UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) if the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant x
Filed by a Party other than the Registrant o
Check the appropriate box: | ||||||||
o | Preliminary Proxy Statement | |||||||
o | Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |||||||
x | Definitive Proxy Statement | |||||||
o | Definitive Additional Materials | |||||||
o | Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 |
MASSBANK CORP.
Payment of Filing Fee (Check the appropriate box):
x | No fee required. | |
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
(1) | Title of each class of securities to which transaction applies: | ||
(2) | Aggregate number of securities to which transaction applies: | ||
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): | ||
(4) | Proposed maximum aggregate value of transaction: | ||
(5) | Total fee paid: | ||
o | Fee paid previously with preliminary materials: | |
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. |
(1) | Amount Previously Paid: | ||
(2) | Form, Schedule or Registration Statement No.: | ||
(3) | Filing Party: | ||
(4) | Date Filed: | ||
1. To consider and act upon a proposal to elect four Class II Directors to serve until the 2009 Annual Meeting of Stockholders and until their respective successors are duly elected and qualified; and | |
2. To consider and act upon any other matters which may properly come before the Annual Meeting. |
By Order of the Board of Directors, | |
Robert S. Cummings,Secretary |
Class I: | Messrs. Brandi, Latham, and Rucci, who were elected to serve until the 2008 Annual Meeting of Stockholders and until their successors are duly elected and qualified. |
Class II: | Ms. Camilli, Ms. Pettinelli, Mr. Bufferd and Dr. Stackhouse, who were elected to serve until the 2006 Annual Meeting of Stockholders and until their successors are duly elected and qualified. |
Class III: | Messrs. Bedell, Costello and Marshall, who were elected to serve until the 2007 Annual Meeting of Stockholders and until their successors are duly elected and qualified. |
2
Mathias B. Bedell | Retired as President of Bedell Brothers Insurance Agency |
![]() | Mr. Bedell, 73, has served as a Director since 1986 and as a Trustee since 1965. Mr. Bedell is also a member of the Executive Committee of the Corporation and a Director and Executive Committee member of MASSBANK (the “Bank”), the Corporation’s principal subsidiary. He also serves on the Insurance Committee of the Corporation and the Nominating Committee of the Corporation, and as Chairman of the Compensation and Option Committee of the Corporation. |
Gerard H. Brandi | Chairman of the Board, President and Chief Executive Officer, MASSBANK Corp. and MASSBANK |
![]() | Mr. Brandi, 57, has served as a Director since 1986. He first joined a predecessor bank in 1975 and became a Trustee in 1978. He has served the Bank and the Corporation in various capacities over the past 30 years. Mr. Brandi was named President of the Corporation and the Bank in 1986, Chief Executive Officer in 1992 and Chairman in 1993. Mr. Brandi is also Chairman of the Executive Committees of the Corporation and the Bank, a member of the Risk Management and Asset/ Liability Committee of the Corporation and a member of the Trust Committee of the Bank. He is a Director of the Depositors Insurance Fund and a member of its Executive Committee, Watch Bank Committee and Compensation Committee. He is a Director and member of the Audit Committee of the New England Automated Clearing House and Director and member of the Audit Committee and Chairman of the Risk Management Committee of the Connecticut On Line Computer Center. He also serves as a Director of the Lowell Development and Financial Corp., Director of the Lowell Plan, Treasurer and Director of the Massachusetts Society for the Prevention of Cruelty to Animals and Chairman of its Audit and Investment Committees. He is also a Director and member of the Executive Committee of the Savings Banks Employees Retirement Association and Chairman of its Investment Committee. |
3
Allan S. Bufferd | Treasurer, Massachusetts Institute of Technology |
![]() | Mr. Bufferd, 68, has served as a Director since 1995. He is a member of the Executive Committee of the Corporation and a Director and Executive Committee member of the Bank. He is also a member of the Risk Management and Asset/ Liability Committee of the Corporation and the Audit Committee of the Corporation. Mr. Bufferd has served as Treasurer of Massachusetts Institute of Technology from 1999 to present. Prior to that, he served as Deputy Treasurer and Director of Investments at Massachusetts Institute of Technology. Mr. Bufferd serves as a Trustee of the Whiting Foundation and a Trustee of Wheelock College. He is also a member of the Investment Advisory Board of the Alaska Permanent Fund Corporation, the Grayce B. Kerr Foundation, and an investment advisor to the National University of Singapore. In addition, he is the Chairman of the Harvard Cooperative Society and a Director of the Harvard Cooperative Society, the Beth Israel Deaconess Medical Center, Controlled Risk Insurance Company (CRICO), Adveq (Switzerland), Explorations, Inc., and Morgan Stanley Prime Property Fund. Mr. Bufferd serves on the compensation committee of each of the Harvard Cooperative Society, Beth Israel Deaconess Medical Center, CRICO and Explorations, Inc. |
Kathleen M. Camilli | President, Camilli Economics, LLC |
![]() | Ms. Camilli, 47, has served as a Director since 2003. Ms. Camilli is a member of the Risk Management and Asset/ Liability Committee of the Corporation. Ms. Camilli is one of the nation’s top economic forecasters and independent economists. Her firm, Camilli Economics, provides clients with ‘real world‘ economic guidance for smart business and financial decisions. A frequent commentator, author and speaker, Ms. Camilli appears regularly on CNN, CNBC, The NewsHour with Jim Lehrer, Nightly Business Report and Bloomberg Business News. Ms. Camilli is on the Board of Directors of the Money Marketers of New York University, the National Association of Business Economists (NABE), and The National Council on Economic Education. She is a contributor to Blue Chip Financial Forecasts. Ms. Camilli is a member of the Financial Women’s Association, the New York Women’s Bond Club, the Forecasters Club, and the New York Association of Business Economists. Her civic activities include serving on the Board of the Epiphany School Foundation. |
Stephen W. Carr | Retired Partner, Attorney, Goodwin Procter LLP |
![]() | Mr. Carr, 63, retired as partner of Goodwin Procter LLP in 2004. He is a director and member of the Audit Committee of Management Sciences for Health, the Concord Museum, and CC Pools, Inc. |
4
Alexander S. Costello | Teacher, Brooks School |
![]() | Mr. Costello, 52, has served as a Director since 1993. He is a member of the Audit Committee of the Corporation. Mr. Costello was the Chairman of the Board of Directors of The Lowell Plan, a non-profit organization dedicated to the revitalization of the City of Lowell, and is a member of the Board of Governors of Saints Memorial Medical Center in Lowell. Mr. Costello is also the former Editorial Page Editor of the Lowell Sun. |
O. Bradley Latham | Attorney, Principal, Latham, Latham & Lamond, P.C. |
![]() | Mr. Latham, 65, has served as a Director since 2005. He is a member of the Insurance Committee of the Corporation. Mr. Latham is a principal in the law firm of Latham, Latham & Lamond, PC in Reading. Mr. Latham is also a Trustee of Stoneham Theater and Director of the Reading Scholarship Foundation. He has served as an arbitrator for the American Arbitration Association, Chairman of the Regional Board of the American Red Cross, Chairman of the Regional Board of the American Cancer Society and a Delegate for the Easter Seal Society. He serves as apro bonocounsel for the Reading Ice Arena Authority. |
Stephen E. Marshall | Retired as President and Treasurer, C. H. Cleaves Insurance Agency, Inc. |
![]() | Mr. Marshall, 67, has served as a Director since 1986 and as a Trustee of a predecessor bank since 1972. He is a member of the Executive Committee of the Corporation and a Director and a member of the Executive Committee of the Bank. Mr. Marshall is also Chairman of the Insurance Committee of the Corporation and a member of the Nominating Committee of the Corporation. Mr. Marshall’s affiliations include the Professional Insurance Agents of Massachusetts. Mr. Marshall is associated with various local charitable, civic and church organizations. |
Nancy L. Pettinelli | Executive Director, Visiting Nurse Association of Greater Lowell, Inc. |
![]() | Ms. Pettinelli, 59, has served as a Director since 1998. She is a member of the Compensation and Option Committee of the Corporation and the Insurance Committee of the Corporation. Ms. Pettinelli was the Director of Clinical Services for the Visiting Nurse Association of Greater Lowell, Inc. from 1986 through April 1995 and has served as its Executive Director thereafter. Ms. Pettinelli serves as President of the Board of Directors of The Home and Healthcare Association of Massachusetts, Inc. and on the Board of Directors of the Visiting Nurse Associations of New England, Inc. Ms. Pettinelli also serves on the Compensation Committees of each of The Home and Healthcare Association of Massachusetts, Inc. and The Visiting Nurse Association of New England, Inc. |
5
William F. Rucci, Jr. | Certified Public Accountant, Partner, Rucci, Bardaro & Barrett, PC |
![]() | Mr. Rucci, 46, has served as a Director since 2005. He is Chairman of the Audit Committee of the Corporation, a member of the Executive Committee of the Corporation, and a Director and member of the Executive Committee of the Bank. Mr. Rucci is the President of the Accounting/ Consulting firm of Rucci, Bardaro & Barrett, PC and is Co-Director of the Russell Bedford International Corporate Tax Group. He is a Trustee and Chairman of the Audit and Compliance Committee of Hallmark Health Systems, Inc., and a Director and past President of the Malden Industrial Aid Society. Mr. Rucci is a member of the American Institute of Certified Public Accountants and Massachusetts Society of Certified Public Accountants, where he is a member of the M.A.P. (Management of an Accounting Practice) Committee. |
Shares of | ||||||||
Common Stock | ||||||||
Beneficially | Percent of | |||||||
Name | Owned(1) | Class(2) | ||||||
Mathias B. Bedell | 38,515 | (3) | * | |||||
Gerard H. Brandi | 262,358 | (4)(5) | 6.0 | % | ||||
Allan S. Bufferd | 10,475 | (6) | * | |||||
Kathleen M. Camilli | 2,500 | * | ||||||
Stephen W. Carr | — | (7) | — | |||||
Reginald E. Cormier | 71,200 | (5) | 1.6 | % | ||||
Alexander S. Costello | 12,875 | * | ||||||
O. Bradley Latham | — | — | ||||||
Stephen E. Marshall | 11,575 | (8) | * | |||||
James L. Milinazzo | — | — | ||||||
Nancy L. Pettinelli | 5,750 | * | ||||||
William F. Rivers | 4,000 | * | ||||||
William F. Rucci, Jr. | 128 | * | ||||||
Dr. Donald B. Stackhouse | 29,235 | (9) | * | |||||
Donna H. West | 59,101 | (5)(10) | 1.4 | % | ||||
All Directors and executive officers as a group (17 persons) | 536,190 | (5)(11) | 11.9 | % |
* | Less than 1%. |
(1) | Unless otherwise indicated, each person named has sole voting and sole investment power with respect to all shares indicated. Includes the following number of shares that the above listed Directors and executive officers, as applicable, have the right to acquire within 60 days through the exercise of options granted pursuant to the Corporation’s 2004 Stock Option and Incentive Plan and 1994 Stock Incentive Plan: Mr. Bedell, 11,250 shares; Mr. Brandi, 27,250 shares; Mr. Bufferd, 8,375 shares; Ms. Camilli, 2,500 shares; Mr. Cormier, 21,125 shares; Mr. Costello, 8,375 shares; Mr. Marshall, 10,250 shares; Ms. Pettinelli, 5,750 shares; Mr. Rivers, 2,000 shares; Dr. Stackhouse, 11,250 shares; and Ms. West, 21,125 shares, and all directors and executive officers as a group (17 persons) — 146,875 shares. Does not include the following number of units of securities (contracts issued to the holder under the Corporation’s Deferred Compensation Plan) whose value per unit is derived from changes in the market price per share of the Corporation’s Common Stock: Mr. Bufferd, 1,983 units; Mr. Marshall, 1,163 units, and Ms. Pettinelli 1,121 units. | |
(2) | Calculated on the basis of 4,346,129 outstanding shares as of February 1, 2006. |
6
(3) | Includes 5,526 shares owned by Mr. Bedell’s spouse, as to which shares Mr. Bedell disclaims beneficial ownership. | |
(4) | Includes 1,570 shares held by Mr. Brandi as custodian for various nieces and nephews and 18,049 shares owned by Mr. Brandi’s spouse, as to all of which shares Mr. Brandi disclaims beneficial ownership. Also includes 163,739 shares owned jointly with Mr. Brandi’s spouse, with respect to which shares Mr. and Mrs. Brandi share voting and investment power. | |
(5) | Includes shares allocated to the accounts of executive officers under the Bank’s Employee Stock Ownership Plan (the “ESOP”). The number of such allocated shares included in the above table is as follows: Mr. Brandi — 28,221; Mr. Cormier — 11,128; Ms. West — 13,181; and all executive officers as a group (seven persons) — 58,384. | |
(6) | Voting and investment power for these shares (other than shares which may be acquired through the exercise of options as described above) is shared with spouse as to all shares indicated. | |
(7) | On February 10, 2006, Mr. Carr purchased 2,500 shares of the Corporation’s Common Stock. | |
(8) | Includes 1,125 shares owned jointly with Mr. Marshall’s spouse, with respect to which shares Mr. and Mrs. Marshall share voting and investment power. | |
(9) | Includes 8,150 shares owned by Dr. Stackhouse’s spouse, as to which shares Dr. Stackhouse disclaims beneficial ownership. |
(10) | Includes 808 shares held by Ms. West as custodian for her minor grandchildren, as to which shares Ms. West disclaims beneficial ownership. |
(11) | Includes 146,875 shares that such persons have the right to acquire through the exercise of options granted pursuant to the Corporation’s 2004 Stock Option and Incentive Plan and 1994 Stock Incentive Plan. |
7
8
Amount of | Percent of | ||||||||
Beneficial Ownership of | Common Stock | ||||||||
Name and Address | Corporation’s Common Stock | Beneficially Owned | |||||||
Private Capital Management, Inc.(1) | 411,842 | 9.5% | |||||||
8889 Pelican Bay Blvd. Naples, FL 34108 | |||||||||
Jeffrey L. Gendell, et. al.(2) | 288,276 | 6.6% | |||||||
55 Railroad Avenue, 3rd Floor Greenwich, CT 06830 | |||||||||
Gerard H. Brandi(3) | 262,358 | 6.0% | |||||||
MASSBANK Corp. 123 Haven Street Reading, MA 01867 | |||||||||
Dimensional Fund Advisors Inc.(4) | 237,115 | 5.5% | |||||||
1299 Ocean Avenue, 11th Floor Santa Monica, CA 90401 |
(1) | Private Capital Management, L.P. (“PCM”) is an investment adviser registered under Section 203 of the Investment Advisers Act of 1940 (the “Advisers Act”). According to a filing made by PCM with the SEC on Schedule 13G/A dated February 14, 2006, PCM, in its role as investment adviser, has shared voting power and shared dispositive power over the 411,842 above shares, which had been purchased for the accounts of investment advisory clients of PCM. Bruce S. Sherman, CEO of PCM, and Gregg J. Powers, President of PCM, are listed as reporting persons on the filing. |
(2) | Jeffrey L. Gendell filed with the SEC a Schedule 13G on November 23, 2005 on behalf of himself and the following other reporting persons: Totine Financial Partners, L.P., a private investment limited partnership (“TFP”), and Tontine Management, L.L.C., the general partner of Tontine Financial Partners, L.P. (“TM”). According to this filing, Mr. Gendell serves as the managing member of TM and the general partner of TFP. In addition, according to this filing, TFP, TM and Mr. Gendell possess shared voting and dispositive power over 288,276 of the above shares. |
(3) | Gerard H. Brandi is the Chairman of the Board of Directors, and President and Chief Executive Officer of the Corporation. According to a filing made by Mr. Brandi with the SEC on Schedule 13G/A dated February 17, 2006, Mr. Brandi possesses sole voting power over 85,570 of the above shares, shared voting power over 158,739 of the above shares, sole dispositive power over 57,349 of the above shares and shared dispositive power over 158,739 of the above shares. |
(4) | Dimensional Fund Advisors Inc. (“Dimensional”) is an investment adviser registered under Section 203 of the Advisers Act, which furnishes investment advice to four investment companies registered under the Investment Company Act of 1940 and serves as investment manager to certain other commingled group trusts and separate accounts (such investment companies, trusts and accounts, collectively, the “Funds”). According to a filing made by Dimensional with the SEC on Schedule 13G/A dated February 6, 2006, Dimensional, in its role as investment adviser and investment manager, possesses sole voting power and sole dispositive power over the 237,115 above shares, which are owned by the Funds and disclaims beneficial ownership of the shares owned by the Funds. |
9
Long Term Compensation | |||||||||||||||||||||||||||||||||
Annual Compensation | Awards | Payouts | |||||||||||||||||||||||||||||||
Other | Restricted | ||||||||||||||||||||||||||||||||
Annual | Stock | Securities | Payouts | All Other | |||||||||||||||||||||||||||||
Salary | Bonus | Compensation | Award(s) | Underlying | LTIP | Compensation | |||||||||||||||||||||||||||
Name and Principal Position | Year | ($) | ($) | ($) | ($) | Options(#) | ($) | ($)(1) | |||||||||||||||||||||||||
Gerard H. Brandi | 2005 | 481,800 | 0 | (2) | 0 | 3,000 | 0 | 67,285 | (3) | ||||||||||||||||||||||||
Chairman, President | 2004 | 462,000 | 0 | (2) | 0 | 2,500 | 0 | 63,776 | (3) | ||||||||||||||||||||||||
and Chief Executive | 2003 | 447,000 | 0 | (2) | 0 | 2,500 | 0 | 63,540 | (3) | ||||||||||||||||||||||||
Officer | |||||||||||||||||||||||||||||||||
James L. Milinazzo(4) | 2005 | 103,000 | 3,000 | (2) | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||
Senior Vice President, | 2004 | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Lending | 2003 | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Donna H. West | 2005 | 153,600 | 3,000 | (2) | 0 | 2,500 | 0 | 7,092 | (5) | ||||||||||||||||||||||||
Senior Vice President, | 2004 | 146,400 | 2,000 | (2) | 0 | 2,500 | 0 | 6,344 | (5) | ||||||||||||||||||||||||
Community Banking | 2003 | 141,300 | 0 | (2) | 0 | 1,000 | 0 | 7,191 | (5) | ||||||||||||||||||||||||
Reginald E. Cormier | 2005 | 143,400 | 3,000 | (2) | 0 | 2,500 | 0 | 6,619 | (6) | ||||||||||||||||||||||||
Senior Vice President, | 2004 | 135,600 | 2,000 | (2) | 0 | 2,500 | 0 | 5,871 | (6) | ||||||||||||||||||||||||
Treasurer and Chief | 2003 | 130,800 | 0 | (2) | 0 | 1,000 | 0 | 6,639 | (6) | ||||||||||||||||||||||||
Financial Officer | |||||||||||||||||||||||||||||||||
William F. Rivers(7) | 2005 | 109,800 | 2,000 | (2) | 0 | 2,000 | 0 | 0 | |||||||||||||||||||||||||
Vice President, | 2004 | 27,000 | 500 | (2) | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||
Operations | 2003 | — | — | — | — | — | — | — |
(1) | Includes (i) the cash value of shares of MASSBANK Corp. Common Stock acquired by the ESOP and allocated to the named party (but excluding any allocation of dividends and interest thereunder), and (ii) such other items as are disclosed in individual footnotes below. Such cash value was determined by multiplying the number of shares of Common Stock so allocated by the closing price of the Common Stock on December 31 of the applicable year. |
(2) | Perquisites did not exceed 10% of total salary and bonus. |
(3) | Consists of the Bank’s payment of permanent life insurance premiums in the amount of $3,226 in each of 2005, 2004 and 2003 under Mr. Brandi’s executive supplemental retirement agreement, ESOP allocations valued at $9,359, $8,650 and $9,914 representing 284, 231 and 231 shares of Common Stock on December 31, 2005, 2004 and 2003, respectively, determined in accordance with footnote 1 above, and contributions of $54,700, $51,900, and $50,400 to a rabbi trust for a deferred compensation program for Mr. Brandi in 2005, 2004 and 2003, respectively. |
(4) | Mr. Milinazzo was hired by the Corporation effective March 1, 2005. |
(5) | Consists of ESOP allocations of $7,092, $6,344 and $7,191 representing 215, 169 and 167 shares of Common Stock at December 31, 2005, 2004 and 2003, respectively, determined in accordance with footnote 1 above. |
(6) | Consists of ESOP allocations of $6,619, $5,871 and $6,639 representing 201, 157 and 154 shares of Common Stock at December 31, 2005, 2004 and 2003, respectively, determined in accordance with footnote 1 above. |
(7) | Mr. Rivers was hired by the Corporation effective September 27, 2004. |
10
Individual Grants | Potential Realizable | ||||||||||||||||||||||||
Value at Assumed | |||||||||||||||||||||||||
Number of | % of Total | Annual Rates of Stock | |||||||||||||||||||||||
Shares | Options | Price Appreciation for | |||||||||||||||||||||||
Underlying | Granted to | Exercise or | Option Term(1) | ||||||||||||||||||||||
Options | Employees in | Base Price | |||||||||||||||||||||||
Name | Granted | Fiscal Year | Per Share | Expiration Date | 5% | 10% | |||||||||||||||||||
Gerard H. Brandi | 3,000 | 13.1 | % | $ | 37.15 | January 17, 2015 | $ | 70,090 | $ | 177,622 | |||||||||||||||
Chairman, President and Chief Executive Officer | |||||||||||||||||||||||||
James L. Milinazzo | — | — | — | — | — | — | |||||||||||||||||||
Senior Vice President, Lending | |||||||||||||||||||||||||
Donna H. West | 2,500 | 10.9 | % | $ | 37.15 | January 17, 2015 | $ | 58,409 | $ | 148,019 | |||||||||||||||
Senior Vice President, Community Banking | |||||||||||||||||||||||||
Reginald E. Cormier | 2,500 | 10.9 | % | $ | 37.15 | January 17, 2015 | $ | 58,409 | $ | 148,019 | |||||||||||||||
Senior Vice President, Treasurer and Chief Financial Officer | |||||||||||||||||||||||||
William F. Rivers | 2,000 | 8.8 | % | $ | 37.15 | January 17, 2015 | $ | 46,727 | $ | 118,415 | |||||||||||||||
Vice President, Operations |
(1) | Represents the value of the options granted at the end of the option terms if the price of the Corporation’s Common Stock were to appreciate annually by 5% and 10%, respectively. There is no assurance that the stock price will appreciate at the rates shown in the table. |
Number of Shares Underlying | Value of Unexercised In-the- | ||||||||||||||||
Unexercised Options at Fiscal | Money Options at Fiscal | ||||||||||||||||
Shares Acquired | Value | Year End | Year End | ||||||||||||||
Name | on Exercise | Realized(1) | Exercisable / Unexercisable(2) | Exercisable / Unexercisable(3) | |||||||||||||
Gerard H. Brandi | 0 | $ | 0 | 26,750/0 | $ | 285,763/0 | |||||||||||
Chairman, President and Chief Executive Officer | |||||||||||||||||
James L. Milinazzo | 0 | $ | 0 | 0/0 | $ | 0/0 | |||||||||||
Senior Vice President, Lending | |||||||||||||||||
Donna H. West | 3,500 | $ | 80,834 | 18,625/0 | $ | 195,329/0 | |||||||||||
Senior Vice President, Community Banking | |||||||||||||||||
Reginald E. Cormier | 500 | $ | 10,925 | 16,612/0 | $ | 160,101/0 | |||||||||||
Senior Vice President, Treasurer and Chief Financial Officer | |||||||||||||||||
William F. Rivers | 0 | $ | 0 | 0/0 | $ | 0/0 | |||||||||||
Vice President, Operations |
11
(1) | Value realized equals the aggregate market value of the shares acquired on the exercise date(s), less the applicable aggregate option exercise price(s). |
(2) | Includes options exercisable within 60 days of December 31, 2005. |
(3) | Year-end value is based on the closing market price per share on December 30, 2005 ($33.00), less the applicable aggregate option exercise price(s) of in-the-money options multiplied by the number of unexercised in-the-money options which are exercisable and unexercisable, respectively. |
Comparison of Five Year Cumulative Total Return |
![PERFORMANCE GRAPH](https://capedge.com/proxy/DEF 14A/0000950135-06-001694/b59352mcb5935204.gif)
12/31/00 | 12/31/01 | 12/31/02 | 12/31/03 | 12/31/04 | 12/31/05 | |||||||||||||||||||
MASSBANK Corp. | $ | 100.00 | $ | 126.95 | $ | 155.06 | $ | 242.35 | $ | 216.85 | $ | 197.12 | ||||||||||||
NASDAQ Bank Index | $ | 100.00 | $ | 112.68 | $ | 120.50 | $ | 160.25 | $ | 182.16 | $ | 178.65 | ||||||||||||
S&P 500 Index | $ | 100.00 | $ | 88.12 | $ | 68.66 | $ | 88.34 | $ | 97.94 | $ | 102.74 | ||||||||||||
12
Comparison of Ten Year Cumulative Total Return |
![PERFORMANCE GRAPH](https://capedge.com/proxy/DEF 14A/0000950135-06-001694/b59352mcb5935205.gif)
12/31/95 | 12/31/96 | 12/31/97 | 12/31/98 | 12/31/99 | 12/31/00 | 12/31/01 | 12/31/02 | 12/31/03 | 12/31/04 | 12/31/05 | ||||||||||||||||||||||||||||||||||
MASSBANK Corp. | $ | 100.00 | $ | 123.46 | $ | 210.74 | $ | 177.19 | $ | 137.76 | $ | 142.34 | $ | 180.70 | $ | 220.71 | $ | 344.96 | $ | 308.67 | $ | 280.59 | ||||||||||||||||||||||
S&P 500 Index | $ | 100.00 | $ | 122.94 | $ | 163.95 | $ | 210.80 | $ | 255.15 | $ | 231.93 | $ | 204.38 | $ | 159.23 | $ | 204.88 | $ | 227.14 | $ | 238.29 | ||||||||||||||||||||||
NASDAQ Bank Index | $ | 100.00 | $ | 129.42 | $ | 215.62 | $ | 193.50 | $ | 182.27 | $ | 214.53 | $ | 241.74 | $ | 258.50 | $ | 343.88 | $ | 390.79 | $ | 383.26 | ||||||||||||||||||||||
13
Comparison of Fifteen Year Cumulative Total Return |
![PERFORMANCE GRAPH](https://capedge.com/proxy/DEF 14A/0000950135-06-001694/b59352mcb5935206.gif)
12/31/90 | 12/31/91 | 12/31/92 | 12/31/93 | 12/31/94 | 12/31/95 | 12/31/96 | 12/31/97 | |||||||||||||||||||||||||
MASSBANK Corp. | $ | 100.00 | $ | 130.04 | $ | 254.95 | $ | 276.84 | $ | 276.23 | $ | 394.14 | $ | 486.60 | $ | 830.61 | ||||||||||||||||
S&P 500 Index | $ | 100.00 | $ | 130.40 | $ | 140.32 | $ | 154.41 | $ | 156.44 | $ | 215.16 | $ | 264.52 | $ | 352.75 | ||||||||||||||||
[Additional columns below]
[Continued from above table, first column(s) repeated]
12/31/98 | 12/31/99 | 12/31/00 | 12/31/01 | 12/31/02 | 12/31/03 | 12/31/04 | 12/31/05 | |||||||||||||||||||||||||||
MASSBANK Corp. | $ | 698.40 | $ | 542.96 | $ | 561.03 | $ | 712.20 | $ | 869.91 | $ | 1,359.63 | $ | 1,216.59 | $ | 1,105.92 | ||||||||||||||||||
S&P 500 Index | $ | 453.54 | $ | 548.97 | $ | 499.00 | $ | 439.74 | $ | 342.59 | $ | 440.81 | $ | 488.71 | $ | 512.69 | ||||||||||||||||||
(1) | This chart does not compare the performance of the Corporation’s Common Stock to the total return on the NASDAQ Bank Index because the total return on the NASDAQ Bank Index does not include the reinvestment of dividends prior to 1995. |
14
15
Annual Pension Benefit Based on Years of Service | ||||||||||||||||
Average | 25 Years | |||||||||||||||
Compensation(1)(2)(3) | 10 Years | 15 Years | 20 Years | or More | ||||||||||||
$100,000 | $ | 18,078 | $ | 27,117 | $ | 36,156 | $ | 45,195 | ||||||||
120,000 | 22,278 | 33,417 | 44,556 | 55,695 | ||||||||||||
140,000 | 26,478 | 39,717 | 52,956 | 66,195 | ||||||||||||
170,000 | 32,778 | 49,167 | 65,556 | 81,945 | ||||||||||||
200,000 | 39,078 | 58,617 | 78,156 | 97,695 | ||||||||||||
210,000 | 41,178 | 61,767 | 82,356 | 102,945 |
(1) | Benefit based on 1.50% of Final Three Year Average Earnings up to Covered Compensation plus 0.60% of Average Earnings over Covered Compensation for each of the first 25 Years of Service. |
(2) | Based on age 65 retirement in 2005. |
(3) | Under applicable federal laws, the maximum compensation that may be used for plan years beginning in 2005 to calculate benefits under the Bank’s retirement plan is $210,000. |
16
• | reviewed and discussed the audited financial statements with management and independent auditors; | |
• | discussed with the independent auditors the matters required to be discussed by SAS 61; and | |
• | received the written disclosures and the letter from the independent auditors required by Independence Standards Board Standard No. 1 and discussed with the independent auditors the auditors’ independence. |
2005 | 2004 | |||||||
Audit Fees | $ | 199,400 | $ | 353,000 | ||||
Audit-Related Fees (Fees related to the audit of the Corporation’s Employee Stock Ownership Plan) | 5,500 | 7,000 | ||||||
Tax Fees (Fees related to tax returns preparation and estimates of quarterly tax payments) | 27,900 | (1) | 25,000 | |||||
All Other Fees | 0 | 0 | ||||||
Total | $ | 232,800 | $ | 385,000 |
(1) | During fiscal 2005, the aggregate fees and expenses billed for professional services for tax returns preparations and estimates of quarterly tax payments, which totaled $27,900, were rendered by KPMG LLP. |
17
18
19
Equity Compensation Plan Information | |||||||||||||
Number of securities | |||||||||||||
remaining available for | |||||||||||||
Number of securities to be | Weighted Average | future issuance under | |||||||||||
issued upon exercise of | exercise price of | equity compensation plan | |||||||||||
outstanding options, | outstanding options, | (excluding securities | |||||||||||
Plan category | warrants and rights | warrants and rights | referenced in column (a)) | ||||||||||
(a) | (b) | (c) | |||||||||||
Equity compensation plans approved by security holders(1) | 267,638 | (2) | $ | 26.95 | (3) | 366,650 | (4) | ||||||
Equity compensation plans not approved by security holders | — | — | — | ||||||||||
Total | 267,638 | (2) | $ | 26.95 | (3) | 366,650 | (4) |
(1) | Consists of Corporation’s 2004 Stock Option and Incentive Plan, 1994 Stock Incentive Plan and 1986 Stock Option Plan. |
(2) | Includes 16,001 deferred stock units outstanding under the 1994 Stock Incentive Plan and the 2004 Stock Option and Incentive Plan. The Corporation has established a so called “Rabbi Trust” for the benefit of Directors under a Director Deferred Compensation Plan. This plan allows Directors to defer their cash director fees and receive upon retirement that number of shares of the Corporation’s Common Stock that they would have owned if they had not deferred those fees and instead invested them in the Corporation’s Common Stock. The trustee of the trust regularly purchases shares of the Corporation’s Common Stock in the open market with fees deferred by the Directors. |
(3) | Does not include information about the deferred stock units under the 1994 Stock Incentive Plan and the 2004 Stock Option and Incentive Plan because these units do not have an exercise price. |
(4) | Consists of shares that were available for issuance as of December 31, 2005 under the 2004 Stock Option and Incentive Plan. |
20
21
22
• | The business and affairs of the Corporation shall be managed by its officers under the direction of the Board of Directors. | |
• | Each director owes a fiduciary duty of loyalty to the Corporation. | |
• | Each director owes a fiduciary duty of care and diligence to the Corporation. | |
• | Each director, in discharging the director’s duties to the Corporation and in determining what the director reasonably believes to be in the best interest of the Corporation, may, in addition to considering the effects of any action on shareholders, consider the effects on all of the Corporation’s constituencies, including its employees, creditors, customers, the communities it serves, and the long term as well as the short-term interests of the Corporation and its shareholders. | |
• | Each director should take into account the interests of all shareholders. | |
• | Carrying out the duties and fulfilling the responsibilities of a director require a significant commitment of an individual’s time and attention, and each director is expected to ensure that his or her other commitments, including service on boards of other companies, do not materially interfere with the director’s responsibilities to the Corporation. |
• | Not less than three-fourths of the directors shall be independent as determined under applicable rules of the Securities & Exchange Commission and NASDAQ. | |
• | A director may not be elected to a new term after reaching age 72. | |
• | Depth and breadth of business and civic experience in leadership positions (particularly in the markets served by the Corporation), other ties to the Corporation’s markets, and diversity of Board membership are criteria considered in reviewing nominees for the Board. The Corporation’s By-Laws provide for shareholder nominations in accordance with specified procedures. | |
• | The Board has determined not to set a limit on the maximum time an individual may serve as director or adopt policies on an ideal size for the Board or whether or not the positions of Chairman and Chief Executive Officer should be separate, in order to be free to make the choices which seem best for the Corporation at any particular time. | |
• | The Board will be divided into three approximately equal classes of staggered 3 year terms. |
• | All Committee appointments shall be made by the Board. Outside directors normally serve on at least one Committee. | |
• | The Nominating Committee shall be comprised of at least (3) independent directors. | |
• | The Audit Committee and the Compensation and Option Committee shall consist solely of independent directors. With the exception of the Risk Management and Asset/ Liability Committee, a majority of members of all other Committees shall be independent directors. |
A-1
• | The Executive Committee shall exercise all of the powers of the Board of Directors between meetings of the Board to the extent permitted by law. The Executive Committee will be responsible for developing a succession plan for the CEO position. | |
• | The Insurance Committee reviews and recommends all insurance policies of the Corporation and Bank regarding appropriate coverage of insurable risks at reasonable premium prices. | |
• | The Compensation and Option Committee may periodically hire an outside consulting firm to review Executive Officer and director compensation. | |
• | The Compensation and Option Committee recommends to the Bank Board remuneration arrangements for the Chief Executive Officer. The Compensation and Option Committee shall approve all executive incentive plans and grants thereunder. A portion of executive compensation shall be based on the performance of the Corporation and its business units. The Compensation and Option Committee shall review the performance and salary of the Chief Executive Officer and Senior Executives annually. The Compensation and Option Committee shall also annually review the compensation of the outside directors and will recommend to the Board appropriate director fees. | |
• | The Audit Committee shall have a charter which will be reviewed annually by the Audit Committee. Pursuant to its charter, the Audit Committee shall, among other things, appoint and discharge the independent Certified Public Accountants, review their annual audit plan and the results of their auditing activities, and establish audit fees. It shall also review the general audit plan, scope and results of the Corporation’s procedures for internal auditing, the independence and quality of service of the internal and external auditors, and the adequacy of the internal control structure and of the Corporation’s compliance program. The reports of examination of the Corporation and its subsidiaries by state and federal bank regulatory examiners shall be reviewed by the Audit Committee. The Audit Committee shall meet periodically in executive session with the independent Certified Public Accountants. It shall have authority to employ independent legal counsel and other experts. | |
• | The Risk Management and Asset/ Liability Committee shall have a least two outside Directors and have oversight responsibility for implementation of the enterprise risk management program of the Corporation. This program involves the identification of risks, risk measurement, guidelines for risk tolerance, development of risk controls and monitoring of risks. The risk elements generally include credit, market, liquidity, interest rate, operational, legal, reputational, fiduciary, compliance and environmental risk. | |
• | The Board and each committee shall have authority to employ independent legal counsel and other experts. | |
• | Inside directors shall not receive additional compensation for services as directors. |
• | Financial results of the Corporation generally will be reported to the Board at each regularly scheduled meeting. | |
• | The Board or Executive Committee will annually review and approve the operating and capital plans (budgets). | |
• | Management will generally prepare each year an updated strategic plan for the Corporation, which shall be presented to the Executive Committee for its consultation, advice and approval. | |
• | The quarterly Report to Shareholders, SEC Form 10-K and10-Q and FDIC Call Reports shall be reviewed by the Audit Committee. | |
• | The Audit and Compensation and Option Committees shall regularly report their activities to the full Board. All other committees to report their activities to the full board annually. |
A-2
• | The Board encourages active efforts to seek diversity among employees. | |
• | The Board believes that the Corporation and its subsidiaries should be good corporate citizens and serve the convenience and needs of their communities. | |
• | The Board has adopted a code of ethics which includes a code of conduct and a comprehensive policy prohibiting trading on inside information. | |
• | Board members have complete access to executives officers of the Corporation. Senior executives regularly attend portions of the Board Meetings to make presentations and respond to questions. The Board encourages presentations from officers (other than senior executives) who have expertise and future potential. | |
• | The outside directors will meet at least annually in executive sessions without management. The outside directors will select a lead director to preside at these meetings. | |
• | The Board believes that individual directors should not communicate on corporate issues with the press, investors or employee groups without approval of the Board or Executive Committee or at the request of management. | |
• | Although these corporate governance guidelines have been approved by the Board, it is expected that these guidelines will evolve over time as customary practice and legal requirements change. In particular, guidelines which encompass legal requirements as they currently exist will be deemed to be modified as and to the extent such legal requirements are modified. In addition, the guidelines may also be amended by the Board at any time as it deems appropriate. |
A-3
MASSBANK Corp.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
By signing and returning the proxy card on the reverse side, you will be appointing GERARD H. BRANDI and REGINALD E. CORMIER, and each of them, Proxies with power of substitution to vote on your behalf at the Annual Meeting of Shareholders of MASSBANK Corp. (the “Annual Meeting”) to be held at the Sheraton Ferncroft Resort, 50 Ferncroft Road, Danvers, Massachusetts, on Tuesday, April 18, 2006 at 10:00 a.m., and at any adjournments or postponements thereof, thereby granting full power and authority to act on your behalf at the Annual Meeting, and at any adjournments or postponements thereof. In their discretion, the Proxies shall be authorized to vote upon such other business as may properly come before the Annual Meeting or any adjournment or postponements thereof.
(Continued and to be signed on the reverse side)
ANNUAL MEETING OF SHAREHOLDERS OF
MASSBANK Corp.
Tuesday, April 18, 2006
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
òPlease detach along perforated line and mail in the envelope provided.ò
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF DIRECTORS.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK
YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HEREx
1. Election of Directors:
¨ | FOR ALL NOMINEES | NOMINEES: ¡ Allan S. Bufferd ¡ Kathleen M. Camilli ¡ Steven W. Carr ¡ Nancy L. Pettinelli | The undersigned hereby revokes any proxy previously given and acknowledges receipt of he Notice of Annual Meeting of Shareholders and Proxy Statement and a copy of the Annual Report for the fiscal year ended December 31, 2004. | |||
¨ | WITHHOLD AUTHORITY FOR ALL NOMINEES | To vote your shares for all director nominees, mark the “FOR ALL NOMINEES” box. To withhold voting for all nominees, mark the “WITHHOLD AUTHORITY FOR ALL NOMINEES” box at left. To withhold voting for a particular nominee, mark the “FOR ALL EXCEPT” box and follow instruction at left. | ||||
¨ | FOR ALL EXCEPT (see instructions below) | |||||
INSTRUCTION: | To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here:l |
Please check here if you plan to attend the meeting. | ¨ | |||||
To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. | ¨ |
Signature of
Shareholder
Date:
Signature of
Shareholder
Date:
Note: | Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. |