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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 [ ]
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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))
MASSBANK CORP.
(Name of Registrant as Specified In Its Charter)
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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MASSBANK CORP.
123 HAVEN STREET
READING, MASSACHUSETTS 01867
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 17, 2001
To the Stockholders of
MASSBANK CORP.:
The Annual Meeting of Stockholders of MASSBANK Corp. will be held at the
Crowne Plaza Woburn, 2 Forbes Road, Woburn, Massachusetts on Tuesday, April 17,
2001 at 10:00 a.m. (together with all adjournments and postponements thereof,
the "Annual Meeting"), for the following purposes:
1. To consider and act upon a proposal to elect four Directors to
serve until the 2002 Annual Meeting of Stockholders, three Directors to
serve until the 2003 Annual Meeting of Stockholders and four Directors to
serve until the 2004 Annual Meeting of Stockholders and until their
respective successors are duly elected and qualified; and
2. To consider and act upon any other matters which may properly come
before the Annual Meeting.
Only stockholders of record at the close of business on February 28, 2001
are entitled to notice of and to vote at the Annual Meeting.
By Order of the Board of Directors,
ROBERT S. CUMMINGS, Secretary
Reading, Massachusetts
March 22, 2001
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE
COMPLETE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE
PROVIDED. IF YOU WISH TO VOTE YOUR STOCK IN PERSON AT THE ANNUAL MEETING, YOUR
PROXY MAY BE REVOKED.
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MASSBANK CORP.
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 17, 2001
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of MASSBANK Corp. (the "Corporation") for the
Annual Meeting of Stockholders of the Corporation, and any adjournments or
postponements thereof (the "Annual Meeting"). At the Annual Meeting,
stockholders will consider and act upon the matters set forth in the
accompanying Notice of Annual Meeting of Stockholders.
Stock transfer books will not be closed, but the Board of Directors has
fixed the close of business on February 28, 2001 as the record date for
determining the stockholders entitled to notice of and to vote at the Annual
Meeting. On that date, there were outstanding 3,145,743 shares of common stock,
par value $1.00 per share ("Common Stock"), and the holders thereof on that date
are entitled to one vote for each share held by them.
The presence, in person or by proxy, of holders of at least a majority of
the total number of outstanding shares of Common Stock entitled to vote is
necessary to constitute a quorum for the transaction of business at the Annual
Meeting. The Corporation intends to count abstentions and broker non-votes as
present for purposes of determining the presence or absence of a quorum for the
transaction of business at the Annual Meeting. A broker non-vote occurs when a
broker or other nominee holding shares for a beneficial owner votes on one
proposal, but does not vote on another proposal because such broker or other
nominee does not have discretionary voting power as to the proposal and has not
received voting instructions from the beneficial owner.
A quorum being present, Directors will be elected by a plurality of the
votes cast. Votes may only be cast in favor or withheld from the nominees; there
is no ability to abstain. Accordingly, votes that are withheld and broker
non-votes will have no effect on the results of the vote for the election of
Directors.
The cost of soliciting proxies will be borne by the Corporation. The
solicitation of proxies by mail may be followed by the solicitation of certain
stockholders by officers or regular employees of the Corporation by telephone or
oral communication. The enclosed proxy, if executed and returned, may be revoked
at any time before it has been exercised (i) by delivery of a revocation in
writing to the Secretary of the Corporation at the principal executive offices
of the Corporation (123 Haven Street, Reading, Massachusetts 01867), (ii) by
delivering a later-dated proxy, or (iii) by voting in person at the Annual
Meeting. Attendance at the Annual Meeting will not by itself constitute
revocation of a proxy.
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Stockholders are requested to complete, date, sign and return the
accompanying proxy in the enclosed envelope. Shares represented by a properly
executed proxy received prior to the vote at the Annual Meeting and not revoked
will be voted at the Annual Meeting as directed on the proxy. If a properly
executed proxy is submitted and no instructions are given, the proxy will be
voted FOR the election of the eleven nominees for Director set forth herein. It
is not anticipated that any other matters than those set forth in this Proxy
Statement will be presented at the Annual Meeting. If other matters are
presented, proxies will be voted in accordance with the discretion of the proxy
holders.
The approximate date on which this Proxy Statement and the enclosed proxy
are first being sent to stockholders is March 22, 2001. The Corporation's 2000
Annual Report, including financial statements for the fiscal year ended December
31, 2000, is being mailed to stockholders concurrently with this Proxy
Statement. The Annual Report, however, is not part of the proxy soliciting
materials.
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PROPOSAL ONE
ELECTION OF DIRECTORS
In accordance with the Corporation's Restated Certificate of Incorporation
and By-Laws, the Board of Directors is divided into three approximately equal
classes, with each Director serving for a term of three years. As a consequence,
the term of only one class of Directors expires each year, and their successors
are elected for terms of three years. The Board of Directors is presently
comprised as follows:
Class I: Ms. Pettinelli, Messrs. Costello and Marshall and Dr.
Stackhouse, who were elected to serve until the 2002 Annual
Meeting of Stockholders and until their successors are elected
and qualified.
Class II: Messrs. Bedell, Bufferd, Lapidus and Schurian, who were elected
to serve until the 2003 Annual Meeting of Stockholders and until
their successors are elected and qualified.
Class III: Messrs. Altschuler, Brandi, Carr and Cummings, who were elected
to serve until the 2001 Annual Meeting of Stockholders and until
their successors are elected and qualified.
In order to better facilitate the Directors' long-term contribution to the
Corporation, and to maximize each Director's term in light of the mandatory
retirement age as set forth in the Corporation's By-Laws, the Board of Directors
has decided to realign the classes of Directors. The Board of Directors has
nominated eleven Class I, Class II and Class III Directors to stand for election
at the Annual Meeting to serve for terms as follows. Each of Messrs. Brandi,
Carr, Cummings and Schurian will stand for election at the Annual Meeting as
Class I Directors to serve until the 2002 Annual Meeting of Stockholders and
until their successors are elected and qualified. Each of Mr. Bufferd, Ms.
Pettinelli and Dr. Stackhouse will stand for election at the Annual Meeting as
Class II Directors to serve until the 2003 Annual Meeting of Stockholders and
until their successors are elected and qualified. Each of Messrs. Bedell,
Costello, Lapidus and Marshall will stand for election at the Annual Meeting as
Class III Directors to serve until the 2004 Annual Meeting of Stockholders and
until their successors are elected and qualified. Mr. Altschuler has reached the
mandatory retirement age and, therefore, is not standing for election at the
Annual Meeting.
Unless otherwise noted thereon, proxies solicited hereby which are executed
and returned on a timely basis will be voted for the election of the Board of
Directors' nominees. The Corporation believes that each nominee for Director
will be able to serve. If one or more of such nominees should be unable to
serve, the individuals named in the enclosed proxy will vote for such other
person or persons, if any, as the Board of Directors at the time may recommend
to serve in place of the person or persons unable to serve.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION
OF ITS NOMINEES.
Set forth below is information regarding (i) the nominees for election as
Class I, Class II and Class III Directors at the Annual Meeting and (ii) the
Director whose term expires at the Annual Meeting.
SAMUEL ALTSCHULER RETIRED AS EXECUTIVE VICE PRESIDENT AND DIRECTOR, SANMINA
CORPORATION
[PICTURE OF SAMUEL ALTSCHULER]
Mr. Altschuler, 73, has served as a Director since 1986 and as a Trustee of
a predecessor bank since 1979. He is also a member of the Compensation and
Option Committee of the Corporation. Mr. Altschuler was Chairman, President and
a Director of Altron, Inc., a manufacturer of electronic interconnect products,
since founding the company in 1970. In December 1998, Mr. Altschuler became
Executive Vice President and a Director of Sanmina Corporation, a provider of
electronic manufacturing services and the successor of Altron, Inc. Mr.
Altschuler retired from such positions in May 1999. Mr. Altschuler is a past
President of IPC, an industry trade association.
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MATHIAS B. BEDELL RETIRED AS PRESIDENT OF BEDELL BROTHERS INSURANCE AGENCY
[PICTURE OF MATHIAS B. BEDELL]
Mr. Bedell, 68, has served as a Director since 1986 and as a Trustee of a
predecessor bank since 1965. Mr. Bedell is also a member of the Executive
Committee of the Corporation and a Director and Executive Committee member of
MASSBANK (the "Bank"), the Corporation's principal subsidiary. He also serves on
the Insurance Committee of the Corporation and as Chairman of the Compensation
and Option Committee of the Corporation.
GERARD H. BRANDI CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER,
MASSBANK CORP. AND MASSBANK
[PICTURE OF GERARD H. BRANDI]
Mr. Brandi, 52, has served as a Director since 1986. He first joined a
predecessor bank in 1975 and became a Trustee in 1978. He has served the Bank
and the Corporation in various capacities over the past twenty-five years. Mr.
Brandi was named President of the Corporation and the Bank in 1986, Chief
Executive Officer in 1992 and Chairman in 1993. Mr. Brandi is also Chairman of
the Executive Committees of the Corporation and the Bank, a member of the
Asset/Liability Committee of the Corporation and a member of the Trust Committee
of the Bank. He is a Director of the Depositors Insurance Fund, The Lowell Plan,
the New England Automated Clearing House, Connecticut On Line Computer Center
and the Massachusetts Bankers Association. He also serves as Vice President and
Director of the Lowell Development and Financial Corp., Treasurer and Director
of the Massachusetts Society for the Prevention of Cruelty to Animals,
Massachusetts State Chairman of the American Bankers Association, and Director
of the Savings Banks Employees Retirement Association and Chairman of its
Investment Committee.
ALLAN S. BUFFERD TREASURER, MASSACHUSETTS INSTITUTE OF TECHNOLOGY
[PICTURE OF ALLAN S. BUFFERD]
Mr. Bufferd, 63, has served as a Director since 1995. He is also a member
of the Asset/Liability Committee of the Corporation. Mr. Bufferd serves as a
Trustee of the Beth Israel Deaconess Medical Center, a Trustee of the Whiting
Foundation and Chairman of the Board of Trustees of Wheelock College. He is also
a member of the Investment Subcommittee of the Commonwealth of Massachusetts
Pension Retirement Investments Trust and of the Investment Advisory Board of the
Alaska Permanent Fund Corporation. In addition, he is the Chairman of the
Harvard Cooperative Society and a Director of MASCO.
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PETER W. CARR RETIRED AS VICE PRESIDENT/FINANCE OF GUILFORD TRANSPORTATION
INDUSTRIES
LOGO
ALEXANDER S. COSTELLO EDITORIAL PAGE EDITOR, THE LOWELL SUN
LOGO
ROBERT S. CUMMINGS ATTORNEY, SENIOR COUNSEL OF NIXON PEABODY LLP
LOGO
Mr. Carr, 70, has served as a Director since 1986 and as a Trustee of a
predecessor bank since 1980. Mr. Carr is also the Chairman of
the Audit Committee of the Corporation.
Mr. Costello, 47, has served as a Director since 1993. He is a member of the
Audit Committee of the Corporation. Mr. Costello was the
Chairman of the Board of Directors of The Lowell Plan, a
non-profit organization dedicated to the revitalization of the
City of Lowell, and is a member of the Board of Governors of
Saints' Memorial Hospital of Lowell.
Mr. Cummings, 70, has served as a Director since 1986 and as a Trustee of a
predecessor bank since 1979. Mr. Cummings is Secretary of the
Corporation, a member of the Executive Committee of the
Corporation and a Director and Executive Committee member of
the Bank. He also serves on the Compensation and Option
Committee of the Corporation and as Chairman of the Trust
Committee of the Bank. Mr. Cummings is a Trustee and Secretary
of Hallmark Healthcare, Chairman of the Commissioners of Trust
Funds of the Town of Reading, Chairman and Director of the
Massachusetts Society for the Prevention of Cruelty to
Animals, Vice President, Treasurer, Director and Executive
Committee member of the World Society for the Prevention of
Cruelty to Animals and member of the Board of Directors of the
Burbank YMCA.
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LEONARD LAPIDUS BANKING AND BANK REGULATION CONSULTANT
[PICTURE OF LEONARD LAPIDUS]
Mr. Lapidus, 71, has served as a Director since 1994. He is a member of the
Asset/Liability Committee of the Corporation. Mr. Lapidus served as a Director
of the Bank from 1994 to 1995. Mr. Lapidus served from 1981 to 1994 as President
of the Depositors Insurance Fund, a fund established under Massachusetts law to
provide deposit insurance to Massachusetts savings banks. From 1995 to 1999, he
was a United States Government official who advised, and arranged to place
advisors with, the governments of former Soviet bloc countries and emerging
nations to help them reform their banking and bank regulatory systems. Since
June 1999, Mr. Lapidus has been a self-employed consultant on banking and bank
regulatory systems.
STEPHEN E. MARSHALL PRESIDENT AND TREASURER, C. H. CLEAVES INSURANCE AGENCY,
INC.
[PICTURE OF STEPHEN E. MARSHALL]
Mr. Marshall, 62, has served as a Director since 1986 and as a Trustee of a
predecessor bank since 1972. He is a member of the Executive Committee of the
Corporation and a Director and Executive Committee member of the Bank. Mr.
Marshall is also Chairman of the Insurance Committee of the Corporation. Mr.
Marshall's affiliations include the Professional Insurance Agents of
Massachusetts. Mr. Marshall is associated with various local charitable, civic
and church organizations.
NANCY L. PETTINELLI EXECUTIVE DIRECTOR, VISITING NURSE ASSOCIATION OF GREATER
LOWELL, INC.
[PICTURE OF NANCY L. PETTINELLI]
Ms. Pettinelli, 54, has served as a Director since October 1998. She is a
member of the Compensation and Option Committee and the Insurance Committee of
the Corporation. Ms. Pettinelli was the Director of Clinical Services for the
Visiting Nurse Association of Greater Lowell, Inc. from 1986 through April 1995
and has served as its Executive Director thereafter.
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HERBERT G. SCHURIAN CERTIFIED PUBLIC ACCOUNTANT
[PICTURE OF HERBERT G. SCHURIAN]
Mr. Schurian, 64, has served as a Director since 1986 and as a Trustee of a
predecessor bank since 1973. He is a member of the Executive Committee of the
Corporation and a Director and an Executive Committee member of the Bank. He is
Chairman of the Asset/Liability Committee and a member of the Audit Committee of
the Corporation. Mr. Schurian is associated with various professional, civic and
local charitable organizations.
DONALD B. STACKHOUSE, D.M.D. RETIRED AS PRESIDENT OF DENTAL HEALTH CONCEPTS
[PICTURE OF DONALD B. STACKHOUSE, D.M.D.]
Dr. Stackhouse, 69, has served as a Director since 1986 and as a Trustee of
a predecessor bank since 1972. He is also a member of the Executive Committee of
the Corporation and a Director and an Executive Committee member of the Bank.
Dr. Stackhouse is a former Clinical Professor in Graduate Prothodontics at Tufts
University and a Director of the L.D. Pankey Dental Institute.
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The following chart shows the number of shares of the Corporation's Common
Stock beneficially owned by each Director and named executive officer of the
Corporation as of January 16, 2001.
SHARES OF
COMMON STOCK
BENEFICIALLY PERCENT
NAME OWNED(1) OF CLASS(2)
---- ------------ -----------
Samuel Altschuler........................................... 19,239 *
Mathias B. Bedell........................................... 30,860(3) *
Gerard H. Brandi............................................ 163,574(4)(5) 5.1%
Allan S. Bufferd............................................ 5,150(6) *
Peter W. Carr............................................... 17,750(6) *
David F. Carroll............................................ 38,429(5)(6) 1.2%
Reginald E. Cormier......................................... 42,015(5) 1.3%
Alexander S. Costello....................................... 8,250 *
Robert S. Cummings.......................................... 26,150 *
Leonard Lapidus............................................. 6,349 *
Stephen E. Marshall......................................... 10,665(7) *
Nancy L. Pettinelli......................................... 2,000 *
Herbert G. Schurian......................................... 20,950(8) *
Dr. Donald B. Stackhouse.................................... 24,057(9) *
Donald R. Washburn.......................................... 43,732(5)(10) 1.4%
Donna H. West............................................... 43,234(5)(11) 1.4%
All Directors and executive officers as a group (17
persons).................................................. 515,252(5)(12) 15.1%
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* Less than 1%.
(1) Unless otherwise indicated, each person named has sole voting and sole
investment power with respect to all shares indicated. Includes the
following number of shares that the above listed Directors and executive
officers have the right to acquire within 60 days through the exercise of
options granted pursuant to the Corporation's 1986 Stock Option Plan or
Amended and Restated 1994 Stock Incentive Plan: Mr. Altschuler, 13,750
shares; Mr. Bedell, 15,750 shares; Mr. Brandi, 32,000 shares; Mr. Bufferd,
4,750 shares; Mr. Carr, 13,750 shares; Mr. Carroll, 23,417 shares; Mr.
Cormier, 18,133 shares; Mr. Costello, 8,250 shares; Mr. Cummings, 18,750
shares; Mr. Lapidus, 6,083 shares; Mr. Marshall, 9,750 shares; Ms.
Pettinelli, 2000 shares; Mr. Schurian, 14,750 shares; Dr. Stackhouse,
15,417 shares; Mr. Washburn, 23,317 shares; and Ms. West, 23,317 shares,
respectively. Does not include the following number of units of securities
(contracts issued to the holder under the Corporation's Deferred
Compensation Plan) whose value per unit is derived from changes in the
market price per share of the Corporation's Common Stock: Mr. Bedell, 6,218
units; Mr. Bufferd, 428 units; Mr. Cummings, 6,218 units; Mr. Lapidus, 469
units; Mr. Marshall, 165 units and Ms. Pettinelli 130 units.
(2) Calculated on the basis of 3,160,693 outstanding shares as of January 16,
2001.
(3) Includes 3,684 shares owned by Mr. Bedell's spouse, as to which shares Mr.
Bedell disclaims beneficial ownership.
(4) Includes 811 shares held by Mr. Brandi as custodian for various nieces and
nephews and 9,898 shares owned by Mr. Brandi's spouse, as to all of which
shares Mr. Brandi disclaims beneficial ownership. Also
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includes 89,843 shares owned jointly with Mr. Brandi's spouse, with respect
to which shares Mr. and Mrs. Brandi share voting and investment power.
(5) Includes shares allocated to the accounts of executive officers under the
Bank's Employee Stock Ownership Plan (the "ESOP"). The number of such
allocated shares included in the above table is as follows: Mr. Brandi --
15,336; Mr. Carroll -- 6,592; Mr. Cormier -- 5,633; Mr. Washburn -- 7,224;
Ms. West -- 6,760; and all executive officers as a group (six persons) --
44,307. Does not include any portion of the unallocated shares under the
ESOP which may be deemed to be beneficially owned by participating
executive officers as a result of their ability to direct the voting of
such shares through the voting of shares allocated to their accounts under
the ESOP. The number of such unallocated shares over which the executive
officers may exercise voting power is as follows: Mr. Brandi -- 1,929; Mr.
Carroll -- 829; Mr. Cormier -- 708; Mr. Washburn -- 908; Ms. West -- 850;
and all executive officers as a group -- 5,572.
(6) Voting and investment power for these shares (other than shares which may
be acquired through the exercise of options as described above) is shared
with spouse as to all shares indicated.
(7) Includes 750 shares owned jointly with Mr. Marshall's spouse, with respect
to which shares Mr. and Mrs. Marshall share voting and investment power.
(8) Includes 3,800 shares owned by Mr. Schurian's spouse and 400 shares owned
jointly by his spouse and son, as to all of which shares Mr. Schurian
disclaims beneficial ownership.
(9) Includes 4,000 shares owned by Dr. Stackhouse's spouse, as to which shares
Dr. Stackhouse disclaims beneficial ownership.
(10) Includes 2,400 shares owned jointly with Mr. Washburn's spouse, with
respect to which shares Mr. and Mrs. Washburn share voting and investment
power.
(11) Includes 341 shares held by Ms. West as custodian for her grandson and
granddaughter, as to which shares Ms. West disclaims beneficial ownership.
(12) Includes 253,267 shares that such persons have the right to acquire through
the exercise of options granted pursuant to the Corporation's 1986 Stock
Option Plan or Amended and Restated 1994 Stock Incentive Plan.
BOARD AND COMMITTEE MEETINGS
During 2000, the Board of Directors of the Corporation held four meetings,
the Executive Committee of the Corporation held ten meetings, the Audit
Committee of the Corporation held four meetings and the Compensation and Option
Committee of the Corporation held one meeting. During 2000, each incumbent
Director attended at least 75% of the aggregate number of meetings of the
Corporation's Board of Directors and of the committees of which he or she was a
member, with the exception of Messrs. Marshall, Altschuler and Carr who attended
64%, 67% and 63% of the meetings, respectively.
The Executive Committee of the Corporation consists of Messrs. Bedell,
Brandi, Cummings, Marshall and Schurian and Dr. Stackhouse and is vested with
the authority of the Board of Directors in most matters between Board meetings.
The Audit Committee of the Corporation consists of Messrs. Carr, Costello and
Schurian and is responsible for reviewing the Corporation's financial statements
and the scope of the audit, reviewing the Corporation's internal financial and
accounting controls and recommending to the Board the appointment of independent
auditors. The Compensation and Option Committee of the Corporation consists of
Messrs. Altschuler, Bedell and Cummings and Ms. Pettinelli. The Compensation and
Option Committee is responsible for making recommendations to the Board of
Directors of the Bank with respect to the policies which govern both annual
compensation and incentive stock ownership programs for the employees of the
Bank.
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The Board of Directors of the Corporation acts as a nominating committee,
selecting nominees for election as Directors and executive officers. The Board
considers the recommendation of any stockholder with respect to nominees for
election to the Board if such recommendation is timely in accordance with, and
is accompanied by the information required by, the Corporation's By-Laws. To
make a recommendation, a stockholder should send the nominee's name and
supporting information to the Secretary of the Corporation at the Corporation's
principal offices. See "Stockholder Proposals."
PRINCIPAL STOCKHOLDERS
The following table sets forth information with respect to each holder who,
to the knowledge of the Corporation, beneficially owned more than 5% of the
Corporation's Common Stock as of December 31, 2000.
AMOUNT OF PERCENT OF
BENEFICIAL OWNERSHIP OF COMMON STOCK
NAME AND ADDRESS CORPORATION'S COMMON STOCK BENEFICIALLY OWNED(1)
---------------- -------------------------- ---------------------
Private Capital Management, Inc.(2) ......... 338,294 10.7%
3003 North Tamiami Trail
Naples, FL 33940
Dimensional Fund Advisors Inc.(3)............ 197,499 6.2%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Heartland Advisors, Inc.(4).................. 195,098 6.2%
789 North Water Street
Milwaukee, WI 53202
First Manhattan Co.(5)....................... 191,188 6.0%
437 Madison Avenue
New York, NY 10022
BKF Capital Group, Inc.(6)................... 182,218 5.8%
200 West Madison Street
Chicago, IL 60606
Gerard H. Brandi(7).......................... 162,574 5.1%
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(1) Calculated on the basis of 3,160,693 outstanding shares as of January 16,
2001.
(2) Private Capital Management, Inc. ("PCM") is an investment adviser registered
under the Investment Advisers Act of 1940 (the "Advisers Act"). According to
a filing made by PCM with the Securities and Exchange Commission (the "SEC")
on Schedule 13F dated February 14, 2001, PCM, in its role as investment
adviser, possesses shared voting power and shared dispositive power over the
338,294 above shares which had been purchased for the accounts of investment
advisory clients of PCM.
(3) Dimensional Fund Advisors Inc. ("Dimensional") is an investment adviser
registered under the Advisers Act, which furnishes investment advice to four
investment companies registered under the Investment Company Act and serves
as investment manager to certain other investment vehicles (such investment
companies and investment vehicles, collectively, the "Portfolios").
According to a filing made by it with the SEC on Schedule 13G dated February
2, 2001, Dimensional, in its role as investment adviser and investment
manager, possesses sole voting power and sole dispositive power over the
197,499 above shares which are owned by the Portfolios.
(4) Heartland Advisors, Inc. ("Heartland") is an investment adviser registered
under the Advisors Act. According to a joint filing made by Heartland and
William J. Nasgovitz with the SEC on Schedule 13G dated January 15, 2001,
Heartland possesses sole voting power over 5,065 of the above shares and
sole dispositive power over 195,098 of the above shares. Mr. Nasgovitz is
President, principal shareholder and
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a director of Heartland which positions could be deemed to confer upon him
beneficial ownership of 190,033 shares and voting power over the shares
Heartland beneficially owns.
(5) First Manhattan Co. ("First Manhattan") is a broker or dealer registered
under the Securities Exchange Act of 1934 and an investment adviser
registered under the Advisers Act. According to a filing made by it with the
SEC on Schedule 13G dated February 8, 2001, First Manhattan possesses sole
voting power over 164,587 of the above shares, shared voting power over
7,001 of the above shares, sole dispositive power over 164,587 of the above
shares and shared dispositive power over 26,601 of the above shares.
(6) BKF Capital Group, Inc. ("BKF") is an investment company registered under
the Investment Company Act of 1940 (the "Investment Company Act"). According
to a joint filing made by BKF and John A. Levin & Co., Inc. ("Levin") with
the SEC on Schedule 13G dated February 14, 2001, BKF possesses sole voting
power over 18,265 of the above shares, shared voting power over 77,965 of
the above shares, sole dispositive power over 18,265 of the above shares and
shared dispositive power over 163,953 of the above shares. Levin, an
investment adviser under the Advisers Act, holds for the accounts of its
investment advisory clients the above 182,218 shares. BKF is the sole
shareholder of Levin Management Co., Inc., which is the sole shareholder of
Levin. BKF, therefore, may be deemed the beneficial owner of the above
182,218 shares held by Levin.
(7) Gerard H. Brandi is the Chairman of the Board, President and Chief Executive
Officer of the Corporation. According to a filing made by Mr. Brandi with
the SEC on Schedule 13G dated February 13, 2001, Mr. Brandi possesses sole
voting power over 62,833 of the above shares, shared voting power over
89,843 of the above shares, sole dispositive power over 47,497 of the above
shares and shared dispositive power over 89,843 of the above shares.
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EXECUTIVE COMPENSATION
Until the Corporation becomes actively involved in other business, no
separate compensation is being paid to the executive officers of the
Corporation, all of whom are executive officers of the Bank and receive
compensation as such.
SUMMARY OF COMPENSATION
The following table sets forth for the fiscal years ended December 31,
2000, 1999 and 1998, a summary of the compensation paid by the Bank to the Chief
Executive Officer and the four additional executive officers whose remuneration
from the Corporation and its subsidiaries exceeded $100,000 during 2000.
LONG TERM
COMPENSATION
---------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION ----------------------- -------
--------------------------------------- RESTRICTED
OTHER ANNUAL STOCK SECURITIES LTIP ALL OTHER
SALARY BONUS COMPENSATION AWARD(S) UNDERLYING PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) OPTIONS(#) ($) ($)(1)
- --------------------------- ---- ------ ----- ------------ ---------- ---------- ------- ------------
Gerard H. Brandi......... 2000 400,000 50,000 (2) -0- 2,500 -0- 93,660(3)
Chairman, President 1999 366,000 110,000 (2) -0- 2,500 -0- 73,420(3)
and Chief Executive 1998 351,000 90,000 (2) -0- 2,500 -0- 74,837(3)
Officer
Donald R. Washburn....... 2000 123,600 11,124 (2) -0- 2,000 -0- 10,300(4)
Senior Vice President, 1999 119,100 20,000 (2) -0- 2,000 -0- 9,984(4)
Lending 1998 114,600 21,000 (2) -0- 1,750 -0- 12,280(4)
Donna H. West............ 2000 123,600 16,068 (2) -0- 2,000 -0- 10,284(5)
Senior Vice President, 1999 118,200 20,000 (2) -0- 2,000 -0- 9,734(5)
Community Banking 1998 113,400 18,500 (2) -0- 1,750 -0- 12,417(5)
Reginald E. Cormier...... 2000 110,400 14,352 (2) -0- 2,000 -0- 9,067(6)
Senior Vice President, 1999 102,480 17,000 (2) -0- 2,000 -0- 8,391(6)
Treasurer and Chief 1998 97,800 15,500 (2) -0- 1,750 -0- 10,762(6)
Financial Officer
David F. Carroll......... 2000 99,000 8,910 (2) -0- 1,000 -0- 7,548(7)
Vice President, 1999 96,600 6,000 (2) -0- 2,000 -0- 7,496(7)
Operations 1998 93,600 8,500 (2) -0- 1,750 -0- 9,977(7)
- ---------------
(1) Includes (i) the cash value of shares of MASSBANK Corp. Common Stock
acquired by the ESOP and allocated to the named party (but excluding any
allocation of dividends and interest thereunder), and (ii) such other items
as are disclosed in individual footnotes below. Such cash value was
determined by multiplying the number of shares of Common Stock so allocated
by the closing price of the Common Stock on December 31 of the applicable
year.
(2) Perquisites did not exceed 10% of total salary and bonus.
(3) Consists of the Bank's payment of permanent life insurance premiums in the
amount of $3,226 in each of 2000, 1999 and 1998 under Mr. Brandi's executive
supplemental retirement agreement, ESOP allocations valued at $11,567,
$11,494 and $14,961 representing 395, 390 and 382 shares of Common Stock on
December 31, 2000, 1999 and 1998, respectively, determined in accordance
with footnote 1 above, and contributions of $78,867, $58,700 and $56,650 to
a rabbi trust for a deferred compensation program for Mr. Brandi in 2000,
1999 and 1998, respectively.
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(4) Consists of ESOP allocations of $10,300, $9,984 and $12,280 representing
352, 338 and 314 shares of Common Stock at December 31, 2000, 1999 and 1998,
respectively, determined in accordance with footnote 1 above.
(5) Consists of ESOP allocations of $10,284, $9,734 and $12,417 representing
352, 330 and 317 shares of Common Stock at December 31, 2000, 1999 and 1998,
respectively, determined in accordance with footnote 1 above.
(6) Consists of ESOP allocations of $9,067, $8,391 and $10,762 representing 310,
284 and 275 shares of Common Stock at December 31, 2000, 1999 and 1998,
respectively, determined in accordance with footnote 1 above.
(7) Consists of ESOP allocations of $7,548, $7,496 and $9,977 representing 258,
254 and 255 shares of Common Stock at December 31, 2000, 1999 and 1998,
respectively, determined in accordance with footnote 1 above.
OPTION GRANTS
The following table sets forth certain information regarding options
granted during 2000 to the Chief Executive Officer and the other executive
officers named above.
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------------ VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SHARES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM
OPTIONS EMPLOYEES BASE PRICE ----------------------
NAME GRANTED IN FISCAL YEAR PER SHARE EXPIRATION DATE 5% 10%
---- ---------- -------------- ----------- --------------- --------- ----------
Gerard H. Brandi..... 2,500 9.4% $28.50 January 17, 2010 $44,809 $113,554
Chairman, President
and Chief Executive
Officer
Donald R. Washburn... 2,000 7.5% $28.50 January 17, 2010 $35,847 $ 90,843
Senior Vice
President, Lending
Donna H. West........ 2,000 7.5% $28.50 January 17, 2010 $35,847 $ 90,843
Senior Vice
President,
Community Banking
Reginald E.
Cormier............ 2,000 7.5% $28.50 January 17, 2010 $35,847 $ 90,843
Senior Vice
President,
Treasurer and Chief
Financial Officer
David F. Carroll..... 1,000 3.8% $28.50 January 17, 2010 $17,923 $ 45,422
Vice President,
Operations
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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUE
The following table sets forth certain information regarding options
exercised during the fiscal year ended December 31, 2000 and options held as of
December 31, 2000 by the Chief Executive Officer and the other executive
officers named above.
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES ACQUIRED VALUE FISCAL YEAR END FISCAL YEAR END
NAME ON EXERCISE REALIZED EXERCISABLE / UNEXERCISABLE EXERCISABLE / UNEXERCISABLE
---- --------------- -------- --------------------------- ---------------------------
Gerard H. Brandi......... 500 $ 6,625 22,669/0 $234,188/0
Chairman, President and
Chief Executive Officer
Donald R. Washburn....... -- -- 16,233/0 $172,775/0
Senior Vice President,
Lending
Donna H. West............ 1,050 $17,569 16,233/0 $176,713/0
Senior Vice President,
Community Banking
Reginald E. Cormier...... -- -- 11,050/0 $ 98,059/0
Senior Vice President,
Treasurer and Chief
Financial Officer
David F. Carroll......... -- -- 16,333/0 $196,313/0
Vice President,
Operations
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COMPARATIVE STOCK PERFORMANCE BY THE CORPORATION
COMPARISON OF TEN YEAR CUMULATIVE TOTAL RETURN
The following chart compares the performance of the Common Stock of the
Corporation (assuming reinvestment of dividends) with the S&P 500 Index and a
group comprised of 14 industry peers, including the Corporation (the "Peer
Group"), over a ten-year period. The chart assumes a $100 investment was made on
December 31, 1990 in the Common Stock of MASSBANK Corp., the stocks included in
the S&P 500 and the stocks of the Peer Group. Data for the chart was provided to
the Corporation by The Bloomberg. Information about the indices and the Peer
Group which was provided by The Bloomberg is believed to be reliable, but
neither the accuracy nor the completeness of such information is guaranteed by
the Corporation.
COMPARISON OF TEN YEAR CUMULATIVE TOTAL RETURN
AMONG MASSBANK CORP., THE S&P 500 INDEX AND THE PEER GROUP
[PERFORMANCE CHART]
MASSBANK CORP. S&P 500 INDEX PEER GROUP
-------------- ------------- ----------
12/31/90 100.00 100.00 100.00
12/31/91 130.04 130.40 133.44
12/31/92 254.95 140.32 267.09
12/31/93 276.84 154.41 370.02
12/31/94 276.23 156.44 410.45
12/31/95 394.14 215.16 607.74
12/31/96 486.60 264.52 784.86
12/31/97 830.61 352.75 1402.92
12/31/98 698.40 453.55 1142.84
12/31/99 542.96 548.98 988.64
12/31/00 561.03 499.01 1100.89
(1) The banks in the Peer Group are: Abington Bancorp, Inc., Arrow Financial
Corp., CCBT Financial Companies, Inc., Century Bank, First Essex Bancorp,
First Federal Savings and Loan of East Hartford, Granite State Bankshares,
Inc., Lawrence Savings Bank, MASSBANK Corp., Medford Bancorp, Inc.,
Merchants Bancshares, Metrowest Bank, People's Bancshares, Inc. and Warren
Bancorp, Inc.
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COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
The following chart compares the performance of the Common Stock of the
Corporation (assuming reinvestment of dividends) with the S&P 500 Index and a
group comprised of 14 industry peers, including the Corporation (the "Peer
Group"), over a five-year period. The chart assumes a $100 investment was made
on December 31, 1995 in the Common Stock of MASSBANK Corp., the stocks included
in the S&P 500 and the stocks of the Peer Group. Data for the chart was provided
to the Corporation by The Bloomberg. Information about the indices and the Peer
Group which was provided by The Bloomberg is believed to be reliable, but
neither the accuracy nor the completeness of such information is guaranteed by
the Corporation.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG MASSBANK CORP., THE S&P 500 INDEX AND THE PEER GROUP
[PERFORMANCE CHART]
MASSBANK CORP. S&P 500 INDEX PEER GROUP
-------------- ------------- ----------
12/31/95 100.00 100.00 100.00
12/31/96 123.46 122.94 129.64
12/31/97 210.74 163.95 229.61
12/31/98 177.19 210.80 190.69
12/31/99 137.76 255.16 166.98
12/31/00 142.34 231.93 184.39
(1) The banks in the Peer Group are: Abington Bancorp, Inc., Arrow Financial
Corp., CCBT Financial Companies, Inc., Century Bank, First Essex Bancorp,
First Federal Savings and Loan of East Hartford, Granite State Bankshares,
Inc., Lawrence Savings Bank, MASSBANK Corp., Medford Bancorp, Inc.,
Merchants Bancshares, Metrowest Bank, People's Bancshares, Inc. and Warren
Bancorp, Inc.
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EMPLOYMENT AGREEMENTS
The Corporation and the Bank have entered into a three-year employment
agreement with Mr. Brandi, and the Bank has entered into two-year employment
agreements with Messrs. Carroll, Cormier and Washburn and Ms. West (each an
"Employment Agreement" and collectively, the "Employment Agreements"). Mr.
Brandi's Employment Agreement is scheduled to expire in 2004, unless extended as
explained below. The Employment Agreements of Messrs. Carroll, Cormier and
Washburn and Ms. West are scheduled to expire in 2003, unless extended as
explained below. Pursuant to the Employment Agreements, Mr. Brandi, Mr. Carroll,
Mr. Cormier, Mr. Washburn and Ms. West are paid current annual salaries of
$414,000, $103,200, $120,000, $130,200 and $130,200, respectively.
Under the respective Employment Agreements, the Corporation or the Bank, as
the case may be, may terminate the officer's employment, without incurring any
continuing obligations to him or her, at any time for "cause," as defined in the
Employment Agreement. On each anniversary of the respective Employment
Agreement, unless the Corporation or the Bank, as the case may be, or the
officer has previously given the specified notice to the other of his, her or
its election not to extend the respective Employment Agreement, an additional
one-year period is automatically added to the term of the Employment Agreement.
In addition, the Employment Agreements provide generally that if the
Corporation or the Bank, as the case may be, were to terminate the officer's
employment for any reason other than for "cause," or, solely with respect to Mr.
Brandi, he were to terminate his own employment upon the occurrence of a
significant change in the responsibilities, powers or authorities exercised by
him from those exercised immediately prior to a "Change in Control," or
following a reduction in his annual compensation, or for other reasons as set
forth in his Employment Agreement, the officer would be entitled to continue to
receive the compensation and benefits specified in the Employment Agreement for
the duration of what otherwise would have been its term. The compensation and
benefits payable to Mr. Brandi in the foregoing situations provide for an
adjustment factor tied to increases in the Consumer Price Index. A "Change in
Control" is generally defined in Mr. Brandi's Employment Agreement to mean (i)
the occurrence of a tender or exchange offer, business combination, sale of
assets, contested election or combination of transactions, the result of which
is that the persons who were Directors of the Corporation or the Bank before
such transactions cease to constitute a majority of the Board of Directors of
the Corporation or the Bank, respectively, or (ii) the acquisition by a person
or group of persons of beneficial ownership of 25% or more of the Common Stock
of the Corporation or the Bank, as the case may be, which is not approved by the
respective Board of Directors in the manner established by Mr. Brandi's
Employment Agreement. In addition, Mr. Brandi's Employment Agreement provides
that in the event Mr. Brandi is not elected to, or is subsequently removed from,
the office of Chief Executive Officer of the Corporation or the Bank, then such
event would be treated as a termination without cause by the Corporation and the
Bank, and Mr. Brandi would be entitled to exercise his rights described in this
paragraph under the Employment Agreement.
EXECUTIVE SEVERANCE AGREEMENTS
The Corporation and the Bank have entered into an Executive Severance
Agreement with Mr. Brandi, and the Bank has entered into Executive Severance
Agreements with Messrs. Carroll, Cormier and Washburn and Ms. West (each an
"Executive Severance Agreement" and collectively, the "Executive Severance
Agreements"). The Executive Severance Agreements generally provide that if there
were a "Change in Control" of the Corporation, as defined therein, and if at any
time during the two-year period following the Change in Control, either the
Corporation or the Bank, as the case may be, were to terminate the employment of
any of the above named officers for any reason other than for deliberate
dishonesty with respect to the Corporation or the Bank, conviction of certain
crimes, gross and willful failure to perform his or her duties, or for other
reasons as set forth in the Executive Severance Agreements, or any of the above
named officers were
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to terminate his or her employment following a substantial adverse change in his
or her title or responsibilities or a reduction in his or her annual base
salary, or for other reasons as set forth in the Executive Severance Agreements,
the named officer would be entitled to receive a lump sum payment equal to
approximately three times his or her average annual compensation over the five
previous years of his or her employment with the Corporation or the Bank, as the
case may be. For purposes of the Executive Severance Agreements, a "Change in
Control" is generally deemed to have occurred when (i) a person or group of
persons acquires beneficial ownership of 50% or more of the Common Stock of the
Corporation, (ii) as a result of a tender offer, proxy contest, merger or
similar transaction, persons who were Directors before such transaction cease to
constitute at least a majority of the Board of Directors of the Corporation, or
(iii) the stockholders of the Corporation approve a merger, a plan of
liquidation or an agreement for the sale of all or substantially all of the
Corporation's assets.
Any payments under the Executive Severance Agreements or the Employment
Agreements are subject to reduction if such payments are non-deductible to the
Corporation or the Bank as a result of Section 280G of the Internal Revenue Code
of 1986, as amended (the "Code"). In addition, if the officer becomes entitled
to receive cash compensation pursuant to both the Employment Agreement and the
Executive Severance Agreement, he or she is required to elect to receive cash
compensation pursuant to only one of such agreements. The officer would be
entitled to continue to receive any benefits for which he or she is eligible
under his or her Employment Agreement regardless of the agreement under which he
or she elects to receive cash compensation.
PENSION PLAN
The Bank provides a retirement plan for all of its eligible employees
through the Savings Banks Employees Retirement Association ("SBERA"), an
unincorporated association of savings banks operating within Massachusetts and
other organizations which provide services to or for savings banks.
The following table illustrates annual minimum pension benefits for
retirement at age 65 under the most advantageous plan provisions (in effect for
the plan year November 1, 2000 - October 31, 2001) available for various levels
of compensation and years of service. The figures in this table are calculated
on the basis of a straight-life annuity and are based on the assumption that the
plan continues in its present form. The benefits are not subject to any
deduction for Social Security or other offset amounts.
ANNUAL PENSION BENEFIT BASED ON YEARS OF SERVICE
--------------------------------------------------
AVERAGE 25 YEARS
COMPENSATION(1)(2) 10 YEARS 15 YEARS 20 YEARS OR MORE
------------------ -------- -------- -------- --------
$100,000.................................... $18,894 $28,340 $37,787 $47,234
120,000.................................... 23,094 34,640 46,187 57,734
140,000.................................... 27,294 40,940 54,587 68,234
170,000.................................... 33,594 50,390 67,187 83,984
- ---------------
(1) Average compensation for purposes of this table is based on the three years
immediately preceding retirement.
(2) Under applicable federal laws, the maximum compensation that may be used for
plan years beginning in 2000 to calculate benefits under the Bank's
retirement plan is $170,000.
Mr. Brandi, Mr. Carroll, Mr. Cormier, Mr. Washburn and Ms. West will have
an estimated 38, 29, 25, 35 and 35 credited years of service, respectively,
under the plan at age 65.
EXECUTIVE SUPPLEMENTAL RETIREMENT AGREEMENT
The Corporation and the Bank have entered into an Executive Supplemental
Retirement Agreement with Mr. Brandi. The Executive Supplemental Retirement
Agreement provides in general for monthly payments upon retirement and for
monthly payments to a beneficiary in lieu of retirement payments if Mr. Brandi
dies
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prior to his retirement. Mr. Brandi's agreement provides for 180 monthly
payments of $2,500 upon his retirement and 120 monthly payments of $3,000 in the
case of his death prior to retirement. The agreement is substantially funded by
an insurance policy owned by the Bank on the life of Mr. Brandi.
REPORT OF THE AUDIT COMMITTEE
The Corporation's Audit Committee met four times. As noted earlier, the
members of the Company's Audit Committee during 2000 were Messrs. Carr, Costello
and Schurian. The Audit Committee, among other things, makes recommendations
concerning the engagement of independent public accountants, reviews the
financial statements and the scope of the independent annual audit, reviews and
reassesses the adequacy of the Audit Committee's charter, reviews the
independence of the independent public accountants, considers the range of audit
and non-audit fees, monitors internal financial and accounting controls and
performs such other oversight functions as may be requested from time to time by
the Board of Directors.
REPORT:
The Audit Committee has:
- reviewed and discussed the audited financial statements with management;
- discussed with the independent auditors the matters required to be
discussed by SAS 61; and
- received the written disclosures and the letter from the independent
auditors required by Independence Standards Board Standard No. 1, and
discussed with the independent auditors the auditors' independence.
Based on the review and discussions above, the Audit Committee has
recommended to the Board of Directors that the audited financial statements be
included in the Corporation's Annual Report on Form 10-K for the year ended
December 31, 2000 for filing with the SEC.
The Board of Directors has determined that the members of the Audit
Committee are "independent" under the rules of Nasdaq. The Audit Committee has
adopted a written charter. The charter is included as Exhibit A to this proxy
statement.
During the year ended December 31, 2000 the Corporation was billed for the
following fees by KPMG LLP:
FEES PAID TO INDEPENDENT AUDITORS
Audit fees for fiscal year 2000............................. $122,000
Financial information systems design and implementation
fees...................................................... $ 0
All other fees.............................................. $ 26,825
The Audit Committee has considered whether the provision of the non-audit
services above is compatible with maintaining the auditor's independence.
MEMBERS OF THE AUDIT COMMITTEE:
Peter W. Carr
Alexander S. Costello
Herbert G. Schurian
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REPORT OF THE COMPENSATION AND OPTION COMMITTEE
The Compensation and Option Committee (the "Committee") of the Board of
Directors of the Corporation is comprised of the following non-employee
Directors: Samuel Altschuler (whose term of office will expire at the Annual
Meeting), Mathias B. Bedell (Chairman), Robert S. Cummings and Nancy L.
Pettinelli. The Committee is responsible for making recommendations to the Board
of Directors of the Bank with respect to the policies that govern both annual
compensation and incentive stock ownership programs for the employees of the
Bank.
COMPENSATION PHILOSOPHY
The goals of the compensation program are to align compensation with
business objectives and performance, and to enable the Bank to attract, retain
and reward executive officers who contribute to the success of the Bank.
STRUCTURE OF COMPENSATION
Compensation paid to the Bank's Chief Executive Officer ("CEO") and other
executive officers consists primarily of the following elements: base salary,
annual performance incentives in the form of cash bonuses, and long-term
performance incentives in the form of stock option awards, as discussed below.
BASE SALARY
Several factors determine base salary, including the Corporation's
performance, individual performance, compensation paid in prior years and
compensation of officers employed by similar institutions. The Committee reviews
competitive salary information from independent surveys. The Committee also
consults with the CEO with respect to the salaries for the other executives. The
Committee reviews recommendations of management for the annual salary, benefits
and incentives budget as part of the overall planning and budgeting process of
the Corporation, and submits its recommendations to the Board of Directors of
the Bank.
CHIEF EXECUTIVE OFFICER COMPENSATION
The compensation paid to Gerard H. Brandi, the CEO of the Bank and the
Corporation, consisted of his annual base salary, a cash bonus, awards of stock
options and deferred compensation contributions. For 2000, the Committee
considered the following factors (without any specific weighting of these
measures) in determining the compensation to be paid to Mr. Brandi: the
Corporation's size and performance, including its profitability, efficiency and
share price performance, Mr. Brandi's performance and the compensation of chief
executive officers at similar institutions. Based on these factors, Mr. Brandi's
annual compensation, consisting of base salary and an annual performance
incentive in the form of a cash bonus, was decreased approximately 5.5% during
2000, and he was awarded options to acquire 2,500 shares of Common Stock.
INCENTIVE PROGRAMS
Profit Sharing and Incentive Compensation Bonus Plan. All non-officer
employees of the Bank are eligible to receive annual profit-sharing
distributions based on the Corporation's net income. All officers and senior
executives (including the CEO) are eligible to receive incentive bonuses based
upon the following factors (without any specific weighting of these measures):
the Corporation's net income, return on assets, earnings per share and other
specific goals and objectives. Because substantially all of the target goals for
these factors were met for 2000, bonuses were awarded during 2000 to the CEO and
the other executive officers.
Stock Option Awards. The Corporation's 1986 Stock Option Plan and Amended
and Restated 1994 Stock Incentive Plan are intended as performance incentives
for participants who contribute to the attainment of long-term strategic
objectives of the Corporation. The Plans enable persons to whom options are
granted to
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acquire or increase a proprietary interest in the success of the Corporation.
The long-term strategic objectives of the Corporation are set forth in a
five-year strategic plan which is revised annually. Because substantially all of
the Corporation's strategic objectives were attained, stock options were awarded
to the CEO, Directors and Bank officers.
Employee Stock Ownership Plan. All full-time employees of the Bank and the
Corporation who have at least one year of service are eligible to participate in
the ESOP. The ESOP provides these persons with a long-term ownership interest in
the Corporation that is designed to serve as an incentive for individual
performance.
The Committee's policy with respect to Section 162(m) of the Code is to
make every reasonable effort to ensure that compensation is deductible to the
extent permitted and appropriate, while simultaneously providing the
Corporation's executives with appropriate rewards for their performance.
This report has been furnished by Samuel Altschuler, Mathias B. Bedell,
Robert S. Cummings and Nancy L. Pettinelli, the members of the Committee.
* * * * *
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In 2000, the Compensation and Option Committee of the Board of Directors
was comprised of Messrs. Altschuler (whose term of office will expire at the
Annual Meeting), Bedell (Chairman) and Cummings and Ms. Pettinelli, all of whom
are non-employee Directors of the Corporation. The Corporation retained during
2000 and proposes to retain during 2001 the law firm of Nixon Peabody LLP. Mr.
Cummings is senior counsel of Nixon Peabody LLP.
DIRECTOR COMPENSATION
Members of the Board of Directors of the Corporation (excluding Executive
Committee members and employees of the Corporation or the Bank) received $600
for each Board of Directors or committee meeting attended during 2000, and will
receive $600 for each meeting during 2001, and members of the Executive
Committee received $500 for each Board of Directors meeting attended during
2000, and will receive $500 for each meeting during 2001. In addition, members
of the Executive Committee (excluding employees of the Bank) received during
2000, and will receive during 2001, an annual payment of $6,000, and such
members of the Executive Committee received an additional $250 for each meeting
attended of the Board of Directors of the Bank and of any committee thereof
during 2000, and will receive an additional $350 for each meeting during 2001.
Directors of the Corporation and the Bank also are reimbursed for expenses
incurred in connection with attendance at the meetings. During 2000, the
chairmen of the various committees (other than the Executive Committee)
received, and will receive in 2001, an additional $50 for each committee meeting
over which they presided and the Secretary of the Corporation, who is also the
Clerk of the Bank, received, and will receive in 2001, an annual payment of
$1,000. In addition, during 2000, each non-employee director received options to
purchase 750 shares of the Corporation's Common Stock. Members of the Executive
Committee received options to purchase an additional 250 shares of the
Corporation's Common Stock.
INDEBTEDNESS OF MANAGEMENT
The Bank has made loans (i) to one Director, who is also an executive
officer, (ii) to one other executive officer and (iii) to members of the
immediate families of one executive officer and one Director, under which the
indebtedness of such persons exceeded $60,000 during 2000. In addition, during
2000, the Bank made a participation loan to Massachusetts Institute of
Technology ("MIT"), which loan is currently serviced by the Bank. The Bank's
portion of the participation loan was $15,000,000. Allan S. Bufferd, a Director
of the Corporation, is the Treasurer of MIT. All of the loans described above
were made in the ordinary course of business, were made on substantially the
same terms, including interest rates and collateral, as those prevailing
21
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at the time for comparable transactions with other persons, and did not involve
more than the normal risk of collectibility or present other unfavorable
features.
CERTAIN BUSINESS RELATIONSHIPS
The Corporation retained during 2000 and proposes to retain during 2001 the
law firm of Nixon Peabody LLP. Robert S. Cummings, a Director and Secretary of
the Corporation, is senior counsel of Nixon Peabody LLP.
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of KPMG LLP served as the Corporation's independent accountants
for the year ended December 31, 2000 and is expected to serve as the
Corporation's independent accountants for 2001. A representative of KPMG LLP,
the independent public accountants for the Corporation, expects to be present at
the Annual Meeting and will have an opportunity to make a statement, if he or
she desires to do so. The representative will be available to respond to
appropriate questions.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Corporation's Directors, executive officers and beneficial owners of
more than 10% of its Common Stock are required under Section 16(a) of the
Securities Exchange Act of 1934, as amended, to file reports of ownership and
changes in ownership with the SEC. Copies of those reports must also be
furnished to the Corporation. Based solely on a review of reports furnished to
the Corporation and written representations that no other reports were required,
the Corporation believes that during 2000 no person who was a Director,
executive officer or greater than 10% beneficial owner of the Corporation's
Common Stock failed to file on a timely basis all reports required by Section
16(a), except that, reports were filed late inadvertently in connection with
shares that the Corporation purchased on behalf of Messrs. Bedell, Bufferd,
Cummings, Lapidus and Marshall pursuant to the Deferred Compensation Plan. In
addition, with respect to Private Capital Management, Inc., which the
Corporation believes beneficially owned greater than 10% of the Corporation's
Common Stock during 2000, the Corporation has not received any filings under
Section 16(a) and is therefore unable to make this determination.
STOCKHOLDER PROPOSALS
For a proposal of a stockholder to be included in the Board of Directors'
Proxy Statement for the Corporation's 2002 Annual Meeting of Stockholders, it
must be received at the principal executive offices of the Corporation (123
Haven Street, Reading, Massachusetts 01867) on or before November 23, 2001. Such
a proposal must also comply with the requirements as to form and substance
established by the SEC for such a proposal to be included in the Proxy
Statement.
In addition, the Corporation's By-Laws also provide that any stockholder
wishing to have any director nominations or a stockholder proposal considered at
an annual meeting must provide written notice of such nominations or stockholder
proposal and certain other information as set forth in the By-Laws of the
Corporation to the Secretary of the Corporation at its principal executive
offices (a) not less than 75 days nor more than 120 days prior to the
anniversary of the immediately preceding annual meeting of stockholders (the
"Anniversary Date") or (b) in the event that the annual meeting of stockholders
is scheduled to be held on a date more than seven days prior to the Anniversary
Date, not later than the close of business on (i) the 20th day (or if that day
is not a business day for the Corporation, on the next succeeding business day)
following the first date on which the date of such meeting was publicly
disclosed or (ii) if the first date of such public
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disclosure occurs more than 75 days prior to such scheduled date of such
meeting, then the later of (1) the 20th day (or if that day is not a business
day for the Corporation, on the next succeeding business day) following the
first date of such public disclosure or (2) the 75th day prior to such scheduled
date of such meeting (or if that day is not a business day for the Corporation,
on the next succeeding business day). Any stockholder desiring to submit a
nomination or proposal must comply with the By-Laws of the Corporation.
Proxies solicited by the Board of Directors will confer discretionary
voting authority with respect to stockholder proposals, subject to SEC rules
governing the exercise of this authority.
CORPORATE GOVERNANCE
On July 18, 2000, the Board of Directors adopted corporate governance
guidelines. The guidelines are included in Exhibit B to this proxy statement.
OTHER MATTERS
The Board of Directors is not aware of any other matters which may come
before the Annual Meeting. It is the intention of the persons named in the
enclosed proxy to vote the proxy in accordance with their best judgment if any
other matters shall properly come before the Annual Meeting.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE
COMPLETE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE
PROVIDED. IF YOU WISH TO VOTE YOUR STOCK IN PERSON AT THE ANNUAL MEETING, YOUR
PROXY MAY BE REVOKED.
March 22, 2001
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EXHIBIT A
MASSBANK CORP.
AUDIT COMMITTEE CHARTER
I. GENERAL STATEMENT OF PURPOSE
The Audit Committee of the Board of Directors (the "Audit Committee") of
MASSBANK Corp. (the "Company") assists the Board of Directors (the "Board") in
general oversight and monitoring of management and the independent auditors'
participation in the Company's financial reporting process and of the Company's
procedures for compliance with legal and regulatory requirements. The primary
objective of the Audit Committee in fulfilling these responsibilities is to
promote and preserve the integrity of the Company's financial statements and
monitor the independence and performance of the Company's external independent
auditors and internal auditing department.
II. AUDIT COMMITTEE COMPOSITION
The Audit Committee shall consist of at least three members who shall be
appointed annually by the Board and shall satisfy the qualification requirements
set forth in Rule 4310 of the Marketplace Rules of the National Association of
Securities Dealers, Inc. The Board shall designate one member of the Audit
Committee to be Chairman of the committee.
III. MEETINGS
The Audit Committee generally is to meet four times per year in person or
by telephone conference call, with any additional meetings as deemed necessary
by the Audit Committee.
IV. AUDIT COMMITTEE ACTIVITIES
The principal activities of the Audit Committee will generally include the
following:
A. Review of Charter
- Review and reassess the adequacy of this Charter at least annually.
Submit the Charter to the Board of Directors for approval and have the
document published at least every three years in accordance with SEC
regulations.
B. Audited Financial Statements and Annual Audit
- Review the overall audit plan (both external and internal) with the
independent auditors and the members of management who are responsible
for maintaining the Company's accounts and preparing the Company's
financial statements, including the Company's Chief Financial Officer
and/or principal accounting officer or principal financial officer (the
Chief Financial Officer and such other officer or officers are referred
to herein collectively as the "Senior Accounting Executive").
- Review and discuss with management (including the Company's Senior
Accounting Executive) and with the independent auditors:
(i) the Company's annual audited financial statements, including any
significant financial reporting issues which have arisen in
connection with the preparation of such audited financial
statements;
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(ii) major changes in and other questions regarding accounting and
auditing principles and procedures; and
(iii) the effectiveness of the Company's internal audit process
(including evaluations of its Senior Accounting Executive and any
other relevant personnel).
- Review and discuss with management (including the Company's Senior
Accounting Executive), the independent auditors and the internal
auditors:
(i) the adequacy of the Company's internal financial reporting processes
and controls that could significantly affect the integrity of the
Company's financial statements. Discuss significant financial risk
exposures and the steps management has taken to monitor, control,
and report such exposures. Review significant findings prepared by
the independent auditors and the internal auditing department
together with management's responses.
- Review and discuss with the independent auditors (outside of the presence
of management) how the independent auditors plan to handle their
responsibilities under the Private Securities Litigation Reform Act of
1995, and receive assurance from the auditors that Section 10A of the
Private Securities Litigation Reform Act of 1995 has not been implicated.
- Review and discuss with the independent auditors (outside of the presence
of management) any problems or difficulties that the auditors may have
encountered with management or others and any management letter provided
by the auditors and the Company's response to that letter. This review
shall include considering:
(i) any difficulties encountered by the auditors in the course of
performing their audit work, including any restrictions on the scope
of their activities or their access to information; and
(ii) any changes required by the auditors in the scope or performance of
the Company's internal audit.
- Review and discuss major changes to the Company's auditing and accounting
principles and practices as may be suggested by the independent auditors
or management.
- Discuss with the independent auditors such issues as may be brought to
the Audit Committee's attention by the independent auditors pursuant to
Statement on Auditing Standards No. 61 ("SAS 61").
- Based on the Audit Committee's review and discussions (1) with management
of the audited financial statements, (2) with the independent auditors of
the matters required to be discussed by SAS 61, and (3) with the
independent auditors concerning the independent auditors' independence,
make a recommendation to the Board as to whether the Company's audited
financial statements should be included in the Company's annual Report on
Form 10-K.
- Request that the independent auditors provide the Audit Committee with
the written disclosures and the letter required by Independent Standards
Board Standard No. 1, and review and discuss with the independent
auditors the independent auditors' independence.
C. Unaudited Quarterly Financial Statements
- Review and discuss with management and the independent auditors the
Company's quarterly financial statements. Such review shall include
discussions by the Chairman of the Audit Committee or the Audit Committee
with the independent auditors of such issues as may be brought to the
Chairman's or
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Audit Committee's attention by the independent auditors pursuant to
Statement on Auditing Standards No. 71.
D. Matters Relating to Selection, Performance and Independence of
Independent Auditors
- Recommend to the Board the appointment of the independent auditors.
- Instruct the independent auditors that the independent auditors' ultimate
accountability is to the Board and the Audit Committee as representatives
of the Company's shareholders.
- Evaluate on an annual basis the performance of the independent auditors
and, if necessary in the judgment of the Audit Committee, recommend that
the Board replace the independent auditors.
- Recommend to the Board on an annual basis the fees to be paid to the
independent auditors.
- Require that the independent auditors provide the Audit Committee with
periodic reports regarding the auditors' independence, which reports
shall include but not be limited to a formal written statement setting
forth all relationships between the independent auditors and the Company
or any of its officers or directors. The Audit Committee shall discuss
such reports with the independent auditors, and if necessary in the
judgment of the Audit Committee, the committee shall recommend that the
Board take appropriate action to ensure the independence of the auditors
or replace the auditors.
E. Matters Relating to the Independence of the Audit Committee
- Periodically review the independence of each member of the Audit
Committee and promptly bring to the attention of management and the Board
any relationships or other matters that may in any way compromise or
adversely affect the independence of any member of the Audit Committee or
any member's ability to assist the Audit Committee in fulfilling its
responsibilities under this Charter, including any such relationship or
other matter that may have caused or may in the future cause the Company
to fail to comply with the requirements set forth in Rule 4310 of the
Marketplace Rules of the National Association of Securities Dealers, Inc.
F. Matters Relating to the Internal Audit Department
- Review on at least an annual basis the performance of the internal audit
department.
- Review significant reports prepared by the internal audit department
together with management's response and follow-up to these reports.
G. Other Audit Committee Responsibilities
- Prepare the Audit Committee report required by Item 306 of Schedule 14A
of the Securities Exchange Act of 1934 (or any successor provision) to be
included in the Company's annual proxy statement.
- Perform such other oversight functions as may be requested by the Board.
- Maintain minutes of meetings and periodically report to the Board of
Directors.
H. General
- The Audit Committee may be requested by the Board to review or
investigate on behalf of the Board activities of the Company or of its
employees, including compliance with laws, regulations or Company
policies.
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- In performing its responsibilities, the Audit Committee shall be entitled
to rely upon advice and information that it receives in its discussions
and communications with management and the independent auditors. The
Audit Committee shall have the authority to retain special legal,
accounting or other professionals to render advice to the committee. The
Audit Committee shall have the authority to request that any officer or
employee of the Company, the Company's outside legal counsel, the
Company's independent auditors or any other professionals retained by the
Company to render advice to the Company attend a meeting of the Audit
Committee or meet with any members of or advisors to the Audit Committee.
- Notwithstanding the responsibilities and powers of the Audit Committee
set forth in this Charter, the Audit Committee does not have the
responsibility of planning or conducting audits of the Company's
financial statements or determining whether or not the Company's
financial statements are complete, accurate and in accordance with
generally accepted accounting principles. Such responsibilities are the
duty of management and, to the extent of the independent auditors' audit
responsibilities, the independent auditors. It also is not the duty of
the Audit Committee to resolve disagreements, if any, between management
and the independent auditors or to ensure compliance with laws,
regulations or Company policies.
A-4
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EXHIBIT B
CORPORATE GOVERNANCE GUIDELINES
The Board of Directors has adopted the Corporate Governance Guidelines set
forth below for the management of the Corporation.
DUTIES OF DIRECTORS
- The business and affairs of the Corporation shall be managed by its
officers under the direction of the Board of Directors.
- Each director owes a fiduciary duty of loyalty to the Corporation.
- Each director owes a fiduciary duty of care and diligence to the
Corporation.
- Each director, in discharging the director's duties to the Corporation
and in determining what the director reasonably believes to be in the
best interest of the Corporation, may, in addition to considering the
effects of any action on shareholders, consider the effects on all of the
Corporation's constituencies, including its employees, creditors,
customers, the communities it serves, and the long term as well as the
short-term interests of the Corporation and its shareholders.
- Each director should take into account the interests of all shareholders.
DIRECTOR QUALIFICATIONS AND BOARD STRUCTURE
- Not less than three-fourths of the directors shall be outside directors,
i.e., persons not (i) currently employees of the Corporation, (ii) former
executive officers of the Corporation, or (iii) professional advisors,
consultants or counsel receiving material compensation for services to
the Corporation.
- A director may not be elected to a new term after reaching age 72.
- The full Board of Directors of the Corporation shall also serve as the
Nominating Committee.
- Depth and breadth of business and civic experience in leadership
positions, (particularly in the markets served by the Corporation) other
ties to the Corporation's markets, and diversity of Board membership are
criteria considered in reviewing nominees for the Board. The
Corporation's By-Laws provide for shareholder nominations in accordance
with specified procedures.
- The Board has determined not to set a limit on the maximum time an
individual may serve as director or adopt policies on an ideal size for
the Board or whether or not the positions of Chairman and Chief Executive
Officer should be separate, in order to be free to make the choices which
seem best for the Corporation at any particular time.
- The Board will be divided into three approximately equal classes of
staggered 3 year terms.
COMMITTEE STRUCTURE AND RESPONSIBILITIES
- All committee appointments shall be made by the Board. Outside directors
normally serve on at least one committee.
- The Compensation and Audit Committees shall consist solely of outside
directors. With the exception of the Risk Management and Asset/Liability
Committee, a majority of members of all other committees shall be outside
directors.
B-1
31
- The Executive Committee shall exercise the powers of the Board of
Directors between meetings of the Board to the extent permitted by law.
- The Insurance Committee reviews and recommends all insurance policies of
the Corporation and Bank regarding appropriate coverage of insurable
risks at reasonable premium prices.
- The Compensation and Option Committee recommends to the Board
remuneration arrangements for executive officers and directors. The
Compensation and Option Committee shall approve all executive incentive
plans and grants thereunder. A portion of executive compensation shall be
based on the performance of the Corporation and its business units. The
Compensation and Option Committee shall review the performance and salary
of the Chief Executive Officer and senior executives annually. The
Compensation and Option Committee shall also review the compensation of
the outside directors annually.
- The Audit Committee shall have a charter which will be reviewed annually
by the Audit Committee. Pursuant to its charter, the Audit Committee
shall, among other things, recommend the engagement and discharge of
independent certified public accountants, review their annual audit plan
and the results of their auditing activities, and consider audit fees. It
shall also review the general audit plan, scope and results of the
Corporation's procedures for internal auditing, the independence and
quality of service of the internal and external auditors, the adequacy of
the internal control structure and progress of the Corporation's
compliance program. The reports of examination of the Corporation and its
subsidiaries by state and federal bank regulatory examiners shall be
reviewed by the Audit Committee. The Audit Committee shall meet
periodically in executive session with the independent certified public
accountants. It shall have authority to employ independent legal counsel.
- The Risk Management and Asset/Liability Committee shall have at least two
outside directors and have oversight responsibility for implementation of
the enterprise risk management program of the Corporation. This program
involves the identification of risks, risk measurement, guidelines for
risk tolerance, development of risk controls and monitoring of risks. The
risk elements generally include credit, market, liquidity, interest rate,
operational, legal, reputational, fiduciary, compliance and environmental
risk.
- Inside directors shall not receive additional compensation for services
as directors.
COMMITTEE AND BOARD FUNCTIONS
- Financial results of the Corporation generally will be reported to the
Board at each regularly scheduled meeting.
- The Board or Executive Committee will annually review and approve the
operating and capital plans (budgets).
- Management will generally prepare each year an updated strategic plan for
the Corporation, which shall be presented to the Executive Committee for
its consultation, advice and approval.
- The quarterly report to shareholders, SEC Forms 10-K and 10-Q and FDIC
call reports shall be reviewed by at least one member of the Audit
Committee.
- The Audit and Compensation and Option Committees shall regularly report
their activities to the full Board. All other committees are to report
their activities to the full board annually.
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GENERAL POLICIES
- The Board encourages active efforts to seek diversity among employees.
- The Board believes that the Corporation and its subsidiaries should be
good corporate citizens and serve the convenience and needs of their
communities.
- The Board has issued a comprehensive policy prohibiting trading on inside
information.
- Board members have complete access to executive officers of the
Corporation. Senior executives regularly attend portions of the Board
Meetings to make presentations and respond to questions. The Board
encourages presentations from officers other than senior executives who
have expertise and future potential.
- The Board believes that individual directors should not communicate on
corporate issues with the press, investors or employee groups without
approval of the Board or Executive Committee or at the request of
management.
- Although these corporate governance guidelines have been approved by the
Board, it is expected that these guidelines will evolve over time as
customary practice and legal requirements change. In particular,
guidelines which encompass legal requirements as they currently exist
will be deemed to be modified as and to the extent such legal
requirements are modified. In addition, the guidelines may also be
amended by the Board at any time as it deems appropriate.
B-3
33
0728-PS-00
34
MASSBANK CORP.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
By signing and returning the proxy card on the reverse side, you will be
appointing GERARD H. BRANDI and REGINALD E. CORMIER, and each of them, Proxies
with power of substitution to vote on your behalf at the Annual Meeting of
Stockholders of MASSBANK Corp. (the "Annual Meeting") to be held at the Crowne
Plaza Woburn, 2 Forbes Road, Woburn, Massachusetts, on Tuesday April 17, 2001 at
10:00 a.m., and at any adjournments or postponements thereof, thereby granting
full power and authority to act on your behalf at the Annual Meeting, and at any
adjournments or postponements thereof. In their discretion, the Proxies shall be
authorized to vote upon such other business as may properly come before the
Annual Meeting or any adjournment or postponement thereof.
Your vote for the election of directors may be indicated on the reverse
side. To vote your shares for all director nominees, mark the "FOR ALL NOMINEES"
box. To withhold voting for all nominees, mark the "WITHHELD FROM ALL NOMINEES"
box. To withhold voting for a particular nominee, mark the "FOR ALL EXCEPT" box
and write such nominee's name in the space provided. IF NO DIRECTION IS GIVEN,
THE PROXY WILL BE VOTED FOR THE NOMINEES LISTED IN THE PROXY, SO THAT A
STOCKHOLDER WISHING TO VOTE IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD
OF DIRECTORS NEED ONLY SIGN AND DATE THE PROXY AND RETURN IT IN THE ENCLOSED
ENVELOPE.
The nominees for Class I are (01) Gerard H. Brandi, (02) Peter W. Carr,
(03) Robert S. Cummings and (04) Herbert G. Schurian and the nominees for Class
II are (05) Allan S. Bufferd, (06) Nancy L. Pettinelli, and (07) Dr. Donald B.
Stackhouse and the nominees for Class III are (08) Mathias B. Bedell, (09)
Alexander S. Costello, (10) Leonard Lapidus and (11) Stephen E. Marshall.
35
PLEASE DETACH PROXY CARD HERE
================================================================================
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
The undersigned hereby appoints GERARD H. BRANDI and REGINALD E. CORMIER, and
each of them, Proxies for the Annual Meeting with the powers set forth in this
proxy card and the introduction to this proxy card. When properly executed, this
proxy will be voted in the manner directed herein by the undersigned. IF NO
DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED IN THIS
PROXY. THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS OF MASSBANK CORP.
1. Election of Directors:
CLASS I: (01) Gerard H. Brandi, (02) Peter W. Carr, (03) Robert S.
Cummings, (04) Herbert G. Schurian
CLASS II: (05) Allan S. Bufferd, (06) Nancy L. Pettinelli, (07) Dr.
Donald B. Stackhouse
CLASS III: (08) Mathias B. Bedell, (09) Alexander S. Costello, (10)
Leonard Lapidus, (11) Stephen E. Marshall
FOR ALL NOMINEES [ ] [ ] WITHHELD FROM ALL NOMINEES
FOR ALL EXCEPT [ ]
--------------------------------------
For all nominees except as noted above
MARK HERE FOR ADDRESS CHANGE AND NOTE AT
LEFT [ ]
MARK HERE IF YOU PLAN TO ATTEND THE
MEETING [ ]
The undersigned hereby revokes any proxy
previously given and acknowledges
receipt of the Notice of Annual Meeting
of Stockholders and Proxy Statement and
a copy of the Annual Report for the
fiscal year ended December 31, 2000.
Please date this proxy and sign exactly
as your name appears hereon. Joint
owners should each sign. If signing as
an attorney or for an estate, trust or
corporation, title or capacity should be
stated.
Signature: Date: Signature: Date:
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