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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------------
FORM 10-K/A
(Amendment No. 1)
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File No. 0-25251
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CENTRAL BANCORP, INC.
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(Exact Name of Registrant as Specified in Its Charter)
MASSACHUSETTS 04-3447594
- ------------------------------------- ------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
399 HIGHLAND AVENUE, SOMERVILLE, MASSACHUSETTS 02144
- ---------------------------------------------- -------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (617) 628-4000
--------------
Securities registered pursuant to Section 12(b) of the Act: NONE
----
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $1.00 PER SHARE
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(Title of Class)
STOCK PURCHASE RIGHTS
---------------------
(Title of Class)
Indicate by check mark whether the registrant (l) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment of this Form 10-K. [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes No X
--- ---
The aggregate market value of voting stock held by nonaffiliates of the
registrant at March 31, 2004 was approximately $22.4 million based on the
closing sale price of the registrant's Common Stock as listed on the Nasdaq
National MarketSM as of September 30, 2003 ($34.73 per share). Solely for
purposes of this calculation, directors, executive officers and greater than 5%
stockholders are treated as affiliates.
At June 25, 2004, the registrant had 1,664,957 shares of its Common Stock,
$1.00 par value, outstanding.
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EXPLANATION FOR AMENDMENT:
The Annual Report on Form 10-K of Central Bancorp, Inc. (the "Company") for
the fiscal year ended March 31, 2004 (the "2004 Form 10-K") filed with the
Securities and Exchange Commission (the "Commission") on June 28, 2004 is being
amended hereby to include the items listed below:
ITEM DESCRIPTION
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Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
Item 13. Certain Relationships and Related Transactions
Item 14. Principal Accountant Fees and Services
Item 15. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
As originally filed, the Company's 2004 Form 10-K incorporated the
information required by Items 10, 11, 12, 13 and 14 of Form 10-K by reference to
the Company's Definitive Proxy Statement for its 2004 Annual Meeting of
Stockholders (the "Proxy Statement") as permitted by Instruction G.(3). Since
the Proxy Statement is not expected to be filed with the Commission within 120
days of the close of the Company's fiscal year ended March 31, 2004 as required
by Instruction G.(3), Items 10, 11, 12, 13 and 14 in Part III of the 2004 Form
10-K are hereby amended by deleting the texts thereof in their entirety and
substituting therefore the following text. In addition, the Company is
furnishing updated Exhibits 31.1, 31.2 and 32, which requires that the full text
of Item 15 be amended, pursuant to Exchange Act Rule 12b-15. Therefore, Item 15
in Part IV of the 2004 Form 10-K is also hereby amended by deleting the text
thereof in its entirety and substituting the following text.
2
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------------------------------
Set forth below is information about the directors, nominees for director
and executive officers and significant employees of the Company. The Board of
Directors is divided into three classes. Directors serve for three-year terms
with one class of directors standing for election each year. Executive officers
are elected annually by the Board of Directors. 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. Unless indicated otherwise, the
positions stated for each individual are positions held in the Company's
principal subsidiary, Central Co-operative Bank (the "Bank"), and the positions
stated are positions which are currently held.
Year First
Elected or
Appointed Present
Positions with Director of Term to
Name Age the Company Company or Bank Expire
- ---- --- -------------- --------------- -------
Joseph R. Doherty 80 Director of the Company and the Bank 1958 2006
Gregory W. Boulos 47 Director of the Company and the Bank 1998 2004
John D. Doherty 47 Chairman of the Board, President 1983 2004
and Chief Executive Officer of the
Company, the Bank, Central
Securities Corporation and Central
Preferred Capital Corporation
Paul E. Bulman 66 Director of the Company and the Bank 2002 2005
James F. Linnehan 83 Director of the Company and the Bank 2003 2005
Richard J. Fates 59 Director of the Company and the Bank 2002 2005
Albert J. Mercuri, Jr. 47 Director of the Company 2003 2004
Edward F. Sweeney, Jr. 63 Director of the Company and the Bank 2003 2006
Richard J. Lashley 46 Director of the Company and the Bank 2003 2006
John J. Morrissey 37 Director of the Company 2003 2005
David W. Kearn 62 Senior Vice President - Lending; -- --
Director of Central Securities
Corporation and Central Securities
Corporation II
Michael K. Devlin 53 Senior Vice President, -- --
Treasurer/Chief Financial
Officer of the Company
and the Bank; Treasurer and
Director of Central Securities
Corporation and Central Securities
Corporation II
Paul S. Feeley 57 Senior Vice President and -- --
Chief Information Officer of the
Company and the Bank
William P. Morrissey 76 Senior Vice President - Corporate -- --
Affairs of the Company and the Bank
3
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 Securities Corporation II. 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 Banks Employees 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 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 to the Supreme Judicial Court. Since 2000, Mr.
Morrissey 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. Mr. Morrissey also serves as a member of the Board of Governors of the
Massachusetts Academy of Trial Attorneys and as a Regional Delegate of the
Massachusetts Bar Association. John J. Morrissey is the son of William P.
Morrissey, the Company's and the Bank's Senior Vice President for Corporate
Affairs.
4
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, Goodbody/PL Capital, LLC 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 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, Security
Financial Bancorp, Inc., St. John, Indiana, from 2000 to 2003 and Franklin
Bancorp, Inc., Southfield, Michigan, from 2001 to 2004.
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 conducted 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 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.
DAVID W. KEARN, 62, 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
Securities Corporation II.
MICHAEL K. DEVLIN, 53, 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 Securities Corporation II. 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.
5
PAUL S. FEELEY, 57, 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 former
chairman and a current member 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.
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, 2004 all Reporting
Persons have complied with these reporting requirements, except that Directors
Lashley and Sweeney each filed one late report on Form 3.
AUDIT COMMITTEE
The Company has a separately designated Audit Committee established in
accordance with Section 3(a)(58)(A) of the Exchange Act. The Company's Audit
Committee meets quarterly to review reports prepared by the Company's internal
auditing firm. In addition, the Audit Committee engages the Company's
independent auditors with whom it meets to review the planning for and the
results of the annual audit of the Company's consolidated financial statements.
The members of the Audit Committee are Directors James F. Linnehan (Chairman),
Richard J. Fates and Albert J. Mercuri, Jr. 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 Board of Directors
has determined that one member of the Audit Committee, James F. Linnehan,
qualifies as an "audit committee financial expert" as defined in Section 401(h)
of Regulation S-K promulgated by the U.S. Securities and Exchange Commission.
Director Linnehan is "independent," as such term is defined in Item
7(d)(3)(iv)(A) of Schedule 14A under the Exchange Act.
NOMINATION PROCEDURES TO BE FOLLOWED BY STOCKHOLDERS
Any stockholder wishing to recommend a candidate for consideration by the
Nominating Committee as a possible director nominee for election at an upcoming
annual meeting of stockholders must provide written notice to the Nominating
Committee of such stockholder's recommendation of a director nominee no later
than March 31 preceding the annual meeting of stockholders. Notice should be
provided to: Secretary and Clerk, Central Bancorp, Inc., 399 Highland Avenue,
Somerville, Massachusetts 02144.
CODE OF ETHICS
The Company has adopted a Code of Ethics that applies to the Company's
Officers, directors and employees. The Code of Ethics was filed with the SEC on
April 13, 2004 in a Current Report on Form 8-K.
6
ITEM 11. EXECUTIVE COMPENSATION
- --------------------------------
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 2004 (the "Named Executive Officers").
Long-Term
Compensation
------------
Awards
Annual Compensation ------------
---------------------------- Securities
Name and Fiscal Other Annual Underlying All Other
Principal Position Year Salary Bonus (1) Compensation (2) Options Compensation (3)
- ------------------ ---- ------ --------- ---------------- ------- ----------------
John D. Doherty 2004 $ 298,102 $ -- $ -- -- $ 38,097
President and Chief 2003 286,144 66,214 -- -- 40,867
Executive Officer 2002 272,160 -- -- -- 31,842
Michael K. Devlin 2004 153,866 -- -- -- 14,757
Senior Vice President, 2003 147,694 28,904 -- -- 1,267
Treasurer and Chief 2002 11,346 -- -- -- --
Financial Officer
David W. Kearn 2004 146,231 -- -- -- 27,300
Senior Vice President/ 2003 140,365 27,469 -- -- 24,653
Lending 2002 133,505 -- -- -- 20,644
Paul S. Feeley 2004 136,263 -- -- -- 18,325
Senior Vice President/ 2003 130,797 25,597 -- -- 13,330
Chief Information Officer 2002 124,405 -- -- -- 12,874
William P. Morrissey 2004 153,543 -- -- -- 25,955
Senior Vice President for 2003 131,496 25,734 -- -- 22,607
Corporate Affairs 2002 121,133 -- -- -- 19,359
- --------------
(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 2004, consists of $5,000, $3,738, $4,429, $816 and
$4,416, respectively, in Company contributions to the defined
contribution retirement plan, the value of 796, 255, 555, 431 and 552
shares, based on $34.99 per share (the last reported sale price of such
shares on the effective date of the allocation, October 31, 2003),
allocated to the ESOP accounts of Messrs. Doherty, Devlin, Kearn,
Feeley and Morrissey, respectively, and $2,160, $2,079, $1,980, $1,854
and $780 in paid life insurance premiums for Messrs. Doherty, Devlin,
Kearn, Feeley and Morrissey, respectively.
7
OPTION EXERCISES AND FISCAL YEAR-END VALUES. The following table sets forth
information regarding the values of options held by the Named Executive Officers
at the end of fiscal year 2004. No option grants were made to any of the Named
Executive Officers in fiscal year 2004, and no Named Executive Officer exercised
options during fiscal year 2004.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END (1)
--------------------------- ------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
John D. Doherty -- -- $ -- $ --
David W. Kearn 8,878 -- 173,368 --
Paul S. Feeley 3,122 -- 56,347 --
William P. Morrissey 5,370 -- 104,866 --
Michael K. Devlin -- -- -- --
- --------
(1) Value is based on the difference between the aggregate market value of
shares underlying the unexercised in-the-money options at March 31,
2004 ($38.00 per share based on the closing sale price reported on the
Nasdaq National Market SM) and the aggregate exercise price of these
options. Options are considered in-the-money if the value of the
underlying securities exceeds the exercise price of the options.
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 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 $298,102.
The Employment Agreement also provides for annual salary review by the Board of
Directors, as well as inclusion of 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 John D. Doherty without just cause, he is entitled to a
continuation of his salary for the remaining term of the Employment Agreement.
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, 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 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 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
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 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 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 John D. Doherty and the Bank, as to the
terms or interpretation of the Employment Agreement, John D. Doherty will be
reimbursed for all reasonable expenses
8
arising from such dispute. Payments made under these "change in control"
provisions are in lieu of any rights to which 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, 2004, John D. Doherty
would have received up to approximately $1,046,000.
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 for an
additional one-year period beyond the then-effective expiration date, unless
either the Bank or Messrs. Kearn, Devlin, Feeley or Morrissey gives written
notice that the Severance Agreement will not be extended further. The Severance
Agreements provide that in the event of their involuntary termination of
employment in connection with, or within one year after, any change in control
of the Company or the Bank, Messrs. Kearn, Devlin, Feeley and Morrissey will be
paid within 10 days of such termination an amount equal to two times their
annual base salary at the rate just prior to the change in control provided,
however, the amount received shall in no event exceed the difference between (i)
2.99 times their "base amount," as defined in Section 280G(b)(3) of the Internal
Revenue Code, and (ii) the sum of any other parachute payments, as defined under
Section 280G(b)(2) of the Internal Revenue Code, that they receive on account of
the change in control. "Control" generally refers to the acquisition, by any
person or entity, of the ownership, holding, or power to vote more than 25% of
the Company's or the Bank's voting stock, the control of the election of a
majority of the Company's or the Bank's directors, or the exercise of a
controlling influence over the management or policies of the Company or the
Bank. In addition, a change in control occurs when, during any consecutive
two-year period, directors of the Company or the Bank at the beginning of such
period cease to constitute a majority of the Board of Directors of the Company
or the Bank, unless the election of replacement directors was approved by a
two-thirds vote of the initial directors then in office. The Severance
Agreements also provide for a similar lump sum payment in the event of Messrs.
Kearn's, Devlin's, Feeley's or Morrissey's voluntary termination of employment
within one year following a change in control, upon the occurrence, or within 90
days thereafter, of certain specified events following a change in control,
which have not been consented to in writing by Messrs. Kearn, Devlin, Feeley or
Morrissey, including (i) the requirement that they perform their principal
executive functions more than 35 miles away from their primary office, (ii) a
reduction in the their base compensation as in effect prior to the change in
control, (iii) the failure of the Company or the Bank to provide them with
compensation and benefits substantially similar to those provided to them at the
time of the change in control under any employee benefit plans in which they
become a participant, (iv) the assignment to them of material duties and
responsibilities other than those normally associated with their position with
the Bank, and (v) a material reduction in their authority and responsibility. In
the event that a dispute arises between Messrs. Kearn, Devlin, Feeley or
Morrissey and the Bank, as to the terms or interpretation of the Severance
Agreements, they will be reimbursed for all reasonable expenses arising from
such dispute. If the change in control provisions had been triggered as of March
31, 2004, Messrs. Kearn, Devlin, Feeley and Morrissey would have received up to
approximately $292,000, $308,000, $273,000 and $307,000, respectively.
9
PENSION PLAN. The following table illustrates the maximum estimated annual
benefits payable upon retirement pursuant to the Bank's defined benefit pension
plan based upon the pension plan formula for specified final average earnings
and specified years of service.
Final Years of Service
Average ---------------------------------------------------------------------------------------------------
Earnings 10 15 20 25 30 35
-------- ---------------------------------------------------------------------------------------------------
$ 25,000 $ 2,500 $ 3,750 $ 5,000 $ 6,250 $ 7,500 $ 8,750
50,000 5,330 7,996 10,661 13,326 15,991 18,656
100,000 12,830 19,246 25,661 32,076 38,491 44,906
150,000 20,330 30,496 40,661 50,826 60,991 71,156
175,000 24,080 36,121 48,161 60,201 72,241 84,281
200,000 27,830 41,746 55,661 69,576 83,491 97,406
250,000 28,080 42,121 56,161 70,201 84,241 98,282
300,000 28,080 42,121 56,161 70,201 84,241 98,282
Benefits are hypothetical amounts only. Currently, the maximum annual
benefit payable under the pension plan is $165,000. 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 $201,667 are not covered under the
pension plan for post-1993 accruals. "Final average earnings," which are based
upon a participant's highest three consecutive years of compensation, consist of
compensation that would appear under the "Salary" and "Bonus" columns of the
Summary Compensation Table. 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, 2004, Messrs. Doherty, Kearn, Devlin, Feeley and Morrissey
had approximately 23, 11, two, six and 11 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.
DIRECTOR COMPENSATION
Directors of the Company and the Bank are each paid a fee of $950 and $450,
respectively, per Board meeting attended. The Chairman of the Company's Audit
Committee and the Bank's Finance and Security Committees each are paid a fee of
$660 for each meeting of the respective committee which they attend in their
capacities as chairman. Members of the Audit, Finance 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 $567 per month as a
consulting fee for services rendered in connection with the Bank's Woburn
branches. Bank Chairman Joseph R. Doherty receives group health and life
insurance benefits under the Bank's group plans. Premiums paid by the Bank on
behalf of Joseph R. Doherty amounted to $4,240 during the year ended March 31,
2004.
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 Company's Board of Directors. During the year ended March 31,
2004, 904, 459, 87, 52 and 322 shares were credited to the accounts of Directors
Boulos, Bulman, Mercuri and Morrissey and former Director Nancy Neri,
respectively, who were the only directors participating in the Deferred
Compensation Plan for Non-Employee Directors.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL. For fiscal year 2004, the function of administering the Company's
executive compensation policies was performed by the Finance Committee (the
"Committee") of the Board of Directors of the Bank, 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 for overseeing all aspects of the Company's executive
compensation program, including employee and executive benefit plans.
10
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. In April 2004, the Company's Board of
Directors established a Compensation Committee composed entirely of independent
directors to administer the Company's executive compensation policies.
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 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. The Bank has 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 established performance goals have been satisfied.
Performance goals for fiscal 2004 were based solely 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 2004.
Compensation of Chief Executive Officer. For fiscal year 2004, the
Committee determined to increase the Chief Executive Officer's base salary by
approximately 3.5% after considering a variety of factors, including the salary
ranges previously established, the relative positions of the Chief Executive
Officer and other executive officers within those ranges and an analysis of
salaries being paid by Northeast commercial banks and savings institutions in
the asset range of $250 million to $500 million. Based on the Bank's performance
relative to the targets established under the Management Incentive Plan, the
Chief Executive Officer received no cash bonus in fiscal 2004.
MEMBERS OF THE FINANCE COMMITTEE
(as the Compensation Committee)
GREGORY W. BOULOS
PAUL E. BULMAN
EDWARD F. SWEENEY, JR.
11
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. The Company
and the Bank had no "interlocking" relationships that existed during the year
ended March 31, 2004 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, 2004, (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 $60,000 during
the fiscal year ended March 31, 2004.
12
STOCK PRICE PERFORMANCE GRAPH
The graph and table which follow show the cumulative total return on the
Common Stock of the Company from March 31, 1999 through March 31, 2004 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, 1999, 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, 1999 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.
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 all
companies whose equity securities are traded on the S&P 500 and the Nasdaq Banks
Index. Line graph plots the cumulative total return from March 31, 1999 to March
31, 2004. Plot points are provided below.]
- ------------------------------- ----------- ------------ ----------- ---------- ---------- ----------
3/31/99 3/31/00 3/31/01 3/31/02 3/31/03 3/31/04
- ------------------------------- ----------- ------------ ----------- ---------- ---------- ----------
Central Bancorp, Inc. $100.00 $ 90.49 $112.04 $175.78 $199.98 $247.20
- ------------------------------- ----------- ------------ ----------- ---------- ---------- ----------
S&P 500 100.00 117.94 92.37 92.59 69.67 94.15
- ------------------------------- ----------- ------------ ----------- ---------- ---------- ----------
NASDAQ Banks Index 100.00 89.68 113.14 143.80 137.14 189.93
- ------------------------------- ----------- ------------ ----------- ---------- ---------- ----------
13
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
- --------------------------------------------------------------------------------
(a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
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, 2004.
Percent of Shares
Name and Address Amount and Nature of Common Stock
of Beneficial Owner Beneficial Ownership (1) Outstanding (2)
- ------------------- ------------------------ ---------------
Central Co-operative Bank
Employee Stock Ownership Plan Trust
399 Highland Avenue
Somerville, Massachusetts 02144 239,706 (3) 14.40%
John D. Doherty
Joseph R. Doherty
Joseph R. Doherty Family Limited
Partnership, L.P.
399 Highland Avenue
Somerville, Massachusetts 02144 212,877 (4) 12.79
Jeffrey L. Gendell
Tontine Financial Partners, L.P.
Tontine Management, L.L.C.
200 Park Avenue, Suite 3910
New York, New York 10166 161,400 (5) 9.69
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 (6) 9.27
Mendon Capital Advisors Corp.
Anton Villars Schutz
150 Allens Creek Road
Rochester, New York 14618 126,100 (7) 7.57
- ------------
(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, 2004. 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, 2004.
(3) Of the shares beneficially owned by the Central Co-operative Bank Employee
Stock Ownership Plan Trust ("ESOP"), 127,425 shares have been allocated to
participating employees over which shares Directors Boulos and Bulman, as
co-trustees of the ESOP (the
14
"ESOP Trustees"), may be deemed to have shared voting and sole investment
power, and 112,281 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 14,633 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 13G as amended filed January 22,
2002, each of the reporting persons shares voting and dispositve power over
the listed shares.
(6) 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.
(7) According to their statement on Schedule 13G as amended filed February 17,
2004, each of the reporting persons shares voting and dispositive power
over the listed shares. Additionally, based on information filed in a
Schedule 13G with the U.S. Securities and Exchange Commission on February
17, 2004 by Burnham Financial Services Fund ("Burnham"), Burnham
beneficially owns 113,100 of the listed shares. Burnham is a registered
investment company that has delegated its sole right to vote and dispose of
such shares to Mendon Capital Advisors Corp. ("Mendon") in Mendon's
capacity as an investment sub-adviser.
(b) SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of June 30, 2004, 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 69,375 (5) 4.17
Gregory W. Boulos 294 (3)(4) *
Albert J. Mercuri, Jr. 200 *
Edward F. Sweeney, Jr. 100 *
John D. Doherty 143,502 (6) 8.62
Richard J. Lashley 153,768 (7) 9.24
John J. Morrissey 60 *
Michael K. Devlin 255 (8) *
David W. Kearn 15,905 (9) *
Paul S. Feeley 5,931 (10) *
William P. Morrissey 12,330 (11) *
All directors, nominees and executive
officers as a group (14 persons) 407,065 (12) 24.20
- -----------
(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 June 30,
2004 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 239,706 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) Includes 14,633 shares of Common Stock allocated to his account in the
ESOP.
(7) 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.
(8) Includes 255 shares allocated to his ESOP account.
(9) Includes 7,027 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 June 30, 2004.
(10) Includes 2,809 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 June 30, 2004.
15
(11) Includes 6,960 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 June 30, 2004.
(12) Includes 17,370 shares of Common Stock which may be acquired pursuant to
stock options exercisable within 60 days of June 30, 2004, 31,684 shares
allocated to the ESOP accounts of executive officers and 4,735 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.
(c) CHANGES IN CONTROL
Management of the Company knows of no arrangements, including any pledge by
any person of securities of the Company, the operation of which may at a
subsequent date result in a change in control of the Company.
(d) EQUITY COMPENSATION PLANS
The Company has adopted the 1999 Stock Option and Incentive Plan pursuant
to which equity may be awarded to participants. This plan has been approved by
stockholders.
The following table sets forth certain information with respect to the
Company's equity compensation plan as of March 31, 2004.
(a) (b) (c)
Number of securities
remaining available
Number of securities to be for future issuance
issued upon exercising Weighted-average exercise under equity compensation
upon exercise of outstanding price of outstanding plan (excluding securities
Plan Category options, warrants and rights options, warrants and rights reflected in column (a))
- ------------- ---------------------------- ---------------------------- --------------------------
Equity compensation plans 28,950 $18.581 33,299
approved by security holders
Equity compensation plans not
approved by security holders -- -- --
------ ------- ------
Total (1) 28,950 $18.581 33,299
====== ======= ======
- ---------
(1) The 1999 Stock Option and Incentive Plan provides for a proportionate
adjustment to the number of shares reserved thereunder in the event of
a stock split, stock dividend, reclassification or similar event.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED 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 October 2003, the ESOP obtained a loan from an outside lender and used
the proceeds from such loan to repay its indebtedness of $3,506,000 to the
Company. The ESOP's trustees are Directors Boulos and Bulman.
16
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.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
- ------------------------------------------------
INDEPENDENT AUDITORS
Vitale, Caturano & Company, P.C. ("Vitale"), independent public
accountants, served as the Company's independent auditors for the 2004 fiscal
year, and KPMG LLP served as the Company's independent auditors for the 2003
fiscal year.
For the years ended March 31, 2004 and 2003, the Company was billed by its
independent auditors for fees aggregating $134,439 and $164,240, 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, 2004 and 2003 and for the
reviews of the financial statements included in the Company's Quarterly Reports
on Form 10-Q were $95,500 and $108,000, respectively.
AUDIT-RELATED FEES
The aggregate fees billed for audit-related services for the fiscal years
ended March 31, 2004 and 2003 were $6,200 and $900, respectively. The fees for
fiscal year 2004 related to accounting research matters and the transition to
new independent auditors. The fee for fiscal year 2003 related 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, 2004 and 2003 were $32,739 and $55,340, respectively. For fiscal year 2004,
$25,000 was paid for the preparation of tax returns and estimated tax payments,
$4,738 for tax consulting and $3,000 for tax planning services. For fiscal year
2003, $41,275 was paid for the preparation of tax returns and estimated tax
payments, $9,065 for tax consulting and $5,000 for tax planning services.
ALL OTHER FEES
For fiscal years 2004 and 2003, there were no other fees paid by the
Company to its independent auditors besides fees for those services listed
above.
PRE-APPROVAL OF SERVICES BY THE INDEPENDENT AUDITOR
The Audit Committee does not have a policy for the pre-approval of
non-audit services to be provided by the Company's independent auditor. Any such
services would be considered on a case-by-case basis. All non-audit services
provided by the independent auditors in fiscal years 2004 and 2003 were approved
by the Audit Committee.
17
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
- --------------------------------------------------------------------------
(a) The following documents are filed as part of this Annual Report on Form
10-K/A.
(1) FINANCIAL STATEMENTS
--------------------
For the Financial Statements filed as part of this Annual
Report on Form 10-K/A, reference is made to "Item 8 --
Financial Statements and Supplementary Data."
(2) FINANCIAL STATEMENT SCHEDULES
-----------------------------
All financial statement schedules have been omitted as not
applicable or not required or because they are included in the
financial statements appearing at Item 8.
(3) EXHIBITS
--------
The exhibits required by Item 601 of Regulation S-K are either
filed as part of this Annual Report on Form 10-K/A or
incorporated by reference herein.
(b) REPORTS ON FORM 8-K. The Registrant filed the following Current Reports on
--------------------
Form 8-K during the fourth quarter of the fiscal year ended March 31, 2004:
DATE OF REPORT ITEM(S) REPORTED FINANCIAL STATEMENTS FILED
-------------- ---------------- --------------------------
January 23, 2004 7, 12 N/A
(c) EXHIBITS
--------
The following exhibits are filed as exhibits to this report.
EXHIBIT NO. DESCRIPTION
----------- -----------
3.1* Articles of Organization of Central Bancorp, Inc.
3.2** Amended Bylaws of Central Bancorp, Inc.
4.1** Shareholder Rights Agreement, dated as of October 11, 2001, by and between Central Bancorp, Inc.
and Registrar and Transfer Company, as Rights Agent, as amended and restated as of January 29,
2003, and as amended on February 11, 2003, May 22, 2003, July 24, 2003 and August 4, 2003
10.1* Employment Agreement between the Bank and John D. Doherty, dated October 24, 1986 +
10.2* First Amendment to Employment Agreement between the Bank and John D. Doherty, dated March 31, 1992 +
10.3* Second Amendment to Employment Agreement between the Bank and John D. Doherty, dated June 8, 1995 +
10.4* Third Amendment to the Employment Agreement between the Bank and John D. Doherty, dated January
8, 1999 +
10.5* Severance Agreement between the Bank and William P. Morrissey, dated December 14, 1994 +
10.6* Severance Agreement between the Bank and David W. Kearn, dated December 14, 1994 +
10.7* Severance Agreement between the Bank and Paul S. Feeley, dated May 14, 1998 +
10.8* Amendments to Severance Agreements between the Bank and Messrs. Feeley, Kearn and Morrissey, dated
January 8, 1999. +
18
10.09*** 1999 Stock Option and Incentive Plan +
10.10**** Deferred Compensation Plan for Non-Employee Directors +
10.11** Senior Management Incentive Plan, as amended +
10.12***** Severance Agreement between the Bank and Michael K. Devlin, dated February 25, 2002. +
14****** Code of Ethics
21** Subsidiaries of Registrant
23.1** Consent of Vitale, Caturano & Company, P.C.
23.2** Consent of KPMG LLP
31.1 Rule 13a-14(a) Certification of Chief Executive Officer
31.2 Rule 13a-14(a) Certification of Chief Financial Officer
32 Section 1350 Certifications
---------
+ Management contract or compensatory plan.
* Incorporated by reference to the Form 10-K for the fiscal year ended
March 31, 1999, filed with the SEC on June 28, 1999.
** Incorporated by reference to the Form 10-K for the fiscal year ended
March 31, 2004, filed with the SEC on June 28, 2004.
*** Incorporated by reference to the Registration Statement on Form S-8
(File No. 333-87005) filed on September 13, 1999.
**** Incorporated by reference to the Registration Statement on Form S-8
(File No. 333-49264) filed on November 3, 2000.
***** Incorporated by reference to the Annual Report on Form 10-K for the
fiscal year ended March 31, 2002 filed with the SEC on June 28, 2002.
****** Incorporated by reference to the Current Report on Form 8-K filed with
the SEC on April 13, 2004.
19
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
CENTRAL BANCORP, INC.
Date: July 23, 2004 By: /s/ John D. Doherty
-------------------------------------------
John D. Doherty
President and Chief Executive Officer
(Duly Authorized Representative)