DIME FINANCIAL CORPORATION
NOTICE OF 1998 ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF DIME FINANCIAL CORPORATION:
Notice is hereby given that the 1998 Annual Meeting of Shareholders of
Dime Financial Corporation will be held at the Yankee Silversmith Inn in
Wallingford, Connecticut, at 10:00 a.m., on Wednesday, April 29, 1998, for
the purpose of considering and voting upon the following matters:
1. The election of three directors for a three-year term who, with
the seven directors whose terms of office do not expire at this
meeting, will constitute the full Board of Directors;
2. The ratification of the appointment of KPMG Peat Marwick LLP as
independent public accountants for the fiscal year ending
December 31, 1998; and
3. Such other business as may properly be brought before the
meeting.
Only shareholders of record at the close of business on February 27,
1998, are entitled to notice of, and to vote at, the meeting.
BY THE ORDER OF THE BOARD
OF DIRECTORS
/s/ ELEANOR M. TOLLA
Eleanor M. Tolla
Secretary
March 20, 1998
WE URGE YOU TO SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS
POSSIBLE WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON. IF YOU DO
ATTEND THE MEETING, YOU MAY THEN REVOKE YOUR PROXY AND VOTE IN PERSON.
DIME FINANCIAL CORPORATION
95 Barnes Road
Wallingford, Connecticut 06492
(203) 269-8881
PROXY STATEMENT
1998 ANNUAL MEETING OF SHAREHOLDERS
April 29, 1998
INTRODUCTION
GENERAL
This Proxy Statement is being furnished to the shareholders of Dime
Financial Corporation (the "Company") in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the 1998 Annual
Meeting of Shareholders of the Company to be held at the Yankee Silversmith
Inn at 1033 N. Colony Road in Wallingford, Connecticut, at 10:00 a.m. on
Wednesday, April 29, 1998 (the "Meeting") and any adjournments thereof.
This Proxy Statement and the enclosed proxy card are first being given or
sent to shareholders on or about March 20, 1998.
The Company, a Connecticut corporation, operates principally as a bank
holding company for its wholly-owned subsidiary, The Dime Savings Bank of
Wallingford ("Dime").
RECORD DATE; VOTING RIGHTS
The Board of Directors of the Company has fixed the close of business
on February 27, 1998 as the record date (the "Record Date") for determining
holders of outstanding shares of Common Stock entitled to notice of and to
vote at the Meeting and any adjournments thereof. Only holders of shares of
Common Stock of record on the books of the Company at the close of business
on February 27, 1998 will be entitled to vote at the Meeting and any
adjournments thereof. As of the Record Date, there were 5,246,567 shares
of Common Stock issued and outstanding, each of which is entitled to one
vote on each proposal submitted to a vote at the Meeting. Pursuant to the
Company's Bylaws, the holders of a majority of the outstanding shares of
Common Stock present in person or by proxy will constitute a quorum for
transacting business at the Meeting.
USE OF PROXIES, REVOCATION AND SOLICITATION
Shares of Common Stock represented by properly executed proxies will,
unless such proxies have previously been revoked, be voted at the Meeting in
accordance with the instructions indicated on the proxy card. Proxies that
contain no instructions to the contrary will be voted FOR the election of
the three nominees for director named in Proposal 1, FOR the ratification of
the appointment of KPMG Peat Marwick LLP as independent public accountants
for the fiscal year ending December 31, 1998, and in the discretion of the
proxy holders as to other matters which may properly come before the Meeting
or any adjournments thereof. No proposal scheduled to be voted upon at the
Meeting will create appraisal or similar rights under Connecticut law.
In certain circumstances, a shareholder will be considered to be in
attendance at the Meeting for quorum purposes, but will not be deemed to
have voted on a particular proposal or proposals. Such circumstances will
exist where a shareholder is present in person or by proxy, but specifically
abstains from voting, or where shares are represented at the Meeting by a
proxy conferring authority to vote on a certain proposal or proposals but
not on others. If a proxy indicates that a shareholder abstains from voting
or that shares are not to be voted on a particular proposal, the shares will
not be counted as having been voted on that proposal, and those shares will
not be reflected in the final tally of votes cast with respect to that
proposal.
A shareholder who executes and returns the enclosed proxy card has the
power to revoke such proxy at any time before it is voted at the Meeting by
filing with the Company an instrument revoking it, by filing a duly executed
proxy bearing a later date or by attending the Meeting and voting by ballot
in person. Attendance at the Meeting will not in and of itself constitute
the revocation of a proxy. Any shareholder proxy filings before the Meeting
should be either mailed or hand-delivered to Eleanor M. Tolla, Corporate
Secretary, Dime Financial Corporation, 95 Barnes Road, Wallingford, CT
06492.
The Company will bear the costs of soliciting proxies from its
shareholders. In addition to this solicitation by mail, proxies may be
solicited by the directors, officers and employees of the Company or Dime by
personal interview, telephone or telegram for no compensation other than
their regular salaries. Arrangements will also be made with brokerage
houses and other custodians, nominees and fiduciaries for the forwarding of
solicitation material to the beneficial owners of Common Stock held of
record by such persons, and the Company may reimburse such custodians,
nominees and fiduciaries for reasonable out-of-pocket expenses incurred in
connection therewith. The Company also has engaged Regan and Associates,
Inc. to assist in the solicitation of proxies. The estimated cost of such
solicitation services to be provided by Regan and Associates, Inc. is
$1,600.
PRINCIPAL SHAREHOLDERS OF THE COMPANY
The following table shows, as of February 10, 1998, those persons
(including any "group" as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "1934 Act")), known to the
Company to be the beneficial owner of more than five percent of the Common
Stock. In preparing the following table, the Company has relied on
information supplied by such persons in their Schedules 13D and 13G, filed
with the Securities and Exchange Commission (the "Commission"), and
information furnished by such persons in response to a questionnaire
distributed to such persons by the Company.
Name and Address
of Beneficial Owner Shares Beneficially Owned Percent of Class
- ----------------------------------------------------------------------------
The Sachs Company 483,556 9.04%
1346 South Third Street
Louisville, Kentucky 40208
First Union Corporation 305,000 5.91%
One First Union Center
Charlotte, North Carolina 28288
FMR Corp. 499,400 9.67%
82 Devonshire Street
Boston, Massachusetts 02109
PROPOSAL 1
ELECTION OF A CLASS OF DIRECTORS
GENERAL
The Certificate of Incorporation and the Bylaws of the Company provide
for the election of directors by the shareholders. For this purpose, the
Board of Directors of the Company is divided into three classes as nearly
equal in number as possible. The terms of office of the members of one
class expire, and a successor class is to be elected, at each annual meeting
of shareholders. Vacant directorships may be filled, until the expiration
of the term of the vacated directorship, by the vote of a majority of the
directors then in office.
There are currently ten directors of the Company. The terms of three
directors expire at the Meeting. Each of the three incumbent directors, M.
Joseph Canavan, William J. Farrell and Ralph D. Lukens, is nominated to be
re-elected at the Meeting for a three-year term, expiring at the annual
meeting of shareholders in 2001. The terms of the remaining two classes of
directors expire at the annual meetings of shareholders in 1999 and 2000,
respectively, or when their successors are otherwise duly elected.
In the event that any nominee for election as a director at the
Meeting is unable or declines to serve, which the Board of Directors has no
reason to expect, the persons named in the proxy will vote for a substitute
nominee designated by the present Board of Directors.
Pursuant to the Company's Bylaws, nominations of persons for election
to the Board of Directors may be made at a meeting of shareholders by or at
the direction of the Board of Directors or by any shareholder of the Company
entitled to vote for the election of directors at a meeting who complies
with certain notice procedures set forth in the Bylaws. Such nominations,
other than those made by or at the direction of the Board of Directors, must
be made pursuant to timely notice in writing to the Secretary of the
Company. To be timely, a shareholder's notice must be delivered to or
mailed and received at the principal executive offices of the Company not
less than 60 days or more than 90 days prior to the date of a meeting;
provided, however, that in the event that less than 50 days notice or prior
public disclosure of the date of a meeting is given or made to shareholders,
notice by the shareholder to be timely must be mailed or given to the
Secretary of the Company not later than the close of business on the seventh
day following the day on which such notice of the date of a meeting was
mailed or such public disclosure was made. A shareholder's notice must set
forth (a) as to each person whom the shareholder proposes to nominate for
election or re-election as a director, (I) the name, age, business address
and residence address of such person, (ii) the principal occupation or
employment of such person, (iii) the class and number of shares of Common
Stock which are beneficially owned by such person and (iv) any other
information relating to such person that is required to be disclosed in a
solicitation of proxies for election of directors, or is otherwise required,
in each case pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended (including, without limitation, such person's written
consent to being named in the proxy statement of the Company as nominee and
to serving as a director if elected) and (b) as to the shareholder giving
the notice (i) the name and address, as they appear on the Company's books,
of such shareholder, and (ii) the class and number of shares of Common Stock
which are beneficially owned by such shareholder.
The following table sets forth certain information, as of February
10, 1998, regarding the nominees for re-election as directors at the Meeting
and directors whose terms of office will continue after the Meeting.
Except as indicated in the notes following the table below, the nominees and
the directors continuing in office had sole voting and investment powers
with respect to the shares of Common Stock listed as being beneficially
owned by them.
NOMINEES FOR ELECTION AT THE MEETING FOR A THREE-YEAR TERM EXPIRING IN 2001
Shares of
Positions Held With the Current Common Stock
Company and Dime; Has served Term Will Beneficially Percent of
Principal Occupation as a Expire At Owned as of Common Stock
During the Past Five Years Director the Annual February 10, Beneficially
Name and Directorships Age Since(1) Meeting in 1998 Owned(2)
- ----------------------------------------------------------------------------------------------------------------------------
M. Joseph Canavan Director of the Company and 55 1987 1998(3) 21,350(4)(5) .38%
Dime; President and Chief
Executive Officer of Vision
Medical Imaging, Inc.
William J. Farrell Director of the Company and 57 1988 1998(3) 26,810(4)(6)(7) .48%
Dime; President, William J.
Farrell, CPA/PFS, a Professional
Corp.; Officer and Director
of Connecticut Enterprises, Inc.;
Time Saver Business Systems,
Inc.; F.J. Properties, Inc.;
Consolidated International
Technologies LTD S.A.
Ralph D. Lukens Chairman of the Boards of 68 1986(8) 1998(3) 31,610(9)(10) .57%
Directors of the Company and
Dime; Retired Probate Court
Administrator for the State of
Connecticut.
DIRECTORS CONTINUING IN OFFICE
Rosalind F. Gallagher Director of the Company and 53 1984 1999 13,861(11) .25%
Dime; President and Co-Owner
of Gallagher Travel Shoppe;
Co-owner of The Card Gals, LLC
Theodore H. Horwitz Director of the Company and 56 1986(8) 1999 15,000(10) .27%
Dime; President and Chief
Executive Officer of Veterans
Memorial Medical Center
Gary O. Olson Director of the Company and 68 1977(8) 1999 22,198(10) .40%
Dime; Of Counsel to the law
firm of Luby, Olson, Mango,
Gaffney and DeFrances, Director
and President of Meriden
Cemetery Assoc.
Richard H. Dionne Director of the Company and 53 1995 2000 128,500(12) 2.31%
Dime; President and Chief
Executive Officer of the
Company and Dime; formerly
Chairman, President and Chief
Executive Officer of West Newton
Savings Bank, 1987 - 1994
Dr. Robert Nicoletti Director of the Company and 61 1985 2000 11,000(13)(14) .20%
Dime; Superintendent of
Schools, Shepaug Valley
Regional School District 12
(Retired)
Richard D. Stapleton Director of the Company and 61 1974(8) 2000 27,000(10)(15) .49%
Dime; Director, Executive
Vice President, Secretary and
General Counsel of The Lane
Construction Corporation;
Director, Secretary and Asst.
Treasurer of Lane Industries, Inc.;
Director, President and Treasurer,
The Ball and Socket
Manufacturing Company, Inc.
Fred A. Valenti Director of the Company and 67 1974 2000 40,280(13)(16) .73%
Dime; President of Valenti
Auto Sales, Inc. and Valenti
Leasing Co., Inc.; Vice President
of Valenti Motors, Village Ford,
Prestige Olds, and Bob Valenti
Chevy Olds, Inc.
All Directors and Executive Officers as a Group (13 persons) 443,884(17) 7.68%
- --------------------
<F1> Indicates first date of service on the Board of Directors of Dime,
City Savings Bank of Meriden, or the Company; unless otherwise noted,
all persons serving as directors became directors of the Company on
June 20, 1988 at the Company's organizational meeting. City Savings
Bank of Meriden was acquired by the Company on December 2, 1988 and
merged with and into Dime at the close of business on August 14, 1992.
<F2> For the purpose of calculating the percentage of Common Stock
beneficially owned for each of the persons and the group listed above,
the total number of shares of Common Stock outstanding include all
shares reserved for issuance upon the exercise of options granted to
such person or group pursuant to the stock option plans that may be
exercised within 60 days of the Record Date.
<F3> If re-elected, term will expire at the annual meeting of the Company's
shareholders in 2001.
<F4> Includes currently exercisable options to purchase 5,000 shares
pursuant to certain Non-Qualified Stock Option Agreements between Dime
and Mr. Canavan and Mr. Farrell and 10,000 shares granted pursuant to
the 1996 Stock Option Plan for Outside Directors. Also includes
options to purchase 2,000 shares granted to Mr. Canavan and Mr.
Farrell, respectively, under the 1986 Stock Option Plan for Outside
Directors.
<F5> Includes 4,000 shares owned jointly with spouse, but does not include
200 shares owned by spouse, as to which Mr. Canavan disclaims
beneficial ownership.
<F6> Includes 6,190 shares as to which Mr. Farrell shares voting and
investment powers; 2,900 shares owned by F.J. Properties, Inc., of
which Mr. Farrell is a partner.
<F7> Mr. Farrell is the brother-in-law of Jeanne Carmody, the wife of
Robert Carmody, Senior Vice President of Dime.
<F8> Mr. Stapleton and Judge Lukens became directors of the Company and
Dime upon consummation of the acquisition of City Savings Bank of
Meriden by the Company on December 2, 1988, Mr. Olson became a
director of the Company and Dime on December 31, 1989, and Mr. Horwitz
became a director of the Company and Dime on January 1, 1991.
<F9> Includes 7,386 shares owned jointly with spouse and options to
purchase 10,000 shares granted pursuant to the Non- Qualified Stock
Option Agreement with Mr. Lukens.
<F10> Includes options to purchase 2,000 shares granted pursuant to the 1986
Stock Option Plan for Outside Directors. Also includes options to
purchase 10,000 shares granted pursuant to the 1996 Stock Option Plan
for Outside Directors.
<F11> Includes 2,641 shares for which Mrs. Gallagher serves as custodian for
her children, but does not include 4,160 shares owned by her spouse as
to which shares Mrs. Gallagher disclaims beneficial ownership. Also
includes options to purchase 10,000 shares granted pursuant to the
1996 Stock Option Plan for Outside Directors.
<F12> Includes 10,000 shares owned jointly with spouse; also includes
currently exercisable options granted pursuant to Dime's 1986 and 1996
Stock Option and Incentive Plans to purchase 118,500 shares.
<F13> Includes currently exercisable options to purchase 10,000 shares
granted pursuant to the 1996 Stock Option Plan for Outside Directors.
<F14> Includes 1,000 shares owned jointly with spouse.
<F15> Does not include 2,000 shares owned by spouse and 2,000 shares owned
by minor children, as to which shares Mr. Stapleton disclaims
beneficial ownership.
<F16> Includes 10,000 shares owned jointly with spouse.
<F17> Includes 19,625 shares beneficially owned by Albert E. Fiacre, Jr.,
Executive Vice President and Chief Financial Officer, representing
.35% of Common Stock outstanding; such shares include 10,125 shares
subject to options granted pursuant to Dime's 1986 and 1996 Stock
Option and Incentive Plans. Also includes 45,375 shares beneficially
owned by Timothy R. Stanton; Senior Vice President - Retail, Bank
Operations and Administration and Chief Operating Officer,
representing .82% of Common Stock outstanding; such shares include
45,375 shares subject to options granted pursuant to Dime's 1986 and
1996 Stock Option and Incentive Plans. In addition, includes 23,625
shares beneficially owned by Frank P. LaMonaca, Senior Vice President
and Senior Loan and Senior Credit Officer, representing .43% of Common
Stock outstanding; such shares include 23,625 shares subject to
options granted pursuant to Dime's 1986 and 1996 Stock Option and
Incentive Plans.
---------------------
THE BOARD OF DIRECTORS AND ITS COMMITTEES
From January 1, 1997 through December 31, 1997, the Board of Directors
of the Company held eleven regular meetings and five special meetings. The
committees of the Board of Directors of the Company for 1997 were the Audit
Committee and the Personnel, Benefits, Nominating and Stock Option
Committee. The committees of the Board of Directors of Dime for 1997 were a
Loan Committee which reviews loan policies and makes recommendations for
Dime; a Finance and Investment Committee, which monitors Dime investments
and finance matters; a Planning Committee, which monitors compliance with
regulatory orders and addresses matters of strategic and long term planning;
and a Contributions Committee. Each incumbent director attended at least 75
percent of the combined total of the meetings (held during the period for
which he or she has been a director) of the Boards of Directors of the
Company and Dime, and any committee(s) of the Boards of the Company or Dime
of which he or she was a member.
The Audit Committee met four times during 1997. The Audit Committee
reviews the examination reports of state and federal regulatory agencies,
the quarterly reports of the internal auditors of the Company and Dime, and
the annual reports of the independent public accountants, and reviews the
adequacy of the accounting, financial and operating controls of the Company
and Dime. The members of the Audit Committee for 1997 were Theodore H.
Horwitz, Robert Nicoletti, and Gary O. Olson.
The Personnel, Benefits, Nominating and Stock Option Committee met two
times during 1997. This Committee, sitting as the Nominating Committee,
recommends to the Board of Directors candidates for directors to be elected
either at meetings of the shareholders or to be appointed by the Board of
Directors from time to time for the purpose of filling any vacancy among the
directors. The Committee will consider nominees recommended by shareholders
but has no formal procedure for considering such nominees. The Committee,
sitting as the Personnel and Benefits Committee, also recommends the
compensation paid to the Company's executive officers. The members of the
Personnel, Benefits, Nominating and Stock Option Committee for 1997 were M.
Joseph Canavan, Fred A. Valenti and Robert Nicoletti.
COMPENSATION AND RELATED MATTERS
The persons who serve on the Board of Directors of the Company also
serve on the Board of Directors of Dime. Directors who are officers of the
Company or Dime receive no additional compensation for serving as a
director. In 1997, non-employee directors of Dime received $500 for the
annual meeting, for each regular and special board meeting and for each
committee meeting that they attended. Mr. Lukens also received $500 for
each committee meeting that he attended as an ex officio committee member.
In addition, in 1997 non-employee directors of Dime were paid an annual
retainer of $10,000 and Ralph D. Lukens was paid an additional annual
retainer of $10,000 for services as Chairman of the Board. On January 19,
1998 the Personnel, Benefits, Nominating and Stock Option Committee voted to
change the term of the position of Chairman of the Board of the Company and
Dime from a two year term commencing and ending at an Annual Meeting to a
two year term commencing January 1 of a given year and ending December 31 of
the next year. This change will be effective on January 1, 1999. Also on
January 19, 1998, the Personnel, Benefits, Nominating and Stock Option
Committee voted to extend Mr. Lukens' term as Chairman of the Board to
December 31, 1998. Mr. Lukens' term had been due to expire at the Meeting.
Executive Compensation
The following Summary Compensation Table shows the compensation of the
Company's President and Chief Executive Officer, Executive Vice President
and Chief Financial Officer, Senior Vice President - Retail, Bank Operations
and Administration, and Senior Vice President - Senior Loan and Senior
Credit Officer (the "Named Executive Officers"), earned in the 1995, 1996
and 1997 fiscal years. (No such person was employed by the Company prior to
1995.)
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Annual Compensation Awards
------------------- ------------
Name Other Securities
and Principal Annnual Underlying All Other
Position Year Salary($) Bonus($) Compensation($) Options (#) Compensation($)
- ----------------------------------------------------------------------------------------------------------
Richard H. Dionne, 1997 253,271 177,520 5,973(5) 24,500 883(6)
President & Chief 1996 244,519 155,000 126,563(5) 50,000 1,075(6)
Executive Officer 1995(1) 198,846(1) 75,000 - 50,000 1,076(6)
Albert E. Fiacre, Jr., 1997 134,172 91,000 20,563(7) 13,300 487(6)
Executive Vice President 1996 122,260 75,000 - 27,000 587(6)
Chief Financial Officer 1995(2) 88,846(2) 35,000 - 15,000 493(6)
Timothy R. Stanton, 1997 126,671 76,080 - 13,150 466(6)
Senior Vice President - 1996 122,260 60,000 - 27,000 587(6)
Retail, Bank Operations 1995(3) 80,385(3) 35,000 - 15,000 431(6)
and Administration,
Chief Operating Officer
Frank P. LaMonaca, 1997 126,671 63,400 - 13,100 466(6)
Senior Vice President - 1996 122,260 60,000 - 27,000 587(6)
Senior Loan and 1995(4) 44,423(4) 25,000 - 15,000 246(6)
Senior Credit Officer
- --------------------
<F1> Mr. Dionne was hired on January 30, 1995. His annual base salary for
1995 was $220,000.
<F2> Mr. Fiacre was hired on March 3, 1995. His annual base salary for 1995
was $110,000.
<F3> Mr. Stanton was hired on April 3, 1995. His annual base salary for
1995 was $110,000.
<F4> Mr. LaMonaca was hired on July 31, 1995. His annual base salary for
1995 was $110,000.
<F5> No reportable perquisites nor other personal benefits were paid to any
of the Named Executive Officers except for Mr. Dionne. The amount
reported for Mr. Dionne in 1996 includes a relocation allowance of
$120,524 and $6,039 for personal use of a Company provided vehicle.
The amount reported for Mr. Dionne in 1997 consists of $5,973 for
personal use of a Company provided vehicle.
<F6> Premiums paid by the Company for term life insurance for Named
Executive Officer
<F7> Preferential earnings on shares issued upon the exercise of 1,000 non-
qualified options granted pursuant to Dime's 1986 Stock Option and
Incentive Plan.
Options Granted in 1997. The following table shows the number and
value of options granted to Messrs. Dionne, Fiacre, Stanton and LaMonaca in
1997.
OPTION GRANTS IN 1997
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation For
Individual Grants Option Term
------------------------------------- --------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise or
Options Employees Base Price Expiration
Name Granted in 1997 ($/Share) Date 5%($) 10%($)
- -------------------------------------------------------------------------------------------------
Richard H. Dionne 12,500(1) 11.36% 23.50 6/18/07 184,738 468,162
12,000(2) 10.91% 31.00 12/17/07 233,949 592,872
------ ----- ------- ---------
Total 24,500 22.27% 418,687 1,061,034
Albert E. Fiacre, Jr. 6,750(3) 6.14% 23.50 6/18/07 99,758 252,807
6,550(4) 5.95% 31.00 12/17/07 127,697 323,609
------ ----- ------- -------
Total 13,300 12.09% 227,455 576,416
Timothy R. Stanton 6,750(3) 6.14% 23.50 6/18/07 99,758 252,807
6,400(4) 5.82% 31.00 12/17/07 124,773 316,199
------ ----- ------- -------
Total 13,150 11.95% 224,531 569,006
Frank P. LaMonaca 6,750(3) 6.14% 23.50 6/18/07 99,758 252,807
6,350(4) 5.77% 31.00 12/17/07 123,798 313,728
------ ----- ------- -------
Total 13,100 11.91% 223,556 566,535
- --------------------
<F1> The options were fully vested at 12/31/97.
<F2> The options vest as to 6,000 shares on 6/17/98; the remaining were
fully vested at 12/31/97.
<F3> The options vest as to one half on 6/18/98; the remaining were fully
vested at 12/31/97.
<F4> The options vest as to one half on 6/17/98 and one half on 12/17/98.
Year-End Option Value Table. The following table shows the number and
value of unexercised options held by Messrs. Dionne, Fiacre, Stanton and
LaMonaca at December 31, 1997 to acquire shares of the Common Stock of the
Company.
AGGREGATED OPTION EXERCISES IN 1997
AND 12/31/97 OPTION VALUES
Number of
Shares Value of
Acquired on Number of Securities Unexercised In-the-
Exercise in Value Underlying Unexercised Money Optionst
Name 1997 Realized Options at 12/31/97 at 12/31/97(1)
- ---------------------------------------------------------------------------------------------
Richard H. Dionne - - Exercisable 118,500 $1,926,563
Unexercisable 6,000 0
Albert E. Fiacre, Jr. 1,000 $20,563 Exercisable 37,625 619,469
Unexercisable 16,675 138,375
Timothy R. Stanton - - Exercisable 38,625 650,344
Unexercisable 16,525 138,375
Frank P. LaMonaca - - Exercisable 38,625 624,094
Unexercisable 16,475 138,375
- --------------------
<F1> Market value of underlying securities at 12/31/97, minus the exercise
price.
Employment Agreement
The Company and Dime have entered into an employment agreement (the
"Employment Agreement") with Richard H. Dionne, President and Chief
Executive Officer, whereby Mr. Dionne has agreed to remain in the employ of
the Company and Dime (the "Employers"), and the Employers have agreed to
retain Mr. Dionne's services for a specified period of time (the "Term").
As the Agreement was originally entered into, the Term consisted of a period
of thirty-six (36) months from January 30, 1995 to January 31, 1998. On
January 30, 1998, an amendment to the Employment Agreement (the "Amendment")
became effective which extended the Term from January 30, 1995 through
January 31, 2001 subject to extension of the Term as mutually may be agreed
upon by Mr. Dionne and Dime; however, Mr. Dionne must be given not less than
six (6) months advance notice if Dime decides not to extend the Term beyond
January 31, 2001. Under the Amendment, Mr. Dionne's base salary is set at
the annual rate of $220,000 or such larger sum as the Board of Directors of
Dime may from time to time determine in connection with annual performance
reviews, provided that, commencing January 1, 1998, Mr. Dionne's base salary
will not be less than $263,700. In addition, Mr. Dionne is eligible to
earn annual bonus payments during the Term that are conditional upon the
achievement of individual or other goals for the bonus period. The
Amendment provides that from calendar year 1998 to the end of the Term, Mr.
Dionne's bonus will not be less than $177,520. Also under the Amendment,
Mr. Dionne will be provided with the use of a replacement vehicle with a
purchase price not to exceed $40,000; the original Employment Agreement had
provided for a vehicle for Mr. Dionne with a purchase price not to exceed
$30,000. The Employment Agreement also indicates that if, during the Term,
Mr. Dionne is terminated by the Employers other than for cause, disability,
material breach, as these terms are defined in the Employment Agreement, or
death, the Employers will pay to Mr. Dionne a lump sum severance payment
equal to the commuted value of Mr. Dionne's base salary in effect or
authorized at the time of the termination for the period remaining in the
Term (determined by discounting all payments at an agreed upon discount
rate). Mr. Dionne also would receive these benefits if he terminated his
employment for "good reason" as it is defined in the Employment Agreement.
He would not, however, receive any benefits under the Employment Agreement
if he is otherwise entitled to accept benefits provided for in the Change of
Control Agreement described below.
Change-In-Control Severance Agreements
The Company and Dime (the "Employers") also have entered into change-
in-control severance agreements (the "Change-In-Control Agreements") with
each of their four senior officers, Richard H. Dionne, Albert E. Fiacre,
Jr., Timothy R. Stanton, and Frank P. LaMonaca (hereinafter "Executive" or
"Executives").
For a period of two (2) years following a "change-in-control," as
defined in each Change-In-Control Agreement, the Executive would be entitled
to certain payments in the event of the termination of his employment other
than upon death, retirement or disability or by the Employers for "cause,"
as defined in the Change-In-Control Agreement, or in the event of a
termination by the Executive for "good reason" ("Change-In-Control
Termination"). If the Executive terminates his employment because of a
reduction of his compensation, position, duties, or responsibilities, the
need to move his principal residence, the non-payment by the Employers of
any salary, bonus or other material benefit due to the Executive, or a
material breach of any material terms of employment, such termination would
be considered to be for "good reason."
Upon a Change-In-Control Termination, Mr. Dionne would be entitled to,
among other benefits, a lump sum severance benefit of 2.99 times the average
of the cash compensation received by Mr. Dionne from the Employers in the
most recent three (3) (or such lesser number as may exist) years in which
Mr. Dionne was employed prior to the date of his termination. In the case
of each of Messrs. Fiacre, Stanton and LaMonaca, the lump sum severance
benefit equals one (1) times the cash compensation received by the Executive
in the most recent calendar year of employment prior to termination. In
addition, all stock options granted to each Executive under any plan of the
Employers would become immediately exercisable in full and remain so for a
period of three (3) months from the date of the Change-In-Control
Termination. Benefits payable under the change-in-control Agreement are
subject, however, to the limitation described in Section 280 G of the
Internal Revenue Code of 1986, as amended, if applicable.
The Change-In-Control Agreements also include a non-competition
covenant (the "Covenant") between each Executive and the Employers. In the
event of the termination of the Executive's employment with the Employers,
for a period of one (1) year the Executive agrees not to engage in
competitive activity with the Employers by becoming interested in any way
(except as an owner of stock in a public corporation in a nominal amount) in
any other business similar to that of the Employers or in any way in
competition with the Employers, or to lend his name to any business which
is, or as a result of the Executive's engagement or participation would
become competitive with the Employers, in any city or town where the
Employers operate a full service branch. The Covenant does not apply if the
Executive terminates his employment for good reason, or if the Employers
terminate his employment other than for cause, disability, or material
breach, as defined in the Change-In-Control Agreements.
Report of Personnel, Benefits, Nominating and Stock Option Committee
The following summarizes the Personnel, Benefits, Nominating and Stock
Option Committee Report on Executive Compensation for 1997.
DIME FINANCIAL CORPORATION
PERSONNEL, BENEFITS, NOMINATING AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Company provides no compensation to its executive officers.
Rather, Dime provides their compensation. For this reason, the Personnel,
Benefits, Nominating and Stock Option Committee of Dime, sitting as the
Personnel and Benefits Committee, recommends the compensation paid to the
Company's executive officers.
Historically, the Committee has considered several factors when
determining executive officer compensation. The first factor is industry
data from a peer group of companies on the salary ranges and actual
incumbent salary for the positions under review. Another factor is the
financial performance of the Company with respect to previous years and with
respect to other publicly traded thrifts in Connecticut. Return on average
equity, return on average assets, deposit growth, and cash dividends to
shareholders represent some of the financial performance elements
considered.
In addition to basing salary decisions on the above factors, the
Committee also annually recommends to the full Board of Directors bonus
compensation to be paid under the Company's Profit Incentive Plan for the
current year and appropriate corporate performance targets under the Plan
for the coming year. Target bonus awards are established for the Company's
executive officers as a percentage of base salary. Bonuses are paid only if
the established corporate performance targets are met. While all of the
above factors play a role in the Committee's decisions regarding the Profit
Incentive Plan, the absolute level of profitability in the current year and
the payment of cash dividends to shareholders are significant factors in
determinations under the Profit Incentive Plan.
Long-term equity-based incentive awards encourage officer retention
and tie executive opportunity for financial reward to the financial success
experienced by the Company's shareholders. Determinations regarding
individual grants of short-term and long-term compensation awards are made
by the Committee based on a subjective assessment of the various factors
cited above in this report.
CEO Compensation. In 1997, the compensation of the Company's Chief
Executive Officer, Mr. Dionne, consisted of base salary, incentive bonus,
and performance stock option awards. Base salary was established at
$253,271 per year. Based upon its assessment of Mr. Dionne's and the
Company's performance in 1997, measured against the factors described above
in this report, the Committee recommended, and the Board subsequently
approved, a 1997 bonus for Mr. Dionne of $177,520.
Under Mr. Dionne's leadership in 1997, the Company reported net income
of $16.7 million, an increase of 34.3% over 1996. The increase in earnings
resulted directly from expense controls and other actions recommended and
implemented by senior management. In 1997, the levels of both non-
performing loans and non-performing assets declined, while the ratio of
reserves to non-performing loans increased. Operating expenses declined by
2.7%. Shareholder equity, regulatory capital, total assets and total
deposits all increased. The Company's ROA increased to 1.94% from 1.82% in
1996 and the Company's ROE rose to 24.20% from 22.19% in 1996.
The Committee also established the 1998 base salary for Mr. Dionne at
$263,700. In June of 1997, the Committee approved, and the Board
subsequently ratified, a non-qualified stock option grant of 12,500 shares
with an exercise price of $23.50 per share. All options of this grant were
fully vested at December 31, 1997. In December of 1997, the Committee also
approved, and the Board subsequently ratified, a non-qualified stock option
grant of 12,000 shares with an exercise price of $31.00. One half of these
options were fully vested at December 17, 1997. The remaining 6,000 options
of this grant will vest on June 17, 1998. Mr. Dionne must be employed by
the Company in order to vest on that date.
Other Senior Executive Officers. Compensation decisions with respect
to senior executive officers other than the CEO are also made by the
Committee by applying the factors described above in this report. In
addition, an important factor considered by the Committee is the
recommendation of the CEO with respect to each of the other senior executive
officers. In making his recommendation to the Committee, the CEO also
applies the above factors to the performance of each executive officer.
In 1997, the compensation of the Company's other senior executive
officers, Messrs. Fiacre, Stanton and LaMonaca, consisted of base salary,
incentive bonus, and performance stock option awards. Mr. Fiacre's annual
base salary was $134,172 in 1997. Messrs. Stanton and LaMonaca each had an
annual base salary of $126,671 in 1997. During 1997, the Committee
approved, and the Board subsequently ratified, a non-qualified stock option
grant to each of Messrs. Fiacre, Stanton and LaMonaca to purchase 6,750
shares with an exercise price of $23.50 per share. This grant was fully
vested as to 3,375 shares on December 31, 1997, and will vest as to 3,375
shares on June 18, 1998. In December of 1997, the Committee approved, and
the Board subsequently ratified, non-qualified stock option grants to
Messrs. Fiacre, Stanton and LaMonaca to purchase 6,550, 6,400 and 6,350
shares, respectively, with an exercise price of $31.00 per share. Each
grant will vest as to one half on June 17, 1998 and will vest as to the
remaining shares on December 17, 1998.
The Committee also approved the granting of options to a number of
other officers of the Company at the same time. All options, including
those granted to the CEO and other senior executive officers, were granted
under the 1996 Stock Option and Incentive Plan.
The Committee discussed the subject of setting incentive targets for
its senior executives in 1998, which, among other things, would be used as
measures for assessing 1998 performance and determining 1998 bonus awards.
The Committee determined that such incentive goals should be tied closely to
the strategic plan objectives for the Company for 1998 and the 1998 budget.
Personnel, Benefits, Nominating and Stock Option Committee Members
Fred A. Valenti, Chairperson
M. Joseph Canavan
Robert Nicoletti
Employee Benefit Plan
Dime maintains a noncontributory, defined benefit pension plan which
is qualified under the Employee Retirement Income Security Act of 1974, as
amended, and covers employees and officers of the Company or Dime who have
attained the age of 21 years and in one year have completed at least 1,000
hours of service with the Company or Dime. The following table illustrates
annual pension benefits under the Pension Plan for retirement at 65 under
the most current plan provisions available for various levels of
compensation and years of services as of January 1, 1998.
ANNUAL PENSION BENEFIT (a)
BASED ON YEARS OF CREDITED SERVICE
Final Average
Compensation (b) Years of Credited Service(f)
- ---------------- ---------------------------------------------------------------------
10 15 20 25 30 35 40(c)
----------------------------------------------------------------------------------------
$ 25,000 $ 2,500 $ 3,750 $ 5,000 $ 6,250 $ 7,500 $ 8,750 $ 10,000
50,000 6,000 9,000 12,000 15,000 18,000 21,000 24,000
75,000 9,750 14,625 19,500 24,375 29,250 34,125 39,000
100,000 13,500 20,250 27,000 33,750 40,500 47,250 54,000
125,000 17,250 28,875 34,500 43,125 51,750 60,375 69,000
150,000 21,000 31,500 42,000 52,500 63,000 73,500 84,000
200,000(e) 28,500 42,750 57,000 71,250 85,500 99,750 114,000
250,000(e) 36,000 54,000 72,000 90,000 108,000 126,000 144,000(d)
- --------------------
<Fa> Calculated according to the following formula in effect through
December 31, 1997: 1.0% of final average compensation up to Social
Security Covered Compensation (1997 basis) plus 1.5% of final average
compensation in excess of Social Security Covered Compensation, all
multiplied by years of credited service.
<Fb> Average salary for highest 5 consecutive years.
<Fc> Maximum years of credited service is 40.
<Fd> Maximum benefit payable to a retiree age 65 is $125,000 in 1997 and
$130,000 in 1998.
<Fe> Maximum Allowable Compensation used to determine Benefits is $160,000
in 1997 and 1998.
<Ff> As of December 31, 1997, the individuals listed in The Summary
Compensation Table had the following years of credited service: Mr.
Dionne, 3.0 years; Mr. Fiacre, 3.0 years; Mr. Stanton, 3.0 years; Mr.
LaMonaca, 2.4 years. If they remain in the employ of the Bank through
age 65, they will have 14.4, 20.2, 27.0 and 26.75 years of credited
service, respectively, under the Plan. The compensation of Messrs.
Dionne, Fiacre, Stanton and LaMonaca listed as "Salary" in the Summary
Compensation Table above counts as annual compensation for purposes of
the Plan.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Some of the directors and executive officers of the Company or Dime
are and have been customers of Dime and have had banking transactions with
Dime before and since January 1, 1997. Loans made to such persons, and to
corporations or organizations of which any of such persons is, directly or
indirectly, the beneficial owner of 10 percent or more of any class of
equity securities, if any, (i) were made in the ordinary course of Dime's
business, (ii) were made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other persons, and (iii) did not involve more than the
normal risk of collectibility or present other unfavorable features.
As a matter of policy, loans are made to directors, officers and
employees of Dime in compliance with Regulation O of the Federal Reserve
Board regulations and Section 36a-263 of the Connecticut General Statutes on
substantially the same terms, including interest rates, as those of
comparable transactions prevailing at the time and do not involve more than
the normal risk of collectibility or present other unfavorable features. On
September 19, 1995, the Board of Directors of Dime passed a resolution
prohibiting future loans or personal endorsements to directors or executive
officers of the Company or Dime and their immediate family members (as
defined in Regulation O) and to require pre-approval by the Board of
Directors of any modification to existing relationships. The Company and
Dime had no loans outstanding as of February 20, 1998 to any person known by
the Company to be a beneficial owner of more than five percent of the Common
Stock.
Any business transactions of the Company or Dime with officers,
directors, employees, principal shareholders or affiliates of the Company or
Dime, have been and will be on terms no less favorable to the Company or
Dime than could have been or could be obtained from third parties. If a
director of the Company also was an executive officer or 10% shareholder of
another entity during 1997, then the Company neither paid to nor received
from such entity for property or services an amount in excess of 5% of
either (1) the Company's gross consolidated revenues or (2) the entity's
gross consolidated revenues, unless the amounts paid for such property or
services were determined by competitive bids. Furthermore, neither the
Company, nor its subsidiaries were indebted to any such entity in an
aggregate amount exceeding 5% of the Company's total consolidated assets.
COMPLIANCE WITH SECTION 16(a) OF THE 1934 ACT
Section 16(a) of the 1934 Act requires the Company's officers and
directors and persons who own more than ten percent of a registered class of
the Company's equity securities ("10% Shareholders") to file reports of
beneficial ownership of Company Common Stock and of changes in beneficial
ownership with the Commission and the NASD. Specific due dates are
prescribed for the filings. Officers, directors, and 10% Shareholders are
required by the Commission to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on its copies of such forms received by the Company, or
written representations from certain reporting persons, the Company believes
that in fiscal 1997 all filing requirements applicable to its officers,
directors, and greater than ten percent beneficial owners were properly and
promptly satisfied.
PERFORMANCE GRAPH
Set forth on the following page, is a line graph comparing the
cumulative total shareholder return on the Company's Common Stock, based on
the market price of the Common Stock and assuming the reinvestment of
dividends, with the cumulative total return of companies on the NASDAQ U.S.
Market Value Index and the NASDAQ Bank Index. The NASDAQ Bank Index
represents the total return of all Banks traded on the NASDAQ exchange.
FIVE YEAR TOTAL RETURN COMPARISON* AMONG
DIME FINANCIAL CORPORATION, NASDAQ BANK INDEX AND NASDAQ U.S. INDEX
The graph assumes a $100 investment on January 1, 1993 in the
Company's Common Stock, the NASDAQ Bank Index and the NASDAQ U.S. Market
Value Index.
12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
---------------------------------------------------------------
Dime Financial Corp. 100.00 123.47 142.86 220.41 287.36 516.88
NASDAQ Bank Index 100.00 114.04 113.63 169.22 223.41 377.44
NASDAQ U.S. Index 100.00 114.80 112.21 158.70 195.19 239.53
- --------------------
<F*> Total return assumes reinvestment of all dividends.
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES PRESENT, IN PERSON OR BY
PROXY, AND VOTING AT THE MEETING IS REQUIRED TO ELECT EACH NOMINEE FOR
DIRECTOR. THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" THE ELECTION OF EACH NOMINEE.
PROPOSAL 2
RATIFICATION OF THE APPOINTMENT OF
KPMG PEAT MARWICK LLP
AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR
ENDING DECEMBER 31, 1998
The Board of Directors of the Company has renewed the Company's
arrangements with KPMG Peat Marwick LLP, Independent Certified Public
Accountants, to be the Company's independent public accountants for the
fiscal year ending December 31, 1998, subject to ratification by the
Company's shareholders. A representative of KPMG Peat Marwick LLP is
expected to be present at the Annual Meeting to respond to shareholders'
questions and to have the opportunity to make a statement if he or she
desires to do so.
SHAREHOLDER PROPOSALS
Proposals of shareholders of the Company intended to be presented at
the 1999 annual meeting of shareholders of the Company must be received by
the Company not later than November 21, 1998 to be included in the Company's
proxy statement and form of proxy relating to that meeting. Any such
proposal must comply with Rule 14a-8 promulgated by the Commission under the
1934 Act.
OTHER MATTERS
At the time of preparation of this Proxy Statement, the Board of
Directors of the Company knew of no matter to be presented for action at the
Meeting other than as set forth in the Notice of Annual Meeting of
Shareholders and described in this Proxy Statement. If any other matters
properly come before the Meeting, the proxies have discretionary authority
to vote their shares according to their best judgment.
By order of the Board of Directors
/s/ ELEANOR M. TOLLA
Eleanor M. Tolla
Secretary
March 20, 1998
A COPY OF THE COMPANY'S 1997 ANNUAL REPORT TO SHAREHOLDERS IS
ENCLOSED. A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE
FINANCIAL STATEMENTS AND THE FINANCIAL STATEMENT SCHEDULES, AS REQUIRED TO
BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR 1997, WILL BE
PROVIDED WITHOUT CHARGE TO ANY SHAREHOLDER UPON THE WRITTEN REQUEST OF SUCH
SHAREHOLDER. REQUESTS SHOULD BE ADDRESSED TO ELEANOR TOLLA, SECRETARY, DIME
FINANCIAL CORPORATION, 95 BARNES ROAD, WALLINGFORD, CONNECTICUT 06492.
DETACH HERE
PROXY
DIME FINANCIAL CORPORATION
1998 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of DIME FINANCIAL CORPORATION, a
Connecticut corporation, hereby appoints Gary O. Olson and Robert Nicoletti,
Ph.D. and each of them the proxies of the undersigned with full power of
substitution to vote at the Annual Meeting of Shareholders of the Company to
be held at the Yankee Silversmith Inn, Wallingford, Connecticut, at 10:00
a.m. on April 29, 1998 and at any adjournment or adjournments thereof (the
"Meeting"), with all the power which the undersigned would have if
personally present, hereby revoking any proxy heretofore given. A majority
of said proxies or their substitutes who attend the Meeting (or if only one
shall be present, then that one) may exercise all of the powers hereby
granted. The undersigned hereby acknowledges receipt of the proxy statement
for the Meeting and instructs the proxies to vote as directed on the reverse
side.
The Board of Directors recommends a vote "FOR" Proposals 1 and 2.
PLEASE MARK, SIGN AND DATE ON THE REVERSE SIDE
SEE REVERSE SIDE
[X] Please mark votes as in this example.
THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE MANNER DIRECTED. IF
NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL
NOMINEES LISTED BELOW, FOR THE RATIFICATION OF THE APPOINTMENT OF KPMG PEAT
MARWICK LLP FOR THE FISCAL YEAR ENDING DECEMBER 31, 1998 AND IN THE
DISCRETION OF THE PROXY HOLDERS AS TO ANY OTHER MATTERS WHICH MAY PROPERLY
COME BEFORE THE MEETING.
1. To elect the nominees for directors:
Nominees: M. Joseph Canavan, William J, Farrell, Ralph D. Lukens
[ ] FOR [ ] WITHHELD
[ ] ---------------------------
For all nominees except as noted on the line above
2. To ratify the appointment of KPMG Peat Marwick LLP as independent
auditors for the fiscal year ending December 31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. With discretionary authority upon such other matters as may properly
come before the Meeting.
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Please sign exactly as your name appears on this proxy card. When signing as
attorney, executor, trustee or guardian, please give your full title.
Signature: Date: Signature: Date:
--------------- --------- --------------- ---------