the
attention of the committee and approved prior to the completion of the audit by the committee or by
one or more members of the committee to whom authority to grant such approval has been delegated by
the committee.
Nominations.
The Board of Directors has a standing nominating committee consisting of all of
the members of the Board of Directors who are independent directors within the meaning of NASDAQ
Rule 5605(a)(2). The nominating committee is responsible for the evaluation of nominees for
election as director, the nomination of director candidates for election by the shareholders and
evaluation of sitting directors. The Board of Directors has adopted a charter addressing the
nominations process, a copy of which is included as Appendix B to this definitive proxy statement.
The Board has not developed a formal policy for the identification or evaluation of nominees.
In general, when the Board determines that expansion of the Board or replacement of a director is
necessary or appropriate, the nominating committee will review, through candidate interviews with
members of the Board and management, consultation with the candidates associates and through other
means, a candidates honesty, integrity, reputation in and commitment to the community, judgment,
personality and thinking style, willingness to invest in the Company, residence, willingness to
devote the necessary time, potential conflicts of interest, independence, understanding of
financial statements and issues, and the willingness and ability to engage in meaningful and
constructive discussion regarding Company issues. The committee would review any special expertise,
for example, expertise that qualifies a person as an audit committee financial expert, and
membership or influence in a particular geographic or business target market, or other relevant
business experience. To date the Company has not paid any fee to any third party to identify or
evaluate, or to assist it in identifying or evaluating, potential director candidates. The Board of
Directors has not established a specific diversity component in its consideration of candidates for
director.
The nominating committee will consider director candidates nominated by shareholders during
such times as the Company is actively considering obtaining new directors on the same basis as
candidates proposed by the committee, the Board or other sources. Candidates recommended by
shareholders will be evaluated based on the same criteria described above. Shareholders desiring to
suggest a candidate for consideration should send a letter to the Companys Secretary and include:
(a) a statement that the writer is a shareholder (providing evidence if the persons shares are
held in street name) and is proposing a candidate for consideration; (b) the name and contact
information for the candidate; (c) a statement of the candidates business and educational
experience; (d) information regarding the candidates qualifications to be director, including but
not limited to an evaluation of the factors discussed above which the Board would consider in
evaluating a candidate; (e) information regarding any
relationship or understanding between the proposing shareholder and the candidate; (f) information
regarding potential conflicts of interest; and (g) a statement that the candidate is willing to be
considered and willing to serve as director if nominated and elected.
7
Because of the limited resources of the Company and the limited opportunity to seek additional
directors, there is no assurance that all shareholder proposed candidates will be fully considered,
that all candidates will be considered equally, or that the proponent of any candidate or the
proposed candidate will be contacted by the Company or the Board, and no undertaking to do so is
implied by the willingness to consider candidates proposed by shareholders.
Compensation.
The Company maintains a standing Compensation Committee of the Board of
Directors. The Compensation Committee is currently comprised of Mr. Shenk (Chairman) and Messrs.
Howlin, Mitchell, Richardson and Watts. Each of the members of the Committee is independent, as
determined under the definition of independence adopted by the NASDAQ for board members in Rule
5605(a)(2). The Committee determines all incentive compensation payments as well as the
compensation levels of executive officers. According to the charter, the committees determinations
are reported to the Board of Directors. The Board of Directors has adopted a charter for the
Committee, a copy of which is included as Appendix C to this definitive proxy statement. To date,
no compensation consultant has been engaged to assist the Committee or the Board of Directors in
connection with establishing executive compensation. The President and Chief Executive Officer has
no role in the determination of his compensation but may make recommendations as to other senior
officers compensation.
Board Leadership Structure and Risk Oversight Role.
The role of Chairman of the Board of
Directors and President/Chief Executive Officer of the Company are not currently held by the same
person. While the Chairman of the Board is considered to be an officer, he is not, and has not
been, involved in the day to day management of the Company or the Bank. He is considered as a
liaison between management and the outside directors. The foregoing structure is not mandated by
any provision of law or our articles of incorporation or bylaws, but the Board of Directors
currently believes that this structure provides for an appropriate balance of authority between
management and the Board. The Board of Directors reserves the right to establish a different
structure in the future.
The Board of Directors of the Company, all of the members of which are also members of the
Board of Directors of the Bank, is actively involved in the Companys and Banks risk oversight
activities, through the work of numerous committees of the Company and Bank, and the policy
approval function of the Board of Directors of the Bank.
Shareholder Communications.
Company shareholders who wish to communicate with the Board of
Directors or an individual director may write to CommerceFirst Bancorp, Inc., 1804 West Street,
Suite 200, Annapolis, Maryland 21401, Attention: Candace M. Springmann, Corporate Secretary. Your
letter should indicate that you are a shareholder, and whether you own your shares in street name.
Depending on the subject matter, management will: (a) forward the communication to the director or
directors to whom it is addressed; (b) handle the inquiry directly or delegate it to appropriate
employees, such as where the communication is a request for information, a stock related matter, or
a matter related to ordinary course matters in the conduct of the Companys banking business; or
(c) not forward the communication where it is primarily commercial or political in nature, or where
it relates to an improper, frivolous or irrelevant topic. Communications which are not forwarded
will be retained until the next Board meeting, where they will be available to all directors. There
is no assurance that all communications will receive a response.
8
Audit Committee Report
The Audit Committee has been appointed to assist the Board of Directors in fulfilling the
Boards oversight responsibilities by reviewing the financial information that will be provided to
the shareholders and others, the systems of internal controls established by management and the
Board and the independence and performance of the Companys audit process.
The Audit Committee has:
(1) reviewed and discussed with management the audited financial statements included in the
Companys Annual Report to Shareholders and Annual Report on Form 10-K;
(2) discussed with TGM Group LLC, the Companys independent accountants, the matters required
to be discussed by Statement of Auditing Standards No. 61 as adopted by the Public Company
Accounting Oversight Board in Rule 3200T; and
(3) has received the written disclosures and letter from TGM Group LLC as required by the
applicable requirements of the Public Company Accounting Oversight Board regarding the independent
accountants communications concerning independence with the Audit Committee and discussed with TGM
Group LLC its independence.
Based on these reviews and discussions, the Audit Committee has recommended to the Board of
Directors that the audited financial statements be included in the Companys Annual Report on Form
10-K for the year ended December 31, 2010. The Audit Committee has also considered whether the
amount and nature of non-audit services provided by TGM Group LLC is compatible with the auditors
independence.
Members of the Audit Committee: Charles L. Hurtt, Jr., CPA, Chairman; Robert Mitchell; John A.
Richardson, Sr.
Directors Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees earned
|
|
|
|
|
|
|
|
|
|
or Paid in
|
|
|
All Other
|
|
|
|
|
Name
|
|
Cash
|
|
|
Compensation
|
|
|
Total
|
|
Milton D. Jernigan, II
|
|
$
|
42,500
|
|
|
$
|
213
|
(1)
|
|
$
|
42,713
|
|
Edward B. Howlin, Jr.
|
|
$
|
2,600
|
|
|
|
|
|
|
$
|
2,600
|
|
Charles L. Hurtt, Jr., CPA
|
|
$
|
13,100
|
|
|
|
|
|
|
$
|
13,100
|
|
Robert R. Mitchell
|
|
$
|
3,100
|
|
|
|
|
|
|
$
|
3,100
|
|
John A. Richardson, Sr.
|
|
$
|
4,100
|
|
|
|
|
|
|
$
|
4,100
|
|
George C. Shenk, Jr.
|
|
$
|
4,200
|
|
|
|
|
|
|
$
|
4,200
|
|
Lamont Thomas
|
|
|
|
|
|
$
|
52,000
|
(2)
|
|
$
|
52,000
|
|
Jerome A. Watts
|
|
$
|
2,000
|
|
|
|
|
|
|
$
|
2,000
|
|
|
|
|
(1)
|
|
Represents insurance premium.
|
|
(2)
|
|
Represents payment under his consulting agreement discussed below.
|
Directors of the Company and Bank received compensation for membership on the Board or
attendance at Board or committee meetings in 2010. Directors of the Company and the Bank (excluding
Messrs. Jernigan, II, Morgan and Thomas) were paid $100 per meeting attended, except for Mr. Hurtt,
the Chair of the Audit Committee, who received $3,000 per quarter during 2010 while serving in that
capacity. Directors of the Company and the Bank will be paid $250 per meeting attended in 2011. The
Company does not currently maintain any plans pursuant to which stock options, restricted stock or
other equity based plans may be awarded to directors. The Company does not maintain any pension,
retirement or deferred compensation plans in which directors may participate.
9
Under his employment agreement with the Company, Mr. Jernigan, II received $42,500 in 2010 and
will receive a 2011 base salary of $45,000 and a term life insurance policy in the amount of
$100,000 for service as Chairman of the Boards of Directors of the Company and the Bank. He has
previously been granted options to purchase 2,500 shares of common stock at an exercise price of
$10.00 per share under his agreement. These options expired in August 2010 without having been
exercised. He is also entitled to receive cash bonuses and additional grants of options as
determined by the Board of Directors. The term of Mr. Jernigans employment agreement expires on
August 15, 2014. If the agreement is terminated by the Company without cause, the Company will
continue to pay his annual compensation and benefits as severance compensation for a period of 12
months; i.e. $45,000 plus life insurance coverage as described above. In the event of any change in
control (as defined) of the Company, Mr. Jernigan, II may continue his employment, execute a new
employment agreement on mutually agreeable terms or resign his employment.
In the event that Mr. Jernigan, II resigns or is terminated within 12 months of the change in
control, Mr. Jernigan, II will be entitled to the sum of twice the base salary and bonuses, if any,
paid to him during the 12 months immediately preceding the change in control. If Mr. Jernigan, II
were entitled to receive this payment as of December 31, 2010 he would have been entitled to
receive six equal monthly payments totaling approximately $90,000. For a period on one year after
termination of his employment, Mr. Jernigan, II has agreed that he will not accept employment by or
on behalf of any bank headquartered in Anne Arundel County, Maryland, or in such capacity request
or advise any present or future investors, depositors or customers of the Company or the Bank to
curtail or discontinue their business with the Company or the Bank, or induce, or attempt to
induce, any employee of the Company or the Bank to terminate his employment with the Company or the
Bank. Mr. Jernigan, II would also be subject to nondisparagement and nondisclosure obligations
during this period.
In March 2007, the Company and Mr. Thomas amended his employment agreement in recognition of
Mr. Thomas retirement from the Company and the desire to provide transition to a new COO/CFO.
Following Mr. Thomas retirement on December 31, 2007, Mr. Thomas will provide consulting services
to the Company for a four year term ending December 31, 2011. Mr. Thomass compensation for these
services will be $52,000 per year. He will continue to serve on the Companys Board of Directors
(subject to expected shareholder approval at appropriate annual meetings), the Banks Board of
Directors and its executive committee for the duration of the agreement, but will not receive fees
for Board service during the term of the consulting agreement. He has previously been granted
options to purchase 7,500 shares of common stock at an exercise price of $10.00 per share under his
agreement. These options expired in August 2010 without having been exercised.
Executive Officers Who Are Not Directors
Set forth below is certain information regarding persons who are executive officers of the
Company or the Bank and who are not directors of the Company or the Bank. Except as otherwise
indicated, the occupation listed has been such persons principal occupation for at least the last
five years.
Michael T. Storm.
Mr. Storm, 60, has served as Executive Vice President, Chief Operating
Officer and Chief Financial Officer of the Company and Bank since January 1, 2008, and served as
Chief Financial Officer of the Company and Bank since September 12, 2007. Mr. Storm previously
served as Senior Vice President and Chief Financial Officer of CN Bancorp, Inc. and County National
Bank from 1998 until the acquisition of CN Bancorp by Sandy Spring Bancorp, Inc. in May 2007. He
had served in that capacity since 1998. He previously served as Executive Vice President and Chief
Financial Officer of Annapolis National Bank from 1990 to 1997.
10
Executive Compensation
The following table sets forth a comprehensive overview of the compensation for Mr. Morgan,
the President and Chief Executive Officer of the Company and each other executive officer who
received total compensation of $100,000 or more during the fiscal year ended December 31, 2010.
SUMMARY COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
Name and Position
|
|
Year
|
|
|
Salary
|
|
|
Bonus
|
|
|
Compensation
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard J. Morgan
|
|
|
2010
|
|
|
$
|
199,992
|
|
|
$
|
10,000
|
|
|
$
|
19,642
|
(1)
|
|
$
|
229,634
|
|
President and CEO
|
|
|
2009
|
|
|
$
|
200,000
|
|
|
$
|
|
|
|
$
|
25,427
|
(1)
|
|
$
|
225,427
|
|
|
|
|
2008
|
|
|
$
|
199,330
|
|
|
$
|
|
|
|
$
|
12,213
|
(1)
|
|
$
|
211,543
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael T. Storm
|
|
|
2010
|
|
|
$
|
144,206
|
|
|
$
|
6,000
|
|
|
$
|
18,221
|
(2)
|
|
$
|
168,427
|
|
Executive Vice President,
|
|
|
2009
|
|
|
$
|
140,000
|
|
|
$
|
|
|
|
$
|
17,308
|
(2)
|
|
$
|
157,308
|
|
COO and CFO
|
|
|
2008
|
|
|
$
|
140,000
|
|
|
$
|
|
|
|
$
|
6,000
|
(2)
|
|
$
|
146,001
|
|
|
|
|
(1)
|
|
For 2010, amount represent automobile allowance of $6,000, Company 401(k) match of
$8,007, life insurance premiums of $716 and $4,919 of payment of unused leave time under
the Companys leave policy. For 2009, amount represent automobile allowance of $5,980,
Company 401(k) match of $5,423, life insurance premiums of $948 and $13,076 of payment of
unused leave time under the Companys leave policy. For 2008, amount represents automobile
allowance of $5,980, Company 401(k) match of $5,285 and life insurance premiums of $948.
|
|
(2)
|
|
For 2010, amount represents automobile allowance of $6,000, Company 401(k) match of
$5,776, life insurance premiums of $1,141 and $5,304 payment of unused leave time under the
Company leave policy. For 2009, amount represents automobile allowance of $6,000, Company
401(k) match of $3,796, life insurance premiums of $1,099 and $6,413 payment of unused
leave time under the Company leave policy. For 2008, amount represents automobile allowance
of $6,000.
|
The Company does not currently maintain any plans pursuant to which stock options or other
equity based compensation awards may be granted to the named executive officers. The Company does
not maintain any non-equity incentive plans or compensation programs (other than discretionary
bonuses), and does not maintain any defined benefit retirement plans, or deferred compensation
plans or arrangements.
Employment Agreements.
Mr. Morgan has an employment agreement with the Company pursuant to
which he serves as President and Chief Executive Officer of the Bank. The employment agreement, as
amended in January 2009, expires in August 2014 unless terminated sooner. Under his employment
agreement, Mr. Morgan is entitled to receive a 2011 base salary of $210,000 and a term life
insurance policy in the amount of $300,000. He has previously been granted options to purchase
10,000 shares of common stock at an exercise price of $10.00 per share under his agreement. These
options expired in August 2010 without having been exercised. Mr. Morgan is also entitled to
receive bonuses and additional grants of options as determined by the Board of Directors, and to
participate in all other health, welfare, benefit, stock, option and bonus plans, if any, generally
available to officers or employees of the Company. Mr. Morgan is also entitled to the use of a
leased vehicle or a comparable vehicle allowance. If the employment agreement is terminated by the
Company without cause, the Company will continue to pay Mr. Morgan his annual compensation and
benefits as severance compensation for a period of 12 months, i.e. $210,000 plus cost of benefits
approximating $12,000. In the event of any change in control (as defined) of the Company, Mr.
Morgan may continue his employment, execute a new employment agreement on mutually agreeable terms
or resign his employment. In the event that Mr. Morgan resigns or is terminated within 12 months
of the change in control, Mr. Morgan will be entitled to the sum of twice the base salary and
bonuses paid to him during the 12 months immediately preceding the change in control. If Mr.
Morgan were entitled to receive this payment as of December 31, 2010, he would have been entitled
to receive six equal monthly payments totaling approximately $400,000. For a period on one year
after termination of his employment, Mr. Morgan has agreed that he will not accept employment by or
on behalf of any bank headquartered in Anne Arundel County, Maryland, or in such capacity request
or advise any present or future investors, depositors or customers of the Company or the Bank to
curtail or discontinue their business with the Company or the Bank, or induce, or attempt to
induce, any employee of the Company or the Bank to terminate his employment with the Company or the
Bank. Mr. Morgan would also be subject to non-disparagement and nondisclosure obligations during
this period.
11
Mr. Storm has an employment agreement under which he serves as Executive Vice President and
Chief Operating Officer and Chief Financial Officer of the Company. Under his employment agreement,
Mr. Storm is entitled to receive a 2011 base salary of $150,200 per year and a term life insurance
policy in the amount of $300,000. Mr. Storm is also entitled to receive bonuses and to participate
in all health, welfare, benefit, stock, option and bonus plans, if any, generally available to
officers or employees of the Company. Mr. Storm is also entitled to a vehicle allowance of $500 per
month. The term of Mr. Storms employment agreement expires on September 9, 2012 unless sooner
terminated. If the agreement is terminated by the Company without cause, the Company will continue
to pay Mr. Storm his annual compensation rate and benefits as severance compensation for a period
of six (6) months, i.e. $72,000 plus cost of benefits approximating $11,000, if he were entitled to
receive such payment at December 31, 2010. In the event of any change in control (as defined) of
the Company, Mr. Storm may continue his employment, execute a new employment agreement on mutually
agreeable terms or resign his employment. In the event that Mr. Storm resigns or is terminated
within 12 months of the change in control, then Mr. Storm will be entitled to twice his base
salary, paid over a period of 12 months (the change in control payment), provided that if the
change in control occurred at December 31, 2010, he would have been entitled to 40% of the change
in control payment i.e. $115,200; if it occurs during 2011, he will be entitled to 60% of the
change in control payment; if it occurs during 2012, he will be entitled to 80% of the change in
control payment; and if it occurs in 2013 or beyond, he will be entitled to the entire change in
control payment. For a period on one year after termination of his employment, Mr. Storm has agreed
that he would be subject to non-disparagement and nondisclosure obligations.
Employee Benefit Plans.
The Bank provides a benefit program that includes health and dental
insurance, life and long term and short-term disability insurance and a 401(k) plan under which the
Company matched 50% of eligible employee contributions up to 6% of base salary in 2009 and prior.
The Company adopted safe harbor provisions for the 401(k) plan as of January 1, 2010. Under these
provisions, the Company will match 100% of employee contributions up to 3% of salary and match 50%
of the contributions in excess of the 3% employee contributions but not more than 6% of base
salary. The total match cannot exceed 4% of base salary.
Outstanding Options and Option Exercises.
The Company has never maintained any plan for the
award of equity based compensation other than stock options or warrants. No options or warrants
were exercised by any named executive officer in 2010, no options held by such officers vested
during 2010, and no options were granted to such officers during 2010. All outstanding options and
warrants held by executive officers expired in August 2010 without having been exercised.
Certain Relationships and Related Transactions
The Bank has had, and expects to have in the future, banking transactions in the ordinary
course of business with some of the Companys directors, officers, and employees and other related
parties. In the past, all of such transactions have been on substantially the same terms,
including interest rates, maturities and collateral requirements as those prevailing at the time
for comparable transactions with non-affiliated persons and did not involve more than the normal
risk of collectability or present other unfavorable features.
The activity of loans to the Companys directors, officers, and employees and other related parties
during 2010 and 2009 is as follows:
|
|
|
|
|
|
|
|
|
In thousands
|
|
2010
|
|
|
2009
|
|
Total loans at beginning of year
|
|
$
|
3,594
|
|
|
$
|
3,604
|
|
New loans and funding during the year
|
|
|
492
|
|
|
|
353
|
|
Director status change to non-Director
|
|
|
(1,182
|
)
|
|
|
|
|
Repayments during the year
|
|
|
(251
|
)
|
|
|
(363
|
)
|
|
|
|
|
|
|
|
Total loans at end of year
|
|
$
|
2,653
|
|
|
$
|
3,594
|
|
|
|
|
|
|
|
|
12
The Company paid $50 thousand and $42 thousand during the years ended December 31, 2010 and
2009 respectively, to a computer services firm of which a Director is also a principal.
Expenditures included computer
hardware, software, installation, training, compliance and real-time support. The Company paid
$22 thousand during 2010 and $51 thousand in 2009 to a law firm of which a Director is a partner
for various legal services provided. Expenditures totaling less than $25,000 were paid to several
entities in which directors were principals during 2010 and 2009.
All of the above transactions have been consummated on terms equivalent to those that prevail
in arms- length transactions. The Audit Committee of the Company reviews related party transactions
in the course of its review of 10Q and 10K filings.
PROPOSAL 2 RATIFICATION OF THE APPOINTMENT OF THE
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors has selected TGM Group LLC (formerly known as
Trice Geary & Myers LLC) independent public accountants, to audit the Companys financial
statements for the fiscal year ending December 31, 2011. TGM Group LLC has audited the financial
statements of the Company since its organization. Representatives of TGM Group LLC are expected to
be present at the meeting and available to respond to appropriate questions. The representatives
also will be provided with an opportunity to make a statement, if they desire. Services provided to
the Company and its subsidiaries by TGM Group LLC in 2010 are described under Fees Paid to
Independent Accounting Firm below. Additional information regarding the Audit Committee is
provided in the Report of the Audit Committee.
The Board of Directors recommends that shareholders vote FOR the ratification of the
appointment of TGM Group LLC as the Companys independent registered public accounting firm.
The
affirmative vote of a majority of votes validly cast on the proposal is required for adoption of
the ratification of the appointment of the independent registered public accounting firm. If the
shareholders fail to ratify this appointment, the Audit Committee will reconsider whether to retain
TGM Group LLC, and may recommend to the Board of Directors that it retain TGM Group LLC or another
firm, without resubmitting the matter to shareholders. Even if the appointment is ratified, the
Audit Committee may, in its discretion, recommend the appointment of a different independent
registered public accounting firm at anytime during the year if it determines that such change
would be in the Companys best interests.
Fees Paid to Independent Accounting Firm
Set forth below is a schedule of fees billed, or to be billed, to the Company by TGM Group LLC
during 2010 and 2009 by category of service.
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
Comments
|
|
|
|
|
|
|
|
|
|
Audit fees
|
|
$
|
49,000
|
|
|
$
|
50,500
|
|
|
Audit services, reviews of SEC filings
|
Tax fees
|
|
|
2,000
|
|
|
|
2,000
|
|
|
Preparation of income and related tax returns
|
All Other fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
51,000
|
|
|
$
|
52,500
|
|
|
|
|
|
|
|
|
|
|
|
|
All services from the independent accountants during 2010 and 2009 were pre-authorized and
requested by the Audit Committee of the Company prior to the services being performed. The Audit
Committee is required to approve all audit and non-audit services, if any, provided by TGM Group
LLC prior to such services being rendered. Non-audit services can only be provided by the Companys
independent accountant to the extent permitted by law. There were no services provided by TGM Group
LLC pursuant to the
de minimus
exception to the pre-approval requirement contained in the rules of
the Securities and Exchange Commission.
13
FORM 10-K ANNUAL REPORT
The Company will provide, without charge, to any shareholder of record entitled to vote at the
meeting or any beneficial owner of common stock solicited hereby, a copy of its 2010 Annual Report
on
Form 10-K
filed with the Securities and Exchange Commission, upon the written request of such
shareholder. Requests should be directed to Candace M. Springmann, Corporate Secretary, at the
Companys executive offices, 1804 West Street, Suite 200, Annapolis, Maryland 21401.
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be
Held on May 4, 2011.
This Proxy Statement and our Annual Report to Shareholders for the year ended
December 31, 2010 is also available online at
http:www.cfpproxy.com/5001
.
DELIVERY OF DOCUMENTS TO STOCKHOLDERS SHARING AN ADDRESS
The rules of the Securities and Exchange Commission allow us to deliver a single copy of proxy
materials to any household at which two or more stockholders reside, if we believe the stockholders
are members of the same family.
We will promptly deliver, upon oral or written request, a separate copy of the proxy materials
to any stockholder residing at the same address as another stockholder and currently receiving only
one copy of the proxy materials who wishes to receive his or her own copy. Requests should be
directed to Candace M. Springmann, Corporate Secretary, at the Companys executive offices, 1804
West Street, Suite 200, Annapolis, Maryland 21401, 410.280.6695.
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Companys directors and
executive officers, and persons who own more than ten percent of the common stock, to file reports
of ownership and changes in ownership on Forms 3, 4 and 5 with the Securities and Exchange
Commission, and to provide the Company with copies of all Forms 3, 4, and 5 they file.
Based solely upon the Companys review of the copies of the forms which it has received and
written representations from the Companys directors, executive officers and ten percent
shareholders, the Company is not aware of any failure of any such person to comply with the
requirements of Section 16(a), except that two Forms 4 for Mr. Howlin, reporting an aggregate of
four transactions, were not filed in a timely manner.
OTHER MATTERS
The Board of Directors of the Company is not aware of any other matters to be presented for
action by shareholders at the meeting. If, however, any other matters not now known are properly
brought before the meeting or any adjournment thereof, the persons named in the accompanying proxy
will vote such proxy in accordance with their judgment on such matters.
SHAREHOLDER PROPOSALS
All shareholder proposals to be presented for consideration at the next annual meeting and to
be included in the Companys proxy materials must be received by the Company no later than December
1, 2011. Shareholder proposals for nominations for election as director must be received by the
Company no later than December 31, 2011. In order to be eligible for consideration at the next
annual meeting of shareholders, the Company must receive notice of shareholder proposals for
business other than the election of directors to be conducted at the annual meeting which are not
proposed to be included in the Companys proxy materials not less than thirty and not more than
ninety days before the date of the annual meeting, or if less than forty five days notice of the
meeting is given, by the earlier of two days before the meeting and fifteen days after the notice
of the meeting is mailed.
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By Order of the Board of Directors
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Candace M. Springmann
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Corporate Secretary
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March 30, 2011
14
APPENDIX A
COMMERCEFIRST BANCORP, INC.
AUDIT COMMITTEE CHARTER
GOALS AND OBJECTIVES
The primary function of the audit committee (herein referred to as the Committee) is to oversee
and report to the Board of Directors regarding the 1) integrity of the financial statements and
accounting and financial reporting processes of CommerceFirst Bancorp, Inc. and its subsidiaries
(the Company), 2) the Companys compliance with legal and regulatory requirements, 3) the
independent auditors qualifications and independence 4) the performance of the Companys internal
audit function and independent accountants; and perform the other duties of the Committee specified
by federal securities laws and regulations, the Federal Deposit Insurance Act and related
regulations, or the listing standards of The NASDAQ Stock Market, Inc. or other securities exchange
or market on which the Companys securities are listed or eligible for trading(Listing
Standards).
While the Committee has the review, oversight, and reporting responsibilities set forth in this
charter, it does not have responsibility for planning or conducting audits or for determining that
the financial statements are complete and accurate and are in accordance with generally accepted
accounting principles. Those are responsibilities of management and the independent accountants,
rather than the Committee. The Committee also is not responsible for ensuring compliance with laws
or regulations.
GENERAL RESPONSIBILITIES
It is the responsibility of the Committee to maintain open avenues of communication
among the internal auditors, the independent accountants, the board of directors and management.
The Committee will meet at least four times each year or more frequently if appropriate.
The Committee chairman has the power to call a Committee meeting whenever he thinks there is a
need. An audit Committee member should not vote on any matter in which he or she is not
independent. The Committee may ask members of management or others to attend the meeting and is
authorized to receive all pertinent information from management.
The Committee shall establish procedures for the (a) receipt, retention and treatment of
complaints received by the Company regarding accounting, internal accounting controls or auditing
matters and (b)confidential, anonymous submission by the Companys employees of concerns regarding
questionable accounting or auditing matters.
The Committee shall regularly report on its activities to the Board and shall provide
the Board with such information as the Board may request, and shall make such recommendations as
the Committee shall deem appropriate.
The Committee shall fulfill such other duties and responsibilities as are required by
applicable law, the regulations of the Securities and Exchange Commission (SEC), or the Listing
Standards, and as assigned to the Committee from time to time by the Board.
MEMBERSHIP
The Committee shall consist of three or more independent directors, appointed by the
Board on an annual basis. In determining the independence of members of the Committee, the Board
shall meet current standards of independence established for service on the audit committee by
applicable law, the regulations of the SEC, the Listing Standards and the Federal Deposit Insurance
Corporation. At a minimum, all Committee members shall have (a) the ability to read and understand
fundamental financial statements, including the Companys balance sheet, income statement, cash
flow statement, and key performance indicators; (b) the ability to understand key business and
financial risks, related controls and control processes. No member of the Committee shall have
participated in the preparation of the financial statements of the Company or any current
subsidiary of the Company at any time during the past three years. At least one member of the
Committee shall have past employment in finance or
accounting, professional certification in accounting or other comparable experience or background
which causes such member to be financially sophisticated, including being or having been a chief
executive officer, chief financial officer or other senior officer with financial oversight
responsibilities.
A - 1
RESPONSIBILITIES FOR ENGAGING INDEPENDENT ACCOUNTANTS AND APPOINTING THE INTERNAL AUDITOR
The Committee shall be solely responsible for: (a) the appointment compensation,
retention and oversight (including resolution of disagreements between management and the
independent accountants regarding financial reporting) and termination of the Companys
independent accountants engaged for the purpose of preparing or issuing an audit report or
performing other audit, review and attest services, who shall report directly to the Committee, (b)
the approval, before such engagement commences, of all audit, review and attest engagements
of the independent accountants; and (c) the approval, before such engagement commences, of all
non-audit service engagements of the independent accountants.
The Committee shall be solely responsible for determining and approving fees and other
terms for engagements.
Notwithstanding the foregoing, the Committee shall not approve any non-audit service
engagement where the provision of such service by the independent accountants is prohibited by
applicable law, the regulations of the SEC or the Listing Standards, and the independent auditor
shall not provide any such prohibited service.
Notwithstanding the foregoing, pre-approval is not required with respect to the
provision of non-audit services if: (a) the aggregate amount of all such non-audit services
provided to the Company constitutes not more than five percent of the total amount of revenues
paid by the Company to its independent auditors during the fiscal year in which the non-audit
services are provided; (b) such services were not recognized by the Company at the time of the
engagement to be non-audit services; and (c) the non-audit services are promptly brought to the
attention of the Committee and approved by the Committee, or by one or more members of the
Committee to whom authority to grant such approval has been delegated, prior to the completion of
the audit.
The Committee may delegate the authority to grant such pre-approvals to one or more
Committee members designated by the Committee, provided that any matters so pre-approved shall be
presented to the full Committee at its next regular meeting.
The Committee will review and have veto power over the appointment, replacement,
reassignment or dismissal of the head of internal audit services.
The Committee will oversee the compliance with lead (or coordinating) and review partner
and other rotation requirements by the independent auditor.
On an annual basis, the Committee shall receive from the independent accountants the
written disclosures and letters required to be provided, and review and discuss with the
accountants all significant relationships the accountants have with the Company to determine the
accountants independence.
The Committee will consider, in consultation with the independent accountant and
internal audit, the audit scope and procedural plans made by internal audit services and the
independent accountant. The Committee will review and discuss with internal audit services and the
independent accountant their plans to coordinate the internal and external audits. The purpose of
coordinating these efforts is to assure completeness of coverage, reduce redundancy and use audit
resources effectively.
The Committee will listen to management and the independent auditor if either thinks
there might be a need to engage additional auditors. The Committee will decide whether to engage an
additional firm and, if so, which one.
A - 2
RESPONSIBILITIES FOR REVIEWING INTERNAL AUDITS, THE ANNUAL EXTERNAL AUDIT AND
THE REVIEW OF QUARTERLY AND ANNUAL FINANCIAL STATEMENTS
The Committee will ascertain that the independent accountant views the Committee as its
client, that it will be available to the full board of directors at least annually and that it will
provide the Committee with a timely analysis of significant financial reporting issues.
The Committee will discuss with management, the internal auditor and the independent
accountant significant risks and exposures and will assess managements steps to minimize them.
The Committee will review the following with the independent accountant, the internal
auditor and management:
a. The adequacy of the banks internal controls, including computerized information system
controls and security; and the resolution of identified material weaknesses and reportable
conditions in internal controls;
b. Any fraud that involves management or other employees who have a significant role in the
Companys internal controls;
c. Any significant findings and recommendations made by the independent accountant or
internal auditing, together with managements responses to them;
d. All critical accounting policies and practices and any other material components of the
Companys financial statements involving managements judgment or estimates, and about the quality
of accounting principles and the clarity of financial disclosure practices used or proposed to be
used by the Company;
e. The alternative treatments of financial information within generally accepted accounting
principles that have been discussed with management officials, ramifications of the use thereof,
and the treatment preferred by the independent accountants, as well as any required or suggested
changes in auditing or accounting practices or principles;
f. Material off-balance sheet transactions, arrangements, obligations and other
relationships of the Company with unconsolidated entities or others that may have a material
current or future effect on the Companys financial condition, changes in financial condition,
results of operations, liquidity, capital expenditures, capital resources of significant components
of revenue or expenses;
g. Any material changes in accounting policies or practices and the impact thereof on the
Companys financial statements;
h. The annual audited financial statements and quarterly financial statements, including the
Companys disclosures under Managements Discussion and Analysis of Financial Condition and
Results of Operations;
i. Any report or recommendations of the independent accountants;
j. Anything else about the audit procedures or findings that GAAP requires the accountants
to discuss with the Committee.
k. Disclosures made by CEO and CFO during the Forms 10-K and 10-Q certification process about
significant deficiencies in the design or operation of internal controls;
A - 3
l. Any difficulties or disputes encountered with management while conducting audits,
including any restrictions on the scope of their work or access to required information.
The Committee will review annual filings with the SEC and other published documents
containing the Companys financial statements and will consider whether the information in the
filings is consistent with the information in the financial statements. The Committee shall discuss
earnings press releases (particularly use of pro forma, or adjusted non-GAAP, information), as
well as financial information and earnings guidance provided to
analyst and rating agencies. Such matters may be discussed generally (e.g., types of information
and presentations) and need not include specific releases or guidance.
The Committee will determine that the quarterly financial statements have been reviewed
by the independent accountants in accordance with SAS 100 before those interim statements are
released to the public or filed with the SEC.
The Committee shall prepare a report for inclusion in the proxy statement that describes
the Committees composition and responsibilities, and how they were discharged, including a
statement regarding their review and discussion of the annual financial statements, review of the
independence of the independent accountants, and discussions with the independent accountants, and
a statement that based on the foregoing, the Committee recommended that the annual financial
statements be included in the Companys annual report on Form 10-K.
PERIODIC RESPONSIBILITIES
On an on-going basis, the Committee shall conduct an appropriate review of all related
party transactions for potential conflicts of interest and all such transactions shall be approved
by the Committee to the extent required by applicable law.
In performing its duties hereunder, the Committee shall have the authority to conduct or
authorize investigations, to retain and terminate such outside legal, accounting or other advisors
as it shall deem necessary, without seeking further approval of the Board of Directors, and the
Company shall provide for appropriate funding therefore. The Committee may utilize, consult with
and engage the members and resources of CommerceFirst Bank in the discharge of their duties.
The Committee shall, to the extent it determines appropriate, review from time to time
the expenses of the senior officers (and, if it so desires, any other officers) of the Company
charged to the Company and any transactions between the Company and any of its subsidiaries.
Review legal and regulatory matters that may have a material effect on the
organizations financial statements, compliance policies and programs and reports from regulators.
Meet with the internal auditor, the independent accountant and management in separate
executive sessions to discuss any matters that warrant Committee attention
The Committee shall review and assess at least annually its performance, and the
adequacy of this Charter in light of applicable law and the rules of the SEC and the Listing
Standards.
The Committee shall discuss the Companys policies with respect to risk assessment and
risk management, including legal and ethical compliance programs.
Assess the continued adequacy of the Audit Services Charter as well as the
responsibilities, budget and staffing of the internal audit services function.
A - 4
APPENDIX B
COMMERCEFIRST BANCORP, INC.
NOMINATIONS PROCESS CHARTER
In order that the broadest viewpoints and perspectives may be brought into the evaluation of
sitting directors, the decision whether to invite new directors and the determination and
evaluation of potential candidates for nomination as director, the responsibility for identifying,
evaluating and designating persons to stand for nomination or election as members of the Board of
Directors of the Company shall reside collectively in all of the members of
the Board of Directors who are independent directors as defined in Rule 4200(a)(15) of The Nasdaq
Stock Market, Inc. (or successor rule or the listing standards of any other securities exchange or
market on which the Companys securities are listed or eligible for trading), and who are otherwise
independent for purposes of such duties under other applicable law and regulation. Such directors
are referred to in this Charter as the Nominating Directors.
In its determination of whether or not to recommend a director for nomination, the Nominating
Directors should consider whether or not such director meets the minimum criteria for board
membership based upon the
individuals honesty, integrity, reputation in and commitment to the community, judgment,
personality and thinking style, willingness to invest in the Company, residence, willingness to
devote the necessary time, potential conflicts of interest, independence, understanding of
financial statements and issues, and the willingness and ability to engage in meaningful and
constructive discussion regarding company issues. The Nominating Directors should also review any
special expertise, for example, expertise that qualifies a person as an audit committee financial
expert, and membership or influence in a particular geographic or business target market, or other
relevant business experience, the candidates record, if any, of past service as a director of the
Company, and may consider additional factors it deems appropriate.
The Nominating Directors shall meet at such times as are established by the full Board of
Directors or the Nominating Directors.
The Nominating Directors may consider director candidates nominated by shareholders, other
directors, officers, employees or other sources. In general, the Nominating Directors need consider
such nominees only during such times as the Company is actively considering obtaining new
directors, but the Nominating Directors shall have discretion to consider and evaluate any
candidate at any time.
Candidates recommended by shareholders should be evaluated based on the same criteria as other
candidates. Shareholders desiring to suggest a candidate for consideration should send a letter to
the Companys Secretary and include: (a) a statement that the writer is a shareholder (providing
evidence if the persons shares are held in street name) and is proposing a candidate for
consideration; (b) the name and contact information for the candidate; (c) a
statement of the candidates business and educational experience; (d) information regarding the
candidates qualifications to be director, including but not limited to an evaluation of the
factors discussed above which the Board would consider in evaluating a candidate; (e) information
regarding any relationship or understanding between the proposing shareholder and the candidate;
(f) information regarding potential conflicts of interest; and (g) a statement that the candidate
is willing to be considered and willing to serve as director if nominated and elected.
The Nominating Directors may establish reasonable rules for the conduct of meetings, subject
to the requirements of this charter. In the absence of such rules, the Nominating Directors shall
conduct business in accordance with the same rules and standards utilized by the full Board of
Directors. The Nominating Directors may meet by conference call or in person, and also may act by
unanimous consent. A majority of the Nominating Directors constitutes a quorum. Minutes of meeting
of the Nominating Directors shall be kept in the same manner as minutes of the full Board of
Directors.
B - 1
APPENDIX C
COMMERCEFIRST BANCORP, INC.
COMPENSATION COMMITTEE CHARTER
Purpose
The primary purpose of the Compensation Committee (the Committee) is to aid the Board of
Directors (the Board) in discharging its responsibilities relating to the compensation of the
Companys executive officers, including the chief executive officer. The Committee has overall
responsibility for evaluating and approving the Companys compensation plans, policies and
programs. The Committee is also responsible for producing an annual report on executive
compensation for inclusion in the Companys proxy statement.
Membership
The Committee shall be composed of at least three (3) members of the Board each of whom shall: (a)
meet the independence requirements of the NASDAQ Stock Market listing standards and any other
applicable laws, rules and regulations governing independence, as determined by the Board; (b)
qualify as non-employee directors as defined in Section 16 of the Securities Exchange Act of
1934; and (c) qualify as outside directors under Section 162(m) of the Internal Revenue Code.
Structure and Meetings
The chairperson of the Committee will preside at each meeting of the Committee and in consultation
with the other members of the Committee, shall set the frequency and length of each meeting and the
agenda of items to be addressed at each meeting.
Duties and Responsibilities
The Committee shall have the duties, responsibilities and authority to:
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Annually review and determine (i) the annual compensation, including salary,
bonus, incentive and other compensation of the chief executive officer and chief
operating officer, and (ii) corporate goals and objectives relevant to compensation
of the chief executive officer and chief operating officer, evaluate performance in
light of these goals and objectives, approve compensation in accordance therewith
and provide a report thereon to the Board.
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Annually review and approve the amounts and terms of base salary, incentive
compensation and all other compensation for the Companys executive officers, and
report the Committees determination to the Board. In determining compensation,
factors which the Committee considers, may include, among other factors, the
following: overall performance in the fiscal year, income and earnings per share,
non-interest revenue and income, various expense control criteria, deposit growth,
loan production, customer satisfaction, customer retention sales and referral
revenues and development and expansion of the Companys product lines, market areas
and strategies.
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Prepare, or oversee the preparation of, and approve the annual Committee report
on executive compensation for inclusion in the Companys proxy statement.
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Review executive officer compensation in reference to Section 162(m) of the
Internal Revenue Code, as it may be amended from time to time, and any applicable
laws, rules and regulations.
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Annually review employee compensation strategies, benefits and equity programs.
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C - 1
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Recommend to the Board the compensation for directors (including retainer,
committee and committee chair fees, stock options and other similar items, as
appropriate).
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Review and approve employment agreements, severance arrangements and change in
control agreements and provisions when, and if appropriate, as well as any special
supplemental benefits.
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Review and make recommendations to the Board with respect to incentive based
compensation plans and equity based plans, establish criteria for the terms of
awards granted to participants under such plans, grant awards in accordance with
such criteria and exercise all authority granted to the Committee under such plans,
or by the Board in connection with such plans.
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Conduct an annual review of the Committees performance, periodically assess the
adequacy of its charter and recommend changes to the Board as needed.
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Regularly report to the Board on the Committees activities.
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Obtain advice and assistance, as needed, from internal or external legal,
accounting, search firms, compensation specialists or other advisors, including the
retention, termination and negotiation of terms and conditions of the assignment.
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Perform any other activities consistent with this Charter, the Companys By-laws
and governing law as the Committee or the Board deem appropriate.
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Delegate responsibility to subcommittees of the Committee as necessary or
appropriate.
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C - 2
REVOCABLE PROXY
COMMERCEFIRST BANCORP, INC.
This Proxy is solicited on behalf of the Board of Directors
The undersigned hereby makes, constitutes and appoints Tina Marie Jernigan and Katherine M.
Burdon, and each of them (with the power of substitution), proxies for the undersigned to represent
and to vote, as designated below, all shares of common stock of CommerceFirst Bancorp, Inc. (the
Company) which the undersigned would be entitled to vote if personally present at the Companys
Annual Meeting of Shareholders to be held on May 4, 2011 and at any adjournment or postponement of
the meeting.
Election of Directors for a Three Year Term Expiring in 2014:
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FOR all nominees listed below.
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WITHHOLD AUTHORITY to vote for all nominees listed below.
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FOR all nominees, except as noted.
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Nominees: Milton D. Jernigan, II, John A. Richardson, Sr., Jerome A. Watts
(Instructions: To withhold authority to vote for any individual nominee, write that
nominees name in the space provided below.)
Ratification of the Independent Registered Public Accounting Firm:
o
FOR
o
AGAINST
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ABSTAIN
This proxy, when properly executed, will be voted in the manner directed herein by the undersigned
shareholder. If no direction is made, this proxy will be voted
FOR
all of the nominees set forth
above and
FOR
ratification of the appointment of the independent registered accounting firm.
In
addition, this proxy will be voted at the discretion of the proxy holder(s) upon any other matter
which may properly come before the meeting or any adjournment or postponement of the meeting.
Important: Please date and sign your name as addressed, and return this proxy in the enclosed
envelope. When signing as executor, administrator, trustee, guardian, etc., please give full title
as such. If the shareholder is a corporation, the proxy should be signed in the full corporate
name by a duly authorized officer whose title is stated.
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Signature
of Shareholder
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Signature of Shareholder
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Dated:
, 2011
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PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
o
Please check here if you plan to attend the Annual Meeting.
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