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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
WARREN BANCORP, INC.
(Name of Registrant as Specified In Its Charter)
WARREN BANCORP, INC.
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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WARREN BANCORP, INC.
10 Main Street, Peabody, Massachusetts 01960
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of Warren Bancorp, Inc.
NOTICE IS HEREBY GIVEN that the Annual Meeting of the stockholders of Warren
Bancorp, Inc. (the "Annual Meeting") will be held at the King's Grant Inn, Route
128, Danvers, Massachusetts, on Wednesday, May 3, 2000, at 10:00 A.M., local
time, for the purpose of considering and voting upon the following matters:
1. Election of four Directors, each to serve for a three-year term until
the 2003 Annual Meeting of stockholders;
2. Such other business as may properly come before the meeting.
The Board of Directors has fixed the close of business on March 6, 2000 as the
record date for determining the stockholders entitled to notice of and to vote
at the Annual Meeting and any adjournments thereof. Only holders of common stock
at the record date will be entitled to notice of and to vote at the Annual
Meeting or any adjournments thereof.
By the order of the Board of Directors
Susan G. Ouellette, Clerk
Peabody, Massachusetts
March 27, 2000
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.
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WARREN BANCORP, INC.
10 Main Street, Peabody, Massachusetts 01960
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS - MAY 3, 2000
This Proxy Statement is furnished to stockholders of Warren Bancorp,
Inc. ("Bancorp" or the "Corporation") in connection with the solicitation of
proxies by the Board of Directors of Bancorp for the Annual Meeting of
Stockholders of Bancorp (the "Annual Meeting") on Wednesday, May 3, 2000, and
any adjournments thereof.
Stockholders are requested to complete, date, sign and promptly return
the accompanying proxy card in the enclosed envelope. If the enclosed form of
proxy is properly executed and returned to Bancorp in time to be voted at the
Annual Meeting, the shares represented thereby will, unless such proxy has
previously been revoked, be voted in accordance with the instructions marked
thereon. Executed proxies with no instructions indicated thereon will be voted
FOR the election of the nominees for Directors named below. Distribution of the
Proxy Statement and the accompanying proxy materials commenced on or about April
1, 2000.
The presence of a stockholder at the Annual Meeting will not
automatically revoke that stockholder's proxy. A stockholder may, however,
revoke a proxy at any time prior to the voting thereof on any matter (without,
however, affecting any vote taken prior to such revocation) by filing with the
Clerk of Bancorp a written notice of revocation, by delivering to Bancorp a duly
executed proxy bearing a later date, or by attending the Annual Meeting and
voting in person. All written notices of revocation and other communications
with respect to revocation of proxies in connection with the Annual Meeting
should be addressed as follows: Warren Bancorp, Inc., Post Office Box 6159, 10
Main Street, Peabody, Massachusetts 01961-6159, attention: Shareholder Relations
Department.
Bancorp's Annual Report to Stockholders for the year ended December 31,
1999, which includes Bancorp's Annual Report to the Securities and Exchange
Commission on Form 10-K (without exhibits), is being mailed to stockholders with
this Proxy Statement. The Annual Report to Stockholders is not part of the proxy
materials. Bancorp will provide without charge to each person receiving a copy
of this Proxy Statement a copy of the exhibits to its Annual Report on Form
10-K, upon written request. Request should be directed to Warren Bancorp, Inc.,
Post Office Box 6159, 10 Main Street, Peabody, Massachusetts 01961-6159,
attention: Shareholder Relations Department.
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VOTING SECURITIES
The Board of Directors has fixed the close of business on March 6, 2000
as the record date (the "Record Date") for determining the stockholders entitled
to notice of and to vote at the Annual Meeting and any adjournments thereof. On
the Record Date there were 7,312,051 shares of Common Stock ("Common Stock") of
Bancorp outstanding. As of the Record Date there were approximately 650 holders
of record of the Common Stock. All such shares carry voting rights and all
stockholders are entitled to cast one vote for each such share held of record at
the close of business on the Record Date upon each matter properly brought
before the Annual Meeting or any adjournment thereof. Holders of the Common
Stock are not entitled to cumulative voting in the election of directors. A
majority of the outstanding shares of Common Stock present in person or by proxy
will constitute a quorum for transaction of business at the Annual Meeting.
Shares with respect to which votes have been withheld from any director
and shares abstaining from voting, and broker non-votes (i.e., shares
represented in the meeting held by brokers on nominees as to which instructions
have not been received from the beneficial owners entitled to vote such shares
and with respect to which one or more but not all proposals, such brokers or
nominees do not have discretionary voting power), will be counted for purposes
of determining whether a quorum is present at the Annual Meeting for the
transaction of business. Abstentions and broker non-votes will have no effect on
the election of directors, since directors are elected by a plurality of shares
voting at the Annual Meeting.
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BENEFICIAL OWNERSHIP OF COMMON STOCK
The table below sets forth, as of March 1, 2000, certain information
about persons known to Bancorp to own, directly or beneficially, more than five
percent of Bancorp's outstanding Common Stock.
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- ------------------- ----------------- -------
Perkins, Wolf, McDonnell & Company......................... 771,500(1) 10.55%(4)
2300 Main Street, Suite 1000
Kansas City, MO 64108
Dimensional Fund Advisors, Inc............................. 531,100(2) 7.26%(4)
1299 Ocean Avenue
Suite 650
Santa Monica, California 90401
Franklin Mutual Advisers, LLC.............................. 405,300(3) 5.54 (4)
777 Mariners Island Boulevard
P.O. Box 7777
San Mateo, California 94404-7777
- ----------
(1) Based on information contained in Amendment No. 2 to a Schedule 13G
filed by them with the Securities and Exchange Commission (the
"Commission") on February 9, 2000, Perkins, Wolf, McDonnell & Company
is deemed to have voting and investment powers shared with others.
(2) Based on information contained in Amendment No. 8 to a Schedule 13G
filed by them with the Commission on February 4, 2000, Dimensional Fund
Advisors, Inc. ("Dimensional"), a registered investment advisor, is
deemed to have beneficial ownership of 531,100 shares of Warren
Bancorp, Inc. common stock as of December 31, 1999, all of which shares
are held in portfolios of DFA Investment Dimensions Group Inc., a
registered open-end investment company, or in series of the DFA
Investment Trust Company, a Delaware business trust, or the DFA Group
Trust and DFA Participation Group Trust, investment vehicles for
qualified employee benefit plans, all of which Dimensional serves as
investment manager. Dimensional disclaims beneficial ownership of all
such shares.
(3) Based on information contained in a Schedule 13G filed with the
Commission on January 13, 2000 by Franklin Mutual Advisers, LLC and
certain affiliated persons and entities, reporting beneficial ownership
as of December 31, 1999. This Schedule 13G indicates that Franklin
Mutual Advisers, LLC, registered under the Investment Company Act of
1940, is the beneficial owner of 405,300 shares of the Common Stock
outstanding of Warren Bancorp, Inc. as a result of acting as an
investment advisor to several investment companies registered under
Section 8 of the Investment Company Act of 1940.
(4) Percentages as reported are based on the number of shares issued and
outstanding at March 1, 2000.
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The following table shows as of March 1, 2000, the number of shares of
Bancorp's Common Stock owned beneficially by each nominee for director, each
director, each of the individuals named in the Summary Compensation Table, and
by all nominees, directors and executive officers of Bancorp as a group.
PERCENT
BENEFICIALLY OF CLASS
NAME OWNED(1) (IF OVER 1%)
- ---- ------------ ----------
Peter V. Bent.................................................... 26,200(2)
Stephen J. Connolly, IV.......................................... 111,400(3) 1.52%
Francis L. Conway................................................ 22,400(4)
Paul J. Curtin................................................... 23,000(5)
Leo C. Donahue................................................... 129,335(6) 1.76%
Robert R. Fanning, Jr............................................ 18,600(7)
Arthur E. Holden................................................. 32,400(8)
Stephen R. Howe.................................................. 48,200(9)
John C. Jeffers.................................................. 17,400(10)
Stephen G. Kasnet................................................ 110,477(11) 1.51%
Linda Lerner..................................................... 18,000(12)
Arthur E. McCarthy............................................... 70,600(13)
Arthur J. Pappathanasi........................................... 17,400(14)
Paul M. Peduto................................................... 139,596(15) 1.90%
George W. Phillips............................................... 170,000 2.33%
John R. Putney................................................... 131,052(16) 1.78%
John D. Smidt.................................................... 58,168(17)
Mark J. Terry.................................................... 21,048(18)
John H. Womack................................................... 16,300(19)
All nominees, directors and
executive officers as a
group (19 persons)............................................. 1,181,576 15.62%
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(1) Beneficial ownership of Common Stock has been determined in accordance
with Rule 13d-3 under the Securities Act of 1934, as amended (the "1934
Act"). For purposes of this table a person is deemed to be the
beneficial owner of Common Stock if that person has or shares voting
power or investment power in respect of such Common Stock or has the
right to acquire ownership within 60 days after March 1, 2000.
Accordingly, the amounts shown on the table do not purport to represent
beneficial ownership for any purpose other than compliance with the
reporting requirements of the 1934 Act. Further, beneficial ownership
as determined in this matter does not necessarily bear on the economic
incidents of ownership of Common Stock. Voting power or investment
power with respect to shares reflected on the table is not shared with
others except as otherwise indicated.
(2) Includes 4,200 shares held in a retirement trust for Mr. Bent. Also
includes 10,000 shares held in a residuary trust of which Mr. Bent is a
one-third beneficiary. Also includes options presently exercisable or
exercisable within 60 days to purchase 8,400 shares under the Warren
Bancorp, Inc. 1995 Incentive and Nonqualified Stock Option Plan.
(3) Includes 95,600 shares owned in the name of Connolly Brothers, Inc., of
which Mr. Connolly is President and sole stockholder. Also includes
options presently exercisable or exercisable within 60 days to purchase
5,800 shares under the Warren Bancorp, Inc. 1986 and 1995 Incentive and
Nonqualified Stock Option Plans.
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(4) Includes 12,000 shares as to which Mr. Conway shares voting and
investment power with his wife. Also includes options presently
exercisable or exercisable within 60 days to purchase 11,000 shares
under the Warren Bancorp, Inc. 1986 and 1995 Incentive and Nonqualified
Stock Option Plans.
(5) Includes 6,000 shares held in trust for the pension plan of Mr. Curtin.
Also includes options presently exercisable or exercisable within 60
days to purchase 17,000 shares under the Warren Bancorp, Inc. 1986 and
1995 Incentive and Nonqualified Stock Option Plans. Mr. Curtin's wife
owns an additional 14,513 shares as to which he disclaims beneficial
ownership.
(6) Voting and investment power is shared with his wife. Includes options
presently exercisable or exercisable within 60 days to purchase 51,680
shares under the Warren Bancorp, Inc. 1986, 1991, 1995 and 1998
Incentive and Nonqualified Stock Option Plans. Also includes 5,015
shares beneficially owned by Mr. Donahue under the Bank's 401(k)
Savings Plan.
(7) Voting and investment power is shared with his wife. Includes options
presently exercisable or exercisable within 60 days to purchase 5,800
shares under the Warren Bancorp, Inc. 1986 and 1995 Incentive and
Nonqualified Stock Option Plans.
(8) Includes 26,400 shares as to which Mr. Holden shares voting and
investment power with his wife. Also, includes options presently
exercisable or exercisable within 60 days to purchase 6,000 shares
under the Warren Bancorp, Inc. 1986 and 1995 Incentive and Nonqualified
Stock Option Plans.
(9) Includes options presently exercisable or exercisable within 60 days to
purchase 5,800 shares under the Warren Bancorp, Inc. 1986 and 1995
Incentive and Nonqualified Stock Option Plans. Mr. Howe is sole
beneficiary of a testamentary trust which owns 8,800 shares as to which
he disclaims beneficial ownership.
(10) Includes options presently exercisable or exercisable within 60 days to
purchase 13,400 shares under the Warren Bancorp, Inc. 1986 and 1995
Incentive and Nonqualified Stock Option Plans.
(11) Includes 84,877 shares as to which Mr. Kasnet shares voting rights with
his wife. Also includes 22,000 shares held in retirement trust for the
benefit of Mr. Kasnet. Also includes options presently exercisable or
exercisable within 60 days to purchase 3,600 shares under the Warren
Bancorp, Inc. 1995 Incentive and Nonqualified Stock Option Plans. Mr.
Kasnet's children own an additional 11,100 shares as to which he
disclaims beneficial ownership.
(12) Includes options presently exercisable or exercisable within 60 days to
purchase 12,000 shares under the Warren Bancorp, Inc. 1995 Incentive
and Nonqualified Stock Option Plan.
(13) Includes options presently exercisable or exercisable within 60 days to
purchase 7,600 shares under the Warren Bancorp, Inc. 1986 and 1995
Incentive and Nonqualified Stock Option Plans. Mr. McCarthy's wife owns
an additional 30,000 shares as to which he disclaims beneficial
ownership.
(14) Includes options presently exercisable or exercisable within 60 days to
purchase 7,800 shares under the Warren Bancorp, Inc. 1995 Incentive and
Nonqualified Stock Option Plan.
(15) Includes 99,360 shares as to which Mr. Peduto shares voting and
investment power with his wife. Also includes options presently
exercisable or exercisable within 60 days to purchase 29,920 shares
under the Warren Bancorp, Inc. 1986, 1991, 1995 and 1998 Incentive and
Nonqualified Stock Option Plans. Also includes 5,916 shares
beneficially owned by Mr. Peduto under the Bank's 401(k) Savings Plan.
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(16) Includes 87,160 shares as to which Mr. Putney shares voting and
investment power with his wife. Also includes 6,400 shares held in
retirement trust for the benefit of Mr. Putney. Also includes options
presently exercisable or exercisable within 60 days to purchase 34,320
shares under the Warren Bancorp, Inc. 1986, 1991, 1995 and 1998
Incentive and Nonqualified Stock Option Plans. Also includes 3,172
shares beneficially owned by Mr. Putney under the Bank's 401(k) Savings
Plan.
(17) Includes 39,500 shares as to which Mr. Smidt shares voting and
investment power with his wife. Also includes 12,868 shares held in
retirement trust for the benefit of Mr. Smidt. Also includes options
presently exercisable or exercisable within 60 days to purchase 5,800
shares under the Warren Bancorp, Inc. 1986 and 1995 Incentive and
Nonqualified Stock Option Plans. Mr. Smidt's wife owns an additional
1,000 shares in a retirement trust as to which he disclaims beneficial
ownership.
(18) Includes options presently exercisable within 60 days to purchase
19,840 shares under the Warren Bancorp, Inc. 1995 and 1998 Incentive
and Nonqualified Stock Option Plans. Also includes 1,208 shares
beneficially owned by Mr. Terry under the Bank's 401(k) Savings Plan.
(19) Includes options presently exercisable or exercisable within 60 days to
purchase 7,600 shares under the Warren Bancorp, Inc. 1986 and 1995
Incentive and Nonqualified Stock Option Plans.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Bancorp's
executive officers and directors and persons who own more than 10% of a
registered class of Bancorp's equity securities to file reports of ownership and
changes in ownership with the Securities and Exchange Commission ("SEC") and the
National Association of Securities Dealers, Inc. Officers, directors and greater
than 10% shareholders are required by SEC regulations to furnish Bancorp with
copies of all Section 16(a) reports they file. To Bancorp's knowledge, based
solely on review of the copies of such reports furnished to Bancorp and written
representations that no other reports were required during the fiscal year ended
December 31, 1999, all Section 16(a) filing requirements applicable to its
executive officers, directors, and greater than 10% beneficial owners were
satisfied except for the following late filings: Mr. Curtin filed one Form 5
reporting the transfer of 14,000 shares owned by Mr. Curtin's wife for which he
disclaims beneficial interest to a revocable trust and the reinvestment of
dividends into the trust.
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ELECTION OF A CLASS OF DIRECTORS
The Board of Directors of Bancorp presently consists of seventeen
members and is divided into three classes as nearly equal in number as possible.
The term of office of one class of Directors expires each year and their
successors are elected at each annual meeting of stockholders for a term of
three years and until their successors are duly elected and qualified.
At the Annual Meeting, four Directors will be elected to serve until
the 2003 annual meeting and until their respective successors are duly elected
and qualified. The Board of Directors has nominated Stephen J. Connolly, IV,
Robert R. Fanning, Jr., Paul M. Peduto and John R. Putney for election as
Directors to serve until the 2003 annual meeting. Unless otherwise specified in
the proxy, it is the intention of the persons named in the proxy to vote the
shares represented by each properly executed proxy for the election of Messrs.
Connolly, Fanning, Peduto, and Putney as Directors. Each of Messrs. Connolly,
Fanning, Peduto, and Putney has agreed to stand for election and to serve if
elected as a Director. However, if any person nominated by the Board of
Directors fails to stand for election or is unable to accept election, the
proxies will be voted for the election of such other person as the Board of
Directors may recommend.
The affirmative vote of holders of a plurality of the shares of Common
Stock represented in person or by proxy at the Annual Meeting is necessary to
elect the nominees as Directors.
INFORMATION REGARDING NOMINEES AND DIRECTORS
The following table sets forth for each of the four nominees for
election as Directors at the Annual Meeting the nominee's name, age as of March
1, 2000, the nominee's principal occupation for at least the past five years and
the year in which the nominee was first elected as a Director of Bancorp, based
on information furnished by the nominee to Bancorp. Similar information is
provided for those Directors whose terms expire at the annual meetings of the
stockholders of Bancorp in 2001 and 2002.
NOMINEES
(TERMS TO EXPIRE IN 2003)
NAME AND PRINCIPAL OCCUPATION FOR DIRECTOR
PAST FIVE YEARS; DIRECTORSHIPS AGE SINCE(1)
- ------------------------------ --- --------
Stephen J. Connolly, IV(4)................................................... 50 1989
President, Connolly Brothers, Inc. (building contractors)
since prior to 1995.
Robert R. Fanning, Jr.(2)(3)(4).................. ......................... 57 1988
President and Chief Executive Officer of Northeast
Health Systems, Inc. since 1995; President and
Chief Executive Officer of Cape Ann and
Northeast Health Systems, Inc., prior to 1995 to 1995;
President and Chief Executive Officer, Beverly Hospital
Corporation since prior to 1995; Director, Health Care
Property Investors since prior to 1995.
Paul M. Peduto............................................................... 50 1988
Treasurer of Bancorp and Executive Vice President,
Chief Financial Officer and Treasurer of the
Bank since prior to 1995.
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NAME AND PRINCIPAL OCCUPATION FOR DIRECTOR
PAST FIVE YEARS; DIRECTORSHIPS AGE SINCE(1)
- ------------------------------ --- --------
John R. Putney............................................................... 56 1997
President and Chief Executive Officer of Bancorp
and the Bank since 1998; Executive Vice President
of Bancorp and the Bank, 1997; Senior Vice President
for Corporate Banking and Senior Lending Officer of
the Bank since prior to 1995 to 1997.
OTHER DIRECTORS
(TERMS TO EXPIRE IN 2001)
NAME AND PRINCIPAL OCCUPATION FOR DIRECTOR
PAST FIVE YEARS; DIRECTORSHIPS AGE SINCE(1)
- ------------------------------ --- --------
Francis L. Conway (3)........................................................ 59 1978
President and Treasurer, F.L. Conway & Sons, Inc.
(funeral home) since prior to 1995.
Arthur E. Holden (2)(4)...................................... .............. 71 1978
President, Holden Oil., Inc. and Vice President,
Holden Bottled Gas, Inc. since prior to 1995.
Stephen G. Kasnet (2)(4)................................. .................. 54 1983
Chairman of the Board of Bancorp and Bancorp's
wholly owned subsidiary, Warren Five Cents Savings Bank (the
"Bank"), since prior to 1995; President, Pioneer Global
Investments, 1998 to present; President, Pioneer Real Estate
Advisors, Inc. since 1995 to present; President, Pioneer
Global Institutional Advisors, 1997 to 1998; President,
Management Board, Pioneer Polish Real Estate Fund, since
1997 to present; Executive Vice President, The Pioneer
Group, 1998 to present; Vice President, Pioneer Group,
(mutual fund complex, real estate investment management),
1995 to 1998; Managing Director of First Winthrop
Corporation and Winthrop Financial Associates (real estate
investment and management), since prior to 1995 to 1995;
Director, Bradley Real Estate Inc.; Trustee and Vice
President, Pioneer Real Estate Shares; Trustee and Vice
President, Pioneer Real Estate Shares (Dublin).
Linda Lerner (3)........................................................... 61 1995
Retired since 1995. President of Jilcraft, Inc. (business
communications) since prior to 1995.
Arthur J. Pappathanasi (3)................................................. 61 1995
President of West Lynn Creamery and Richdale Dairy
Stores, LLC since 1998. President and Chief Executive
Officer of West Lynn Creamery, Inc. and Richdale Dairy
Stores, Inc. since prior to 1995 to 1998.
George W. Phillips........................................................... 61 1991
Retired since 1997; President and Chief Executive
Officer of Bancorp and the Bank since prior to 1995 to 1997.
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NAME AND PRINCIPAL OCCUPATION FOR DIRECTOR
PAST FIVE YEARS; DIRECTORSHIPS AGE SINCE(1)
- ------------------------------ --- --------
John H. Womack............................................................... 55 1989
President and Chief Executive Officer, TJM Enterprise, Inc.,
(formerly JJS Services, Inc.) since 1998; President and Chief
Executive Officer, JJS Services, Inc. (janitorial services)
since prior to 1995 to 1998; President, Peabody Paper &
Industrial Supply since prior to 1995. Mr. Womack was
President of Classical Foods, Inc. which filed for
bankruptcy on June 20, 1996.
OTHER DIRECTORS
(TERMS TO EXPIRE IN 2002)
NAME AND PRINCIPAL OCCUPATION FOR DIRECTOR
PAST FIVE YEARS; DIRECTORSHIPS AGE SINCE(1)
- ------------------------------ --- --------
Peter V. Bent(3)............................................................. 54 1995
Owner/Manager of Brown's Yacht Yard since prior to 1995.
Paul J. Curtin (2)......................................................... 55 1976
Certified public accountant in private practice since prior to 1995.
Stephen R. Howe (3)............... ......................................... 64 1976
Certified public accountant in private practice since prior to 1995.
Arthur E. McCarthy(2)(4)........... ....................................... 64 1979
Vice President and Managing Director, Tucker
Anthony, Inc. (investment advisors) since prior to
1995; Director, Tucker Anthony, Inc.
John D. Smidt................................................................. 57 1989
President and Treasurer, John Smidt Co., Inc.
(contract leather finishing) since prior to 1995.
- ----------
(1) The year shown indicates the beginning of the period during which each
of the above-named persons has continuously served as a Director of
Bancorp. When used in this Proxy Statement, the term "Director" shall
include Directors of Bancorp who were Directors of the Bank prior to
its reorganization into holding company form in 1988 and Trustees of
the Bank prior to the Bank's conversion to stock form of organization
in 1986.
(2) Member of the Executive Committee.
(3) Member of the Finance, Audit and Compliance Committee.
(4) Member of the Nominating Committee.
John C. Jeffers, whose term as a Director expires on May 3, 2000, will
retire effective the date of the Annual Meeting as a result of having
reached the mandatory retirement age as provided by the Corporation's
By-laws.
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THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors of Bancorp held 10 meetings during 1999. During
1999 each incumbent Director, except Paul J. Curtin and John H. Womack, attended
75 percent or more of the total of all meetings of the Board of Directors and
the committees of the Board of Directors on which each served during the period
for which he or she served. The standing committees of the Board include: an
Executive Committee; a Finance, Audit and Compliance Committee and a Nominating
Committee. The Finance, Audit and Compliance Committee, and the Nominating
Committee are described below. The Executive Committee of Bancorp, acting
jointly with the Executive Committee of the Bank, both of which do not include
any employee Directors, is responsible for all compensation matters.
FINANCE, AUDIT AND COMPLIANCE COMMITTEE. At December 31, 1999, the
Finance, Audit and Compliance Committee consisted of Peter V. Bent, Francis L.
Conway, Robert R. Fanning, Jr., Stephen R. Howe, Chairman, John C. Jeffers,
Linda Lerner, and Arthur J. Pappathanasi. The Finance, Audit and Compliance
Committee reviews and approves the adequacy of management reporting and
financial and accounting control systems, as well as monitoring compliance with
state and federal laws and regulations. The Committee also approves the
selection of independent public accountants, reviews audit and compliance
examinations and reports, and approves and monitors appropriate action based
upon these reports, and reviews and advises with respect to material
transactions with Directors or officers. In addition, the Committee reviews and
approves matters relating to financial management and the capital markets.
Meetings are held as necessary to accomplish the objectives of the Committee,
and in 1999 the Committee met twice.
NOMINATING COMMITTEE. At December 31, 1999, the Nominating Committee
consisted of Stephen J. Connolly, IV, Robert R. Fanning, Jr., Arthur E. Holden,
Stephen G. Kasnet and Arthur E. McCarthy, Chairman. The Nominating Committee met
once during 1999. The Nominating Committee selects nominees for election as
Directors; determines committee assignments and recommends for Board approval
the policy regarding directors' compensation. Meetings are held as necessary to
accomplish the objectives of the Nominating Committee. The Nominating Committee
will consider written recommendations from any stockholder of record with
respect to nominees for Directors of Bancorp. Such nominations must be delivered
to or mailed to and received by Bancorp at its principal executive office no
later than March 5, 2001 and no earlier than December 4, 2000 to be considered
at the 2001 annual meeting. To submit a nomination, a stockholder should send
the nominee's name and the appropriate supporting information required by
Bancorp's By-laws to Susan G. Ouellette, Clerk, at Bancorp's principal executive
office (see "Stockholder Proposals").
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EXECUTIVE OFFICERS
The following table sets forth as of March 1, 2000 the names and ages
of all executive officers of Bancorp and its subsidiary, the Bank, the positions
and offices held by each of them with Bancorp and the Bank, the period during
which he has served as such, and the business experience of each during the
previous five years.
POSITIONS HELD AND
BUSINESS EXPERIENCE DURING
NAME THE PREVIOUS FIVE YEARS AGE
---- -------------------------- ---
John R. Putney President and Chief Executive Officer of 56
Bancorp and and the Bank since 1998;
Director of Bancorp and the Bank since
1997; Executive Vice President of Bancorp
and the Bank 1997; Senior Vice President
for Corporate Banking and Senior Lending
Officer of the Bank since prior to 1995 to
1997.
Paul M. Peduto Treasurer and Director of Bancorp and 50
Executive Vice President, Chief Financial
Officer, Treasurer and Director of the
Bank since prior to 1995.
Leo C. Donahue Senior Vice President for Personal Banking 50
of the Bank since prior to 1995.
Mark J. Terry Senior Vice President for Corporate 49
Banking and Senior Lending Officer of the
Bank since 1998; Senior Vice President,
Commercial Real Estate, 1996-1997; Senior
Vice President, Commercial Real Estate,
Eastern Bank, since prior to 1995 to 1996.
11
14
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Executive Committees (the "Committees") of the Boards of Directors
of Bancorp and the Bank, which are comprised of the same individuals, are
responsible for compensation policies and decisions. Bancorp does not pay any
separate compensation to the Chief Executive Officer or executive officers of
Bancorp, all of whom are executive officers of the Bank and receive compensation
in such capacities. Neither John R. Putney nor Paul M. Peduto is or was a member
of the Executive Committee of Bancorp or the Bank.
The Committees' policy with regard to executive compensation is as
follows: Salaries and perquisites, other than bonuses and option grants, are
based in part on the Committees' subjective evaluation of (a) publicly available
information concerning salaries and perquisites earned by individuals with
comparable responsibilities and positions at other public companies and (b) the
performance of Bancorp and the Bank and individual executive officers. The
salary and perquisites paid to the Chief Executive Officer in 1999 are specified
in a December 1997 employment agreement between the Chief Executive Officer and
Bancorp and the Bank. The Committees review the Chief Executive Officer's salary
each year, as required by his employment agreement, and increase his salary on
the bases described above. See "Executive Compensation (Salary and Bonus
Payments, Options Granted and Other) - Employment Agreement - John R. Putney,"
below. In the case of compensation for executive officers other than the Chief
Executive Officer, the Committees rely to a large extent upon the
recommendations of the Chief Executive Officer. Because the Committees believe
that employment opportunities for executive officers are not necessarily limited
to or coextensive with the financial institutions included in the Keefe,
Bruyette & Woods New England Bank Index or the Nasdaq Bank Index shown in the
performance graph below, its review of compensation information includes
companies not included in this industry index.
Bonuses and option grants to the Chief Executive Officer and other
executive officers are intended to provide annual and long-term compensation
incentives. Bonuses and option grants are awarded to executive officers other
than the Chief Executive Officer based mainly on the financial performance of
Bancorp and the Bank and on financial performance compared to targets for the
business segment for which each executive is responsible. In the case of the
Chief Executive Officer, financial performance is compared to targets for
Bancorp and the Bank as a whole. These targets are related mainly to net income,
return on stockholders' equity and credit quality. Bonuses were paid after the
Committees reviewed the financial performance of the Bank for 1999. Stock option
grants are intended to create incentives for the long-term growth and financial
success of Bancorp and the Bank and to increase the commonality of interest
between management and Bancorp's shareholders and are granted as and when
determined appropriate by the Committees. Stock option awards during 1999
reflect the Committees' review of the Bank's financial performance. The level of
bonuses and stock options awarded to individuals is not based on any formula;
instead, a general determination is made based on the above factors and, in the
case of executive officers other than the Chief Executive Officer, the
recommendations of the Chief Executive Officer.
MEMBERS OF THE EXECUTIVE COMMITTEE(S)
Paul J. Curtin
Robert R. Fanning, Jr.
Arthur E. Holden, Chairman
Stephen G. Kasnet
Arthur E. McCarthy
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15
EXECUTIVE COMPENSATION (SALARY AND BONUS PAYMENTS, OPTIONS GRANTED AND OTHER)
The following table sets forth the executive compensation paid for
services in all capacities to Bancorp, the Bank and its subsidiaries during
calendar years 1997, 1998 and 1999 for the Chief Executive Officer and all other
executive officers.
SUMMARY COMPENSATION TABLE
(1997-1999)
Annual Compensation Long Term
----------------------------------------------- Compensation
Name and principal position Other annual Awards All other
December 31, 1999 Year Salary($) Bonus($) Compensation($) Options(# of Shs.) Compensation ($)
--------------------------- ---- --------- -------- --------------- ------------------ ------------
John R. Putney* 1999 190,500 39,000 15,000 40,399(1)(5)
President, Chief Executive 1998 182,000 42,000 15,000 20,813
Officer and Director of 1997 126,815 32,000 7,000 21,184
Warren Bancorp, Inc., and
Warren Five Cents Savings Bank
Paul M. Peduto 1999 136,615 17,000 12,000 21,929(2)(5)
Treasurer and Director of 1998 132,115 17,000 11,600 20,457
Warren Bancorp, Inc.; 1997 133,019 14,000 5,800 21,889
Executive Vice President,
Chief Financial Officer,
Treasurer and Director of
Warren Five Cents Savings Bank
Leo C. Donahue 1999 106,461 10,000 10,000 16,499(3)(5)
Senior Vice President for 1998 102,917 12,000 10,600 11,307
Personal Banking of 1997 103.617 9,000 5,300 16,364
Warren Five Cents Savings Bank
Mark J. Terry 1999 114,615 27,500 12,000 22,427(4)(5)
Senior Vice President for 1998 110,288 27,500 11,600 12,418
Corporate Banking of 1997 111,000 37,000 4,000 19,084
Warren Five Cents Savings Bank
* Mr. Putney was elected President and CEO of Bancorp and the Bank effective
January 1, 1998.
- ----------
(1) Consists of contribution of $14,899 to Mr. Putney's 401(k) account and
premium paid for a split-dollar life insurance policy in the amount of
$25,500.
(2) Consists of contribution of $13,429to Mr. Peduto's 401(k) account and
premium paid for a split-dollar life insurance policy in the amount of
$8,500.
(3) Consists of contribution of $10,627 to Mr. Donahue's 401(k) account and
premium paid for a split-dollar life insurance policy in the amount of
$5,872.
(4) Consists of contribution of $10,527 to Mr. Terry's 401(k) account and
premium paid for a split-dollar life insurance policy in the amount of
$11,900.
(5) Owns a split-dollar life insurance policy provided by Bancorp. The
ownership of the policy is structured so that upon the executive's death,
retirement or other termination of employment, Bancorp will be reimbursed
for the cumulative premium amounts paid. The result is that over the life
of the program there is minimal cost to Bancorp.
13
16
EMPLOYMENT AGREEMENT - JOHN R. PUTNEY. Mr. Putney, who currently serves
as President and Chief Executive Officer and a director of Bancorp and the Bank,
entered into an employment agreement with Bancorp and the Bank effective January
1, 1998, the date he began serving as President and Chief Executive Officer. The
agreement is for an initial two-year term and automatically extends for an
additional one-year period on each anniversary. Mr. Putney may terminate the
agreement upon 90 days notice to the Bank subject to an obligation not to
solicit Bank customers on behalf of businesses engaged in banking or mortgage
lending or encourage Bank customers to terminate or adversely modify their
business relationship with the Bank. Mr. Putney is currently paid at a rate of
$205,000 per year. The agreement provides for base salary adjustments and
bonuses each year. Under the agreement the Bank also provides Mr. Putney with
the use of an automobile and customary insurance and retirement benefits.
CONSULTING AGREEMENT
CONSULTING AGREEMENT - GEORGE W. PHILLIPS. Mr. Phillips, who served as
President, Chief Executive Officer and director of Bancorp and the Bank from
prior to 1995 to 1997 and currently serves as a director of Bancorp, entered
into a consulting agreement with Bancorp effective January 1, 1998. For his
services Mr. Phillips is paid at a rate of $50,000 per year and has agreed to
waive director fees and other benefits during the term of the agreement. The
agreement expires May 31, 2000, and may be terminated for any reason by either
party with 60 days prior notice.
SEVERANCE ARRANGEMENTS
EMPLOYMENT AGREEMENT - JOHN R. PUTNEY. The employment agreement between
John R. Putney and Bancorp and the Bank provides that upon a "non-hostile change
of control" the term of the employment agreement shall automatically convert to
a term of three years from the date of the "change of control" and automatically
extend for an additional one-year period on each anniversary. "Non-hostile
change of control" is defined in the agreement and generally refers to a 25
percent or more change in ownership of the Common Stock of Bancorp which is
consented to by a two-thirds vote of the directors of Bancorp.
SPECIAL TERMINATION AGREEMENTS. Bancorp and the Bank have entered into
severance agreements with Leo C. Donahue, Paul M. Peduto, John R. Putney and
Mark J. Terry. Each severance agreement provides severance pay benefits to the
relevant officer if his employment is terminated under certain circumstances
following a "change of control." "Change of control" is defined in each
agreement and generally refers to a 25 percent or more change in ownership of
the Common Stock of Bancorp or the Bank which, in some cases, is not consented
to by the Board of Directors. If there is such a "change of control" at any time
during the term of the agreement, and thereafter the officer's employment were
terminated either by Bancorp or the Bank other than for "cause" or by the
officer following the officer's demotion, the officer's loss of title or office,
or a reduction in the officer's annual compensation, the officer would generally
be entitled to receive a lump sum cash payment equal to approximately three
times his average annual compensation over his five most recent years of
employment with Bancorp or the Bank. The agreements terminate upon the earliest
of termination of the officer's employment by Bancorp and the Bank for cause,
the officer's resignation or termination for any reason prior to a change in
control, or resignation after a change in control except for reasons just
described.
STOCK OPTION AGREEMENTS. Stock option agreements with Leo C. Donahue,
Paul M. Peduto, John R. Putney and Mark J. Terry provide that currently
exercisable stock options shall immediately vest in full and become exercisable
upon a "change of control," as defined in such stock option agreements.
14
17
STOCK OPTIONS
The following tables show, as to the executive officers named in the
Summary Compensation Table, information regarding options granted during 1999
and option values at December 31, 1999.
OPTION GRANTS IN 1999
Individual Grants
------------------------------------------------------------ Potential realizable value
Percent of at assumed annual rates
Total of stock appreciation
Options options granted Exercise or for option term (1)
granted to employees base price Expiration --------------------------
Name (# of Shs.) in 1999 ($/Sh) date 5%($) 10%($)
---- ----------- --------------- ----------- ---------- ------- --------
John R. Putney 15,000 10.95% $8.00 6/16/09 $75,468 $191,244
Paul M. Peduto 12,000 8.76% $8.00 6/16/09 $60,374 $152,995
Leo C. Donahue 10,000 7.30% $8.00 6/16/09 $50,312 $127,496
Mark J. Terry 12,000 8.76% $8.00 6/16/09 $60,374 $152,995
(1) The potential gain is calculated from the closing price of Common Stock on
the date of grants to executive officers. These amounts represent assumed
rates of appreciation only. Actual gains, if any, on stock option exercises
and common stock holdings depend entirely on the future performance of the
Common Stock and overall market conditions.
AGGREGATED OPTIONS EXERCISED IN 1999 AND
THE YEAR-END VALUE OF UNEXERCISED OPTIONS
Number of Value of unexercised
Unexercised options in-the-money options
Shares at year-end 1999(#) at year end 1999($)(1)
acquired on ------------------- ---------------------
exercise Value Exercisable/ Exercisable/
Name (# of Shs.) realized($) Unexercisable Unexercisable
---- ----------- ----------- ------------------- ---------------------
John R. Putney -0- -0- 34,320/28,720 $40,235/$2,783
Paul M. Peduto -0- -0- 29,920/23,320 $36,773/$2,783
Leo C. Donahue -0- -0- 51,680/20,720 $117,143/$2,783
Mark J. Terry -0- -0- 19,840/21,760 0/0
(1) The value of unexercised options is calculated using the difference between
the option exercise price and the closing price of the common Stock
reported by the Nasdaq National Market on December 31, 1999 ($7.500 per
share), multiplied by the number of shares that are subject to the options.
15
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RETIREMENT BENEFITS
EXECUTIVE SUPPLEMENTAL RETIREMENT ARRANGEMENT. An Executive
Supplemental Retirement Arrangement between George W. Phillips and Bancorp and
the Bank provides that Mr. Phillips is entitled to receive annual pension
benefits of $62,400 beginning January 1, 1998.
DIRECTORS' COMPENSATION
Directors of Bancorp receive $350 for each Board meeting that they
attend. Members of the Board committees and committee chairmen receive $300 for
each meeting that they attend.
Directors of the Bank receive $350 for each Board meeting they attend.
Committee members and committee chairmen receive $300 for each committee meeting
they attend. In addition, each Director receives an annual fee of $3,000.
Stephen G. Kasnet, who is Chairman of the Board of Bancorp and the
Bank, in addition to receiving compensation for Board and committee meeting
attendance, also receives an annual fee of $12,500.
Employees of Bancorp or the Bank who are also Directors of Bancorp or
the Bank do not receive directoral fees.
Each Director receives stock options for 3,000 shares of Bancorp Common
Stock per year under the 1995 Incentive and Nonqualified Stock Option Plan,
exercisable at the fair market value of Bancorp's Common Stock on the date of
grant. In addition, any new directors will receive a one-time grant of stock
options for 6,000 shares of Bancorp Common Stock.
George W. Phillips, who is a director of Bancorp, has agreed to waive
director fees and receipt of options. (See Consulting Agreement - George W.
Phillips, above).
Copies of the aforementioned agreements, plans and documents discussed
under "Executive Compensation" are available for inspection at Bancorp's office,
10 Main Street, Peabody, Massachusetts 01960.
16
19
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG WARREN BANCORP. INC., THE TOTAL
RETURN INDEX FOR THE NASDAQ STOCK MARKETS (U.S. COMPANIES), THE KEEFE, BRUYETTE
AND WOODS TOTAL RETURN INDEX FOR NEW ENGLAND BANKS AND THE TOTAL RETURN INDEX
FOR NASDAQ BANKS.
[PERFORMANCE GRAPH]
WARREN BANCORP, INC. WARREN NASDAQ KB&W(1) NASDAQ(1)
PRICE PLUS BANCORP, INC. U.S. COMPANIES NEW ENGLAND BANK
CUMULATIVE DIVIDENDS (INDEXED) INDEX BANK INDEX INDEX
--------------------- ------------- -------------- ----------- ---------
12/31/94 $ 4.000 100.00 100.00 100.00 100.00
12/31/95 5,802 145.06 137.70 156.08 147.36
12/31/96 8.066 201.65 169.62 215.58 186.77
12/31/97 12.955 323.89 226.33 370.62 303.15
12/31/98 10.840 271.00 292.05 342.49 268.49
12/31/99 9.669 241.72 354.04 303.96 248.60
- ----------
(1) Keefe, Bruyette & Woods, Inc. (KB&W) is an investment banking firm
specializing in banks and bank stock. Included in its published index are
total returns for 18 New England banks which were chosen by Keefe, Bruyette
& Woods for their range of asset size, market capitalization and
geographical dispersion. This is the last year for which KB&W will maintain
this index. The Corporation will use in its place the Nasdaq Bank Index,
which is a broad-based index of domestic and foreign common stocks of banks
that are traded on the Nasdaq National Market as well as the SmallCap
Market.
17
20
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Bank makes and has made loans to certain of its officers and
Directors and their associates. All of such loans were made in the ordinary
course of business and were made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with other persons. Management believes that such loans did not
involve more than the normal risk of collectibility or present other unfavorable
features.
Certain loans or other extensions of credit to principal officers and
Directors must be approved by the Bank's Loan Committee and the Board of
Directors, and reported annually to the Massachusetts Commissioner of Banks. In
addition, the Bank is subject to regulations of the Federal Deposit Insurance
Corporation which (i) require that such loans to principal officers be made on
the same rates, terms and conditions as loans to unaffiliated persons, and (ii)
impose reporting requirements, approval procedures and limits on the amounts of
such loans. As a matter of policy, the Bank also makes certain loans to other
employees.
18
21
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Arthur Andersen LLP has served as Bancorp's independent
public accountants since 1997. Representatives of Arthur Andersen LLP have
accepted an invitation to attend the Annual Meeting. They will have an
opportunity to make a statement should they so desire and will be available to
respond to appropriate questions.
OTHER MATTERS
The cost of soliciting proxies will be paid by Bancorp. In addition to
solicitation by mail, officers and employees of the Bank, who will receive no
compensation for their services other than their salaries, may solicit proxies
by telephone, telegraph or personal interview. Brokerage houses, nominees,
fiduciaries and other custodians are requested to forward soliciting material to
the beneficial owners of shares held of record by them and will be reimbursed
for their expenses.
It is not anticipated that matters other than those set forth in the
Notice of Annual Meeting and described in this Proxy Statement will be brought
before the Annual Meeting, but if any such matters are properly presented, the
persons named in the proxy will vote in accordance with their best judgment.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the next annual
meeting of stockholders must be received by Bancorp on or before November 30,
2000 in order to be considered for inclusion in Bancorp's proxy statement. These
proposals must also comply with the rules of the SEC governing the form and
content of proposals in order to be included in Bancorp's proxy statement and
form of proxy and should be directed to: Clerk, Warren Bancorp, Inc., 10 Main
Street, Peabody, MA 01960.
A stockholder who wishes to present a proposal at the next annual
meeting of stockholders, other than a proposal to be considered for inclusion in
Bancorp's proxy statement described above, must deliver the proposal to Bancorp
at the address above. Bancorp must receive the proposal not earlier than
December 4, 2000 and not later than March 5, 2001. The proposal must also comply
with the other requirements contained in Bancorp's By-laws, including supporting
documentation and other information. Proxies solicited by the Board of Directors
will confer discretionary voting authority with respect to these proposals,
subject to SEC rules governing the exercise of this authority.
By order of the Board of Directors
Susan G. Ouellette, Clerk
March 27, 2000
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REVOCABLE PROXY WITH- FOR ALL
[x] PLEASE MARK VOTES WARREN BANCORP, INC. FOR HOLD EXCEPT
AS IN THIS EXAMPLE [ ] [ ] [ ]
ANNUAL MEETING OF STOCKHOLDERS PROPOSAL #1:
MAY 3, 2000
To elect four Directors to hold
The undersigned hereby constitutes and appoints Stephen G. Kasnet, office until the 2003 Annual
John R. Putney and Paul M. Peduto, and each of them, as Proxies of the Meeting of Stockholders and
undersigned, with full power of substitution, and authorizes each of until their successors are duly
them to represent and to vote all shares of Common Stock of Warren elected and qualified.
Bancorp, Inc. (the "Company"), held by the undersigned at its close
of business on March 6, 2000, at the Annual Meeting of Stockholders STEPHEN J. CONNOLLY, IV PAUL M. PEDUTO
to be held on Wednesday, May 3, 2000, at 10:00 a.m., at the King's ROBERT R. FANNING, Jr. JOHN R. PUTNEY
Grant Inn, Route 128, Danvers, Massachusetts, or at any adjournments
or postponements thereof. INSTRUCTION: TO WITHHOLD ANTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, MARK "FOR ALL EXCEPT" AND WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
----------------------------------------------------
When properly executed, this proxy will be voted in
the manner directed herein by the undersigned
stockholder(s). If no direction is given, this proxy
will be voted FOR Proposal 1 and the Proxies are each
authorized in their discretion to vote upon such other
business as may properly come before the meeting or
any adjournments or postponements thereof. A
stockholder wishing to vote in accordance with the
Board of Directors' recommendations need only sign
and date this proxy and return it in the postage-paid
envelope provided.
Please be sure to sign and date ------------------------
this Proxy in the box below. Date
- -----------------------------------------------------------------------
- ---- Stockholder sign here -------- Co-holder (if any) sign above -----
DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
WARREN BANCORP. INC.
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PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
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