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:
[X]Preliminary Proxy Statement [ ]Confidential, for Use of the
[ ]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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4. Proposed maximum aggregate value of transaction:
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5. Total fee paid:
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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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2. Form, Schedule or Registration Statement No.:
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3. Filing Party:
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4. Date Filed:
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[LETTERHEAD OF CENTRAL BANCORP, INC.]
August __, 2002
IMPORTANT ANNUAL MEETING
SEPTEMBER 30, 2002
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of Central Bancorp, Inc.
(the "Company"), I cordially invite you to attend the 2002 Annual Meeting of
Stockholders (the "Annual Meeting"), which will be held at
______________________, _____________________, __________, Massachusetts, on
Monday, September 30, 2002 at __:__ _.m. Accompanying this letter are a Notice
of Annual Meeting and a Proxy Statement describing the business to be
transacted, and a copy of the Company's Annual Report. Please review these
materials carefully.
At the Annual Meeting, you will be asked to re-elect three directors
nominated by the Board of Directors. The Board of Directors unanimously
recommends that you vote FOR its nominees. 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
stockholders may have.
Whether or not you plan to attend the Annual Meeting, please sign and date
the enclosed WHITE proxy card and mail it in the accompanying postage-paid
return envelope as promptly as possible. This will not prevent you from voting
in person at the Annual Meeting, but will assure that your vote is counted if
you are unable to attend. PLEASE SIGN, DATE AND PROMPTLY MAIL THE WHITE PROXY
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CARD TODAY. YOUR VOTE IS VERY IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU
OWN.
YOUR VOTE IS IMPORTANT. WE ENCOURAGE YOU TO VOTE YOUR SHARES AS SOON AS
POSSIBLE.
Your continued interest and support of Central Bancorp, Inc. are sincerely
appreciated.
Sincerely,
John D. Doherty
President and Chief Executive Officer
IF YOU HAVE ANY QUESTIONS OR NEED FURTHER ASSISTANCE IN VOTING
YOUR SHARES, PLEASE CALL:
GEORGESON SHAREHOLDER COMMUNICATIONS, INC.
17 STATE STREET, 10TH FLOOR, NEW YORK, NY 10004
CALL TOLL FREE (866) 367-5518
CENTRAL BANCORP, INC.
399 HIGHLAND AVENUE
SOMERVILLE, MASSACHUSETTS 02144
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 30, 2002
Notice is hereby given that the 2002 Annual Meeting of Stockholders (the
"Annual Meeting") of Central Bancorp, Inc. (the "Company") will be held at
___________________________, ____________________, __________, Massachusetts on
Monday, September 30, 2002 at __:__ _.m.
A White 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 three 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 August __, 2002 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.
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
YOU ARE ENCOURAGED TO VOTE BY PROXY SO THAT YOUR SHARES WILL BE REPRESENTED AND
VOTED AT THE MEETING EVEN IF YOU CANNOT ATTEND. ALL STOCKHOLDERS OF RECORD CAN
VOTE BY WRITTEN WHITE PROXY CARD. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES
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ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM
YOUR RECORD HOLDER TO VOTE PERSONALLY AT THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
RHODA K. ASTONE
SECRETARY AND CLERK
Somerville, Massachusetts
August __, 2002
CENTRAL BANCORP, INC.
399 HIGHLAND AVENUE
SOMERVILLE, MASSACHUSETTS 02144
(617) 628-4000
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 30, 2002
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GENERAL
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This Proxy Statement and the enclosed white Proxy Card are furnished in
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connection with the solicitation of proxies by the Board of Directors of Central
Bancorp, Inc. ("Central" or the "Company"), the holding company for Central
Co-operative Bank (the "Bank"), to be used at the Company's 2002 Annual Meeting
of Stockholders (hereinafter called the "Annual Meeting") which will be held at
________________________, __________________, __________, Massachusetts, on
Monday, September 30, 2002 at __:__ _.m., local time. The accompanying Notice of
Annual Meeting and this Proxy Statement are being first mailed to stockholders
on or about August __, 2002.
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VOTING AND PROXY PROCEDURES
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WHO CAN VOTE AT THE ANNUAL MEETING
You are only entitled to vote at the Annual Meeting if the Company's
records show that you held shares of Central's common stock, $1.00 par value
(the "Common Stock") as of the close of business on August __, 2002 (the "Record
Date"). If your shares are held by a broker or other intermediary, you can only
vote your shares at the Annual Meeting if you have a properly executed proxy
from the record holder of your shares (or their designee). As of the Record
Date, a total of _________ shares of Common Stock were outstanding. Each share
of Common Stock has one vote.
VOTING BY PROXY
The Board of Directors is sending you this proxy statement for the purpose
of requesting that you allow your shares of Common Stock to be represented at
the Annual Meeting by the persons named in the enclosed WHITE proxy card. All
shares of Common Stock represented at the Annual Meeting by properly executed
and dated proxies will be voted according to the instructions indicated on the
proxy card. If you sign, date and return a WHITE proxy card without giving
voting instructions, your shares will be voted as recommended by the Company's
Board of Directors. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF ITS
NOMINEES FOR DIRECTOR.
If any matters not described in this proxy statement are properly presented
at the Annual Meeting, the persons named in the proxy card will vote your shares
as determined by a majority of the Board of Directors. This includes a motion to
adjourn or postpone the Annual Meeting in order to solicit additional proxies.
If the Annual Meeting is postponed or adjourned, your Common Stock may be voted
by the persons named in the proxy card on the new Annual Meeting dates as well,
unless you have revoked your proxy. The Company does not know of any other
matters to be presented at the Annual Meeting.
You may revoke your proxy at any time before the vote is taken at the
Annual Meeting. To revoke your proxy you must either advise the Company's
Secretary in writing before your Common Stock has been voted at the Annual
Meeting, deliver a later-dated proxy, or attend the Annual Meeting and vote your
shares in person. Attendance at the Annual Meeting will not in itself constitute
revocation of your proxy.
1
If you hold your Common Stock in "street name," you will receive
instructions from your broker, bank or other nominee that you must follow in
order to have your shares voted. Your broker, bank or other nominee may allow
you to deliver your voting instructions via the telephone or the Internet.
Please see the instruction form provided by your broker, bank or other nominee
that accompanies this proxy statement.
IF YOU HAVE ANY QUESTIONS ABOUT VOTING, PLEASE CONTACT OUR PROXY SOLICITOR,
GEORGESON SHAREHOLDER COMMUNICATIONS, INC., AT (866) 367-5518.
PARTICIPANTS IN THE CENTRAL CO-OPERATIVE BANK ESOP
If you are a participant in the Central Co-operative Bank Employee Stock
Ownership Plan (the "ESOP"), you will receive a voting instruction form that
reflects all shares you may vote under the plan. Under the terms of the ESOP,
all shares held by the ESOP are voted by the ESOP trustees, but each participant
in the ESOP may direct the trustees how to vote the shares of Common Stock
allocated to his or her account. Unallocated shares and allocated shares for
which no timely voting instructions are received will be voted by the ESOP
trustees in the same proportion as the shares for which the trustees have
received timely voting instructions. The deadline for returning your voting
instruction form to the ESOP trustees is ________ ____, 2002.
VOTE REQUIRED
The Annual Meeting will be held if a majority of the outstanding shares of
Common Stock entitled to vote is represented at the Annual Meeting. If you
return valid proxy instructions or attend the Annual Meeting in person, your
shares will be counted for purposes of determining whether there is a quorum,
even if you abstain from voting. Broker non-votes will be counted for purposes
of determining the existence of a quorum. A broker non-vote occurs when a
broker, bank or other nominee holding shares for a beneficial owner does not
have discretionary voting power with respect to the agenda item and has not
received voting instructions from the beneficial owner.
In voting on the election of directors, you may vote in favor of all
nominees, withhold votes as to all nominees, or withhold votes as to specific
nominees. There is no cumulative voting in the election of directors. Directors
must be elected by a plurality of the votes cast at the Annual Meeting. This
means that the nominees receiving the greatest number of votes will be elected.
Votes that are withheld and broker non-votes will have no effect on the outcome
of the election.
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PRINCIPAL HOLDERS OF VOTING SECURITIES
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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.
2
The following table sets forth 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 COMMON STOCK
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) OUTSTANDING (2)
- ------------------- ------------------------ ---------------
John D. Doherty
Joseph R. Doherty
Joseph R. Doherty Family Limited
Partnership, L.P.
399 Highland Avenue
Somerville, Massachusetts 02144 202,205 (3) 12.19%
Central Co-operative Bank
Employee Stock Ownership Plan Trust
399 Highland Avenue
Somerville, Massachusetts 02144 184,636 (4) 11.31%
Jeffrey L. Gendell
Tontine Financial Partners, L.P.
Tontine Management, L.L.C.
200 Park Avenue, Suite 3910
New York, New York 10166 161,400 (5) 9.88%
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401 102,400 6.27%
Financial Edge Fund, L.P.
Financial Edge - Strategic Fund, L.P.
Goodbody/PL Capital, L.P.
PL Capital, LLC
Goodbody/PL Capital LLC
John Wm. Palmer
Richard J. Lashley
Garrett Goodbody
20 East Jefferson Avenue, Suite 22
Naperville, Illinois 60540
Richard Fates
95 Rock Maple Avenue
Hamilton, Massachusetts 01982 155,368 (6) 9.52%
<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) Includes 12,661 shares of Common Stock allocated to the account of John D.
Doherty in the ESOP. Each of John D. Doherty, Joseph R. Doherty and the
Joseph R. Doherty Family Limited Partnership, L.P. disclaims beneficial
ownership of any shares held by the other.
(4) Of the shares beneficially owned by the Central Co-operative Bank Employee
Stock Ownership Plan Trust ("ESOP"), 121,099 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 63,537 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.
(5) According to their statement on Schedule 13G as amended January 22, 2002,
each of the reporting persons shares voting and dispositve power over the
listed shares.
(6) According to Amendment No. 7 to their Schedule 13D, filed July 12, 2002,
includes 113,900 and 23,200 shares owned by Financial Edge Fund, L.P. and
Financial Edge-Strategic Fund, L.P., respectively, whose general partner is
PL Capital, LLC of which Messrs. Palmer and Lashley are the managing
members, 12,168 shares held by Goodbody/PL Capital, L.P. whose general
partner is Goodbody/PL Capital, LLC of which Messrs. Palmer, Lashley and
Goodbody are the managing members and 600, 5,000 and 500 shares
beneficially owned by Messrs. Lashley, Goodbody and Fates, respectively, in
their individual capacities.
</FN>
3
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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.
Under the Company's Articles of Organization and Bylaws, Directors are divided
into three classes, with one class standing for election for a three-year term
at each Annual Meeting. Three 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 of the Board of Directors
has nominated Directors Marat E. Santini, John F. Gilgun, Jr. and John G. Quinn
for re-election as directors, all to serve for a three-year term. Directors are
elected by a plurality of all votes cast.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RE-ELECTION OF MARAT E. SANTINI, JOHN F. GILGUN, JR. AND JOHN G. QUINN AS
DIRECTORS OF THE COMPANY.
Proxies solicited by the Board of Directors will be voted for the
re-election of the above named nominees. 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 Board 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 2005
Marat E. Santini 77 1972 2002
John F. Gilgun, Jr. 78 1987 2002
John G. Quinn 39 1999 2002
DIRECTORS CONTINUING IN OFFICE
Joseph R. Doherty 78 1958 2003
Terence D. Kenney 86 1975 2003
Nancy D. Neri 46 1999 2003
Gregory W. Boulos 45 1998 2004
John D. Doherty 44 1983 2004
In addition to the Board's nominees, a stockholder has publicly stated an
intention to nominate Garrett Goodbody, Sharon, Connecticut, and Richard Fates,
Hamilton, Massachusetts, for election as directors at the Annual Meeting.
4
Presented below is certain information concerning each of the Board's
nominees and Directors continuing in office. Unless otherwise stated, all such
nominees and Directors have held the positions listed for at least the last five
years.
MARAT E. SANTINI was the Office Manager of Santini Inc., a general
construction 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. He is a member of the Woburn
Lodge of Elks and the American Legion. Mr. Gilgun is the former Mayor of the
City of Woburn, Massachusetts.
JOHN G. QUINN has been the President of Quinn Printing Company, Inc., a
printing and graphics firm located in Newton, Massachusetts, since 1990. He is a
member of Catholic Charities, the Genesis Fund, the Art Institute of Boston, the
Treasurers Club of Boston, the Financial Executives Institute of Boston,
Printing Industry of New England, Printing Industry of America and the Small
Business Association of New England. Mr. Quinn is also active in Tenacity, a
non-profit program for inner-city youth, and Coats for Kids.
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 recently retired as Chairman of the Board of Assessors of the
City of Woburn, Massachusetts, a post he had held for 23 years. Mr. Kenney is a
member of the Woburn Elks Lodge, the Woburn Knights of Columbus and Woburn
Kiwanis Club.
NANCY D. NERI is the President and Funeral Director for the George L.
Doherty Funeral Service, Inc., a funeral home located in Somerville,
Massachusetts.
GREGORY W. BOULOS 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. Mr. Boulos is a past
director of Junior Achievement, The Center for Dental Health, and The Portland
Symphony Orchestra. He is also a past Chairman of both the Cumberland County
Civic Center and Catholic Charities Maine Board of Directors. Mr. Boulos is a
member of the Portland Chamber of Commerce, the Maine Commercial Association of
Realtors, the National Association of Realtors, a Trustee of Mercy Hospital, and
Director of Wayneflete School.
JOHN D. DOHERTY is the President and Chief Executive Officer of the Company
and the Bank. He 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 Directors. Commencing April 1,
1992, Mr. Doherty also became the Chief Executive Officer of the Bank. Mr.
Doherty also serves as the president and a director of the Bank's subsidiaries,
Central Securities Corporation and Central Preferred Capital Corporation. He has
been employed by the Bank in various capacities since 1981. Mr. Doherty holds an
M.B.A. degree from Boston University and a B.A. in Business Administration from
Babson College. Mr. Doherty is Chairman of the Co-operative Central Bank and a
Trustee of the Co-operative Bank Employee Retirement Association. He is a member
of the Somerville Kiwanis Club, a former director of the Somerville Chamber of
Commerce, former Treasurer of the Woburn Development Corporation and a former
member of the Somerville High School Scholarship Committee, the Woburn Kiwanis
Club, and the Needham Business Association, a past president of the Economy Club
of Cambridge and a former Lieutenant of the Hamilton Auxiliary Police. Mr.
Doherty is the son of Chairman of the Board Joseph R. Doherty.
5
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
DAVID W. KEARN, 60, 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 and was
Senior Vice President/Branch Administration at United States Trust Company from
1987 to 1990. He serves on the Board of Directors of the Somerville Boys Club.
He also serves as a director of the Bank's subsidiaries, Central Securities
Corporation and Central Preferred Capital Corporation.
MICHAEL K. DEVLIN, 51, joined the Bank in February 2002 as Senior Vice
President, Treasurer and Chief Financial Officer. He also serves as a director
and treasurer of the Bank's subsidiary, Central Securities Corporation. From
1997 until joining the Bank, Mr. Devlin, who is a Certified Public Accountant,
was a Financial Consultant to the banking industry in Massachusetts. Between
1973 and 1997, he was a member of the accounting and business advisory practice
of Arthur Andersen LLP, where he served as a partner for 11 years.
PAUL S. FEELEY, 55, joined the Bank in July 1997 as Senior Vice President,
Treasurer and Chief Financial Officer and became Senior Vice President and Chief
Information Officer in February 2002. Mr. Feeley is a member of the Financial
Managers Society of which he is a former local chapter President and National
Director. He is also a member of the Massachusetts Society of CPAs and serves on
its Financial Institutions Committee. 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. Mr. Feeley
also serves as a director and treasurer of Central Preferred Capital
Corporation.
WILLIAM P. MORRISSEY, 74, joined the Bank in November 1992 as Senior Vice
President for Corporate Affairs representing the Bank in outside banking and
business organizations. Mr. Morrissey is chairman of the Board of the Federal
Home Loan Bank of Boston. 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.
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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, 2002, the Board of
Directors of the Company held 12 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 Terence D. Kenney, Nancy D.
Neri and Gregory W. Boulos 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 Bank'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 auditing firm. In addition, the Finance Committee
selects the Company's independent auditors with whom it meets to review the
results of the Company's annual 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 the National Association of Securities Dealers, Inc.'s listing
standards. The Company's Audit Committee has adopted a written charter, a copy
of which was included as an appendix to the Company's proxy statement for the
2001 Annual Meeting of Stockholders. This Committee met 12 times during the year
ended March 31, 2002.
6
The 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, 2002, the Finance
Committee met two times 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 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 to be paid out in
equal annual installments over a three-year period beginning six months after
the director ceases to be a director. Shares held in the Deferred Compensation
Plan for Non-Employee Directors are voted by the trustees in accordance with the
direction of the Board of Directors. During the year ended March 31, 2002, 1,100
and 403 shares were credited to the accounts of Directors Boulos and Neri,
respectively, who were the only directors participating in the Deferred
Compensation Plan for Non-Employee Directors.
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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 2002 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 2002 $ 272,160 $ -- $ -- -- $ 31,842
President and Chief 2001 259,200 51,760 -- 12,573 32,401
Executive Officer 2000 244,915 45,000 -- 13,066 29,731
David W. Kearn 2002 133,505 -- -- -- 20,644
Senior Vice President/ 2001 127,148 20,343 -- 4,354 23,311
Lending and Retail Banking 2000 121,536 20,000 -- 4,524 21,929
Paul S. Feeley 2002 124,405 -- -- -- 12,874
Senior Vice President/ 2001 120,781 14,493 -- 2,757 15,299
Chief Information Officer 2000 114,942 10,000 -- 2,865 15,873
William P. Morrissey 2002 121,133 -- -- -- 19,359
Senior Vice President for 2001 115,365 13,843 -- 2,634 21,450
Corporate Affairs 2000 109,731 10,000 -- 2,736 19,316
<FN>
_____________
(1) Reflects fiscal year for which bonus was earned. For fiscal 2002, no bonus
was earned under the Bank's Management Incentive Plan.
(2) Does not include perquisites which totaled less than ten percent of annual
salary and bonus.
(3) For fiscal year 2002, consists of $4,250, $2,625, $636 and $2,625,
respectively, in Company contributions to the defined contribution
retirement plan, $1,123, $1,207, $1,207 and $1,207, respectively, in paid
life insurance premiums and the value of 1,195, 759, 498 and 701 shares,
based on $22.15 per share (the last reported sale price of such shares on
the effective date of the allocation, October 31, 2001), allocated to the
ESOP accounts of Messrs. Doherty, Kearn, Feeley and Morrissey,
respectively.
</FN>
7
OPTION EXERCISES AND FISCAL YEAR-END VALUES. The following table sets forth
information regarding option exercises during the last fiscal year and the
values of options held by the Named Executive Officers at the end of fiscal year
2002.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END (2)
ACQUIRED ON VALUE --------------------------- ------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- ----------- ----------- ------------- ----------- -------------
John D. Doherty 25,000 $ 116,010 25,639 -- $ 237,869 $ --
David W. Kearn -- -- 8,878 -- 82,369 --
Paul S. Feeley -- -- 5,622 -- 52,160 --
William P. Morrissey -- -- 5,370 -- 49,824 --
<FN>
- --------
(1) Based on the difference between the aggregate exercise price and aggregate
market value of shares acquired as of the date of exercise.
(2) Value is based on the difference between the aggregate market value of
shares underlying the unexercised in-the-money options at March 31, 2002
($27.75 per share based on the closing sale price reported on the Nasdaq
National Market SM) 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.
John D. Doherty gives written notice that the Employment Agreement will not be
extended further. The current base annual salary of John D. Doherty is $272,160.
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
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
8
terminated without just cause. If the change in control provisions had been
triggered as of March 31, 2002, Mr. John D. Doherty would have received up to
approximately $850,000.
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 2002, 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 $10,050 for Board meetings attended
during fiscal 2002 and health and life insurance benefits in the amount of
$3,437 and $1,146, respectively.
The Bank has entered into severance agreements (the "Severance Agreements")
with David W. Kearn, Senior Vice President/Lending & Retail Banking, Michael K.
Devlin, Senior Vice President, Treasurer, and Chief Financial Officer, Paul S.
Feeley, Senior Vice President/Chief Information Officer 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. Kearn, Devlin, Feeley 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. Kearn, Devlin, Feeley 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 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. Kearn's, Devlin's, Feeley'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. Kearn, Devlin, Feeley 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. Kearn,
Devlin, Feeley 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, 2002, Messrs. Kearn, Devlin, Feeley and Morrissey
would have received up to approximately $267,000, $295,000, $249,000 and
$242,000, respectively.
9
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 5,528 8,292 11,056 13,820 16,583 19,347
100,000 13,028 19,542 26,056 32,570 39,083 45,597
150,000 20,528 30,792 41,056 51,320 61,583 71,847
175,000 24,278 36,417 48,556 60,695 72,833 84,972
200,000 25,028 37,542 50,056 62,570 75,083 87,597
250,000 25,028 37,542 50,056 62,570 75,083 87,597
300,000 25,028 37,542 50,056 62,570 75,083 87,597
Benefits are hypothetical amounts only. Currently, the maximum annual
benefit payable under the pension plan is $160,000. 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 $180,000 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. 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, 2002, Messrs. Doherty, Kearn, Feeley and Morrissey had
approximately 20, eight, four and nine 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
collectibility 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 existing prior to
the implementation of this restriction are grandfathered. The same loans
available to the public are available to Directors, officers and employees.
In August, 2001, the Company agreed to lend the ESOP sufficient funds to
acquire up to an additional 5% of the outstanding Common Stock. The ESOP's
trustees are Directors Boulos and Kenney. As of March 31, 2002, the Company had
lent the ESOP an aggregate of $199,000 which was the highest amount of
indebtedness outstanding since the beginning of the 2002 fiscal year. The ESOP
loan bears interest at the prime rate. In addition, the ESOP is indebted to the
Bank in the amount of $107,000 on a loan originally made in 1997. 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 2002, the Bank paid Santini, Inc. a total of $145,420 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.
10
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 2002 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
2002 focused on Bank profitability. 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. Option grants,
however, are discretionary with the Committee and no options were granted during
fiscal 2002.
Compensation of Chief Executive Officer. For fiscal year 2002, the
Committee determined to increase the Chief Executive Officer's base salary by
approximately 5% after considering a variety of factors, including the 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 did not receive a cash bonus.
MEMBERS OF THE FINANCE COMMITTEE
(which serves as the Compensation Committee)
GREGORY W. BOULOS
TERENCE D. KENNEY
NANCY D. NERI
JOHN G. QUINN
11
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, 2002, (b) (other than Director Kenney) 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, 2002.
- --------------------------------------------------------------------------------
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 and Named
Executive Officers, and by all directors and executive officers as a group.
BENEFICIAL OWNERSHIP (1)
----------------------------------------------
NUMBER PERCENTAGE OF
NAME OF SHARES SHARES OUTSTANDING(2)
- ---- --------- ---------------------
Marat E. Santini 2,363 (3) 0.14%
John F. Gilgun, Jr. 1,575 (3) 0.07%
John G. Quinn 1,200 0.07%
Joseph R. Doherty 60,675 (4) 3.72%
Terence D. Kenney 1,541 (3)(5) 0.09%
Nancy D. Neri 200 (6) 0.01%
Gregory W. Boulos 5,500 (5)(6) 0.34%
John D. Doherty 141,530 (7) 8.53%
David W. Kearn 14,706 (8) 0.90%
Paul S. Feeley 7,610 (9) 0.46%
William P. Morrissey 11,162 (10) 0.68%
All directors and executive
officers as a group (12 persons) 249,804 (11) 15.12%
<FN>
- -----------
(1) For definition of beneficial ownership, see footnote 1 to the table in
"Principal Holders of Voting Securities."
(2) In calculating percentage ownership for a given individual or group of
individuals, the number of shares of the Common Stock outstanding includes
unissued shares subject to options exercisable within 60 days of the Record
Date held by that individual or group.
(3) Held jointly with his spouse.
(4) Shares held by the Joseph R. Doherty Family Limited Partnership, L.P. of
which he is the sole general partner.
(5) Does not include 184,636 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.
(6) Excludes shares credited to their accounts in the Deferred Compensation
Plan for Non-Employee Directors.
(7) Includes 12,661 shares of Common Stock allocated to his account in the
ESOP. Mr. Doherty acquired a portion of his shares with funds borrowed from
Joseph R. Doherty pursuant to a demand promissory note with a current
principal balance of $1,062,360.
(8) Includes 5,828 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.
(9) Includes 1,988 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.
(10) Includes 5,792 shares allocated to his account in the ESOP and 5,370 shares
which he has the right to acquire pursuant to options exercisable within 60
days of the Record Date.
(11) Includes 19,870 shares of Common Stock which may be acquired pursuant to
stock options exercisable within 60 days of the Record Date, 26,269 shares
allocated to the ESOP accounts of directors and executive officers and
1,742 shares held by the trust for the Deferred Compensation Plan for
Non-Employee Directors which are voted as directed by the Board of
Directors. Does not include unallocated 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, 1997 through March 31,
2002 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, 1997, 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, 1997 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 PEFORMANCE OF SELECTED INDICES
[Line graph appears here depicting the cumulative total shareholder return
of $100 invested in the Common Stock as compared to $100 invested in the Nasdaq
Bank Index and the S&P 500 Index. Line graph begins at March 31, 1997 and plots
the cumulative return at March 31, 1998, 1999, 2000, 2001 and 2002. The plot
points are provided below.]
3/31/97 3/31/98 3/31/99 3/31/00 3/31/01 3/31/02
------- ------- ------- ------- ------- -------
Central Bancorp, Inc. 100.0 197.4 107.8 97.5 120.8 189.6
S&P 500 100.0 148.3 176.1 208.3 163.0 163.6
NASDAQ Bank Index 100.0 160.8 131.1 120.5 143.5 176.1
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 2003
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. The aggregate fees billed for professional services rendered
for the audit of the Company's annual financial statements for the fiscal year
ended March 31, 2002 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, 2002 were $114,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. During the
fiscal year ended March 31, 2002, 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, 2002, 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 $40,350 including $36,150 for tax services.
- --------------------------------------------------------------------------------
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, 2002, for filing with the Securities and Exchange Commission.
FINANCE COMMITTEE
GREGORY W. BOULOS
TERENCE D. KENNEY
NANCY D. 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, 2002 and the prior
fiscal year all Reporting Persons have complied with these reporting
requirements, except for Mr. Gilgun who was late reporting one transaction.
- --------------------------------------------------------------------------------
EXPENSES OF SOLICITATION
- --------------------------------------------------------------------------------
The cost of soliciting proxies will be borne by the Company. The Company
will reimburse brokerage firms and other custodians, nominees and fiduciaries
for reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of the Company may solicit proxies
personally or by telegraph, telephone or other electronic means without
additional compensation. The Company has retained Georgeson Shareholder
Communications ("Georgeson") to assist in the solicitation of proxies by mail,
personally or by telephone or other means of communication, for a fee estimated
at $50,000 plus expenses. It is anticipated that approximately 25 persons will
be used by Georgeson in its solicitation efforts. Total expenditures for the
solicitation of proxies (including fees of attorneys, accountants, public
relations or financial advisors, solicitors, printing, transportation and other
costs incidental to the solicitation but excluding the amount normally expended
for a solicitation for an election of directors) are estimated to be $________,
and total cash expenditures to date have been approximately $25,000. Annex A
hereto sets forth certain information relating to the Company's directors and
executive officers who may be soliciting proxies on the Company's behalf.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The Company's 2002 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.
15
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STOCKHOLDER PROPOSALS
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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 May __, 2003. Any such
proposals shall be subject to the requirements of the proxy rules adopted under
the Exchange Act.
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
RHODA K. ASTONE
SECRETARY AND CLERK
Somerville, Massachusetts
August __, 2002
16
ANNEX A
INFORMATION CONCERNING THE DIRECTORS AND CERTAIN EXECUTIVE OFFICERS
OF THE COMPANY WHO MAY ALSO SOLICIT PROXIES
PARTICIPANTS IN THE COMPANY'S PROXY SOLICITATION
The following table sets forth certain information with respect to each
director and executive officer of the Company who may assist in soliciting
proxies from the Company's stockholders. The principal occupation or employment
of each such person and the name and principal business of any corporation or
organization in which such employment is carried on are set forth under the
caption "Proposal I - Election of Directors" in this Proxy Statement which also
contains additional biographical and other information concerning each such
person. Unless otherwise indicated below, the principal business address of each
such person is 399 Highland Avenue, Somerville, Massachusetts 02144.
NAME BUSINESS ADDRESS
---- ----------------
John D. Doherty *
Joseph R. Doherty *
Terence D. Kenney *
Gregory W. Boulos CB Richard Ellis/The Boulos Company
One Canal Plaza
Portland, Maine 04101
John F. Gilgun, Jr. John F. Gilgun Agency
11 Ledgewood Road
Woburn, Massachusetts 01801
Nancy D. Neri George L. Doherty Funeral Service, Inc.
855 Broadway
Somerville, Massachusetts 02144
John G. Quinn Quinn Printing Company, Inc.
165 Needham Street
Newton, Massachusetts 02464
Marat E. Santini Santini, Inc.
60 Dudley Street
Arlington, Massachusetts 02476
David W. Kearn *
Michael K. Devlin *
Paul S. Feeley *
William P. Morrissey *
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* Principal business address is Central Bancorp, Inc., 399 Highland Avenue
Somerville, MA 02144
A-1
BENEFICIAL OWNERSHIP OF THE COMPANY'S SECURITIES BY PARTICIPANTS AND ASSOCIATES
Information regarding the amount of each class of the Company's securities
beneficially owned by each Director and Named Executive Officer is set forth
under the caption "Security Ownership of Management' in this Proxy Statement.
Mr. Devlin does not currently own any securities of the Company. Information
regarding the security ownership of the Central Co-operative Bank Employee Stock
Ownership Plan ("ESOP") Trust which may be deemed an associate of its trustees,
Messrs. Kenney and Boulos, is set forth under "Principal Holders of Voting
Securities." The Grantor Trust for the Central Bancorp, Inc. Deferred
Compensation Plan for Non-Employee Directors (the "Deferred Compensation Plan
Trust") may also be deemed an associate of Messrs. Kenney and Boulos and Ms.
Neri who serve as its trustees. The Deferred Compensation Plan Trust owns 1,503
shares of the Common Stock. The address of the ESOP Trust and Deferred
Compensation Plan Trust are each 399 Highland Avenue, Somerville, MA 02114. None
of the Company, its directors or any executive officer named in this Annex owns
any shares of Common Stock of record but not beneficially, except to the extent
that the trustees of the ESOP and Deferred Compensation Plan Trust may be
considered the record holders of shares held by those trusts. Each director and
executive officer other than Mr. Devlin owns one share of preferred stock in the
Bank's subsidiary, Central Preferred Capital Corporation.
INFORMATION REGARDING TRANSACTIONS IN THE COMPANY'S SECURITIES BY PARTICIPANTS
The following table sets forth information with respect to all purchases
and sales of shares of the Company's Common Stock by directors and executive
officers during the past two years. No information is given with respect to
transfers by gift, allocations of shares to accounts in the ESOP or grants of
stock options under the Option Plan.
NUMBER OF SHARES
PURCHASED (SOLD) DATE
----------------- ----
John D. Doherty........................... 405 (1) 8/29/00
862 (1) 2/20/01
18,000 (2) 6/06/01
7,000 (2) 12/04/01
25,639 (2) 7/11/02
Joseph R. Doherty......................... 661 (1) 8/29/00
592 (1) 2/20/01
6,700 (1) 9/25/01
300 (1) 11/27/01
John F. Gilgun, Jr........................ 500 (1) 11/19/01
Marat E. Santini.......................... 13 (3) 11/17/00
12 (3) 2/15/01
12 (3) 5/18/01
9 (3) 8/17/01
10 (3) 11/16/01
8 (3) 2/15/02
8 (3) 5/17/02
<FN>
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(1) Open market transaction.
(2) Acquisition of shares upon exercise of stock options.
(3) Dividend reinvestment through Central Bancorp, Inc. Dividend
Reinvestment Plan
</FN>
A-2
CERTAIN ADDITIONAL INFORMATION REGARDING PARTICIPANTS
Other than as disclosed in this Annex or in the Proxy Statement, none of
the Company, any of its directors or any executive officers named in this Annex
owns any securities of the Company or any subsidiary thereof, beneficially or of
record, has purchased or sold any of such securities within the last two years,
or is or was within the past year a party to any contract, arrangement or
understanding with any person with respect to any such securities. Except as
disclosed in this Annex or in the Proxy Statement, to the knowledge of the
Company, none of the Company, its directors and executive officers named in this
Annex, has any substantial interest, direct or indirect, by security holdings or
otherwise, in any matter to be voted upon at the Annual Meeting.
Other than as disclosed in this Annex or in the Proxy Statement, to the
knowledge of the Company, none of the Company, its directors or executive
officers named in this Annex is, or has been within the past year, a party to
any contract, arrangement or understanding with any person with respect to any
class of securities of the Company, including, but not limited to, joint
ventures, loan or option arrangements, puts or calls, guarantees against loss or
guarantees of profit, division of losses or profits, or the giving or
withholding of proxies.
Other than as set forth in this Annex or in the Proxy Statement, to the
knowledge of the Company, none of the Company, its directors or executive
officers named in this Annex, or any of their associates, has had or will have a
direct or indirect material interest in any transactions or series of
transactions since the beginning of the Company's last fiscal year or any
currently proposed transactions, or series of similar transactions, to which the
Company or any of its subsidiaries was or is to be a party in which the amount
involved exceeds $60,000.
Other than as set forth in this Annex or in the Proxy Statement, to the
knowledge of the Company, none of the Company, its directors or executive
officers named in this Annex, or any of their associates, has any arrangements
or understandings with any person or persons with respect to any future
employment by the Company or its affiliates or with respect to any future
transactions to which the Company or any of its affiliates will or may be a
party.
A-3
[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
Mark box at right if you plan to attend the Annual Meeting.[ ] For All With- For All
Nominees hold Except
Mark box at right if an address change or comment has [ ] (01) Marat E. Santini [ ] [ ] [ ]
been noted on the reverse side of this card. (02) John F. Gilgun, Jr. [ ] [ ] [ ]
(03) John G. Quinn [ ] [ ] [ ]
CONTROL NUMBER:
RECORD DATE SHARES:
NOTE: IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A
PARTICULAR NOMINEE, MARK THE "FOR ALL EXCEPT" BOX AND
STRIKE A LINE THROUGH 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 August __, 2002, and the Company's Annual Report
to Stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE
LISTED NOMINEES.
|----------------------------
Please be sure to sign and date this Proxy | Date |
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| |
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Stockholder Sign here Co-owner sign here
DETACH CARD DETACH CARD
CENTRAL BANCORP, INC.
REVOCABLE PROXY
ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 30, 2002
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints John D. Doherty and Gregory W. Boulos, 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
_________________________, ____________________, __________, Massachusetts on
Monday, September 30, 2002, at __:__ _.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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