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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] | Preliminary Proxy Statement | |||||
[ ] | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |||||
[X] | Definitive Proxy Statement | |||||
[ ] | Definitive Additional Materials | |||||
[ ] | Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2. |
Webster Financial Corporation
Payment of Filing Fee (Check the appropriate box):
[X] | No fee required. |
[ ] | Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12. |
(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: |
[ ] | Fee paid previously with preliminary materials. | |
[ ] | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
(1) | Amount Previously Paid: |
(2) | Form, Schedule or Registration Statement No.: |
(3) | Filing Party: |
(4) | Date Filed: |
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Webster Financial Corporation:
Sincerely, | ||
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James C. Smith | ||
Chairman and Chief Executive Officer |
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Webster Plaza
Waterbury, Connecticut 06702
800-325-2424
TO BE HELD ON APRIL 20, 2006
Webster Financial Corporation:
1. | Election of Directors. To elect three directors to serve for three-year terms (Proposal 1); |
2. | Ratification of Appointment of Independent Registered Public Accounting Firm. To ratify the appointment by the Board of Directors of KPMG LLP as the independent registered public accounting firm of Webster for the fiscal year ending December 31, 2006 (Proposal 2); and |
3. | Other Business.To transact any other business that properly comes before the Annual Meeting or any adjournments of the meeting, in accordance with the determination of a majority of Webster’s Board of Directors. |
By order of the Board of Directors | ||
![]() | ||
James C. Smith | ||
Chairman and Chief Executive Officer |
March 10, 2006
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Webster Plaza
Waterbury, Connecticut 06702
800-325-2424
TO BE HELD ON APRIL 20, 2006
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• | by using the toll-free telephone number listed on the proxy card, | ||
• | by using the Internet website listed on the proxy card, | ||
• | by signing, dating and mailing the proxy card in the enclosed postage-paid envelope, or | ||
• | by attending the Annual Meeting and voting in person. |
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Positions | ||||||||||||||||
Held with | ||||||||||||||||
Age at | Director | Expiration | Webster and | Committee | ||||||||||||
12/31/2005 | Since | of Term | Webster Bank | Membership | ||||||||||||
Director Nominees for a Three-Year Term: | ||||||||||||||||
Robert A. Finkenzeller | 55 | 1986 | 2006 | Director | Audit; Nominating and Corporate Governance | |||||||||||
Roger A. Gelfenbien | 62 | 2003 | 2006 | Director | Audit; Compensation | |||||||||||
Laurence C. Morse | 54 | 2004 | 2006 | Director | Audit; Nominating and Corporate Governance; Risk (Chairman) | |||||||||||
Directors: | ||||||||||||||||
Joel S. Becker | 57 | 1986 | 2007 | Director | Executive; Compensation (Chairman) | |||||||||||
William T. Bromage | 60 | 2001 | 2007 | President, Chief Operating Officer and Director; Vice Chairman of Webster Bank | — | |||||||||||
George T. Carpenter | 65 | 1998 | 2008 | Director | Executive; Compensation; Risk | |||||||||||
John J. Crawford | 61 | 1996 | 2008 | Lead Director | Executive; Nominating and Corporate Governance (Chairman); Compensation | |||||||||||
C. Michael Jacobi | 63 | 1993 | 2008 | Director | Executive; Audit (Chairman); Risk | |||||||||||
James C. Smith | 56 | 1986 | 2007 | Chairman, Chief Executive Officer and Director | Executive (Chairman) | |||||||||||
Robert F. Stoico | 65 | 2004 | 2007 | Director; Former Chairman and Chief Executive Officer of Webster Bank, Massachusetts and Rhode Island Region | — |
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• | George T. Carpenter is the President and Treasurer of Carpenter Realty Co. and in 2005 Webster rented office and storage space from Carpenter Realty Co; and | ||
• | Gregory Jacobi is C. Michael Jacobi’s son, and in 2005 Gregory Jacobi was employed by Webster Bank as a VP-IT Senior Manager. |
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Webster Plaza
Waterbury, Connecticut 06702
Attn: Harriet Munrett Wolfe, Esq.
Executive Vice President, General Counsel and Secretary
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• | Independence from management; | ||
• | Judgment, skill, integrity and reputation; | ||
• | Relevant specific industry experience; | ||
• | Age, gender and ethnic background; | ||
• | Current position with another business or entity; | ||
• | Potential conflicts of interests with other pursuits; and | ||
• | Existing ties to the Corporation’s and Bank’s markets. |
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Annual Board | Annual | |||||||||||||||||||
Retainer (Paid | Committee | Board | Committee | |||||||||||||||||
in Restricted | Chair/Lead | Meeting | Meeting | |||||||||||||||||
Director | Stock)* | Director Retainer | Fees | Fees | Total | |||||||||||||||
Joel S. Becker | $ | 25,000 | $ | 5,000 | $ | 16,000 | $ | 10,750 | $ | 56,750 | ||||||||||
George T. Carpenter | 25,000 | – | 11,000 | 9,750 | 45,750 | |||||||||||||||
John J. Crawford | 25,000 | 20,000 | 16,000 | 15,250 | 76,250 | |||||||||||||||
Robert A. Finkenzeller | 25,000 | – | 13,500 | 12,750 | 51,250 | |||||||||||||||
Roger A. Gelfenbien | 25,000 | – | 16,000 | 10,125 | 51,125 | |||||||||||||||
C. Michael Jacobi | 25,000 | 15,000 | 14,750 | 11,750 | 66,500 | |||||||||||||||
Laurence C. Morse | 25,000 | – | 14,750 | 12,750 | 52,500 | |||||||||||||||
Robert F. Stoico | 22,917 | – | 6,750 | – | 29,667 |
* | The value shown is the number of restricted shares granted in 2005 (519 shares) times the average four quarter value as of the grant date. Mr. Stoico received 476 shares when he became a non-employee director in May 2005. |
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Lead Director of the Board of Directors
P.O. Box 1074
170 Orange Street
New Haven, CT 06504
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Age as of | ||||||
Name | December 31, 2005 | Positions with Webster and Webster Bank | ||||
William T. Bromage | 60 | President and Chief Operating Officer and Director; Vice Chairman, Webster Bank | ||||
Jeffrey N. Brown | 48 | Executive Vice President, Marketing, Communications and Strategy | ||||
William J. Healy | 61 | Executive Vice President and Chief Financial Officer | ||||
Joseph J. Savage | 53 | Executive Vice President, Commercial Banking | ||||
James C. Smith | 56 | Chairman, Chief Executive Officer and Director |
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Long-Term | ||||||||||||||||||||||||
Annual Compensation | Compensation Awards | |||||||||||||||||||||||
Securities | ||||||||||||||||||||||||
Restricted | Underlying | All Other | ||||||||||||||||||||||
Name and | Stock | Options/ | Compensation | |||||||||||||||||||||
Principal Positions | Year | Salary ($) | Bonus ($) (b) | Award(s) ($)(c) | SARs (#)(d) | ($)(e) | ||||||||||||||||||
James C. Smith | 2005 | $ | 748,000 | $ | 554,300 | $ | 606,056 | 47,182 | $ | 120,935 | ||||||||||||||
Chairman, Chief Executive | 2004 | 724,029 | 585,000 | 405,098 | 60,707 | 96,097 | ||||||||||||||||||
Officer and Director | 2003 | 722,250 | (a) | 611,800 | 449,032 | 65,728 | 84,086 | |||||||||||||||||
William T. Bromage | 2005 | $ | 475,000 | $ | 296,400 | $ | 300,658 | 23,408 | $ | 71,275 | ||||||||||||||
President and Chief Operating | 2004 | 443,846 | 312,800 | 200,961 | 30,113 | 53,249 | ||||||||||||||||||
Officer and Director | 2003 | 413,019 | (a) | 276,000 | 200,466 | 29,343 | 46,895 | |||||||||||||||||
William J. Healy | 2005 | $ | 310,000 | $ | 169,300 | $ | — | — | $ | 46,444 | ||||||||||||||
Executive Vice President and | 2004 | 299,942 | 178,500 | 104,847 | 15,711 | 35,689 | ||||||||||||||||||
Chief Financial Officer | 2003 | 307,789 | (a) | 127,780 | 79,394 | 11,619 | 34,102 | |||||||||||||||||
Joseph J. Savage | 2005 | $ | 275,000 | $ | 164,500 | $ | 104,470 | 8,131 | $ | 39,719 | ||||||||||||||
Executive Vice President, | 2004 | 258,631 | 160,650 | 67,831 | 10,165 | 112,053 | ||||||||||||||||||
Commercial Banking | 2003 | 259,038 | (a) | 221,163 | 94,504 | 11,004 | 17,644 | |||||||||||||||||
Jeffrey N. Brown | 2005 | $ | 255,000 | $ | 155,500 | $ | 77,499 | 6,032 | $ | 35,678 | ||||||||||||||
Executive Vice President, | 2004 | 214,477 | 138,922 | 45,055 | 6,749 | 25,296 | ||||||||||||||||||
Marketing, Communications and Strategy | 2003 | 205,154 | (a) | 166,420 | 56,489 | 6,972 | 13,596 |
(a) | Actual salary paid in calendar year 2003 varies from annual salary rate due to timing of pay cycles and the occurrence of an extra pay period in 2003. The annual base salary rates for Messrs. Smith, Bromage, Healy, Savage and Brown were $700,000, $400,000, $297,000, $250,000 and $198,000, respectively. | |
(b) | Mr. Smith received a bonus under the Qualified Performance-Based Compensation Plan and Messrs. Bromage, Healy, Savage and Brown received bonuses under the Annual Incentive Plan. The bonuses were paid in cash. |
(Dollars in Thousands)
Target % | ||||||||||||
of Annual | Total | |||||||||||
Name | Salary | Target $ | Bonus | |||||||||
James C. Smith | 95 | % | $ | 710.6 | $ | 554.3 | ||||||
William T. Bromage | 80 | % | 380.0 | 296.4 | ||||||||
William J. Healy | 70 | % | 217.0 | 169.3 | ||||||||
Joseph J. Savage | 65 | % | 178.8 | 164.5 | ||||||||
Jeffrey N. Brown | 65 | % | 165.8 | 155.5 |
The general terms of the Qualified Performance-Based Compensation Plan and the Annual Incentive Plan are described below in “Compensation Committee Report on Executive Compensation.” | ||
(c) | Granted under the 1992 Stock Option Plan. As of December 31, 2005, the executive officers held the following shares of unvested restricted stock: Mr. Smith, 41,697 shares with a value of $1,955,589, of which |
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20,950 shares granted in 2004 and 2005 are 100% performance based; Mr. Bromage, 20,060 shares with a value of $940,814, of which 6,343 shares granted in 2005 are 100% performance based; Mr. Healy, 8,962 shares with a value of $420,318; Mr. Savage, 7,323 shares with a value of $343,449; and Mr. Brown, 4,869 shares with a value of $228,356. The values of these shares are based on the closing price of the Corporation’s Common Stock on the New York Stock Exchange of $46.90, on December 30, 2005. Dividends are paid on a quarterly basis. | ||
(d) | See option grants table below. | |
(e) | All Other Compensation includes amounts contributed or allocated, as the case may be, to the Webster Bank 401(k) plan (the “401(k) Plan”), the Webster Bank non-contributory employee stock ownership plan (the “ESOP”), the supplemental matching contributions account of the Webster Bank nonqualified supplemental retirement plan, and cash dividends paid on restricted stock on behalf of each executive officer. It also includes a car allowance for each executive officer, a $2,615 premium on a term life insurance policy for Mr. Smith and $77,649 paid to Mr. Savage for relocation expenses in 2004. Matching contributions made by Webster Bank to the 401(k) Plan for fiscal years 2005, 2004 and 2003 were $9,100, $6,950 and $4,810, respectively, for Mr. Smith, $9,100, $6,950 and $6,000, respectively, for Mr. Bromage, $9,100, $6,950 and $4,569, respectively, for Healy, $9,100, $6,950 and $3,400, respectively, for Mr. Savage and $9,100, $6,950 and $4,529, respectively, for Mr. Brown. In fiscal years 2005, 2004 and 2003, no shares of Webster common stock were allocated pursuant to the ESOP. In fiscal years 2005, 2004 and 2003, Webster Bank also made allocations to the supplemental matching contributions accounts as follows: $57,550, $38,200 and $32,380, respectively, for Mr. Smith, $30,290, $17,870 and $14,470, respectively, for Mr. Bromage, $15,330, $8,000 and $9,240, respectively, for Mr. Healy, $12,680, $11,580 and $0, respectively, for Mr. Savage and $10,600, $5,750 and $5,360, respectively, for Mr. Brown, pursuant to the Webster Bank nonqualified supplemental retirement plan. In addition, in 2003 Messrs. Smith, Bromage, Healy and Brown received an additional allocation to their supplemental matching contributions account as follows: $143,918, $40,776, $4,634 and $23,181. These additional amounts represent supplemental contributions for years prior to 2003 and, as such, these amounts are excluded from the table above. Cash dividends paid on restricted stock for fiscal years 2005, 2004 and 2003 were $37,455, $35,126 and $31,111, respectively, for Mr. Smith, $17,854, $16,659 and $ 15,210, respectively, for Mr. Bromage, $10,199, $9,939 and $9,078, respectively, for Mr. Healy, $6,123, $5,074 and $3,028, respectively for Mr. Savage, and $4,163, $3,873 and $3,707, respectively, for Mr. Brown. |
Individual Grants (a) | ||||||||||||||||||||
Number of | % of Total | |||||||||||||||||||
Securities | Options | |||||||||||||||||||
Underlying | Granted to | Grant Date | ||||||||||||||||||
Options | Employees in | Exercise Price | Expiration | Present Value | ||||||||||||||||
Name | Granted (#) (b) | Fiscal year | ($/sh) | Date | ($) (c) | |||||||||||||||
James C. Smith | 47,182 | 22.04 | $ | 47.40 | 12/20/2015 | $ | 606,525 | |||||||||||||
William T. Bromage | 23,408 | 10.93 | 47.40 | 12/20/2015 | 300,910 | |||||||||||||||
William J. Healy | — | — | — | — | — | |||||||||||||||
Joseph J. Savage | 8,131 | 3.80 | 47.40 | 12/20/2015 | 104,524 | |||||||||||||||
Jeffrey N. Brown | 6,032 | 2.82 | 47.40 | 12/20/2015 | 77,541 |
(a) | All option grants were made at 100% of the fair market value of the Common Stock on the date of grant. Options not immediately exercisable may become exercisable in full, or with respect to certain option grants, in part, under certain circumstances when a “change in control” of Webster or Webster Bank has occurred. | |
(b) | Options will become exercisable based on the following vesting schedule: one-fourth vests after one year; one-fourth vests after two years; one-fourth vests after three years and the remaining one-fourth vests after four years. |
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(c) | Based on the Black-Scholes option pricing model of $12.855, which is consistent with the accounting value Webster uses to expense these options. The actual value, if any, an employee may realize will depend on the excess of the stock price over the exercise price on the date the option is exercised. There is no assurance that the value realized by an employee will be at or near the value estimated by the Black-Scholes model. The estimated values under that model are based on assumptions as to variables such as the expected term of the option, the risk-free interest rate for the expected term of the option (based upon the rate available on the date of grant on a zero-coupon U.S. government issue), stock price volatility (based on the Corporation’s historical stock price over a range of years), and the expected future estimated dividend yield (based upon the dividend yield at date of grant). |
and Fiscal Year-End Option Values
Number of Securities | ||||||||||||||||||||||||
Underlying Unexercised | Value of Unexercised | |||||||||||||||||||||||
Shares | Options at | In-the-Money Options at | ||||||||||||||||||||||
Acquired on | Value | December 31, 2005 (#) | December 31, 2005 ($) (a) | |||||||||||||||||||||
Name | Exercise (#) | Realized ($) | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
James C. Smith | 53,794 | $ | 2,030,220 | 930,435 | 141,207 | $ | 15,574,307 | $ | 236,628 | |||||||||||||||
William T. Bromage | 15,000 | 443,849 | 258,916 | 68,217 | 5,099,954 | 112,720 | ||||||||||||||||||
William J. Healy | 6,157 | 82,519 | 47,126 | 22,406 | 585,564 | 67,054 | ||||||||||||||||||
Joseph J. Savage | — | — | 26,509 | 24,287 | 201,091 | 44,697 | ||||||||||||||||||
Jeffrey N. Brown | 11,600 | 327,649 | 42,931 | 16,499 | 685,181 | 28,310 |
(a) | Based on the closing sales price of Webster Common Stock on the New York Stock Exchange on Friday, December 30, 2005 of $46.90, less the exercise price, of all unexercised stock options having an exercise price less than such market value. |
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Type of | Amount | Change in Value | ||||||||||||||
Name | Deferral | Deferred | Date Deferred | Through 12/31/05 | Total | |||||||||||
James C. Smith | Portion of Bonus | $ | 7,500 | 2/4/88 | $ | 15,507 | $ | 23,007 | ||||||||
Roger A. Gelfenbien | Director’s Fees | 46,375 | Monthly during 2004 - 2005 | 3,660 | 50,035 | |||||||||||
C. Michael Jacobi | Director’s Fees | 168,327 | Monthly during 2004 - 2005 | 36,176 | 204,503 | |||||||||||
Laurence C. Morse | Director’s Fees | 27,500 | Monthly during 2005 | 2,054 | 29,554 |
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continues to Normal Retirement
Present | ||||||||||||||||
Qualified | Value of | |||||||||||||||
Executive | Pension | SERP | Total | Total Benefit* | ||||||||||||
James C. Smith | $ | 115,580 | $ | 667,890 | $ | 783,470 | $ | 5,562,900 | ||||||||
William T. Bromage | 50,010 | 349,180 | 399,190 | 3,410,600 | ||||||||||||
William J. Healy | 26,380 | 29,450 | 55,830 | 499,400 | ||||||||||||
Joseph J. Savage | 46,790 | 43,260 | 90,050 | 501,900 | ||||||||||||
Jeffrey N. Brown | 90,180 | 62,670 | 152,850 | 640,300 |
* | This is the present value as of 12/31/2005 of the total projected benefit. |
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Joel S. Becker (Chairman)
George T. Carpenter
John J. Crawford
Roger A. Gelfenbien
O. Joseph Bizzozero, Jr. (Webster Bank only)
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C. Michael Jacobi (Chairman)
Robert A. Finkenzeller
Roger A. Gelfenbien
Laurence C. Morse
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Webster, S&P 500 Index and SNL All Bank & Thrift Index

Period Ending | ||||||||||||||||||||||||
Index | 12/31/00 | 12/31/01 | 12/31/02 | 12/31/03 | 12/31/04 | 12/31/05 | ||||||||||||||||||
Webster Financial Corporation | 100.00 | 113.76 | 128.22 | 172.58 | 194.26 | 183.82 | ||||||||||||||||||
S&P 500 | 100.00 | 88.11 | 68.64 | 88.33 | 97.94 | 102.74 | ||||||||||||||||||
SNL All Bank & Thrift Index | 100.00 | 101.48 | 95.35 | 129.27 | 144.76 | 147.03 |
Source: SNL Financial LC |
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Number of Shares | Percent of | |||||||
NAME AND POSITION(S) | and Nature of | Common Stock | ||||||
WITH WEBSTER | Beneficial Ownership (a) | Outstanding | ||||||
Joel S. Becker | ||||||||
Director | 47,360 | * | ||||||
William T. Bromage | ||||||||
President, Chief Operating Officer, Director | 319,327 | * | ||||||
Jeffrey N. Brown | ||||||||
Executive Vice President, | ||||||||
Marketing, Communications and Strategy | 61,363 | * | ||||||
George T. Carpenter | ||||||||
Director | 100,399 | * | ||||||
John J. Crawford | ||||||||
Director | 43,672 | * | ||||||
Robert A. Finkenzeller | ||||||||
Director (and Director Nominee) | 32,356 | * | ||||||
Roger A. Gelfenbien | ||||||||
Director (and Director Nominee) | 10,942 | * | ||||||
William J. Healy | ||||||||
Executive Vice President | ||||||||
and Chief Financial Officer | 71,538 | * | ||||||
C. Michael Jacobi | ||||||||
Director | 40,238 | * | ||||||
Laurence C. Morse | ||||||||
Director (and Director Nominee) | 5,117 | * | ||||||
Joseph J. Savage | ||||||||
Executive Vice President, Commercial Banking | 39,551 | * | ||||||
James C. Smith | ||||||||
Chairman, Chief Executive Officer, | ||||||||
Director | 1,283,747 | 2.35 | % | |||||
Robert F. Stoico | ||||||||
Director | 179,776 | * |
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Number of Shares | Percent of | |||||||
Name and Position(s) | and Nature of | Common Stock | ||||||
with Webster | Beneficial Ownership (a) | Outstanding | ||||||
All Directors and executive | ||||||||
officers as a group (16 persons) | 2,309,405 | 4.19 | % |
* | Less than 1% of Common Stock outstanding. |
(a) | In accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended, a person is deemed to be the beneficial owner, for purposes of this table, of any shares of Common Stock if such person has or shares voting power and/or investment power with respect to the security, or has the right to acquire beneficial ownership at any time within 60 days from February 1, 2006. As used herein, “voting power” includes the power to vote or direct the voting of shares and “investment power” includes the power to dispose or direct the disposition of shares. | |
The table includes shares owned by spouses, other immediate family members and others over which the persons named in the table possess shared voting and/or shared investment power as follows: Mr. Becker, 2,016 shares; Mr. Carpenter, 3,750 shares; Mr. Smith, 78,241 shares; and all directors and executive officers as a group, 84,007 shares. The table also includes the following: 1,473,460 shares subject to outstanding options which are exercisable within 60 days from February 1, 2006; 136,110 shares held in the 401(k) Plan by executive officers and a director who is a former executive officer; 4,758 shares purchased by executive officers through the Employee Stock Purchase Plan held by Fidelity Investments; 111,714 shares of restricted stock that were not vested as of February 1, 2006; 1,982 shares of common stock underlying restricted stock for Mr. Bromage that were deferred pursuant to the terms of the 1992 Stock Option Plan and 8,254 shares of common stock underlying restricted stock for Mr. Smith that were deferred pursuant to the terms of the 1992 Stock Option Plan. All other shares included in the table are held by persons who exercise sole voting and sole investment power over such shares. | ||
Outstanding options reflected in the table were held as follows: Mr. Becker, 20,000 shares; Mr. Bromage, 258,916 shares; Mr. Brown, 42,931 shares; Mr. Carpenter, 23,360 shares; Mr. Crawford, 25,334 shares; Mr. Finkenzeller, 22,000 shares; Mr. Gelfenbien, 8,000 shares; Mr. Healy, 47,126 shares; Mr. Jacobi, 20,000 shares; Mr. Morse, 4,000 shares; Mr. Savage, 26,509 shares; and Mr. Smith, 930,435 shares. |
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Number of Shares; | ||||||||
Nature of Beneficial | Percent of Common | |||||||
Name and Addresses of Beneficial Owners | Ownership (1) | Stock Owned | ||||||
Private Capital Management (“PCM”) | ||||||||
8889 Pelican Bay Blvd. | ||||||||
Naples, Florida 34108 | 4,540,303 | (2) | 8.50 | % | ||||
Wellington Management Company, LLP (“WMC”) . | ||||||||
75 State Street | ||||||||
Boston, MA 02109 | 4,931,430 | (3) | 9.19 | % |
(1) | Based on information in the most recent Schedule 13D or 13G filed with the Securities and Exchange Commission (the “Commission”) pursuant to the Exchange Act, unless otherwise indicated. In accordance with Rule 13d-3 under the Exchange Act, a person is deemed to be the beneficial owner, for purposes of this table, of any shares of Common Stock if such person has or shares voting power and/or investment power with respect to the security, or has the right to acquire beneficial ownership at any time within 60 days from February 14, 2006. As used herein, “voting power” includes the power to vote or direct the voting of shares and “investment power” includes the power to dispose or direct the disposition of shares. | |
(2) | Bruce S. Sherman is the Chief Executive Officer and Gregg J. Powers is President of PCM. PCM also reports that Messrs. Sherman and Powers exercise shared dispositive and shared voting power over 4,547,303 and 4,540,303 shares, respectively, held by PCM’s clients and managed by PCM. PCM also reports that Messrs. Sherman and Powers disclaim beneficial ownership of the shares held by PCM’s clients and disclaim the existence of a group. | |
(3) | WCM reports that it has shared dispositive and shared voting power over 4,931,430 and 3,620,340 shares, respectively, owned of record by clients of WCM. WCM also reports that its clients have the right to receive, or the power to direct the receipt of, dividends from, or the proceeds from the sale of, such shares and that no client is known to have such right or power with respect to more than five percent of the outstanding common stock of Webster. |
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(Proposal 2)
Fiscal 2005 | Fiscal 2004 | |||||||
Audit Fees (1) | $ | 1,345,000 | $ | 1,482,800 | ||||
Audit Related Fees (2) | 118,500 | 384,142 | ||||||
Tax Fees (3) | 36,200 | 160,750 | ||||||
All Other Fees | — | — | ||||||
Total | $ | 1,499,700 | $ | 2,027,692 |
(1) | Audit Fees consist of fees billed for professional services rendered for the audit of the Corporation’s consolidated annual financial statements and review of the interim consolidated financial statements included in quarterly reports and services that are normally provided by KPMG LLP in connection with statutory and regulatory filings or engagements. Audit Fees also include activities related to internal control reporting under Section 404 of the Sarbanes-Oxley Act. | |
(2) | Audit Related Fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Corporation’s consolidated financial statements and are not reported under “Audit Fees.” This category includes fees related to employee benefit plan audits and assistance related to documentation of internal controls. |
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(3) | Tax Fees consist of fees billed for professional services rendered for tax compliance, tax advice and tax planning. These services include mergers and acquisitions tax compliance. |
FOR INCLUSION IN PROXY STATEMENT
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By order of the Board of Directors | ||
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James C. Smith | ||
Chairman and Chief Executive Officer |
March 10, 2006
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• | Serve as an independent and objective party to monitor the Corporation’s financial reporting process and internal control system. | ||
• | Review and appraise the audit efforts of the Corporation’s independent accountants and internal audit department. | ||
• | Provide an open avenue of communication among the independent accountants, financial and senior management, the internal audit department, and the Board of Directors. |
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• | One or more officers or employees of the Corporation whom the Committee member reasonably believes to be reliable and competent in the matters presented; | ||
• | Counsel, independent auditors or other persons as to matters which the Committee member reasonably believes to be within the professional or expert competence of such person; or | ||
• | Another committee of the Board as to matters within its designated authority which committee the Committee member reasonably believes to merit confidence. |
Audit Administration |
1. | Hold regular meetings as may be necessary, and special meetings as may be called by the Chair of the Audit Committee or at the request of the independent accountants or the Corporation’s General Auditor. | ||
2. | Consult with management for input regarding the Audit Committee’s responsibilities, but may not delegate these responsibilities. | ||
3. | Form and delegate authority to subcommittees when appropriate. |
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4. | On an annual basis, receive from the independent accountants a formal written statement delineating all relationships between the independent accountants and the Corporation, consistent with Independence Standards Board Standard 1, discuss with the independent accountants the independent accountants’ independence, actively engage in a dialogue with the independent accountants with respect to any disclosed relationships or services that may impact objectivity and independence of the independent accountants, and take, or recommend that the full Board of Directors take, appropriate action to oversee the independence of the independent accountants. | ||
5. | Review the experience and qualifications of the senior members of the independent accountant’s team. | ||
6. | Obtain and review a report from the independent accountants, at least annually, describing (a) the independent accountant’s internal quality-control procedures, (b) any material issues raised by the most recent quality-control review, or peer review, of the independent accountant, or by any inquiry or investigation by governmental or professional authorities within the preceding five years, respecting one or more independent audits carried out by the independent accountant, and any steps taken to deal with any such issues, and (c) to assess the independent accountant’s independence, all relationships between the independent accountant and the Corporation. | ||
7. | On an annual basis, review and approve the Audit Committee’s Independent Accountants Retention Guidelines. The Guidelines shall comply with all applicable laws, rules, regulations and guidelines, and shall set clear hiring policies for employees or former employees of the independent accountants. A copy of the Independent Accountant Retention Guidelines is attached hereto as Appendix A. | ||
8. | Review and pre-approve all audit engagement fees and terms and any non-audit engagements (to the extent permitted under applicable law) with the independent accountants. On an annual basis, the Audit Committee shall review and approve the Pre-Approval Policy, a copy of which is attached hereto as Appendix B. | ||
9. | Review the qualifications and the quality control procedures of the independent accountants. Evaluate the performance of the independent accountants and make recommendations to the Board of Directors regarding the selection, appointment, replacement or termination of the independent accountants. The independent accountants shall be ultimately accountable to the Board of Directors and the Audit Committee, as representatives of shareholders. | ||
10. | Confer with the independent accountants and the internal auditors concerning the scope of their audits of the Corporation, the Bank and its subsidiaries, and review and approve the independent accountants’ annual engagement letter. | ||
11. | Review activities, organizational structure, and qualifications of the internal audit department and oversee the appointment and replacement of the Corporation’s General Auditor. |
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12. | Review and discuss with the Corporation’s General Counsel legal matters that may have a material impact on the financial statements, and any material reports or inquiries received from regulators or governmental agencies. | ||
13. | Obtain from the independent accountants assurance that Section 10A of the Private Securities Litigation Reform Act of 1995 has not been implicated. | ||
14. | Retain independent counsel, independent accountants, or others where appropriate, without seeking Board approval, for any matters related to the discharge of the duties and responsibilities assigned to the Audit Committee. As determined by the Audit Committee, the Corporation shall provide appropriate funding for payment of compensation to any such advisors. | ||
15. | Review and reassess the adequacy of the Audit Committee Charter and the Audit Committee’s own performance annually, and recommend any proposed changes to the Board of Directors for approval. | ||
16. | Report through its Chair to the Board of Directors at the Board’s next regularly scheduled meeting following the meeting of the Audit Committee matters reviewed by the Audit Committee. | ||
17. | Discuss with the independent accountants, Statement on Auditing Standards No. 61 matters. In particular: |
(a) | The adoption of, or changes to, the Corporation’s significant auditing and accounting principles and practices as suggested by the independent accountant, internal auditors, or management. | ||
(b) | Any “management” or “internal control” letter issued, or proposed to be issued, by the independent accountant and the Corporation’s response thereto. | ||
(c) | Any difficulties encountered in the course of the audit work, including any restrictions on the independent accountant’s scope of activities or access to requested information, and any significant disagreements with management. |
18. | Make a recommendation to the Board of Directors as to whether the financial statements should be included in the Corporation’s Annual Report on Form 10-K. | ||
19. | Approve the report of Audit Committee to be included in the Corporation’s Proxy Statement for its Annual Meeting of Shareholders. | ||
20. | Perform any other activities consistent with this Charter, the Corporation’s By-laws and governing law, as the Audit Committee or the Board deems necessary or appropriate. | ||
21. | Review with the full Board any issues that arise with respect to the quality and integrity of the Corporation’s financial statements. |
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1. | Review and approve annual audit plans; direct the internal auditors or the independent accountants to specific matters or areas deemed by the Audit Committee to be of special significance; and authorize the performance of supplemental reviews or audits, as the Audit Committee may deem desirable. | ||
2. | Review and discuss with management and the independent accountants the Corporation’s audited annual financial statements and the independent accountants’ opinion rendered with respect to such financial statements. This review shall include the nature and extent of any significant changes in accounting principles or initiatives, off-balance sheet structures (if any), management’s discussion and analysis and accounting estimates, and disagreements with management. | ||
3. | Review with financial management and the independent accountants the Corporation’s annual and quarterly financial reports and disclosures, including the Corporation’s disclosures made under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. | ||
4. | Review with management and the independent accountants the effect of regulatory and accounting initiatives as well as off-balance sheet structures (if any) of the Corporation’s financial statements. | ||
5. | Review with management the Corporation’s earnings press releases, including the use of “pro forma” or non-GAAP financial measures, as well as financial information and earnings guidance provided to analysts and rating agencies. | ||
6. | Review with the Chief Risk Officer, the General Auditor, and the independent accountants the Corporation’s major financial risk exposures and the steps management has taken to monitor and control such exposure. The Audit Committee shall meet at least annually with the Chief Risk Officer to review the Corporation’s Enterprise Risk Management process. | ||
7. | Review the adequacy of the systems of internal controls by obtaining from the independent accountants and internal auditors their recommendations regarding internal controls and other matters relating to the accounting procedures of the Corporation and its subsidiaries and reviewing the correction of controls deemed to be deficient. | ||
8. | Meet at least quarterly with the chief financial officer, the Corporation’s General Auditor and the independent accountants in separate executive sessions, in order to ensure that independent, direct communication between the Boards of Directors, chief financial officer, the Corporation’s General Auditor and independent accountants is provided. | ||
9. | Review the significant reports to management prepared by the internal auditing function and management’s responses thereto. | ||
10. | Discuss with the independent accountants the Corporation’s internal audit function and any recommended changes in the planned scope of the internal audit. |
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11. | Review with the full Board any issues that arise with respect to the performance of the internal audit function. |
1. | Oversee the Corporation’s policies on business ethics and conduct. | ||
2. | Obtain reports from management, the General Auditor, and the independent accountant, that address conformity with applicable legal and regulatory requirements and the Corporation’s Code of Business Conduct and Ethics by the Corporation and its subsidiaries. Review reports and disclosures of insider and affiliated party transactions. Review with the full Board any issues that arise with respect to the Corporation’s compliance with legal and regulatory requirements and with the Corporation’s Code of Business Conduct and Ethics. | ||
3. | Review regulatory examination findings. Discuss with management, the General Auditor, and the independent accountants, any correspondence with regulators or governmental agencies and any employee complaints or published reports, which raise material issues regarding the Corporation’s financial statements or accounting policies. | ||
4. | Establish procedures for the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls or auditing matters. | ||
5. | Establish procedures for the confidential, anonymous submission by employees of the Corporation or any subsidiary of concerns regarding questionable accounting or auditing matters. |
1. | On an annual basis, review and approve the Loan Review Policy and Procedures. | ||
2. | Review activities, organizational structure, and qualifications of the Independent Loan Review Department. | ||
3. | Receive written reports from the Loan Review Manager on control deficiencies and the correction of same. | ||
4. | On an annual basis, review management’s methodology and conclusions regarding the adequacy of the allowance for loan losses. |
1. | Ensure that, at least once during each calendar year, suitable audits of the Trust Department’s affairs and fiduciary activities are performed. Such audits may be performed by the internal auditors, or by independent auditors retained for such purpose. Written audit reports shall be presented to the Audit Committee at their next regularly scheduled meetings. |
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2. | Discuss with the internal or independent accountants whether the Trust Department is operating in a sound condition, and whether adequate internal controls and procedures are being maintained, whether fiduciary powers have been administered according to law, Part 9 of the Regulations of the Comptroller of the Currency, and sound fiduciary principles. |
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1. | On an annual basis review the performance, qualifications and experience of the Independent Accountants and recommend to the Board the appointment or discharge of the Independent Accountants. |
2. | On an annual basis, to assess the Independent Accountant’s independence, the Audit Committee shall review all relationships between the Independent Accountants and Webster. |
3. | On an annual basis review whether the Independent Accountants meet the independence requirements of the Sarbanes-Oxley Act of 2002 and the New York Stock Exchange. This review shall include: obtain and review a report by the Independent Accountants describing the Independent Accountant’s internal quality-control procedures; any material issues raised by the most recent internal quality control review, or peer review of the Independent Accountants, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the Independent Accountants, and any steps taken to deal with such issues. |
4. | On an annual basis, the Audit Committee shall review the engagement of the Independent Accountants to ensure the rotation of the lead (or coordinating) audit partner every five years and other audit partners every seven years, and consider whether there should be regular rotation of the audit firm itself. |
5. | On no less frequently than a 5-year cycle, the Audit Committee shall consider whether it is appropriate or desirable to solicit from qualified accounting firms, formal proposals that include the scope, qualifications, and fees for performing the annual audit. |
1. | The Independent Accountants shall not perform any prohibited non-audit services as set forth in Section 201(a) of Title II of the Sarbanes-Oxley Act (Section 10A(g) of the Securities and Exchange Act of 1934). |
2. | The Independent Accountants shall not perform internal audit work. | |
3. | The Independent Accountants shall not perform internal control related IT consulting. |
4. | Without the prior approval of the Audit Committee, non-audit services performed by the Independent Accountants within the year shall not exceed 100 percent of total annual audit fees. |
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5. | All audit and non-audit services to be performed by the Independent Accountants shall be approved in advance in accordance with the Audit Committee’s Pre-Approval Policy. |
1. | Management, which includes managers, senior managers, principals, and partners, that has performed audit or non-audit services at Webster in the last two years may not be hired without prior Audit Committee approval. |
2. | Management who has not performed audit or non-audit services at Webster within the last two years may be hired without Audit Committee approval. A report of the hiring shall be made to the Committee at its next regularly scheduled meeting. |
3. | Staff members may be hired without Audit Committee approval. A report of the hiring shall be made to the committee at the next regular scheduled meeting. |
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The Audit Committee is required to pre-approve the audit and non-audit services performed by the independent accountant in order to assure that the provision of such services does not impair the accountant’s independence. Unless a type of service to be provided by the independent accountant has received general pre-approval, it will require specific pre-approval by the Audit Committee. Any proposed services exceeding pre-approved cost levels will require specific pre-approval by the Audit Committee. | ||
The appendices to this Policy describe the audit, permissible non-audit and tax services that have the pre-approval of the Audit Committee. The term of any pre-approval is 12 months from the date of pre-approval, unless the Audit Committee specifically provides for a different period. The Audit Committee will periodically revise the list of pre-approved services, based on subsequent determinations. |
The Audit Committee may delegate pre-approval authority to one or more of its members. By this Policy, the Audit Committee delegates specific pre-approval authority to its Chair, provided that the estimated fee for any such proposed pre-approved service does not exceed $100,000. The Chair shall report any pre-approval decisions to the Audit Committee at its next regularly scheduled meeting. |
The annual audit services engagement terms and fees will be subject to the specific pre-approval of the Audit Committee. The Audit Committee will approve, if necessary, any changes in terms, conditions and fees resulting from changes in audit scope, company structure or other matters as may be recommended by the Chief Financial Officer, Controller or independent accountant. | ||
In addition to the annual audit services engagement approved by the Audit Committee, the Audit Committee may grant pre-approval for other audit services as well as permissible non-audit services that would not impair the independence of the independent accountant. The Audit Committee has pre-approved the audit and permissible non-audit services listed inExhibit A; provided, however, that specific engagements for such audit and non-audit services shall be approved and authorized by any one of the Chairman and Chief Executive Officer, the President and Chief Operating Officer, and the Chief Financial Officer of the Corporation. All other audit and permissible non-audit services not listed inExhibit A, or which have not been previously approved in connection with the independent accountant’s engagement letter for the applicable year, must be separately pre-approved by the Audit Committee. |
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The independent accountant shall not perform any prohibited non-audit services as set forth in Section 201(a) of Title II of the Sarbanes-Oxley Act (Section 10A(g) of the Securities and Exchange Act of 1934). In addition, the independent accountant shall not perform internal audit work or internal control related IT consulting. | ||
IV. | Tax Services | |
The Audit Committee believes that the independent accountant can provide tax services such as tax compliance, tax planning and tax advice without impairing the independent accountant’s independence. However, the Audit Committee will not permit the retention of the independent accountant in connection with a transaction initially recommended by the independent accountant, the purpose of which may be tax avoidance and the tax treatment of which may not be supported in the Internal Revenue Code and related regulations. The Audit Committee has pre-approved the tax services listed inExhibit B. All tax services not listed inExhibit B, or which have not been previously approved in connection with the independent accountant’s engagement letter for the applicable year, must be separately pre-approved by the Audit Committee. | ||
V. | Pre-Approved Fee Amounts | |
Maximum fee amounts for pre-approved services to be provided by the independent accountant will be established periodically by the Audit Committee. Any proposed services exceeding these levels will require specific pre-approval by the Audit Committee. | ||
VI. | Procedures | |
Requests or applications to provide services that require separate approval by the Audit Committee will be submitted to the Audit Committee by both the independent accountant and the Chief Financial Officer or Controller, and must include a joint statement as to whether, in their view, the request or application is consistent with the SEC’s rules on auditor independence. | ||
VII. | Additional Matters | |
On a quarterly basis, the Audit Committee shall review a summary of fees paid year-to-date for all audit fees and engagements for audit, audit related, tax and other services, regardless of the fee amount. In addition, on a quarterly basis, management shall submit to the Audit Committee a report of each audit, audit-related, non-audit, tax and other engagement entered into in the quarter with the independent accountant, and the fee for such engagement(s). |
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1. | Consultation on Financial Accounting and Reporting Issues and Standards. This pre-approved service covers advice and consultation from the independent accountants on accounting for specific transactions, the notification of and application of new accounting principles or pronouncements, and consulting with the independent accountants about specific reporting and disclosure items. | ||
2. | M & A Diligence. This pre-approved service covers the performance by the independent accountants of agreed upon procedures with respect to potential target businesses as requested by the Corporation. This includes conducting preliminary diligence to explore potential acquisitions or divestitures. | ||
3. | Securities and Exchange Commission filings. This pre-approved service covers the review of SEC filings including filing of registration statements under the Securities Act of 1933 and periodic reports under the Exchange Act of 1934 Act filings for compliance with application rules and regulations and the provisions of consents for such filings and reports where required. | ||
4. | Employee Benefit Plans. This pre-approved service covers the performance of audits of employee benefit plans. | ||
5. | Internal Control reviews. This pre-approved service covers assistance provided by the independent accountant in connection with documenting internal control policies and procedures over financial reporting. | ||
6. | Specific Acquisitions. This pre-approved service covers accounting consultations and audits in connection with specific acquisitions. | ||
7. | Internal investigations. This pre-approved service authorizes the independent accountants to perform internal investigations or fact-finding services as requested. | ||
8. | Comfort Letters. This pre-approved service covers comfort letters in connection with specific transactions. . |
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1. | Preparation and/or review of quarterly or annual tax returns. | ||
2. | Review of the Corporation’s federal consolidated tax return and all related schedules and disclosure statements. | ||
3. | Review and advice on tax compliance issues. | ||
4. | Tax planning and advice, including assistance with tax audit and appeals, tax advice related to mergers and acquisitions, review of employee benefit plans and requests for rulings or technical advice from taxing authorities;provided however, that the services of the independent accountant as an advocate for the Corporation before a tax court, district court or federal court of claims is specifically prohibited, as is the retention of the independent accountant in a transaction initially recommended by the independent accountant, the sole purpose of which may tax avoidance and the tax treatment of which may not be supported by the Internal Revenue Code and related regulations. | ||
5. | Review of tax positions for purposes of audit services. | ||
6. | Consultation on tax compliance. |
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WEBSTER PLAZA
WATERBURY, CT 06702
Webster Financial Corporation encourages you to take advantage of convenient voting methods. Please take this opportunity to use one of the three voting methods below. Voting is easier than ever.
Use the Internet to transmit your voting instructions and for electronic delivery of information no later than 11:59 p.m., Eastern Time, on April 19, 2006. Have your proxy card in hand when you access the web site and follow the instructions.
Use any touch-tone telephone to transmit your voting instructions no later than 11:59 p.m., Eastern Time, on April 19, 2006. Have your proxy card in hand when you call and follow the instructions.
Mark, sign and date your proxy card and return it in the postage-paid envelope provided for that purpose, or return it to Webster Financial Corporation, c/o ADP, 51 Mercedes Way, Edgewood, NY 11717.
If you would like to reduce the costs incurred by Webster Financial Corporation in mailing proxy material, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above for voting by Internet and, when prompted, indicate that you agree to receive or access future shareholder communications electronically.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | WEBST1 | KEEP THIS PORTION FOR YOUR RECORDS |
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED POSTAGE- | DETACH AND RETURN THIS PORTION ONLY | |
PAID ENVELOPE, UNLESS YOU ARE VOTING BY INTERNET OR TELEPHONE |
all nominees and FOR Proposal 2.
FOR | WITHHOLD | FOR ALL | ||||||||
1. | To elect three directors to serve for three-year terms (Proposal 1). | ALL | FROM ALL | EXCEPT | ||||||
NOMINEES: | 01 — Robert A. Finkenzeller | o | o | o | ||||||
02 — Roger A. Gelfenbien | ||||||||||
03 — Laurence C. Morse |
FOR | AGAINST | ABSTAIN | ||||||
2. | To ratify the appointment by the Board of Directors of KPMG LLP as the independent registered public accounting firm of Webster Financial Corporation for the fiscal year ending December 31, 2006 (Proposal 2). | o | o | o | ||||
3. | The proxies are authorized to vote upon any other business that properly comes before the Annual Meeting or any adjournments thereof, in accordance with the determination of a majority of the Board of Directors of Webster Financial Corporation. |
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Signature [PLEASE SIGN WITHIN BOX] | Date |
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Signature (Joint Owners)[PLEASE SIGN WITHIN BOX] | Date |
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![]() | REVOCABLE PROXY |
April 20, 2006
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS