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)
- --------------------------------------------------------------------------------
(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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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
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[ ] 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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[Central Bancorp, Inc. Logo]
Central Bancorp, Inc.
399 Highland Avenue
Somerville, MA 02144
tel. 617.628.4000
www.centralbk.com
August 29, 2003
IMPORTANT ANNUAL MEETING
SEPTEMBER 30, 2003
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 2003 Annual Meeting of
Stockholders (the "Annual Meeting"), which will be held at the Somerville
Holiday Inn, 30 Washington Street, Somerville, Massachusetts, on Tuesday,
September 30, 2003 at 11:00 a.m., local time. Accompanying this letter are a
Notice of Annual Meeting and a Proxy Statement describing the business to be
transacted, as well as a copy of the Company's Annual Report. Please review
these materials carefully.
At the Annual Meeting, you will be asked to elect three 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 our independent auditors,
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 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 PROXY 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,
/s/John D. Doherty
John D. Doherty
Chairman, 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, 2003
Notice is hereby given that the 2003 Annual Meeting of Stockholders (the
"Annual Meeting") of Central Bancorp, Inc. (the "Company") will be held at the
Somerville Holiday Inn, 30 Washington Street, Somerville, Massachusetts on
Tuesday, September 30, 2003 at 11:00 a.m., local time.
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 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 22, 2003 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 card 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 PROXY CARD. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES 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
/s/Rhoda K. Astone
RHODA K. ASTONE
SECRETARY AND CLERK
Somerville, Massachusetts
August 29, 2003
CENTRAL BANCORP, INC.
399 HIGHLAND AVENUE
SOMERVILLE, MASSACHUSETTS 02144
(617) 628-4000
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 30, 2003
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GENERAL
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This Proxy Statement and the enclosed Proxy Card are furnished in
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 2003 Annual Meeting
of Stockholders (hereinafter called the "Annual Meeting") which will be held at
the Somerville Holiday Inn, 30 Washington Street, Somerville, Massachusetts, on
Tuesday, September 30, 2003 at 11:00 a.m., local time. The accompanying Notice
of Annual Meeting and this Proxy Statement are being first mailed to
stockholders on or about August 29, 2003.
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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 22, 2003 (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 1,663,133 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 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 the 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. 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/Clerk 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.
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 ESOP. 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, provided that in the absence of any voting
directions as to allocated stock, the Board of Directors of the Bank will direct
the ESOP Trustees as to the voting of all shares of stock in the ESOP. The
deadline for returning your voting instruction form to the ESOP trustees is
September 26, 2003.
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 withhold your vote or do not vote your shares at the Annual Meeting.
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 vote in favor of all nominees
except nominees you specify as to which you withhold your vote. 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"). The following table sets
forth certain information as to those persons who the Company believes were the
beneficial owners of more than five percent (5%) of the Company's outstanding
shares of Common Stock as of June 30, 2003.
PERCENT OF SHARES
NAME AND ADDRESS AMOUNT AND NATURE OF COMMON STOCK
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) OUTSTANDING (2)
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Central Co-operative Bank
Employee Stock Ownership Plan Trust
399 Highland Avenue
Somerville, Massachusetts 02144 256,079 (3) 15.40%
John D. Doherty
Joseph R. Doherty
Joseph R. Doherty Family Limited
Partnership, L.P.
399 Highland Avenue
Somerville, Massachusetts 02144 206,581 (4) 12.42
Jeffrey A. Miller
Eric D. Jacobs
121 North Wayne Avenue
Suite 103
Wayne, Pennsylvania 19807 163,500 (5) 9.83
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 (6) 9.70
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
Richard J. Fates
20 East Jefferson Avenue, Suite 22
Naperville, Illinois 60540
Richard Fates
95 Rock Maple Avenue
Hamilton, Massachusetts 01982 154,268 (7) 9.28
Mendon Capital Advisors Corp.
Anton Villars Schutz
1117 Cheese Factory Road
Honeyue Falls, New York 14472 113,100 (8) 6.80
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401 97,200 (9) 5.84
3
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(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 June 30, 2003. 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 June 30, 2003.
(3) Of the shares beneficially owned by the Central Co-operative Bank Employee
Stock Ownership Plan Trust ("ESOP"), 131,178 shares have been allocated to
participating employees over which shares Directors Boulos and Bulman, as
co-trustees of the ESOP (the "ESOP Trustees"), may be deemed to have shared
voting and sole investment power, and 124,901 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) Includes 13,837 shares of Common Stock allocated to the account of John D.
Doherty in the ESOP. John D. Doherty disclaims beneficial ownership of any
shares held by Joseph R. Doherty or the Joseph R. Doherty Family Limited
Partnership, L.P., and Joseph R. Doherty and the Joseph R. Doherty Family
Limited Partnership, L.P. disclaim beneficial ownership of any shares held
by John D. Doherty.
(5) According to their statement on Schedule 13D filed May 16, 2003, each of
the reporting persons shares voting and dispositive power over the listed
shares.
(6) According to their statement on Schedule 13G as amended filed January 22,
2002, each of the reporting persons shares voting and dispositve power over
the listed shares.
(7) According to Amendment No. 16 to their Schedule 13D, filed August 12, 2003,
includes 113,900 and 27,100 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 and Lashley are
the managing members and 600 and 500 shares beneficially owned by Messrs.
Lashley and Fates, respectively, in their individual capacities.
(8) According to their statement on Schedule 13G as amended filed May 15, 2003,
each of the reporting persons shares voting and dispositive power over the
listed shares.
(9) According to their statement on Schedule 13G as amended filed February 10,
2003, each of the reporting persons shares voting and dispositive power
over the listed shares.
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PROPOSAL I -- ELECTION OF DIRECTORS
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The Company's Board of Directors is currently composed of ten 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 Joseph R. Doherty, Richard J. Lashley and Edward F. Sweeney, Jr.
for election as directors, all to serve for three-year terms. Each of these
persons has consented to being named in this Proxy Statement and has indicated
that they will serve if elected. Director Richard J. Lashley was appointed a
director of the Company, and is being nominated for reelection as a director at
the Annual Meeting, pursuant to an Agreement entered into between the Company
and its affiliated persons and entities and PL Capital, LLC and its affiliated
persons and entities, pursuant to which the parties settled all outstanding
litigation between them.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
ELECTION OF JOSEPH R. DOHERTY, RICHARD J. LASHLEY AND EDWARD F. SWEENEY, JR. AS
DIRECTORS OF THE COMPANY.
Proxies solicited by the Board of Directors will be voted for the 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 Company and/or 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." Directors Joseph R. Doherty, Gregory W.
Boulos and John D. Doherty were appointed as directors of the Company in 1998 in
connection with the incorporation and organization of the Company. All other
directors were appointed to the Board of Directors of the Company in the years
indicated on the table below. One current director, Nancy D. Neri, has advised
the Company that she will not seek reelection as a director at the Annual
Meeting.
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YEAR FIRST
ELECTED OR
APPOINTED PRESENT
AGE AS OF DIRECTOR OF TERM TO
NAME RECORD DATE COMPANY OR BANK EXPIRE
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BOARD NOMINEES FOR TERMS TO EXPIRE IN 2006
Joseph R. Doherty 79 1958 2003
Richard J. Lashley 45 2003 2003
Edward F. Sweeney, Jr. 62 -- --
DIRECTORS CONTINUING IN OFFICE
Gregory W. Boulos 46 1998 2004
John D. Doherty 46 1983 2004
Albert J. Mercuri, Jr. 46 2003 2004
Paul E. Bulman 65 2002 2005
James F. Linnehan 82 2003 2005
Richard J. Fates 58 2002 2005
John J. Morrissey 36 2003 2005
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.
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. In March 1992, Mr. Doherty retired as Chief
Executive Officer of the Bank, although he remains Chairman of the Board of the
Bank. Mr. Doherty served as Chairman of the Board of the Company until November
2002. Mr. Doherty is the father of John D. Doherty, the Chairman of the Board,
President and Chief Executive Officer of the Company and the President and Chief
Executive Officer of the Bank.
RICHARD J. LASHLEY Is a Principal, and co-founder and co-owner, of PL
Capital, LLC, an investment management and investment banking firm located in
Naperville, Illinois, specializing in the banking and financial services
industries. He also is a General Partner, and co-founder and co-manager, of the
following investment partnerships: Financial Edge Fund, LP (since 1996),
Financial Edge-Strategic Fund, LP (since September 1998) and Goodbody/PL
Capital, LP (since December 2000). PL Capital, LLC, Financial Edge Fund, LP,
Financial Edge-Strategic Fund, LP and Goodbody/PL Capital, LP collectively
beneficially own in excess of 5% of the Company's outstanding Common Stock. See
"Principal Holders of Voting Securities." From 1998 to 2001, he served as
Managing Member of Bureaus/PL Portfolio LLC, Evanston, Illinois, an investor in
non-performing credit card receivables. He has been a member of the Board of
Directors of Franklin Bancorp, Inc., Southfield, Michigan, since 2001. He has
served since 1997 as an advisory board member of Clever Ideas-LeCard, Inc.,
Chicago, Illinois, a specialty finance and marketing company. He served as a
director of Haven Bancorp, Inc., Westbury, New York, from 2000 to 2001, and
Security Financial Bancorp, Inc., St. John, Indiana, from 2000 to 2003.
EDWARD F. SWEENEY, JR. has served since December 2002 as a Business
Consultant to the Malden Redevelopment Authority, an agency funded by the
Department of Housing and Urban Development to work with communities to promote
home ownership for low and moderate income families. Mr. Sweeney has also served
since March 1990 as a Commissioner, and is a former Chairman, of the Malden
Housing Authority, an agency that provides and manages housing for seniors and
disabled persons. From December 2000 to September 2002 he was a Field Auditor
with RGIS Inc. of Belmont, Massachusetts, where he conducts field audits of
retail clients and schedules assignments for staff auditors. From June to
December 2000, Mr. Sweeney served as a financial consultant to New England
Credit Union Services, Inc., in Southborough, Massachusetts, where he advised
credit
5
unions on financial, structural and strategic issues. From May 1998 to December
2000, he served as Senior Vice President of US Trust, a $6 billion multi-bank
holding company in Boston, Massachusetts. In this capacity, Mr. Sweeney reported
directly to the Chairman and Chief Executive Officer and was responsible for
instituting action plans for potential bank acquisitions, bank activity and
expanded banking power. From 1996 to May 1998, Mr. Sweeney served as Senior Vice
President of Somerset Savings Bank, Somerville, Massachusetts, a $500 million
bank, where he was responsible for review of loan administration, liaison with
the bank's outside counsel, external auditors and regulatory authorities. From
1994 to 1996, Mr. Sweeney was President, Chief Executive Officer and a Director
of Meetinghouse Co-Operative Bank in Dorchester, Massachusetts. From 1966 to
1994, Mr. Sweeney served with the Division of Banking for the Commonwealth of
Massachusetts. He was Senior Deputy Commissioner from 1992 to 1994, Deputy
Commissioner of Stock Institutions from 1989 to 1992 and Deputy Commissioner of
Thrift Institutions from 1978 to 1989.
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, Mercy Hospital 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 and the National Association of Realtors, and Director
of Wayneflete School.
JOHN D. DOHERTY is the Chairman, President and Chief Executive Officer of
the Company and President and Chief Executive Officer of 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 1992, Mr.
Doherty also became the Chief Executive Officer of the Bank. In November 2002,
Mr. Doherty became Chairman of the Board of the Company. 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 and a past president of the Economy
Club of Cambridge. Mr. Doherty is the son of Board member Joseph R. Doherty.
ALBERT J. MERCURI, JR. has served since 1987 as President and Chief
Executive Officer of Data Direct, Inc., a national distributor of digital media
publishing systems, optical media and copiers, located in Needham Heights,
Massachusetts. Mr. Mercuri is a 1979 graduate of Babson College where he earned
a Bachelor of Science degree in Marketing.
PAUL E. BULMAN has served as Chairman of the Policy Holders Protective
Board of the Savings Bank Life Insurance Company since 2000. From 1996 to 2000,
he was President and Chief Executive Officer of Haymarket Co-operative Bank. Mr.
Bulman had previously served as President, Chief Executive Officer and Director
of Hingham Institution for Savings which he had joined in 1988. Prior to that,
he had been Senior Vice President, Lending at New Bedford Institution for
Savings since 1987. Mr. Bulman served as Commissioner for Banks for the
Commonwealth of Massachusetts from 1983 to 1987 after serving as First Deputy
Commissioner and Clerk, Deputy Commissioner, Bank Supervisor and Director,
Commercial Bank Examinations. He joined the State Banking Department in 1960.
Mr. Bulman is a volunteer at the Scituate Senior Center.
JAMES F. LINNEHAN is an attorney and a Certified Public Accountant. Mr.
Linnehan has served as the Assistant Attorney General for the Commonwealth of
Massachusetts and as a Special Investigator for the Suffolk County District
Attorney's office. He is a life trustee of the Board of Trustees of Suffolk
University. He is a former director and chairman of the audit and trust
committees of Bay Bank Middlesex.
RICHARD J. FATES is a financial planner with Baystate Financial Services
and the principal and owner of Fates Financial Advisors. He was formerly a
Regional President at Bank of Boston. Mr. Fates is the Chairman of
6
the Board of Trustees of the Pomfret School and the Coordinator for the North
Shore United Way Campaign for the Hamilton-Wenham area.
JOHN J. MORRISSEY is a partner with the law firm of Quinn and Morris in
Boston, Massachusetts. Since 1999 he has served as a member of the Board of Bar
Overseers' Hearing Committee for Plymouth and Norfolk Counties in Massachusetts,
which investigates complaints of attorney misconduct and makes findings and
recommendations for discipline. Since 2000, Mr. Morrissey also has served as a
member of the Medical Malpractice Tribunal for Suffolk County, Massachusetts,
which hears medical malpractice claims to determine if the evidence is
sufficient for judicial inquiry without posting a statutory bond. John J.
Morrissey is the son of William P. Morrissey, the Company's and the Bank's
Senior Vice President for Corporate Affairs.
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, 61, joined the Bank in June 1993 and currently serves as
the Senior Vice President - Lending of the Company and the Bank. 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, 52, joined the Bank in February 2002 and serves as
Senior Vice President, Treasurer and Chief Financial Officer of the Company and
the Bank. He also serves as a director and treasurer of the Bank's subsidiaries,
Central Securities Corporation and Central Preferred Capital 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, 56, joined the Bank in July 1997 as Senior Vice President,
Treasurer and Chief Financial Officer and became Senior Vice President and Chief
Information Officer of the Company and the Bank 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 Executive Vice President, Chief Financial
Officer and Clerk of the Corporation at The Cooperative Bank of Concord, Acton,
Massachusetts.
WILLIAM P. MORRISSEY, 76, joined the Bank in November 1992 and serves as
Senior Vice President for Corporate Affairs representing the Company and 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.
- -------------------------------------------------------------------------------
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
- -------------------------------------------------------------------------------
The Board of Directors conducts its business through meetings of the Board
and through its committees. During the year ended March 31, 2003, the Board of
Directors of the Company held 12 meetings, and the Board of Directors of the
Bank met 13 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.
The Board of Directors' Nominating Committee nominates directors to be
voted on at the Annual Meeting and recommends nominees to fill any vacancies on
the Board of Directors. The Nominating Committee consists of Directors Paul E.
Bulman, James F. Linnehan and Gregory W. Boulos and met once during the year
ended March 31, 2003. The Company's Articles of Organization provide the
procedures for making nominations and state, among
7
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 Audit Committee meets monthly to review reports prepared by
the Company's accounting staff as well as by its internal auditing firm. In
addition, the Audit Committee engages the Company's independent auditors with
whom it meets to review the results of the Company's annual audit. The members
of the Audit Committee are Directors Gregory W. Boulos (Chairman), Paul E.
Bulman and Nancy D. Neri. 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 amended its
written charter in April 2003, a copy of which is included as Annex A to the
this Proxy Statement. The Audit Committee met 12 times during the year ended
March 31, 2003.
The Finance Committee of the Bank serves as a Compensation Committee for
the officers and directors of the Company and Bank and reviews various personnel
issues such as wage and salary programs and incentive compensation. The
directors who serve on the Audit Committee of the Company are the same as those
who serve on the Finance Committee of the Bank. During the year ended March 31,
2003, the Finance Committee of the Bank met three times in its capacity as a
Compensation Committee.
- -------------------------------------------------------------------------------
DIRECTOR COMPENSATION
- -------------------------------------------------------------------------------
Directors of the Company and the Bank are each paid a fee of $950 and $450,
respectively, per Board meeting attended. The Chairmen of the Audit 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 Audit and Security Committees each receive a fee of $350 per meeting
attended. The President does not receive any director's or committee fees.
Former Director Terence D. Kenney, who retired from the Board of Directors in
August 2003, receives an additional $567 per month as a consulting fee for
services rendered in connection with the Bank's Woburn branches. Bank Chairman
Joseph R. Doherty receives health and life insurance benefits under the Bank's
group plans.
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, 2003, 719,
155, 273 and 90 shares were credited to the accounts of Directors Boulos, Bulman
and Neri and former Director Garrett Goodbody, respectively, who were the only
directors participating in the Deferred Compensation Plan for Non-Employee
Directors.
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.
On July 31, 2002, the Bank and Mr. Doherty agreed to terminate his Consulting
Agreement. No amounts were paid to Mr. Doherty pursuant to this Consulting
Agreement during fiscal 2003. Mr. Doherty receives group health and life
insurance benefits from the Bank, which amounted to $3,865 and $1,147,
respectively, during the year ended March 31, 2003.
8
EXECUTIVE COMPENSATION AND OTHER BENEFITS
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 the four other most highly compensated executive
officers of the Company in fiscal year 2003 (the "Named Executive Officers").
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
--------------------------------------- ------------
SECURITIES
NAME AND FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS (1) COMPENSATION (2) OPTIONS COMPENSATION (3)
- ------------------ ---- ------ --------- ---------------- ------- ----------------
John D. Doherty 2003 $ 286,144 $ 66,214 $ -- -- $ 40,867
President and Chief 2002 272,160 -- -- -- 31,842
Executive Officer 2001 259,200 51,760 -- 12,573 32,401
Michael K. Devlin 2003 147,694 28,904 -- -- 1,267
Senior Vice President, 2002 11,346 -- -- -- --
Treasurer and Chief
Financial Officer
David W. Kearn 2003 140,365 27,469 -- -- 24,653
Senior Vice President/ 2002 133,505 -- -- -- 20,644
Lending 2001 127,148 20,343 -- 4,354 23,311
Paul S. Feeley 2003 130,797 25,597 -- -- 13,330
Senior Vice President/ 2002 124,405 -- -- -- 12,874
Chief Information Officer 2001 120,781 14,493 -- 2,757 15,299
William P. Morrissey 2003 131,496 25,734 -- -- 22,607
Senior Vice President for 2002 121,133 -- -- -- 19,359
Corporate Affairs 2001 115,365 13,843 -- 2,634 21,450
- ---------------------
(1) Reflects fiscal year for which bonus was earned.
(2) Does not include perquisites which totaled less than ten percent of
annual salary and bonus.
(3) For fiscal year 2003, consists of $5,083, $57, $3,509, $654 and $3,287,
respectively, in Company contributions to the defined contribution
retirement plan, the value of 1,176, 0, 644, 390 and 616 shares, based
on $29.40 per share (the last reported sale price of such shares on the
effective date of the allocation, October 31, 2002), allocated to the
ESOP accounts of Messrs. Doherty, Devlin, Kearn, Feeley and Morrissey,
respectively, and $1,210 in paid life insurance premiums for each Named
Executive Officer.
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
2003. No option grants were made to any of the Named Executive Officers in
fiscal year 2003.
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 25,639 $287,891 -- -- $ -- $ --
David W. Kearn -- -- 8,878 -- 112,376 --
Paul S. Feeley 2,500 33,788 3,122 -- 34,899 --
William P. Morrissey -- -- 5,370 -- 67,974 --
Michael K. Devlin -- -- -- -- -- --
- -----------------------
(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, 2003
($31.13 per share based on the closing sale price reported on the Nasdaq
National MarketSM) 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.
9
EMPLOYMENT 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 $298,296.
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 terminated without just cause. If the change in control
provisions had been triggered as of March 31, 2003, Mr. John D. Doherty would
have received up to approximately $1,028,000.
The Bank has entered into severance agreements (the "Severance Agreements")
with David W. Kearn, Senior Vice President/Lending, 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
10
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, 2003, Messrs. Kearn, Devlin,
Feeley and Morrissey would have received up to approximately $281,000, $295,000,
$262,000 and $263,000, 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 5,302 7,952 10,603 13,254 15,905 18,556
100,000 12,802 19,202 25,603 32,004 38,405 44,806
150,000 20,302 30,452 40,603 50,754 60,905 71,056
175,000 24,052 36,077 48,103 60,129 72,155 84,181
200,000 26,302 39,452 52,603 65,754 78,905 92,056
250,000 26,302 39,452 52,603 65,754 78,905 92,056
300,000 26,302 39,452 52,603 65,754 78,905 92,056
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 $190,000 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, 2003, Messrs. Doherty, Kearn, Devlin, Feeley and Morrissey
had approximately 22, nine, one, five and ten 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.
11
- -------------------------------------------------------------------------------
CERTAIN TRANSACTIONS
- -------------------------------------------------------------------------------
The Company engages in transactions with affiliates of the Company 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 $500,000 for a mortgage on a primary
residence, $150,000 loans for educational purposes and $35,000 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 of
the Company and Bank.
In August 2001, the Company agreed to lend the ESOP sufficient funds to
acquire up to an additional 5% of the outstanding Common Stock. In February
2003, the Company agreed to lend the ESOP up to approximately $3,200,000 to
purchase additional shares of the outstanding Common Stock. The ESOP's trustees
are Directors Boulos and Bulman. As of March 31, 2003, the Company had lent the
ESOP an aggregate of $3,795,000, of which $3,660,000 was outstanding at March
31, 2003. The ESOP loans bear interest at the prime rate.
Director John J. Morrissey is a Partner in the law firm of Quinn & Morris,
which the Company retained during the year ended March 31, 2003.
Pursuant to the Agreement entered into between the Company and its
affiliated persons and entities and PL Capital, LLC and its affiliated persons
and entities, pursuant to which the parties settled all outstanding litigation
between them, the Company made a payment of $400,000 in August 2003 to PL
Capital, LLC, of which Director Richard J. Lashley is a Managing Member and in
which he holds a 50% equity interest.
- -------------------------------------------------------------------------------
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 of the Bank, who are the same directors who comprise the Audit
Committee of the Company, which is composed entirely of independent directors.
This 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 an outside consultant, 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
12
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. This plan is reviewed and performance goals are evaluated
annually. 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 2003 focused
on return on average assets. 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 it should have the ability to compensate officers 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 2003.
Compensation of Chief Executive Officer. For fiscal year 2003, 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 for
fiscal 2003, the Chief Executive Officer received a cash bonus of $66,214.
MEMBERS OF THE FINANCE COMMITTEE
(as the Compensation Committee)
GREGORY W. BOULOS
PAUL E. BULMAN
NANCY D. NERI
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. The Company
and the Bank had no "interlocking" relationships that existed during the year
ended March 31, 2003 in which (i) any executive officer of the Company or 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 (other than the Bank and Company),
one of whose executive officers served on the Audit Committee of the Company or
the Finance Committee of the Bank, (ii) any executive officer of the Company or
the Bank served as a director of another entity, one of whose executive officers
served on the Audit Committee of the Company or the Finance Committee of the
Bank, or (iii) any executive officer of the Company or 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 (other than the Company and Bank), one of whose
executive officers served as a member of the Company or the Bank's Board of
Directors. No member of the Audit Committee of the Board of Directors of the
Company or Finance Committee of 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, 2003, (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 and directly or indirectly engaged in transactions
with the Company, the Bank, or any subsidiary involving more than the $60,000
during the fiscal year ended March 31, 2003.
13
- -------------------------------------------------------------------------------
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.
BENEFICIAL OWNERSHIP (1)
----------------------------------------------------
NUMBER PERCENTAGE OF
NAME OF SHARES SHARES OUTSTANDING(2)
- ------ -------------------- ---------------------
James F. Linnehan 70 *%
Richard J. Fates 500 *
Paul E. Bulman 40 (3)(4) *
Joseph R. Doherty 63,875 (5) 3.84
Nancy D. Neri 200 (3) *
Gregory W. Boulos 5,500 (3)(4) *
Albert J. Mercuri, Jr. 200 *
Edward F. Sweeney, Jr. -- (6) --
John D. Doherty 142,706 (7) 8.58
Richard J. Lashley 153,768 (8) 9.25
John J. Morrissey 60 *
Michael K. Devlin -- --
David W. Kearn 15,350 (9) *
Paul S. Feeley 5,500 (10) *
William P. Morrissey 11,778 (11) *
All directors, nominees and executive
officers as a group (15 persons) 399,547 (12) 23.78
- -----------
(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) Excludes shares credited to their accounts in the Deferred Compensation
Plan for Non-Employee Directors.
(4) Does not include 256,079 shares held by the ESOP, over which shares the
ESOP Trustees, Directors Boulos and Bulman, may be deemed to have shared or
sole voting and/or investment power.
(5) Shares held by the Joseph R. Doherty Family Limited Partnership, L.P. of
which he is the sole general partner.
(6) In accordance with the Company's Bylaws, Mr. Sweeney has advised the
Company that he will acquire Common Stock with a market value of not less
than $1,000 prior to becoming a director.
(7) Includes 13,837 shares of Common Stock allocated to his account in the
ESOP.
(8) Consists of 600 shares as to which Mr. Lashley has sole voting and
dispositive power and 153,168 shares as to which Mr. Lashley shares voting
and dispositive power.
(9) Includes 6,472 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.
(10) Includes 2,378 shares allocated to his account in the ESOP and 3,122 shares
which he has the right to acquire pursuant to options exercisable within 60
days of the Record Date.
(11) Includes 6,408 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.
(12) Includes 17,370 shares of Common Stock which may be acquired pursuant to
stock options exercisable within 60 days of the Record Date, 29,095 shares
allocated to the ESOP accounts of executive officers and 2,741 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.
* Represents less than 1% of the Company's outstanding Common Stock.
14
- -------------------------------------------------------------------------------
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, 1998 through March 31,
2003 compared with the cumulative total return of (i) an index of Nasdaq 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, 1998, 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, 1998 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 the Bank.
After January 8, 1999, information is for the Common Stock of the Company.
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 S&P 500 Index. Line graph begins at March 31, 1998 and plots the
cumulative return at March 31, 1998, 1999, 2000, 2001 and 2002. The plot points
are provided below.]
3/31/98 3/31/99 3/31/00 3/31/01 3/31/02 3/31/03
------- ------- ------- ------- ------- -------
Central Bancorp, Inc. 100.0 54.6 49.4 61.2 96.0 109.2
S&P 500 100.0 118.7 140.5 109.9 110.3 83.0
NASDAQ Bank Index 100.0 81.5 75.0 89.2 109.5 102.7
15
- -------------------------------------------------------------------------------
INDEPENDENT AUDITORS
- -------------------------------------------------------------------------------
KPMG LLP, independent public accountants, served as the Company's
independent auditors for the 2003 fiscal year. A representative of KPMG LLP will
be present at the meeting to respond to stockholders' questions and will have
the opportunity to make a statement if he or she so desires.
The Audit Committee has not yet selected a firm to serve as independent
auditors for the Company for the 2004 fiscal year. The Audit Committee intends
to solicit proposals from at least three qualified independent audit firms,
including KPMG LLP.
For the years ended March 31, 2003 and 2002, the Company was billed by KPMG
LLP for fees aggregating $164,240 and $154,350, respectively. Such fees were
comprised of the following:
AUDIT FEES
The aggregate fees billed for the audit of the Company's annual financial
statements for the fiscal years ended March 31, 2003 and 2002 and for the
reviews of the financial statements included in the Company's Quarterly Reports
on Form 10-Q were $108,000 and $114,000, respectively.
AUDIT-RELATED FEES
The aggregate fees billed for Audit-Related services for the fiscal years
ended March 31, 2003 and 2002 were $900 and $0, respectively. This fee relates
to the filing of an amended Form 10-K.
TAX FEES
The aggregate fees billed for tax services for the fiscal years ended March
31, 2003 and 2002 were $55,340 and $36,150, respectively. For fiscal year ended
March 31, 2002, these fees related solely to the preparation of tax returns, and
for fiscal year ended March 31, 2003, $41,275 was paid for the preparation of
tax returns, $9,065 for tax consulting and $5,000 for tax planning services.
ALL OTHER FEES
The aggregate fees for services not included above were $0 and $4,200,
respectively, for the fiscal years ended March 31, 2003 and 2002. This fee for
fiscal year 2002 related to testing performed in connection with a change in
data processing systems.
- -------------------------------------------------------------------------------
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
16
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, 2003, for filing with the Securities and
Exchange Commission.
AUDIT COMMITTEE
GREGORY W. BOULOS
PAUL E. BULMAN
NANCY D. NERI
- -------------------------------------------------------------------------------
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, 2003 all Reporting
Persons have complied with these reporting requirements, except that Directors
Neri and Boulos each filed two late reports on Form 4 with respect to three
transactions, one transaction of which was related to the purchase of shares in
connection with the Deferred Compensation Plan for Non-Employee Directors, and
Director Bulman and former Director Goodbody each filed one late report on Form
4 with respect to 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, facsimile or overnight courier without
additional compensation. The Company has retained Georgeson Shareholder
Communications ("Georgeson") to assist in the solicitation of proxies, for which
they will receive a fee of $15,000, plus expenses.
- -------------------------------------------------------------------------------
OTHER MATTERS
- -------------------------------------------------------------------------------
OTHER BUSINESS
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 as determined by a majority of the Board of Directors.
BYLAW AMENDMENTS
On July 24, 2003, the Board of Directors adopted an amendment to Section 3
of Article III of the Company's Bylaws to add additional qualifications for
directors of the Company. As amended, Section 3 of Article III provided that in
addition to the previously existing qualifications, no person would be permitted
to serve as a director of the Company if the Board of Directors determined in
good faith that within the three-year period preceding the date on which such a
person would begin service as a director such person: (i) has engaged in covert
group activity with regard to the stock of the Company; (ii) has not acted
forthrightly concerning inquiry of the Board of Directors or a committee thereof
concerning activity in the Company's shares; (iii) has failed to cooperate with
such Board of Directors or committee investigation; (iv) has sought to preclude
or inhibit Board of Directors or committee inquiry into the identities and
activities of persons purchasing or selling the Company's stock; or (v) has
17
been nominated for election as a director by a person, entity or group that in
the good faith judgment of the Board of Directors has engaged in any of the
conduct set forth in (i), (ii), (iii) or (iv) above at any time within the
three-year period preceding the date on which such person would begin service as
a director. In addition, the Board of Directors amended Section 3 of Article III
to clarify that in the event a candidate nominated for election to the Board of
Directors were to receive sufficient votes at a meeting of stockholders to be
elected as a director but was not qualified to serve as a director pursuant to
Section 3 of Article III of the Bylaws, then such candidate would not serve as a
director, and the candidate receiving the next highest number of votes and
qualified to serve as a director of the Company pursuant to Section 3 of Article
III would be deemed elected as a director and would be seated on the Board of
Directors. Subsequently, effective August 4, 2003, the Board of Directors
repealed its July 24 Bylaw amendment so that Section 3 of Article III of the
Bylaws contained the same text as it did prior to the July 24 amendment.
- -------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
The Company's 2003 Annual Report to Stockholders, including financial
statements prepared in conformity with accounting principles generally accepted
in the United States of America 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 May 3, 2004. 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
/s/Rhoda K. Astone
RHODA K. ASTONE
SECRETARY AND CLERK
Somerville, Massachusetts
August 29, 2003
18
ANNEX A
CENTRAL BANCORP, INC.
CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
I. AUDIT COMMITTEE PURPOSE
The Audit Committee is appointed by the Board of Directors of the Company to
assist the Board of Directors 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 function.
o Provide an avenue of communication among the independent auditors,
management, the internal auditors 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 qualifications of the NASDAQ National
Market and such qualifications as may be required by the Securities and Exchange
Commission. 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 Chairman is not designated or
present, the members of the Committee may designate a Chairman 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, at least annually,
with the individual responsible for the internal auditing function and the
independent auditors to discuss any matters that the Committee, or either of
these groups, believe should be discussed.
A-1
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. Review and discuss with the independent auditor
all necessary accounting policies and practices to be used, all alternative
treatments of financial information within generally accepted accounting
principles that have been discussed with management and the risks of using
such alternative treatments, and other material written communications
between the independent auditor and management.
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 function 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 of its
Form 10-Q. Discuss any significant changes to the Company's accounting
principles and any items required to be communicated by the independent
auditors in accordance with Statement of Auditing Standards No. 61 (SAS
61). The Chairman 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.
The Audit Committee shall review the independence and performance of the
auditors and annually appoint the independent auditors or approve any
discharge of the 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 auditors' audit plan, including scope and general
audit approach.
9. Prior to releasing the year-end earnings and/or filing of the Annual Report
on Form 10-K, discuss the results of the audit with the independent
auditors.
A-2
Audit Committee Charter Page 3
- ----------------------------------------------------------------------
10. Consider the independent auditors' judgments about the quality and
appropriateness of the Company's accounting principles as applied in its
financial reporting.
11. Review, evaluate and approve any permissible non-audit services the
independent auditor may perform for the Company and disclose such approved
non-auditor services in periodic reports to stockholders.
12. As required by law, the Audit Committee shall assure the regular rotation
of the lead and concurring audit partner, and consider whether there should
be a regular rotation of the auditor itself.
13. Review and discuss the types of presentation and information to be included
in earnings press releases, and any additional financial information and
earning guidance generally provided to analysts and rating agencies.
14. Review and discuss the form and content of the certification documents for
the quarterly reports on Form 10-Q and the annual report on Form 10-K with
the independent auditor, the chief financial officer and the chief
executive officer.
15. Discuss any difficulties encountered by the independent auditor during the
course of the audit, any restrictions on their activities, any restrictions
on their access to information, and any significant disagreements with
management.
Internal Audit Function and Legal Compliance
- --------------------------------------------
16. Review the budget, plan, changes in plan, activities, organizational
structure, and qualifications of the internal audit function, as needed.
The internal audit function shall have a direct reporting responsibility to
the Board of Directors through the Audit Committee.
17. Review the appointment, performance and replacement of the internal audit
function.
18. Review significant reports prepared by the internal auditors together with
management's response and follow-up to these reports.
19. 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 Company's financial statements, compliance with
applicable laws and regulations and inquiries received from regulators or
governmental agencies.
Other Audit Committee Responsibilities
- --------------------------------------
20. 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.
21. 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.
22. Maintain minutes of meetings and periodically report to the Board of
Directors on significant results of the foregoing activities.
A-3
Audit Committee Charter Page 4
- ----------------------------------------------------------------------
23. Establish, review and update periodically a Code of Ethical Conduct and
ensure that management has established a system to enforce this Code.
24. Establish procedures for the receipt, retention, and treatment of
complaints received by the Company regarding accounting, internal
accounting controls or auditing matters and the confidential, anonymous
submission by employees regarding questionable accounting or auditing
matters.
A-4
/ [GEORGESON SHAREHOLDER LOGO] /
/ /
/ 17 State Street, 10th Floor /
/ New York, NY 10004 /
/ (866) 367-5518 (TOLL FREE) /
/ /
/Banks and Brokerage Firms please call collect:/
/ (212) 440-9800 /
[x] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE CENTRAL BANCORP, INC.
With- For All
1.The election as directors of all nominees For hold Except
ANNUAL MEETING OF STOCKHOLDERS listed below (except as noted to the contrary). --- --- ---
SEPTEMBER 30, 2003 / / / / / /
--- --- ---
The undersigned hereby appoints James F. Nominees:
Linnehan and Gregory W. Boulos, with full Joseph R. Doherty, Richard J. Lashley, and Edward F. Sweeney, Jr.
powers of substitution to act, as attorneys
and proxies for the undersigned, to vote all
shares of Common Stock of Central Bancorp, Inc. INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
which the undersigned is entitled to vote at the NOMINEE, MARK "FOR ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME
Annual Meeting of Stockholders, to be held at the IN THE SPACE PROVIDED BELOW.
Somerville Holiday Inn, 30 Washington Street,
Somerville, Massachusetts on Tuesday, September ------------------------------------------------------------------
30, 2003, at 11:00 a.m. and at any and all
adjournments thereof, as set forth hereon. Mark box at right if you plan to attend the ---
Annual Meeting. / /
THIS PROXY WILL BE VOTED AS DIRECTED, BUT ---
IF NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF
WILL BE VOTED FOR EACH OF THE NAMED NOMINEES. THE LISTED NOMINEES.
IF ANY OTHER BUSINESS IS PRESENTED AT SUCH
MEETING, INCLUDING MATTERS RELATING TO THE
CONDUCT OF THE MEETING, THIS PROXY WILL VOTED THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
BY THOSE NAMED IN THIS PROXY AS DETERMINED BY
A MAJORITY OF THE BOARD OF DIRECTORS. AT THE Please be sure to sign and date this Proxy.
PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF
NO OTHER BUSINESS TO BE PRESENTED AT THE Should the undersigned be present and elect to vote at
MEETING. 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.
Please be sure to sign and date --------------
this Proxy in the box below. /Date / The undersigned acknowledges receipt from the Company
/ / prior to the execution of this Proxy of Notice of the
- ----------------------------------------------------- Annual Meeting, a Proxy Statement dated August 29, 2003,
/ / and the Company's 2003 Annual Report to Stockholders.
/ /
/ /
/ /
Stockholder sign above--Co-holder (if any) sign above
- --------------------------------------------------------------------------------
DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED
CENTRAL BANCORP, INC.
- --------------------------------------------------------------------------------
/ 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. /
/ /
/ PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED /
/POSTAGE-PREPAID ENVELOPE. /
- --------------------------------------------------------------------------------
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
- ------------------------------------
- ------------------------------------
- ------------------------------------
[CENTRAL BANCORP LETTERHEAD]
TO: PARTICPANTS IN THE CENTRAL CO-OPERATIVE BANK EMPLOYEE STOCK OWNERSHIP PLAN
Under the terms of the Central Co-operative Bank Employee Stock Ownership
Plan (the "ESOP"), you have the right to direct the ESOP Trustees as to the
manner in which you wish to vote the shares of common stock of Central Bancorp,
Inc. ("Central") allocated to your ESOP account at Central's 2003 Annual Meeting
of Stockholders. Under the terms of the ESOP and subject to the Trustee's
responsibilities under applicable law, the ESOP Trustees will vote your
allocated shares in accordance with your instructions. Allocated shares for
which timely voting instructions are not received will be voted by the Trustees
in the same proportion as participants vote allocated stock, provided that in
the absence of any voting directions as to allocated stock, the Board of
Directors of Central Co-Operative Bank will direct the ESOP Trustees as to the
voting of all shares of stock in the ESOP. Therefore, we encourage you to
exercise your right to direct the voting of your allocated shares at the
meeting.
HOW TO EXERCISE YOUR RIGHTS. You may direct the voting of shares allocated
to your account by completing, signing and returning the enclosed ESOP
Participant Direction Form. Proxy cards supplied with proxy materials are not
appropriate for the purpose of instructing the ESOP Trustees in connection with
the voting of shares allocated to your ESOP account.
CONFIDENTIALITY OF VOTING INSTRUCTIONS. Your instructions to the ESOP
Trustees will be completely confidential. Central has engaged an independent
firm, Registrar and Transfer Company ("RTCO"), which also serves as Central's
transfer agent, to serve as the ESOP's confidential voting agent. ESOP
Participant Direction Forms are to be sent (using the postage-paid envelopes
provided therewith) to RTCO and should not be sent to Central or its proxy
solicitor, Georgeson Shareholder Communications, Inc.
RTCO will count your votes and report the aggregate totals of all voting
instructions to the ESOP Trustees. RTCO has agreed to maintain your voting
instructions in strict confidence. In no event, will your voting instructions be
reported to Central.
DELIVERY OF PROXY MATERIALS. A copy of Central's proxy statement and a copy
of its 2003 Annual Report to Stockholders are enclosed for your review. As noted
in the proxy statement, the 2003 Annual Meeting is scheduled for September 30,
2003, at 11:00 a.m., in Somerville, Massachusetts.
Enclosed is a ESOP Participant Direction Form which you should use if you
wish to direct the ESOP Trustees to vote shares allocated to your account in
connection with the slate of directors endorsed by the Board of Directors of
Central. PLEASE NOTE THAT TO DIRECT THE ESOP TRUSTEES TO VOTE WITH RESPECT TO
ANY OF THE FOREGOING, YOU MUST
SPECIFICALLY MARK YOUR INSTRUCTIONS ON THE ESOP PARTICIPANT DIRECTION FORM.
ITEMS LEFT BLANK WILL NOT BE CONSIDERED INSTRUCTIONS TO THE ESOP TRUSTEES.
Voting instructions for shares allocated to your ESOP account must be
received by RTCO by 5:00 p.m. Eastern time on September 26, 2003 on the ESOP
Participant Direction Forms provided by the ESOP Trustees for that purpose.
AGAIN, ALL ESOP PARTICIPANT DIRECTION FORMS SHOULD BE FORWARDED TO RTCO AND
SHOULD NOT BE MAILED TO CENTRAL OR ITS PROXY SOLICITOR, GEORGESON SHAREHOLDER
COMMUNICATIONS.
In order to make an informed judgment concerning how to instruct the ESOP
Trustees to vote your allocated shares, YOU SHOULD READ ALL PROXY MATERIALS
CAREFULLY AND THOROUGHLY. The ESOP Trustees will not recommend how you should
complete your ESOP Participant Direction Form.
WHEN TO SUBMIT YOUR ESOP PARTICIPANT DIRECTION FORM. You may submit your
voting instructions to the confidential voting agent at any time, except that in
order to be effective your instructions MUST BE RECEIVED by not later than 5:00
p.m. Eastern time on September 26, 2003. If RTCO receives more than one ESOP
Participant Direction Form from you, the Form bearing the LATEST date will be
considered to have cancelled all Forms bearing an earlier date. If more than one
ESOP Participant Direction Form is received from you as of the same date, RTCO
will consider the Form bearing the latest postmark as controlling. You may
request additional Forms at any time by contacting Michael K. Devlin at (617)
629-4244.
If you have any questions regarding the procedures for instructing the ESOP
Trustees, please call (617) 629-4244.
Gregory W. Boulos
Paul E. Bulman
ESOP Trustees
August 29, 2003
[x] PLEASE MARK VOTES REVOCABLE PARTICIPANT DIRECTION FORM
AS IN THIS EXAMPLE CENTRAL BANCORP, INC.
With- For All
1.The election as directors of all nominees For hold Except
ANNUAL MEETING OF STOCKHOLDERS listed below (except as noted to the contrary). --- --- ---
SEPTEMBER 30, 2003 / / / / / /
--- --- ---
CENTRAL CO-OPERATIVE BANK E Nominees:
EMPLOYEE STOCK OWNERSHIP PLAN S Joseph R. Doherty, Richard J. Lashley, and Edward F. Sweeney, Jr.
REVOCABLE ESOP PARTICIPANT DIRECTION FORM O
P
The undersigned hereby instructs the ESOP INSTRUCTION: IF YOU DO NOT WISH YOUR SHARES VOTED "FOR"
Trustee(s) (Gregory W. Boulos and Paul E. A PARTICULAR NOMINEE, MARK THE "FOR ALL EXCEPT" BOX AND
Bulman), or their successors, to vote, WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
either by ballot or by proxy, all shares of YOUR SHARES WILL BE VOTED FOR THE REMAINING NOMINEE(S).
common stock of Central Bancorp, Inc. (the
"Company") which are allocated to the account(s) ------------------------------------------------------------------
of the undersigned pursuant to the Central Co-
Operative Bank Employee Stock Ownership Plan
(the "ESOP") at the Annual Meeting of
Stockholders to be held at the THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF
Somerville Holiday Inn, 30 Washington Street, THE LISTED NOMINEES.
Somerville, Massachusetts on Tuesday, September
30, 2003, at 11:00 a.m. and at any and all THIS DIRECTION FORM IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
adjournments thereof, as set forth hereon.
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS The undersigned acknowledges receipt from the Company
HEREON. prior to the execution of this form of Notice of the
Meeting, a Proxy Statement dated August 29, 2003,
and the Company's 2003 Annual Report to Stockholders.
In order to be effective, voting instructions must be received
by Registrar and Transfer Company, the confidential voting agent,
no later than September 26, 2003. You must specifically mark
your instructions on this form. Items left blank will not be
considered instructions to the ESOP Trustee(s).
THE ESOP TRUSTEE(S) WILL VOTE AS DIRECTED HEREIN. THIS REVOCABLE
ESOP PARTICIPANT DIRECTION FORM CONFERS DISCRETIONARY AUTHORITY TO
VOTE ON ANY OTHER BUSINESS PRESENTED AT THE MEETING. IF ANY OTHER
BUSINESS IS PRESENTED AT THE MEETING, INCLUDING MATTERS RELATING
Please be sure to sign and date -------------- TO THE CONDUCT OF THE MEETING, THE ESOP TRUSTEE(S) WILL VOTE IN HIS
this Direction Form /Date / (THEIR) DISCRETION AND IN ACCORDANCE WITH THE APPLICABLE FIDUCIARY
/ / PRINCIPLES. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO
- ----------------------------------------------------- OTHER BUSINESS TO BE PRESENTED AT THE MEETING. IF NO INSTRUCTIONS
/ / ARE SPECIFIED, THIS DIRECTION FORM WILL HAVE NO FORCE OR EFFECT AND
/ / ALL SHARES ALLOCATED TO YOUR ACCOUNT(S) WILL BE VOTED BY THE ESOP
/ / TRUSTEE(S) IN ACCORDANCE WITH THE TERMS OF THE ESOP, SUBJECT TO THE
/ / ESOP TRUSTEE(S) RESPONSIBILITIES UNDER APPLICABLE LAW.
ESOP Participant sign here Co-Participant (if any) /
sign above.
- --------------------------------------------------------------------------------
DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED
CENTRAL BANCORP, INC.
- --------------------------------------------------------------------------------
/ PLEASE COMPLETE, DATE, SIGN AND MAIL /
/ THIS DIRECTION FORM PROMPTLY IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE. /
- --------------------------------------------------------------------------------