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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 [ ] 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))
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 Peabody Marriott Hotel,
8A Centennial Drive, Peabody, Massachusetts, on Wednesday, May 2, 2001, at 10:00
A.M., local time, for the purpose of considering and voting upon the following
matters:
1. Election of seven Directors, each to serve for a three-year
term until the 2004 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 5, 2001 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 26, 2001
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 2, 2001
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 2, 2001, 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 March
28, 2001.
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,
2000, 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 5, 2001
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 7,337,611 shares of Common Stock ("Common Stock") of
Bancorp outstanding. As of the Record Date there were approximately 600 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, 2001, 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) 10.51% (5)
2300 Main Street, Suite 1000
Kansas City, MO 64108
The Banc Funds................................................ 627,900 (2) 8.56% (5)
208 South LaSalle Street, Suite 1680
Chicago, IL 60604
Dimensional Fund Advisors, Inc................................ 520,700 (3) 7.10% (5)
1299 Ocean Avenue
Suite 650
Santa Monica, California 90401
Franklin Mutual Advisers, LLC................................. 415,300 (4) 5.66% (5)
777 Mariners Island Boulevard
P.O. Box 7777
San Mateo, California 94404-7777
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(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 received from The Banc Funds.
(3) Based on information contained in Amendment No. 9 to a Schedule 13G
filed by them with the Commission on February 2, 2001, Dimensional Fund
Advisors, Inc. ("Dimensional"), a registered investment advisor, is
deemed to have beneficial ownership of 520,700 shares of Warren
Bancorp, Inc. common stock as of December 31, 2000, 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.
(4) Based on information contained in Amendment No. 1 to a Schedule 13G
filed by them with the Commission on January 19, 2001 by Franklin
Mutual Advisers, LLC and certain affiliated persons and entities,
reporting beneficial ownership as of December 31, 2000. This Schedule
13G indicates that Franklin Mutual Advisers, LLC, registered under the
Investment Company Act of 1940, is the beneficial owner of 415,300
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.
(5) Percentages as reported are based on the number of shares issued and
outstanding at March 1, 2001.
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The following table shows as of March 1, 2001, 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 ..................................... 29,200(2)
Stephen J. Connolly, IV ........................... 114,400(3) 1.56%
Francis L. Conway ................................. 26,000(4)
Leo C. Donahue .................................... 139,326(5) 1.88%
Robert R. Fanning, Jr ............................. 21,600(6)
Arthur E. Holden .................................. 35,400(7)
Stephen R. Howe ................................... 51,200(8)
Stephen G. Kasnet ................................. 113,477(9) 1.55%
Linda Lerner ...................................... 23,000(10)
Arthur E. McCarthy ................................ 73,600(11)
Arthur J. Pappathanasi ............................ 20,400(12)
Paul M. Peduto .................................... 151,665(13) 2.06%
George W. Phillips ................................ 170,000 2.32%
John R. Putney .................................... 146,245(14) 1.98%
John D. Smidt ..................................... 61,168(15)
Mark J. Terry ..................................... 32,144(16)
John H. Womack .................................... 19,300(17)
All nominees, directors and
executive officers as a
group (17 persons) .............................. 1,228,125 16.09%
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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, 2001.
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 11,400 shares under the Warren
Bancorp, Inc. 1995 and 1998 Incentive and Nonqualified Stock Option
Plans.
(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
8,800 shares under the Warren Bancorp, Inc. 1986, 1995 and 1998
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 14,000 shares
under the Warren Bancorp, Inc. 1986, 1995 and 1998 Incentive and
Nonqualified Stock Option Plans.
(5) Voting and investment power is shared with his wife. Includes options
presently exercisable or exercisable within 60 days to purchase 61,240
shares under the Warren Bancorp, Inc. 1986, 1995 and 1998 Incentive and
Nonqualified Stock Option Plans. Also includes 5,446 shares
beneficially owned by Mr. Donahue under the Bank's 401(k) Savings
Plans.
(6) Voting and investment power is shared with his wife. Includes options
presently exercisable or exercisable within 60 days to purchase 8,800
shares under the Warren Bancorp, Inc. 1986, 1995 and 1998 Incentive and
Nonqualified Stock Option Plans.
(7) 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 8,400 shares
under the Warren Bancorp, Inc. 1995 and 1998 Incentive and Nonqualified
Stock Option Plans.
(8) Includes options presently exercisable or exercisable within 60 days to
purchase 8,800 shares under the Warren Bancorp, Inc. 1986, 1995 and
1998 Incentive and Nonqualified Stock Option Plans. Does not include
8,800 shares held by a testamentary trust of which Mr. Howe is the sole
beneficiary and to which he disclaims beneficial ownership.
(9) Includes 86,677 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 4,800 shares under the Warren
Bancorp, Inc. 1995 and 1998 Incentive and Nonqualified Stock Option
Plans.
(10) Includes options presently exercisable or exercisable within 60 days to
purchase 15,000 shares under the Warren Bancorp, Inc. 1995 and 1998
Incentive and Nonqualified Stock Option Plans.
(11) Includes options presently exercisable or exercisable within 60 days to
purchase 10,600 shares under the Warren Bancorp, Inc. 1986, 1995 and
1998 Incentive and Nonqualified Stock Option Plans. Mr. McCarthy's wife
owns an additional 30,000 shares as to which he disclaims beneficial
ownership.
(12) Includes options presently exercisable or exercisable within 60 days to
purchase 10,800 shares under the Warren Bancorp, Inc. 1995 and 1998
Incentive and Nonqualified Stock Option Plans.
(13) 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 41,480 shares
under the Warren Bancorp, Inc. 1986, 1991, 1995 and 1998 Incentive and
Nonqualified Stock Option Plans. Also includes 6,425 shares
beneficially owned by Mr. Peduto under the Bank's 401(k) Savings Plan.
(14) Includes 95,600 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 40,800
shares under the Warren Bancorp, Inc. 1995 and 1998 Incentive and
Nonqualified Stock Option Plans. Also includes 3,445 shares
beneficially owned by Mr. Putney under the Bank's 401(k) Savings Plan.
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(15) 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 8,800
shares under the Warren Bancorp, Inc. 1986, 1995 and 1998 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.
(16) Includes options presently exercisable within 60 days to purchase
30,560 shares under the Warren Bancorp, Inc. 1995 and 1998 Incentive
and Nonqualified Stock Option Plans. Also includes 1,584 shares
beneficially owned by Mr. Terry under the Bank's 401(k) Savings Plan.
(17) Includes options presently exercisable or exercisable within 60 days to
purchase 10,600 shares under the Warren Bancorp, Inc. 1986, 1995 and
1998 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, 2000, 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 filing: Mr. Curtin, who retired as a
director effective June 7, 2000, 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 fifteen 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, seven Directors will be elected to serve until
the 2004 annual meeting and until their respective successors are duly elected
and qualified. The Board of Directors has nominated Francis L. Conway, Arthur E.
Holden, Stephen G. Kasnet, Linda Lerner, Arthur J. Pappathanasi, George W.
Phillips and John H. Womack for election as Directors to serve until the 2004
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. Conway, Holden, Kasnet, Pappathanasi,
Phillips, Womack and Ms. Lerner as Directors. Each of Messrs. Conway, Holden,
Kasnet, Pappathanasi, Phillips, Womack and Ms. Lerner 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 seven nominees for
election as Directors at the Annual Meeting the nominee's name, age as of March
1, 2001 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 2002 and 2003.
NOMINEES
(TERMS TO EXPIRE IN 2004)
NAME AND PRINCIPAL OCCUPATION FOR DIRECTOR
PAST FIVE YEARS; DIRECTORSHIPS AGE SINCE (1)
- --------------------------------- --- ---------
Francis L. Conway (3).............................................................. 60 1978
Chairman, Conway, Cahill-Brodeur Funeral Home LLC since 2000; President and
Treasurer, F.L. Conway & Sons, Inc. (funeral home) since prior to 1996 to
2000.
Arthur E. Holden (2)(4)............................................................ 72 1978
Vice President, Holden Oil, Inc. since 2000; President, Holden Oil., Inc. and
Vice President, Holden Bottled Gas, Inc. since prior to 1995 to 2000.
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NAME AND PRINCIPAL OCCUPATION FOR DIRECTOR
PAST FIVE YEARS; DIRECTORSHIPS AGE SINCE (1)
- --------------------------------- --- ---------
Stephen G. Kasnet (2)(4)........................................................... 55 1983
Chairman of the Board of Bancorp and Bancorp's wholly owned subsidiary, Warren
Five Cents Savings Bank (the "Bank"), since prior to 1996; President and Chief
Executive Officer, Harbor Global Co., Ltd. since 2000; President and Chief
Executive Officer, Calypso Management, LLC. since 2000; President, Management
Board, Pioneer Polish Real Estate Fund, since 1997; Executive Vice President,
The Pioneer Group since prior to 1996 to 2000; Vice President, Pioneer Group,
(mutual fund complex, real estate investment management), since prior to 1996
to 1998; President, Pioneer Real Estate Advisors, Inc. since prior to 1996 to
2000; President, Pioneer Global Investments, 1998 to 2000; President, Pioneer
Global Institutional Advisors, 1997 to 1998.
Linda Lerner (3)................................................................... 62 1995
Retired since prior to 1996.
Arthur J. Pappathanasi (2)(3)...................................................... 62 1995
President of Richdale Dairy Stores, LLC since 1998; President of Scangas
Realty Associates since prior to 1996; President and Chief Executive Officer
of West Lynn Creamery, Inc. and Richdale Dairy Stores, Inc. since prior to
1996 to 1998.
George W. Phillips................................................................... 62 1991
Retired since 1997; President and Chief Executive Officer of Bancorp and the
Bank since prior to 1996 to 1997.
John H. Womack (3)................................................................. 56 1989
President and Chief Executive Officer, TJM Enterprise, Inc. and TJM Apparel
since 1998; President and Chief Executive Officer, JJS Services, Inc.
(janitorial services) since prior to 1996 to 1998; President, Peabody Paper &
Industrial Supply since prior to 1996. Mr. Womack was President of Classical
Foods, Inc. which filed for bankruptcy on June 20, 1996. Mr. Womack is also
Pastor of Metropolitan Baptist Church, Dorchester, MA.
OTHER DIRECTORS
(TERMS TO EXPIRE IN 2002)
NAME AND PRINCIPAL OCCUPATION FOR DIRECTOR
PAST FIVE YEARS; DIRECTORSHIPS AGE SINCE (1)
- --------------------------------- --- ---------
Peter V. Bent (3).................................................................. 55 1995
Owner/Manager of Brown's Yacht Yard since prior to 1996.
Stephen R. Howe (3)................................................................ 65 1976
Consultant since June, 2000; certified public accountant in private practice
since prior to 1996 to June, 2000.
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NAME AND PRINCIPAL OCCUPATION FOR DIRECTOR
PAST FIVE YEARS; DIRECTORSHIPS AGE SINCE (1)
- --------------------------------- --- ---------
Arthur E. McCarthy (2)(4)............................................................ 65 1979
Vice President and Managing Director, Tucker Anthony, Inc. (investment
advisors) since prior to 1996; Director, Tucker Anthony, Inc.
John D. Smidt........................................................................ 58 1989
President and Treasurer, John Smidt Co., Inc. (contract leather finishing)
since prior to 1996.
OTHER DIRECTORS
(TERMS TO EXPIRE IN 2003)
NAME AND PRINCIPAL OCCUPATION FOR DIRECTOR
PAST FIVE YEARS; DIRECTORSHIPS AGE SINCE (1)
- --------------------------------- --- ---------
Stephen J. Connolly, IV (4)........................................................ 51 1989
President, Connolly Brothers, Inc. (building contractors) since prior to 1996.
Robert R. Fanning, Jr. (2)(3)(4)................................................... 58 1988
President-Emeritus of Northeast Health Systems, Inc. since 2000; President and
Chief Executive Officer of Northeast Health Systems, Inc. since prior to 1996
to 2000; President and Chief Executive Officer, Beverly Hospital Corporation
since prior to 1996 to 2000; Director, Health Care Property Investors since
prior to 1996.
Paul M. Peduto....................................................................... 51 1988
Treasurer of Bancorp and Executive Vice President, Chief Financial Officer and
Treasurer of the Bank since prior to 1996.
John R. Putney....................................................................... 57 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
1996 to 1997.
- -------------------------------
(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.
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THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors of Bancorp held 11 meetings during 2000. During
2000 each incumbent Director, except Robert R. Fanning, Jr., 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.
NOMINATING COMMITTEE. At December 31, 2000, 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 2000. 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 1, 2002 and no earlier than December 1, 2001 to be considered
at the 2002 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").
FINANCE, AUDIT AND COMPLIANCE COMMITTEE. At December 31, 2000, the
Finance, Audit and Compliance Committee consisted of Peter V. Bent, Francis L.
Conway, Robert R. Fanning, Jr., Stephen R. Howe, Chairman, Linda Lerner, Arthur
J. Pappathanasi and John H. Womack. 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 2000 the Committee met twice.
Below is the Report of the Finance, Audit and Compliance Committee.
REPORT OF THE FINANCE, AUDIT AND COMPLIANCE COMMITTEE
The Finance, Audit and Compliance Committee (the "Committee") operates
under a charter that was adopted in 2000, which is attached as Exhibit A. The
Committee has reviewed and discussed with management and the independent
auditors the Corporation's consolidated balance sheets as of December 31, 2000
and 1999 and consolidated statements of operations, changes in stockholders'
equity and cash flows for each of the three years ended December 31, 2000 and
has recommended to the Corporation's Board of Directors that those financial
statements be included in Form 10-K for the year ended December 31, 2000 for
filing with the Securities and Exchange Commission.
The Committee has also discussed with the independent auditors matters
required to be discussed by Statement of Auditing Standards 61, REQUIRED
COMMUNICATION, and has received from and discussed with the independent auditors
the written disclosures and the letter required by Independence Standards Board
Standard No. 1, INDEPENDENCE DISCUSSIONS WITH AUDIT COMMITTEES. The Committee
also considered whether the auditors' provision of non-audit services was
compatible with independence rules.
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All Committee members are independent within the definition of the
listing requirements of the Nasdaq National Market.
MEMBERS OF THE FINANCE, AUDIT AND COMPLIANCE COMMITTEE
Peter V. Bent
Francis L. Conway
Robert R. Fanning, Jr.
Stephen R. Howe, Chairman
Linda Lerner
Arthur J. Pappathanasi
John H. Womack
EXECUTIVE OFFICERS
The following table sets forth as of March 1, 2001 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 57
Bancorp 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 1996 to 1997.
Paul M. Peduto Treasurer and Director of Bancorp and 51
Executive Vice President, Chief Financial
Officer, Treasurer and Director of the Bank
since prior to 1996.
Leo C. Donahue Senior Vice President for Personal Banking 51
of the Bank since prior to 1996.
Mark J. Terry Senior Vice President for Corporate Banking 50
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 1996 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 2000 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 consider increasing 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 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 2000. 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 2000
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)
Robert R. Fanning, Jr.
Arthur E. Holden, Chairman
Stephen G. Kasnet
Arthur E. McCarthy
Arthur J. Pappathanasi
12
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 1998, 1999 and 2000 for the Chief Executive Officer and all other
executive officers.
SUMMARY COMPENSATION TABLE
(1998-2000)
- ------------------------------------- --------- ----------- ------------ ----------------- ----------------------- ----------------
Long Term
Annual Compensation Compensation
--------- ----------- ----------- ------------------ -----------------------
Name and principal position Other annual Awards
----------------------- All other
December 31, 2000 Year Salary($) Bonus($) Compensation($) Options(# of Shs.) Compensation($)
- ------------------------------------- --------- ----------- ----------- ------------------ ----------------------- ----------------
John R. Putney 2000 205,000 60,000 0 20,000 42,054 (1)(5)
President, Chief Executive 1999 190,500 39,000 15,000 40,399
Officer and Director of 1998 182,000 42,000 15,000 20,813
Warren Bancorp, Inc., and
Warren Five Cents Savings
Bank
- ------------------------------------- --------- ----------- ----------- ------------------ ----------------------- ----------------
Paul M. Peduto 2000 141,096 20,000 0 12,000 23,873 (2)(5)
Treasurer and Director of 1999 136,615 17,000 12,000 21,929
Warren Bancorp, Inc.; 1998 132,115 17,000 11,600 20,457
Executive Vice President,
Chief Financial Officer,
Treasurer and Director of
Warren Five Cents Savings
Bank
- ------------------------------------- --------- ----------- ----------- ------------------ ----------------------- ----------------
Leo C. Donahue 2000 107,000 20,000 0 6,000 17,407 (3)(5)
Senior Vice President for 1999 106,461 10,000 10,000 16,499
Personal Banking of 1998 102,917 12,000 10,600 11,307
Warren Five Cents Savings
Bank
- ------------------------------------- --------- ----------- ----------- ------------------ ----------------------- ----------------
Mark J. Terry 2000 121,712 30,000 0 12,000 25,359 (4)(5)
Senior Vice President for 1999 114,615 27,500 12,000 22,427
Corporate Banking of 1998 110,288 27,500 11,600 12,418
Warren Five Cents Savings
Bank
- ------------------------------------- --------- ----------- ----------- ------------------ ----------------------- ----------------
- ------------------
(1) Consists of contribution of $16,554 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 $15,373to 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 $11,535 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 $13,459 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 1996 to 1997 and currently serves as a director of Bancorp, entered
into a consulting agreement with Bancorp effective January 1, 1998. The
agreement expired May 31, 2000. For his services Mr. Phillips was paid at a rate
of $50,000 per year under the agreement and had agreed to waive director fees
and other benefits during the term of the agreement.
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 2000
and option values at December 31, 2000.
OPTION GRANTS IN 2000
- --------------------------------------------------------------------------------------------------------------------------------
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 2000 ($/Sh) Date 5%($) 10%($)
- -------------------------- -------------- ------------------ ------------- ----------------- ----------------- -----------------
John R. Putney 20,000 11.20% $7.125 6/22/07 $58,012 $135,190
- -------------------------- -------------- ------------------ ------------- ----------------- ----------------- -----------------
Paul M. Peduto 12,000 6.72% $7.125 6/22/07 $34,807 $81,114
- -------------------------- -------------- ------------------ ------------- ----------------- ----------------- -----------------
Leo C. Donahue 6,000 3.36% $7.125 6/22/07 $17,403 $40,557
- -------------------------- -------------- ------------------ ------------- ----------------- ----------------- -----------------
Mark J. Terry 12,000 6.72% $7.125 6/22/07 $34,807 $81,114
- -------------------------- -------------- ------------------ ------------- ----------------- ----------------- -----------------
(1) The potential gain is calculated from the closing price of Common Stock on
the date of grants to executive officers. These amounts represent assumed
rates of appreciation only. Actual gains, if any, on stock option exercises
and common stock holdings depend entirely on the future performance of the
Common Stock and overall market conditions.
AGGREGATED OPTIONS EXERCISED IN 2000 AND
THE YEAR-END VALUE OF UNEXERCISED OPTIONS
----------------------- -------------- -------------- ------------------------- -----------------------------
Number of Value of unexercised
Unexercised options In-the-money options
Shares at year-end 2000(#) at year end 2000($)(1)
acquired on ------------------------- -----------------------------
exercise Value Exercisable/ Exercisable/
Name (# of Shs.) realized($) Unexercisable Unexercisable
----------------------- -------------- -------------- ------------------------- -----------------------------
John R. Putney 8,440 25,940 40,800/33,800 $24,113/$14,350
----------------------- -------------- -------------- ------------------------- -----------------------------
Paul M. Peduto -0- -0- 41,480/23,760 $51,835/$8,690
----------------------- -------------- -------------- ------------------------- -----------------------------
Leo C. Donahue -0- -0- 61,240/17,160 $142,635/$4,465
----------------------- -------------- -------------- ------------------------- -----------------------------
Mark J. Terry -0- -0- 30,560/23,040 $7,275/$8,600
----------------------- -------------- -------------- ------------------------- -----------------------------
(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,
2000 ($8.000 per share), multiplied by the number of shares that
are subject to the options.
15
18
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.
In 2000, each Director received stock options for 3,000 shares of
Bancorp Common Stock under the 1998 Incentive and Nonqualified Stock Option
Plan, exercisable at the fair market value of Bancorp's Common Stock on the date
of grant.
George W. Phillips, who is a director of Bancorp, had a consulting
agreement that expired on May 31, 2000. (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), AND THE TOTAL RETURN
INDEX FOR NASDAQ BANKS.
[GRAPH OMITTED]
WARREN BANCORP, INC.
PRICE PLUS WARREN NASDAQ NASDAQ
REINVESTMENT OF BANCORP, INC. U.S. COMPANIES BANK
CUMULATIVE DIVIDENDS (INDEXED) INDEX INDEX
-------------------- ------------- -------------- ------
12/31/95 $ 5.802 100.00 100.00 100.00
12/31/96 8.066 139.02 123.04 132.04
12/31/97 12.955 223.29 150.69 221.06
12/31/98 10.840 186.83 212.51 219.64
12/31/99 9.669 166.65 394.92 211.14
12/31/00 11.124 191.73 237.62 241.08
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.
Francis L. Conway, a Director of Bancorp, entered into an agreement as
Principal of Conway, Cahill-Brodeur Real Estate, LLC, with Warren Five Cents
Savings Bank to purchase property at 82 Lynn Street, Peabody, MA. The
transaction price was $675,000, which was a market price as determined by an
independent appraisal and was approved by the Bank's Board of Directors. None of
the purchase price was financed by the Bank.
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.
Below is a summary of the fees charged by Arthur Andersen LLP for
services provided for the year ending December 31, 2000:
Audit fees $85,000
Financial information systems
design and implementation fees -0-
All other fees 29,000
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 29,
2001 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.
In addition, a stockholder who wishes to present a proposal at the next
annual meeting of stockholders must deliver the proposal to Bancorp at the
address above. Bancorp must receive the proposal not earlier than December 1,
2001 and not later than March 1, 2002. 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 26, 2001
19
22
EXHIBIT A
WARREN BANCORP, INC.
FINANCE, AUDIT AND COMPLIANCE COMMITTEE CHARTER
I. GENERAL STATEMENT OF PURPOSE
The Finance, Audit and Compliance Committee of the Board of Directors
(the "Audit Committee" or "Committee") of Warren Bancorp, Inc. (the
"Company") assists the Board of Directors (the "Board") in general
oversight and monitoring of management's 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 the independence
and performance of the Company's external independent auditors.
II. AUDIT COMMITTEE COMPOSITION
The Audit Committee shall consist of at least three members who shall
be appointed annually by the Board upon the recommendation of the
Nominating Committee 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 two times per year in person
or by telephone conference call. Additional meetings may be held when
deemed necessary by the Audit Committee.
IV. AUDIT COMMITTEE ACTIVITIES
The principal activities of the Committee will generally include the
following:
A. REVIEW OF CHARTER
- Review and reassess the adequacy of this Charter annually and
submit it to the Board for approval.
B. AUDITED FINANCIAL STATEMENTS AND ANNUAL AUDIT
- Review the overall audit plan (both external and internal)
with the independent auditors, the internal auditor and the
Company's Chief Financial Officer.
- Review and discuss with management (including the Company's
Chief Financial Officer) 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;
A-1
23
(ii) the adequacy of the Company's internal financial
reporting controls that could significantly affect
the integrity of the Company's financial statements;
(iii) major changes in and other questions regarding
accounting and auditing principles and procedures;
and
(iv) the effectiveness of the Company's internal audit
process, including evaluations of its Chief Financial
Officer, Internal Auditor and any other relevant
personnel. (This may be done outside the presence of
management.)
- Review and discuss with the independent auditors (outside of
the presence of management if considered necessary) how the
independent auditors plans to handle its responsibilities
under the Private Securities Litigation Reform Act of 1995.
- Review and discuss with the independent auditors (outside of
the presence of management if considered necessary) 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 its audit work, including any
restrictions on the scope of its activities or its
access to information; and
(ii) any changes required by the auditors in the scope or
performance of the Company's internal audit.
- 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 discussion (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 Independence Standards Board Standard No. 1, and review and
discuss with the independent auditors the independent
auditors' independence.
- 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.
A-2
24
C. UNAUDITED QUARTERLY FINANCIAL STATEMENTS
Appoint the Committee chairman to review with management the
contents of the meeting between management and the independent
auditors regarding the independent auditors' review of the
quarterly financial statements. (The agenda of the meeting
will be sent to the Committee Chairman before his review with
management.) If any issues arise in the review of the
quarterly financial statements by the independent auditors
that require specific reporting under SAS 71 by the
independent auditors, such report will be made by the
independent auditors to the Committee Chairman. If the
Committee Chairman deems it necessary, he will call a meeting
of the Committee at which the independent auditors will review
their findings with the Committee.
D. MATTERS RELATING TO SELECTION, PERFORMANCE AND INDEPENDENCE OF
INDEPENDENT AUDITOR
- 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 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.
- 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. GENERAL
- Review the appointment and replacement of the senior
internal auditing executive.
- Advise the Board with respect to violations of the
Company's Code of Conduct.
A-3
25
- Review the Company's Asset/Liability Policies, any
proposed changes to the policy and approve the policy
annually.
- Meet with the Company's Compliance Officer and review
at both regularly scheduled meetings the Company's
Community Reinvestment Act results and review the
minutes of the Company's internal Compliance
Committee and the internal Lending Compliance
Committee.
- Meet with the Company's Security Officer and review
at both regularly scheduled meetings the Company's
Security Report.
- Review at both regularly scheduled meetings various
internal audit reports and management's responses and
approve annually the internal auditor's annual audit
schedule.
- 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.
- Perform such other oversight functions as may be
requested by the Board.
- 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
professional 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 is also 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.
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[X] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE WARREN BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 2, 2001
The undersigned hereby constitutes and appoints Stephen G. Kasnet, John R.
Putney and Paul M. Peduto, and each of them, as Proxies of the undersigned,
with full power of substitution, and authorizes each of them to represent and
to vote all shares of Common Stock of Warren Bancorp, Inc. (the "Company"),
held by the undersigned at its close of business on March 5, 2001, at the
Annual Meeting of Stockholders to be held on Wednesday, May 2, 2001, at 10:00
a.m., at the Peabody Marriot Hotel, 8A Centennial Drive, Peabody,
Massachusetts, or at any adjournments or postponements thereof.
---------------------------------
Please be sure to sign and date Date
this Proxy in the box below.
- ----------------------------------------------------------------------
- ---Stockholders sign above---------Co-holder (if any) sign above)-----
WITH- FOR ALL
FOR HOLD EXCEPT
PROPOSAL #1: [ ] [ ] [ ]
To elect seven Directors to hold office until the 2004 Annual Meeting of
Stockholders and until their successors are duly elected and qualified.
FRANCIS L. CONWAY ARTHUR J. PAPPATHANASI
ARTHUR E. HOLDEN GEORGE W. PHILLIPS
STEPHEN G. KASNET JOHN W. WOMACK
LINDA LERNER
INSTRUCTION: TO WITHHOLD AUTHORITY 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 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.
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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HAS YOUR ADDRESS CHANGED?
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