SCHEDULE 14A INFORMATION
(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
[x]Definitive Proxy Statement Commission Only (as permitted
[ ]Definitive Additional Materials by Rule 14a-6(e)(2))
[ ]Soliciting Material Under Rule 14a-12
CENTRAL BANCORP, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] 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:
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2. Aggregate number of securities to which transaction applies:
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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):
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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:
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4. Date Filed:
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[Central Bancorp, Inc. Letterhead]
June 26, 2001
Dear Fellow Stockholder:
The 2001 Annual Meeting of Stockholders (the "Annual Meeting") of Central
Bancorp, Inc. (the "Company") will be held at the Auditorium of FleetBoston, 100
Federal Street, Boston, Massachusetts, on Thursday, July 26, 2001 at 11:00 a.m.
Accompanying this letter are a Notice of Annual Meeting, a Proxy Statement,
a Proxy Card for voting your shares and a copy of the Company's Annual Report.
You are encouraged to review these materials carefully. At the Annual Meeting,
you will be asked to elect two directors of the Company. During the meeting, we
will report on the operations of the Company. Directors and officers of the
Company as well as a representative of KPMG LLP will be present to respond to
any questions our stockholders may have.
Your vote is very important, regardless of the number of shares you own. ON
BEHALF OF THE BOARD OF DIRECTORS, I URGE YOU TO SIGN, DATE AND MAIL THE ENCLOSED
PROXY CARD AS SOON AS POSSIBLE, EVEN IF YOU CURRENTLY PLAN TO ATTEND THE ANNUAL
MEETING. This will not prevent you from voting in person, but will assure that
your vote is counted if you are unable to attend the Annual Meeting.
Your continued interest and support of Central Bancorp, Inc. are sincerely
appreciated.
Sincerely,
/s/ John D. Doherty
John D. Doherty
President and Chief Executive Officer
CENTRAL BANCORP, INC.
399 HIGHLAND AVENUE
SOMERVILLE, MASSACHUSETTS 02144
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 26, 2001
Notice is hereby given that the 2001 Annual Meeting of Stockholders (the
"Annual Meeting") of Central Bancorp, Inc. (the "Company") will be held at the
Auditorium of FleetBoston, 100 Federal Street, Boston, Massachusetts on
Thursday, July 26, 2001 at 11:00 a.m.
A Proxy Card and a Proxy Statement for the Annual Meeting are enclosed
herewith.
The Annual Meeting is for the purpose of considering and acting upon:
1. The election of two directors of the Company; and
2. Such other matters as may properly come before the Annual Meeting
or any adjournments thereof.
NOTE: The Board of Directors is not aware of any other business to come
before the Annual Meeting.
Any action may be taken on any one of the foregoing proposals at the Annual
Meeting on the date specified above, or on any date or dates to which, by
original or later adjournment, the Annual Meeting may be adjourned. Stockholders
of record at the close of business on June 8, 2001 are the stockholders entitled
to vote at the Annual Meeting and any adjournments thereof.
Whether or not you expect to be present at the Annual Meeting, please
sign and date the enclosed proxy and mail it promptly in the enclosed
postage-paid envelope. If you do attend the Annual Meeting and wish to vote in
person, you may do so even though you have signed an earlier proxy.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Rhoda K. Astone
RHODA K. ASTONE
SECRETARY AND CLERK
Somerville, Massachusetts
June 26, 2001
IMPORTANT:
PLEASE SIGN, DATE AND MAIL THE ENCLOSED PROXY CARD WITHOUT DELAY. THE
PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF FURTHER REQUESTS
FOR PROXIES. AN ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE
IS REQUIRED IF MAILED IN THE UNITED STATES.
CENTRAL BANCORP, INC.
399 HIGHLAND AVENUE
SOMERVILLE, MASSACHUSETTS 02144
(617) 628-4000
ANNUAL MEETING OF STOCKHOLDERS
JULY 26, 2001
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GENERAL
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This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Central Bancorp, Inc. (the "Company"), the
holding company for Central Co-operative Bank (the "Bank"), to be used at the
Company's 2001 Annual Meeting of Stockholders (hereinafter called the "Annual
Meeting") which will be held at the Auditorium of FleetBoston, 100 Federal
Street, Boston, Massachusetts, on Thursday, July 26, 2001 at 11:00 a.m. The
accompanying Notice of Annual Meeting and this Proxy Statement are being first
mailed to stockholders on or about June 26, 2001.
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VOTING AND REVOCATION OF PROXIES
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Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the Annual Meeting and all adjournments thereof. Proxies may be revoked by
written notice to the Secretary of the Company at the address stated above, or
by the filing of a later- dated proxy, prior to a vote being taken on a
particular proposal at the Annual Meeting. A proxy will not be voted if a
stockholder attends the Annual Meeting and votes in person. The presence of a
stockholder at the Annual Meeting will not automatically revoke such
stockholder's proxy. Proxies solicited by the Board of Directors of the Company
will be voted in accordance with the directions given therein. WHERE NO
INSTRUCTIONS ARE INDICATED, PROXIES WILL BE VOTED FOR THE ELECTION OF THE
NOMINEES FOR DIRECTORS SET FORTH IN THIS PROXY STATEMENT.
The proxy confers discretionary authority on the persons named therein to
vote with respect to the election of any person as a director where the nominee
is unable to serve or for good cause will not serve, and matters incident to the
conduct of the Annual Meeting. If any other business is presented at the Annual
Meeting, proxies will be voted by those named therein in accordance with the
determination of a majority of the Board of Directors. Proxies marked as
abstentions will not be counted as votes cast. In addition, shares held in
street name which have been designated by brokers on proxy cards as not voted
will not be counted as votes cast. Proxies marked as abstentions or as broker
non-votes, however, will be treated as shares present for purposes of
determining whether a quorum is present.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
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Stockholders of record as of the close of business on June 8, 2001 (the
"Record Date"), are entitled to one vote for each share then held. As of the
Record Date, the Company had 1,702,164 shares of common stock, par value $1.00
per share (the "Common Stock"), issued and outstanding. The Company did not have
any other class of equity security outstanding on the Record Date. The presence,
in person or by proxy, of at least a majority of the total number of outstanding
shares of Common Stock entitled to vote is necessary for a quorum at the Annual
Meeting.
Persons and groups beneficially owning in excess of 5% of the Common Stock
are required to file certain reports regarding such ownership pursuant to the
Securities Exchange Act of 1934 (the "Exchange Act"). Based on such reports and
other information which management believes to be correct, management knows of
no persons, except as listed below, who owned more than 5% of the outstanding
shares of Common Stock as of the Record Date.
1
The following table sets forth, as of the Record Date, certain information
as to those persons who were the beneficial owners of more than five percent
(5%) of the Company's outstanding shares of Common Stock.
PERCENT OF SHARES
NAME AND ADDRESS AMOUNT AND NATURE OF OF COMMON STOCK
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) OUTSTANDING (2)
- ------------------- ------------------------ ---------------
Central Co-operative Bank 160,742 (3) 9.44%
Employee Stock Ownership Plan
399 Highland Avenue
Somerville, Massachusetts 02144
Jeffrey L. Gendell 168,700 (4) 9.91%
Tontine Financial Partners, L.P.
Tontine Management, L.L.C.
200 Park Avenue, Suite 3910
New York, New York 10166
Dimensional Fund Advisors, Inc. 102,400 6.02%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
John D. Doherty 140,334 (5) 8.09%
Central Co-operative Bank
399 Highland Avenue
Somerville, MA 02144
<FN>
____________
(1) 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 the
Common Stock as to which he or she has sole or shared voting or investment
power, or has a right to acquire beneficial ownership at any time within 60
days of the Record Date. As used herein, "voting power" is the power to
vote or direct the voting of shares and "investment power" is the power to
dispose or direct the disposition of shares. Unless otherwise indicated,
the listed persons have direct ownership and sole voting and dispositive
power.
(2) For purposes of calculating percentage ownership, the number of shares of
Common Stock outstanding includes any shares which the beneficial owner has
the right to acquire within 60 days of the Record Date.
(3) Of the shares beneficially owned by the Central Co-operative Bank Employee
Stock Ownership Plan ("ESOP"), 126,008 shares have been allocated to
participating employees over which shares Directors Boulos and Kenney, as
co-trustees of the ESOP (the "ESOP Trustees"), may be deemed to have shared
voting and sole investment power, and 34,734 shares have not been
allocated, as to which shares the ESOP Trustees generally would vote in the
same proportion as voting directions received from voting ESOP
participants.
(4) According to their statement on Schedule 13G filed as amended February 14,
2001, each of the reporting persons shares voting and dispositve power over
the listed shares.
(5) Includes 32,639 shares of Common Stock which he has the right to acquire
pursuant to stock options exercisable within 60 days of the Record Date and
11,465 shares allocated to his account in the ESOP.
</FN>
2
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PROPOSAL I -- ELECTION OF DIRECTORS
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The Company's Board of Directors is currently composed of eight members.
The Company's Articles of Organization and Bylaws provide that Directors are to
be divided into three classes, with one class standing for election for a
three-year term at each Annual Meeting. Two directors will be elected at the
Annual Meeting, each to serve for a three-year period or until their respective
successors have been elected and qualified. The Nominating Committee has
nominated Directors Gregory W. Boulos and John D. Doherty, each to serve for a
three-year term. Directors are elected by a plurality of all votes cast.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ELECTION
OF GREGORY W. BOULOS AND JOHN D. DOHERTY AS DIRECTORS OF THE COMPANY.
It is intended that the proxies solicited by the Board of Directors will be
voted for the election of the above named nominees for a three-year term. If a
nominee is unable to serve, the shares represented by all valid proxies will be
voted for the election of such substitute nominee as the Board of Directors may
recommend or the Board may also decide to reduce the number of Directors to
eliminate the vacancy. At this time, the Board of Directors knows of no reason
why any nominee might be unavailable to serve.
The following table sets forth for each nominee and for each director
continuing in office, their name, age, the year he or she first became a
director of the Bank, which is the Company's principal operating subsidiary, and
the year of expiration of their present term. For information regarding Common
Stock beneficially owned by directors, see "Security Ownership of Management."
All persons were appointed as directors of the Company in 1998 in connection
with the incorporation and organization of the Company, except for John G. Quinn
who was elected to the Board of Directors in 1999 and Nancy D. Neri, who was
appointed to the Board of Directors in 1999. Each director of the Company is
also a member of the Board of Directors of the Bank.
YEAR FIRST
ELECTED OR PRESENT
AGE AS OF APPOINTED TERM TO
NAME RECORD DATE DIRECTOR EXPIRE
- ---- ----------- ----------- -------
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2004
Gregory W. Boulos 44 1998 2001
John D. Doherty 43 1983 2001
DIRECTORS CONTINUING IN OFFICE
Marat E. Santini 76 1972 2002
John F. Gilgun, Jr. 77 1987 2002
John G. Quinn 38 1999 2002
Joseph R. Doherty 77 1958 2003
Terence D. Kenney 85 1975 2003
Nancy D. Neri 45 1999 2003
Presented below is certain information concerning each of the nominees and
Directors continuing in office. Unless otherwise stated, all nominees and
Directors have held the positions listed for at least the last five years.
GREGORY W. BOULOS was elected to the Board of Directors in January 1998. He
is a partner in CB Richard Ellis/The Boulos Company of Portland, Maine, which is
Maine's largest commercial real estate brokerage and development firm,
specializing in the sale and leasing of commercial/industrial properties and the
brokerage of investment properties.
JOHN D. DOHERTY was elected President of the Bank in April 1986. As
President, Mr. Doherty is responsible for the day-to-day operations of the Bank
and reports on the Bank's operations directly to the Board of
3
Directors. Commencing April 1, 1992, Mr. Doherty also became the Chief Executive
Officer of the Bank. Mr. Doherty has been employed by the Bank in various
capacities since 1981 and is the son of Chairman of the Board Joseph R. Doherty.
MARAT E. SANTINI was the Office Manager of Santini Inc., a general
contractor located in Arlington, Massachusetts, until January 31, 1990. He is
now retired and acts as a consultant to Santini Inc.
JOHN F. GILGUN, JR., is the sole owner of the John F. Gilgun Agency, a real
estate agency located in Woburn, Massachusetts. Mr. Gilgun is the former Mayor
of Woburn.
JOHN G. QUINN has been the President of Quinn Printing Co., Inc., since
1990, which is located in Newton, Massachusetts.
JOSEPH R. DOHERTY served as President of the Bank from 1958 until April
1986. From April 1986 until March 31, 1992, Mr. Doherty served as Chairman of
the Board of Directors and Chief Executive Officer, responsible for guiding the
overall operations of the Bank. As of March 31, 1992, Mr. Doherty retired as
Chief Executive Officer of the Bank, although he remains Chairman of the Board.
Mr. Doherty is the father of Bank President and Chief Executive Officer, John D.
Doherty.
TERENCE D. KENNEY was Senior Vice President of the Bank from 1975 to
September 1986. He presently serves as Chairman of the Board of Assessors of the
City of Woburn, Massachusetts.
NANCY D. NERI is the President of the George L. Doherty Funeral Service,
Inc., located in West Somerville, Massachusetts.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following sets forth the information, including the ages, as of the
Record Date with respect to executive officers of the Company who do not serve
on the Board of Directors. Executive officers are appointed annually by the
Board of Directors.
PAUL S. FEELEY, 54, joined the Bank in July 1997 as Senior Vice President
and Treasurer/Chief Financial Officer. From 1993 to 1997, Mr. Feeley was Senior
Vice President and Treasurer of Bridgewater Credit Union. Prior to 1993, Mr.
Feeley was Senior Vice President, Chief Financial Officer and Clerk of the
Corporation at The Cooperative Bank of Concord, Acton, Massachusetts.
DAVID W. KEARN, 59, joined the Bank in June 1993 as Senior Vice President -
Retail Banking. From 1990 to 1993, Mr. Kearn was a Vice President of Loan
Administration at Somerset Savings Bank, Somerville, Massachusetts. Mr. Kearn
was Senior Vice President/Branch Administration at United States Trust Company
from 1987 to 1990.
WILLIAM P. MORRISSEY, 73, joined the Bank on November 1, 1992 as Senior
Vice President for Corporate Affairs who represents the Bank in outside banking
and business organizations. Prior to 1986, Mr. Morrissey served as Executive
Vice President for Corporate Affairs at the Boston Five Cents Savings Bank, and
as Deputy Commissioner of Banks for the Commonwealth of Massachusetts.
RHODA K. ASTONE, 46, first joined the Bank in August 1973, working in
various capacities within the Bank, and left in January 1988 to raise her
family. During this period she also worked part-time at the Beth Israel
Children's Hospital Medical Center. Ms. Astone rejoined the Bank in January 1999
as Executive Assistant to the senior staff and became Secretary and Clerk of the
Company in January 2001.
4
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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
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The Board of Directors conducts its business through meetings of the Board
and through its committees. During the year ended March 31, 2001, the Board of
Directors of the Company held seven meetings, and the Board of Directors of the
Bank met 12 times. No Director attended fewer than 75% of the total number of
meetings of the Board of Directors and meetings of committees on which the
director served during this period.
A Nominating Committee consisting of Directors John F. Gilgun, Jr., John G.
Quinn and Marat E. Santini met once to nominate the nominees for Directors to be
voted on at the Annual Meeting. The Company's Articles of Organization provide
the procedures for making nominations and states, among other things, that any
stockholder nomination to the Board of Directors must be made in writing and
delivered or mailed to the Secretary of the Company not less than 30, nor more
than 60 days prior to the meeting of stockholders called for the election of
directors.
The Company's Finance Committee serves as an Audit Committee. This
Committee meets monthly to review reports prepared by the Company's accounting
staff as well as by its internal auditor. In addition, the Finance Committee
selects the Company's independent auditors with whom it meets to review the
Company's audit. The members of the Finance Committee are Directors Gregory W.
Boulos (Chairman), Terence D. Kenney, Nancy D. Neri and John G. Quinn. All of
the members of the Audit Committee are independent within the meaning of Rule
4200(a)(15) of the National Association of Securities Dealers, Inc.'s listing
standards. The Company's Audit Committee has adopted a written charter, a copy
of which appears as an appendix to this Proxy Statement. This Committee met 12
times during the year ended March 31, 2001.
The Company's Finance Committee (as listed above) also serves as a
compensation committee and reviews various personnel issues such as wage and
salary programs and incentive compensation. During the year ended March 31,
2001, the Finance Committee met twice in its capacity as a compensation
committee.
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DIRECTOR COMPENSATION
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Directors of the Company are each paid a fee of $450 per Board meeting
attended. The Chairmen of the Finance Committee and the Security (or loan
review) Committee each are paid a fee of $660 for each meeting of the respective
committee which they attend in their capacities as chairman. Members of both the
Finance and Security Committees each receive a fee of $350 per meeting attended.
The President does not receive any director's or committee fees. Director
Terence D. Kenney receives an additional $567 per month as a consulting fee for
services rendered in connection with the Bank's Woburn branches. Chairman
Doherty receives $800 per meeting as a Director and a member of the Security
Committee.
The Company has established a Deferred Compensation Plan for Non-Employee
Directors pursuant to which directors who are not employees of the Company or
the Bank are eligible to defer all or a portion of their director fees. Deferred
fees are credited to an account in a grantor trust and invested in shares of the
Common Stock. Shares allocated to a director's account are paid out in equal
annual installments over a three-year period beginning six months after the
director ceases to be a director. As of March 31, 2001, Directors Boulos and
Neri were participating in the Deferred Compensation Plan for Non-Employee
Directors but no shares have been credited to their accounts.
5
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EXECUTIVE COMPENSATION AND OTHER BENEFITS
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SUMMARY COMPENSATION TABLE. The following table sets forth cash and noncash
compensation for each of the last three fiscal years awarded to or earned by the
Chief Executive Officer and each other executive officer of the Company whose
salary and bonus earned in fiscal year 2001 exceeded $100,000 for services
rendered in all capacities to the Company and its subsidiaries (the "Named
Executive Officers").
LONG-TERM
COMPENSATION
------------
AWARDS
ANNUAL COMPENSATION ------------
---------------------------------------- SECURITIES
NAME AND FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) OPTIONS COMPENSATION(3)
- ------------------ ---- ------ -------- --------------- ------- ---------------
John D. Doherty 2001 $ 259,200 $ 51,760 $ -- 12,573 $ 32,401
President and Chief 2000 244,915 45,000 -- 13,066 29,731
Executive Officer 1999 222,519 45,000 -- -- 29,076
Paul S. Feeley 2001 120,781 14,493 -- 2,757 15,299
Senior Vice President/ 2000 114,942 10,000 -- 2,865 15,873
Chief Financial Officer 1999 102,600 10,000 -- -- 2,513
and Treasurer
David W. Kearn 2001 127,148 20,343 -- 4,354 23,311
Senior Vice President/ 2000 121,536 20,000 -- 4,524 21,929
Lending and Retail Banking 1999 108,000 20,000 -- -- 21,135
William P. Morrissey 2001 115,365 13,843 -- 2,634 21,450
Senior Vice President for 2000 109,731 10,000 -- 2,736 19,316
Corporate Affairs 1999 98,000 10,000 -- -- 19,695
<FN>
______________
(1) Reflects fiscal year for which bonus was earned. For fiscal 2001, consists
of bonus earned under Management Incentive Program.
(2) Does not include perquisites which totaled less than ten percent of annual
salary and bonus.
(3) For fiscal year 2001, consists of $4,930, $701, $3,601 and $3,789,
respectively, in Company contributions to defined contribution retirement
plan, $1,123, $1,207, $1,207 and $1,207, respectively, in paid life
insurance premiums and the value of 1,511, 768, 1,061 and 944 shares, based
on $17.4375 per share (the last reported sale price of such shares on the
effective date of the allocation, October 31, 2000), allocated to the ESOP
accounts of Messrs. Doherty, Feeley, Kearn and Morrissey, respectively.
</FN>
6
OPTION GRANTS IN FISCAL YEAR 2001. The following table contains information
concerning the grant of stock options during the year ended March 31, 2001 to
the Named Executive Officers.
PERCENT POTENTIAL REALIZABLE
OF TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED TO PRICE APPRECIATION
UNDERLYING EMPLOYEES FOR OPTION TERM (2)
OPTIONS IN FISCAL EXERCISE EXPIRATION ----------------------
NAME GRANTED (1) YEAR PRICE DATE 5% 10%
- ---- ----------- --------- ----- ---------- -------- ---------
John D. Doherty 12,573 38.68% $16.625 12/14/10 $414,722 $660,375
Paul S. Feeley 2,757 8.48 16.625 12/14/10 90,940 144,807
David W. Kearn 4,354 13.40 16.625 12/14/10 143,617 228,686
William P. Morrissey 2,634 8.10 16.625 12/14/10 86,883 138,346
<FN>
- -----------------
(1) All options were granted at an exercise price equal to the fair market
value of the Common Stock on the date of grant and were immediately
exercisable.
(2) Based on the difference between the aggregate exercise price of the options
and the aggregate value of the underlying Common Stock at the expiration
date assuming the indicated annual rate of appreciation in the value of the
Common Stock from the date of grant, December 14, 2000.
</FN>
OPTION EXERCISES AND FISCAL YEAR-END VALUES. The following table sets forth
information regarding the values of options held by the Named Executive Officers
at the end of fiscal year 2001. The Named Executive Officers did not exercise
any options during fiscal year 2001.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END (1)
------------------------------- ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
John D. Doherty 32,639 -- $ 29,538 $ --
Paul S. Feeley 5,622 -- 3,791 --
David W. Kearn 8,881 -- 5,987 --
William P. Morrissey 5,370 -- 3,622 --
<FN>
- --------
(1) Value is based on the difference between the aggregate market value of
shares underlying the unexercised in-the-money options at March 31, 2001
($18.00 per share based on the closing sale price reported on the Nasdaq
National Market) and the aggregate exercise price of these options. Options
are considered in-the-money if the value of the underlying securities
exceeds the exercise price of the options.
</FN>
EMPLOYMENT, CONSULTING AND SEVERANCE AGREEMENTS. The Bank has entered into
an employment agreement (the "Employment Agreement") with John D. Doherty,
President. The Employment Agreement provides for a term of five years and an
automatic annual extension of the term of employment for an additional one-year
period beyond the then-effective expiration date unless either the Bank or Mr.
Doherty gives written notice that the Employment Agreement will not be extended
further. The current base annual salary of John D. Doherty is $259,200. The
Employment Agreement also provides for annual salary review by the Board of
Directors, as well as inclusion of Mr. John D. Doherty in any discretionary
bonus plans, customary fringe benefits, vacation and sick leave and disability
payments of the Bank. The Employment Agreement is terminated upon death and is
terminable by the Bank for "just cause" as defined in the Employment Agreement.
If the Bank terminates Mr. John D. Doherty without just cause, he is entitled to
a continuation of his salary for the remaining term of the Employment Agreement.
Mr. John D. Doherty may terminate the Employment Agreement upon 90 days notice
to the Bank.
The Employment Agreement provides that in the event of his involuntary
termination of employment in connection with, or within three years after, any
change in control of the Bank or the Company, Mr. John D. Doherty will be paid
within 10 days of such termination an amount equal to the difference between (i)
2.99 times his "base amount," as defined in Section 280G(b)(3) of the Internal
Revenue Code, and (ii) the sum of any other parachute payments, as defined under
Section 280G(b)(2) of the Internal Revenue Code, that Mr. John D. Doherty
7
receives on account of the change in control. The term "change in control" is
defined as the acquisition, by any person or entity, of the ownership, holding
or power to vote more than 25% of the Company's or the Bank's voting stock, the
control of the election of a majority of the Company's or the Bank's directors,
or the exercise of a controlling influence over the management or policies of
the Company or the Bank. In addition, under the Employment Agreement, a change
in control occurs when, during any consecutive two-year period, directors of the
Company or the Bank at the beginning of such period cease to constitute a
majority of the Board of Directors of the Company or the Bank, unless the
election of replacement directors was approved by a two-thirds vote of the
initial directors then in office. The Employment Agreement also provides for a
similar lump sum payment to be made in the event of Mr. John D. Doherty's
voluntary termination of employment within three years following a change in
control, upon the occurrence, or within 90 days thereafter, of certain specified
events following a change in control, which have not been consented to in
writing by Mr. John D. Doherty, including (i) the requirement that he perform
his principal executive functions more than 35 miles away from his primary
office, (ii) a reduction in his base compensation as in effect prior to the
change in control, (iii) the failure of the Bank to provide Mr. John D. Doherty
with compensation and benefits substantially similar to those provided to him at
the time of the change in control under any employee benefit plans in which he
becomes a participant, (iv) the assignment to Mr. John D. Doherty of material
duties and responsibilities other than those normally associated with his
position with the Bank, and (v) a material reduction in his authority and
responsibility. In the event that a dispute arises between Mr. John D. Doherty
and the Bank, as to the terms or interpretation of the Employment Agreement, Mr.
John D. Doherty will be reimbursed for all reasonable expenses arising from such
dispute. Payments made under these "change in control" provisions are in lieu of
any rights to which Mr. John D. Doherty would be entitled in the event his
employment was terminated without just cause. If the change in control
provisions had been triggered as of March 31, 2001, Mr. John D. Doherty would
have received up to approximately $787,000.
In connection with Joseph R. Doherty's retirement as Chief Executive
Officer of the Bank effective March 31, 1992, the Bank and Joseph R. Doherty
entered into a Consulting Agreement whereby the Bank retained Mr. Doherty as a
consultant to the Bank and its Board of Directors and as Chairman of the Board.
Pursuant to the Consulting Agreement, Mr. Doherty receives $100,000 annually in
addition to use of an office and secretary, reimbursement for certain business
related dues and expenses, group health and life insurance benefits for him and
his dependents and use of an automobile. The Consulting Agreement currently
provides for a term of one year and is subject to automatic annual extensions
for additional one-year periods, unless written notice from the Bank or Mr.
Doherty directs otherwise. Mr. Doherty's Consulting Agreement may be terminated
by the Board of Directors at any time for "just cause," as defined in the
Consulting Agreement. In addition, the Board may terminate Mr. Doherty at any
time for reasons other than "just cause," however, under such circumstances Mr.
Doherty shall be entitled to the salary and benefits payable under the
Consulting Agreement until its expiration. Mr. Doherty may terminate the
Consulting Agreement upon giving the Board of Directors 60 days prior written
notice. During fiscal 2001, Mr. Doherty waived the receipt of all compensation
and the use of the automobile under this Consulting Agreement due to health
reasons. He did receive directors fees of $8,100 for Board meetings attended
during fiscal 2001.
The Bank has entered into severance agreements (the "Severance Agreements")
with Paul S. Feeley, Senior Vice President/Chief Financial Officer, David W.
Kearn, Senior Vice President/Lending & Retail Banking, and William P. Morrissey,
Senior Vice President for Corporate Affairs. The Severance Agreements each
provide for a term of three years and an automatic annual extension of the term
of employment for an additional one-year period beyond the then-effective
expiration date, unless either the Bank or Messrs. Feeley, Kearn or Morrissey
gives written notice that the Severance Agreement will not be extended further.
The Severance Agreements provide that in the event of their involuntary
termination of employment in connection with, or within one year after, any
change in control of the Company or the Bank, Messrs. Feeley, Kearn and
Morrissey will be paid within 10 days of such termination an amount equal to two
times their annual base salary at the rate just prior to the change in control
provided, however, the amount received shall in no event exceed the difference
between (i) 2.99 times their "base amount," as defined in Section 280G(b)(3) of
the Internal Revenue Code, and (ii) the sum of any other parachute payments, as
defined under Section 280G(b)(2) of the Internal Revenue Code, that they receive
on account of the change in control. "Control" generally refers to the
acquisition, by any person or entity, of the ownership, holding, or power to
vote more than 25% of the Company's or the Bank's voting stock, the control of
the election of a majority of the Company's or the Bank's directors, or the
exercise of a controlling influence over the management or policies of the
Company or the Bank. In addition, a change in control occurs when, during any
consecutive two-year period, directors of the Company or the Bank at the
beginning of such period cease to constitute a majority of
8
the Board of Directors of the Company or the Bank, unless the election of
replacement directors was approved by a two-thirds vote of the initial directors
then in office. The Severance Agreements also provide for a similar lump sum
payment in the event of Messrs. Feeley's, Kearn's or Morrissey's voluntary
termination of employment within one year following a change in control, upon
the occurrence, or within 90 days thereafter, of certain specified events
following a change in control, which have not been consented to in writing by
Messrs. Feeley, Kearn or Morrissey, including (i) the requirement that they
perform their principal executive functions more than 35 miles away from their
primary office, (ii) a reduction in the their base compensation as in effect
prior to the change in control, (iii) the failure of the Company or the Bank to
provide them with compensation and benefits substantially similar to those
provided to them at the time of the change in control under any employee benefit
plans in which they become a participant, (iv) the assignment to them of
material duties and responsibilities other than those normally associated with
their position with the Bank, and (v) a material reduction in their authority
and responsibility. In the event that a dispute arises between Messrs. Feeley,
Kearn or Morrissey and the Bank, as to the terms or interpretation of the
Severance Agreements, they will be reimbursed for all reasonable expenses
arising from such dispute. If the change in control provisions had been
triggered as of March 31, 2001, Messrs. Feeley, Kearn and Morrissey would have
received up to approximately $372,000, $394,000 and $343,000, respectively.
PENSION PLAN. The following table illustrates the maximum estimated annual
benefits payable upon retirement pursuant to the Bank's defined benefit pension
plan based upon the pension plan formula for specified final average earnings
and specified years of service.
FINAL YEARS OF SERVICE
AVERAGE --------------------------------------------------------------------------------------------
EARNINGS 10 15 20 25 30 35
-------- --------------------------------------------------------------------------------------------
$ 25,000 $ 2,500 $ 3,750 $ 5,000 $ 6,250 $ 7,500 $ 8,750
50,000 5,369 8,459 11,279 14,099 16,918 19,738
100,000 13,139 19,709 26,279 32,849 39,418 45,988
150,000 20,639 30,959 41,279 51,599 61,918 72,238
175,000 23,139 34,709 46,279 57,849 69,418 80,988
200,000 23,139 34,709 46,279 57,849 69,418 80,988
250,000 23,139 34,709 46,279 57,849 69,418 80,988
300,000 23,139 34,709 46,279 57,849 69,418 80,988
Benefits are hypothetical amounts only. Currently, the maximum annual
benefit payable under the pension plan is $140,000. Final average earnings in
excess of $228,973 are not covered under the pension plan for pre-1994 accruals,
and final average earnings in excess of $166,667 are not covered under the
pension plan for post-1993 accruals. "Final average earnings," which are based
upon a participant's highest three consecutive years of compensation, consist of
compensation that would appear under the "Salary" and "Bonus" columns of the
Summary Compensation Table above. Benefits under the pension plan become 100%
vested over a six-year period, with 20% of such benefits vesting upon the
completion of each of the second through sixth years of credited service under
the pension plan. As of March 31, 2001, Messrs. Doherty, Feeley, Kearn and
Morrissey had approximately 19, three, seven and eight years, respectively, of
credited service under the pension plan. Benefits set forth in the preceding
table are computed as a single life annuity and are not subject to any deduction
for Social Security or other offset amounts.
- --------------------------------------------------------------------------------
CERTAIN TRANSACTIONS
- --------------------------------------------------------------------------------
The Bank engages in transactions with affiliates of the Bank on the same
terms and other conditions as those offered to unaffiliated parties. Loans by
the Bank made to Directors, officers and employees are made in the ordinary
course of business, on substantially the same terms, including interest rates,
collateral and repayment terms as those prevailing at the time for comparable
transactions with other persons, and do not involve more than the normal risk of
collectability or present other unfavorable features. Massachusetts law provides
that co-operative banks are limited in the amount of money they may lend an
officer of the Bank. These limits are $275,000 for a mortgage on a primary
residence, $75,000 loans for educational purposes and $20,000 for all other
types of loans in total. This restriction does not apply to non-officer
employees of the Bank or to its outside Directors. Any loans
9
existing prior to the implementation of this restriction are grandfathered. The
same loans available to the public are available to Directors, officers and
employees. From time to time, the Bank retains Santini, Inc., a firm controlled
by members of Director Santini's immediate family, to perform various general
contracting services. During fiscal 2001, the Bank paid Santini, Inc. a total of
$71,000 for such services.
- --------------------------------------------------------------------------------
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
GENERAL. The function of administering the Company's executive compensation
policies is currently performed by the Finance Committee of the Board of
Directors, which is composed entirely of outside directors. The Committee is
responsible for developing and making recommendations to the Board concerning
compensation paid to the Chief Executive Officer and each of the other executive
officers and for overseeing all aspects of the Company's executive compensation
program, including employee and executive benefit plans. Because the Company
does not have any executive officers who are not also executive officers of the
Bank, this discussion refers to the executive officers of the Bank, rather than
the Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION. The Committee has
sought to design and implement an executive compensation program that will
achieve the following goals:
o attract and retain qualified executives through competitive base
salaries and benefits;
o motivate executive management to achieve short-term corporate
performance goals through cash incentives; and
o align the interests of senior management with those of stockholders
and promote the long-term performance of the Bank through equity
incentives.
To achieve these goals, the Committee has incorporated the following
elements into the Bank's executive compensation program:
Base Salaries and Benefits. Working with outside consultants, the Committee
has sought to develop a competitive salary and benefit structure for the Bank's
executive officers. Based on surveys of compensation practices at similarly
sized institutions in the northeastern United States, the Committee has
established recommended salary ranges for each position level. The salary
structure has been developed so that the midpoint for each salary range
approximates the competitive market midpoint for the range. Salaries are
reviewed and adjusted within the range annually based on competitive
considerations. The Committee seeks to maintain the competitiveness of its
salary structure by reviewing a comprehensive analysis of market compensation
practices at least every two years.
Management Incentive Program. During the 2001 fiscal year, the Bank adopted
a management incentive program which provides cash incentives payments to
eligible members of management provided that certain corporate performance
criteria are met. Under the Incentive Plan, eligible officers may receive
bonuses equal to a specified percentage of their salary provided that various
corporate performance goals have been satisfied. Performance goals for fiscal
2001 included profitability and asset quality targets, implementation of
technology upgrades and development of strategies for the enhancement of
non-interest income. The Incentive Plan provides for increased incentives if
corporate performance goals are exceeded.
Stock Options. To better align the interests of management with those
stockholders and to promote long-term performance, the Committee has determined
that specified senior officers should be compensated through grants of stock
options based on their contribution to the achievement of corporate performance
goals and individual merit. For each fiscal year, the Committee reserves a
specified number of options for grant to eligible executive officers with one
half of such options reserved for contribution grants and half for merit grants.
All options are granted with an exercise price equal to the fair market value of
the Common Stock on the date of grant and a term of ten years.
Compensation of Chief Executive Officer. For fiscal year 2001, the
Committee determined to increase the Chief Executive Officer's base salary by
approximately 8% after considering a variety of factors, including the
10
salary ranges previously established, the relative positions of the Chief
Executive Officer and other executive officers within those ranges and an
analysis of salaries being paid by Northeast commercial banks and savings
institutions in the asset range of $250 million to $500 million. Based on the
Bank's performance relative to the targets established under the Management
Incentive Plan, the Chief Executive Officer received a cash bonus equal to 20%
of base salary. The Committee additionally awarded the Chief Executive Officer
options for 12,573 shares based on his contribution to the Bank's performance
and individual merit.
MEMBERS OF THE FINANCE COMMITTEE
(which serves as the Compensation Committee)
GREGORY W. BOULOS
TERENCE D. KENNEY
NANCY D. NERI
JOHN G. QUINN
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. The Company
and Bank had no "interlocking" relationships existing on or after January 1,
1997 in which (i) any executive officer of the Bank served as a member of the
compensation committee (or other board committee performing equivalent functions
or, in the absence of any such committee, the entire board of directors) of
another entity, one of whose executive officers served on the Finance Committee
of the Bank, (ii) any executive officer of the Bank served as a director of
another entity, one of whose executive officers served on the Finance Committee
of the Bank, or (iii) any executive officer of the Bank served as a member of
the compensation committee (or other board committee performing equivalent
functions or, in the absence of any such committee, the entire board of
directors) of another entity, one of whose executive officers served as a member
of the Bank's Board of Directors. No member of the Finance Committee of the
Board of Directors of the Company or the Bank was (a) an officer or employee of
the Company or the Bank or any of its subsidiaries during the fiscal year ended
March 31, 2001, (b) a former officer of the Company or the Bank or any of its
subsidiaries, or (c) an insider (i.e., director, officer, director or officer
nominee, greater than 5% stockholder, or immediate family member of the
foregoing) of the Company or the Bank and directly or indirectly engaged in
transactions with the Bank or any subsidiary involving more than the $60,000
during the fiscal year ended March 31, 2001.
11
- --------------------------------------------------------------------------------
SECURITY OWNERSHIP OF MANAGEMENT
- --------------------------------------------------------------------------------
The following table sets forth, as of the Record Date, the beneficial
ownership of the Common Stock by each of the Company's directors, nominees, and
Named Executive Officers, and by all directors, nominees and executive officers
as a group.
PERCENT OF SHARES
AMOUNT AND NATURE OF OF COMMON STOCK
NAME BENEFICIAL OWNERSHIP (1) OUTSTANDING (2)
- ---- ------------------------ -----------------
Joseph R. Doherty 53,675 3.15%
John D. Doherty 140,334 (3) 8.09%
Terence D. Kenney 1,541 (4) 0.09%
John F. Gilgun, Jr. 1,075 0.06%
Marat E. Santini 2,300 0.14%
Nancy D. Neri 200 0.01%
Gregory W. Boulos 5,500 (4) 0.32%
John G. Quinn 1,200 0.07%
Paul S. Feeley 7,112 (5) 0.42%
David W. Kearn 13,946 (6) 0.82%
William P. Morrissey 10,461 (7) 0.61%
All directors, nominees
and executive officers
(12 persons) as a group 238,401 (8) 13.59%
<FN>
- ----------
(1) For definition of beneficial ownership, see note (1) to table in "Voting
Securities and Principal Holders Thereof."
(2) For purposes of calculating percentage ownership the number of shares
outstanding includes any shares which the beneficial owner has the right to
acquire within 60 days of the Record Date.
(3) Includes 32,639 shares of Common Stock which he has the right to acquire
pursuant to stock options exercisable within 60 days of the Record Date and
11,465 shares allocated to his account in the ESOP.
(4) Does not include 160,742 shares held by the ESOP, over which shares the
ESOP Trustees, Directors Boulos and Kenney, may be deemed to have shared or
sole voting and/or investment power.
(5) Includes 1,490 shares allocated to his account in the ESOP and 5,622 shares
which he has the right to acquire pursuant to options exercisable within 60
days of the Record Date.
(6) Includes 5,068 shares allocated to his account in the ESOP and 8,878 shares
which he has the right to acquire pursuant to options exercisable within 60
days of the Record Date.
(7) Includes 5,091 shares allocated to his account in the ESOP and 10,451
shares which he has the right to acquire pursuant to options exercisable
within 60 days of the Record Date.
(8) Includes 52,509 shares of Common Stock which may be acquired pursuant to
stock options exercisable within 60 days of the Record Date and 23,114
allocated to the ESOP accounts of directors and executive officers. Does
not include 160,742 shares held by the ESOP, over which shares the ESOP
Trustees may be deemed to have shared or sole voting and/or investment
power.
</FN>
12
- --------------------------------------------------------------------------------
STOCK PRICE PERFORMANCE GRAPH
- --------------------------------------------------------------------------------
The graph and table which follow show the cumulative total return on the
Common Stock of the Bank and the Company from March 31, 1996 through March 31,
2001 compared with the cumulative total return of (i) an index of Nasdaq
commercial banks and (ii) the S&P 500 Index (the "S&P 500"). Cumulative total
return on the stock or the index equals the total increase in value since March
31, 1996, assuming reinvestment of all dividends paid on the stock or the index,
respectively. The graph and table were prepared assuming that $100 was invested
at the closing price on March 31, 1996 in the Common Stock of the Bank and in
each index. The stockholder returns shown on the performance graph are not
necessarily indicative of the future performance of the Common Stock or of any
particular index. Up to January 8, 1999, information is for the Common Stock of
Central Co-operative Bank. After January 8, 1999, information is for the Common
Stock of Central Bancorp, Inc.
CUMULATIVE TOTAL SHAREHOLDER RETURN
COMPARED WITH PERFORMANCE OF SELECTED INDICES
[Line graph appears here depicting the cumulative total shareholder return of
$100 invested in the Common Stock of the Bank as compared to $100 invested in
the Nasdaq Bank Index and the S&P 500 Index. Line graph begins at March 29, 1996
and plots the cumulative return at March 31, 1997, 1998, 1999, 2000 and 2001.
The plot points are provided below.]
3/31/96 3/31/97 3/31/98 3/31/99 3/31/00 3/31/01
------- ------- ------- ------- ------- -------
Central Bancorp, Inc. 100.00 105.77 181.54 108.46 96.92 110.77
S&P 500 100.00 119.84 177.70 210.98 249.65 195.19
NASDAQ Bank Index 100.00 128.79 200.11 180.33 170.90 189.05
13
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
The Board of Directors has heretofore renewed the Company's arrangements
with KPMG LLP, independent public accountants, to be its auditors for the 2002
fiscal year. A representative of KPMG LLP will be present at the Annual Meeting
to respond to questions from stockholders and will have the opportunity to make
a statement if he or she so desires.
AUDIT FEES. During the fiscal year ended March 31, 2001, the aggregate fees
billed for professional services rendered for the audit of the Company's annual
financial statements and the reviews of the financial statements included in the
Company's Quarterly Reports on Form 10-Q filed during the fiscal year ended
March 31, 2001 were $117,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. During the
fiscal year ended March 31, 2001, the Company did not retain KPMG LLP to provide
advice to the Company regarding financial information systems design and
implementation.
ALL OTHER FEES. For the fiscal year ended March 31, 2001, the aggregate
fees paid by the Company to KPMG LLP for all other services (other than audit
services and financial information systems design and implementation services)
were $142,950.
- --------------------------------------------------------------------------------
AUDIT COMMITTEE REPORT
- --------------------------------------------------------------------------------
The Audit Committee has reviewed and discussed the audited financial
statements of the Company with management and has discussed with KPMG LLP, the
Company's independent auditors, the matters required to be discussed under
Statement of Auditing Standards No. 61 ("SAS 61"). In addition, the Audit
Committee received from KPMG LLP the written disclosures and the letter required
to be delivered by KPMG LLP under Independence Standards Board Standard No. 1
("ISB Standard No. 1") and has discussed with representatives of KPMG LLP their
independence.
The Audit Committee has reviewed the non-audit services currently provided
by the Company's independent auditors and has considered whether the provision
of such services is compatible with maintaining the independence of the
Company's independent auditors.
Based on its review of the financial statements, its discussion with KPMG
LLP regarding SAS 61, and the written materials provided by KPMG LLP under ISB
Standard No. 1 and the related discussion with KPMG LLP of their independence,
the Audit Committee has recommended that the audited financial statements of the
Company be included in its Annual Report on Form 10-K for the year ended March
31, 2001, for filing with the Securities and Exchange Commission.
FINANCE COMMITTEE
GREGORY W. BOULOS
TERENCE D. KENNEY
NANCY P. NERI
JOHN G. QUINN
14
- --------------------------------------------------------------------------------
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
- --------------------------------------------------------------------------------
Under the Exchange Act, the Company's officers and directors and all
persons who own more than ten percent of the Common Stock ("Reporting Persons")
are required to file reports detailing their ownership and changes of ownership
in the Common Stock and to furnish the Company with copies of all such ownership
reports that are filed. Based solely on the Company's review of the copies of
such ownership reports which it has received in the past fiscal year or with
respect to the past fiscal year, or written representations from such persons
that no annual report of changes in beneficial ownership were required, the
Company believes during the fiscal year ended March 31, 2001 and the prior
fiscal year all Reporting Persons have complied with these reporting
requirements, except for Joseph R. Doherty who filed three Form 4s late, John D.
Doherty who was late in filing two Form 4s and Mr. Morrissey who did not timely
file his Form 5 for fiscal year 2000.
- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Annual Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Annual Meeting, it
is intended that proxies in the accompanying form will be voted in respect
thereof in accordance with the judgment of the person or persons voting the
proxies. The cost of the proxy solicitation will be borne by the Company. The
Company has retained Morrow & Company to assist in the solicitation of proxies
for which services Morrow & Company will receive a fee of $4,000 plus
reimbursement of expenses. In addition to solicitations by mail, directors,
officers and regular employees of the Company may solicit proxies personally or
by telegraph or telephone at their regular salary or hourly compensation.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The Company's 2001 Annual Report to Stockholders, including financial
statements prepared in conformity with generally accepted accounting principles,
has been mailed to all stockholders of record as of the Record Date. Any
stockholder who has not received a copy of such Annual Report may obtain a copy
by writing the Company. Such Annual Report is not to be treated as part of the
proxy solicitation materials nor as having been incorporated herein by
reference. A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION WILL BE FURNISHED WITHOUT CHARGE TO
STOCKHOLDERS UPON WRITTEN REQUEST TO RHODA K. ASTONE, SECRETARY AND CLERK,
CENTRAL BANCORP, INC., 399 HIGHLAND AVENUE, SOMERVILLE, MASSACHUSETTS 02144.
- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be eligible for inclusion in the proxy materials of the Company
for next year's Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at the Company's main office at 399
Highland Avenue, Somerville, Massachusetts no later than February 27, 2002. Any
such proposals shall be subject to the requirements of the proxy rules adopted
under the Exchange Act.
15
Stockholder proposals to be considered at such Annual Meeting, other than
those submitted pursuant to the Exchange Act, must be stated in writing,
delivered or mailed to the Secretary and Clerk of the Company at the above
address, not less than 30 days nor more than 60 days prior to the date of any
such Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Rhoda K. Astone
RHODA K. ASTONE
SECRETARY AND CLERK
Somerville, Massachusetts
June 26, 2001
16
APPENDIX A
CENTRAL BANCORP, INC.
CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
I. AUDIT COMMITTEE PURPOSE
The Finance Committee of the Bank serves as the Audit Committee for the Company.
The audit Committee is appointed by the Board of Directors of the Company to
assist the Board of Directors of the Company in fulfilling its oversight
responsibilities. The Audit Committee's primary duties and responsibilities are
to:
o Monitor the integrity of the Company's financial reporting process and
systems of internal controls regarding finance, accounting, and compliance.
o Monitor the independence and performance of the Company's independent
auditors and internal auditing department.
o Provide an avenue of communication among the independent auditors,
management, the internal auditing department, and the Board of Directors.
o Report to the Board of Directors
The Audit Committee has the authority to conduct any investigation appropriate
to fulfilling its responsibilities and it has direct access to the independent
auditors as well as anyone in the organization. The Audit Committee has the
ability to retain, at the Company's expense, special legal, accounting, or other
consultants or experts it deems necessary in the performance of its duties.
II. AUDIT COMMITTEE COMPOSITION AND MEETINGS
Audit Committee members shall meet the requirements of the NASDAQ National
Market. The Audit Committee shall be comprised of at least three and no more
than six directors as determined by the Board, each of whom shall be independent
nonexecutive directors, free from any relationship that would interfere with the
exercise of his or her independent judgment. All members of the Committee shall
have a basic understanding of finance and accounting and be able to read and
understand fundamental financial statements, and at least one member of the
Committee shall have accounting or related financial management expertise.
Audit Committee members shall be appointed by the Board on recommendation of the
Nominating Committee. If an Audit Committee Chair is not designated or present,
the members of the Committee may designate a Chair by majority vote of the
Committee membership.
The Committee shall meet at least four times annually, or more frequently as
circumstances dictate. The Committee should meet privately in executive session
at least annually with management, the director of the internal auditing
department, the independent auditors and as a committee to discuss any matters
that the Committee or each of these groups believe should be discussed. In
addition, the Committee or at least its Chair should communicate with management
and the independent auditors quarterly to review the Company's financial
statements and significant findings based upon the auditor's limited review
procedures.
Audit Committee Charter Page 2
================================================================================
III. AUDIT COMMITTEE RESPONSIBILITIES AND DUTIES
Review Procedures
- -----------------
1. Review and reassess the adequacy of this Charter at least annually. Submit
the charter to the Board of Directors for approval and have the document
published at least every three years in accordance with Securities and
Exchange Commission (SEC) regulations.
2. Review the Company's annual audited financial statements prior to filing or
distribution. Review should include discussion with management and
independent auditors of significant issues regarding accounting principles,
practices and judgments.
3. In consultation with the management, the independent auditors and the
internal auditors, consider the integrity of the Company's financial
reporting processes and controls. Discuss significant financial risk
exposures and the steps management has taken to monitor, control and report
such exposures. Review significant findings prepared by the independent
auditors and the internal auditing department together with management's
responses, including the status of previous recommendations.
4. Review with financial management and/or the independent auditors the
company's quarterly financial results prior to the release of earnings
and/or the company's quarterly financial statements prior to filing or
distribution. Discuss any significant changes to the Company's accounting
principles and any items required to be communicated by the independent
auditors in accordance with SAS 61. The Chair of the Committee may
represent the entire Audit Committee for purposes of this review.
Independent Auditors
- --------------------
5. The independent auditors are ultimately accountable to the Audit Committee
and the Board of Directors. The Audit Committee shall review the
independence, and performance of the auditors and annually recommend to the
Board of Directors the appointment of the independent auditors or approve
any discharge of auditors when circumstances warrant.
6. Approve the fees and other significant compensation to be paid to the
independent auditors.
7. On an annual basis, the Committee should review and discuss with the
independent auditors all significant relationships they have with the
Company that could impair the auditors' independence.
8. Review the independent auditor's audit plan, including scope, staffing,
locations, reliance upon management and internal audit and general audit
approach.
9. Prior to releasing the year-end earnings and/or filing year end SEC
reports, discuss the results of the audit with the independent auditors.
Discuss certain matters required to be communicated to audit committees in
accordance with SAS 61.
10. Consider the independent auditors' judgments about the quality and
appropriateness of the Company's accounting principles as applied in its
financial reporting.
Internal Audit Department and Legal Compliance
- ----------------------------------------------
11. Review the budget, plan, changes in plan, activities, organizational
structure, and qualifications of the internal audit department, as needed.
The internal audit function shall have a direct reporting responsibility to
the Board of Directors through the Audit Committee.
Audit Committee Charter Page 3
================================================================================
12. Review the appointment, performance and replacement of the internal audit
function.
13. Review significant reports prepared by the internal audit department
together with management's response and follow-up to these reports.
14. On at least an annual basis, review with the Company's management and, if
deemed necessary, with counsel, any legal matters that could have a
significant impact on the organization's financial statements, the
Company's compliance with applicable laws and regulations, inquiries
received from regulators or governmental agencies.
Other Audit Committee Responsibilities
- --------------------------------------
15. Annually prepare a report to shareholders as required by the Securities and
Exchange Commission. The report may be included in the Company's annual
proxy statement.
16. Perform any other activities consistent with this Charter, the Company's
By-laws and governing law, as the Committee or the Board deems necessary or
appropriate.
17. Maintain minutes of meetings and periodically report to the Board of
Directors on significant results of the foregoing activities.
18. Establish, review and update periodically a Code of Ethical Conduct and
ensure that management has established a system to enforce this Code.
[x] PLEASE MARK VOTES
AS IN THIS EXAMPLE
________________________
CENTRAL BANCORP, INC. 1. The election as directors of all nominees listed
________________________ below (except as noted to the contrary).
COMMON STOCK For All With- For All
Nominees Held Except
(01) Gregory W. Boulos [ ] [ ] [ ]
Mark box at right if you plan to attend (02) John D. Doherty [ ] [ ] [ ]
the Annual Meeting. [ ]
Mark box at right if an address change [ ]
or comment has been noted on the reverse
side of this card.
NOTE: IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A PARTICULAR
CONTROL NUMBER: NOMINEE, MARK THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH
RECORD DATE SHARES: THE NAME(S) OF THE NOMINEE(S) IN THE LIST ABOVE. YOUR SHARES WILL
BE VOTED FOR THE REMAINING NOMINEE(S).
Should the undersigned be present and elect to vote at the Annual
Meeting or at any adjournment thereof and after notification to
the Secretary of the Company at the Meeting of the stockholder's
decision to terminate this Proxy, then the power of said
attorneys and proxies shall be deemed terminated and of no
further force and effect.
The undersigned acknowledges receipt from the Company prior to
the execution of this Proxy of Notice of the Meeting, a Proxy
Statement dated June 26, 2001, and the Company's Annual Report to
Stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED
PROPOSITIONS.
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Please be sure to sign and date this Proxy | Date |
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Stockholder Sign here Co-owner sign here
DETACH CARD DETACH CARD
CENTRAL BANCORP, INC.
REVOCABLE PROXY
ANNUAL MEETING OF STOCKHOLDERS
JULY 26, 2001
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints John F. Gilgun, Jr. and Marat E. Santini, with
full powers of substitution to act, as attorneys and proxies for the
undersigned, to vote all shares of Common Stock of Central Bancorp, Inc. which
the undersigned is entitled to vote at the Annual Meeting of Stockholders, to be
held at the Auditorium of FleetBoston, 100 Federal Street, Boston, Massachusetts
on Thursday, July 26, 2001, at 11:00 a.m. and at any and all adjournments
thereof, as follows on the reverse side.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED. IF ANY OTHER BUSINESS
IS PRESENTED AT SUCH MEETING, INCLUDING MATTERS RELATING TO THE CONDUCT OF THE
MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST
JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS
TO BE PRESENTED AT THE MEETING.
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| PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED |
| POSTAGE-PREPAID ENVELOPE. |
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| Please sign exactly as your name appears on this card. When signing as |
| attorney,executor, administrator, trustee or guardian, please give your full |
| title. If shares are held jointly, each holder should sign. |
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HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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