SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Northway Financial, Inc.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total Fee Paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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{NORTHWAY FINANCIAL LOGO} NORTHWAY FINANCIAL, INC.
April 2, 2001
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Northway Financial, Inc., to be held on Tuesday, May 15, 2001 at 2:00 p.m. at
The Town and Country Motor Inn, Route 2, Shelburne, New Hampshire 03581.
At the annual meeting you will be asked to consider and act upon the
following:
(1) to elect four (4) class I directors to serve until the 2004 Annual
Meeting of Stockholders or until their successors are duly elected and
qualified; and
(2) to transact such other business as may come properly before the
meeting and any adjournments or postponements thereof.
I, along with the other members of the Board of Directors, look forward to
greeting you personally at the Annual Meeting. However, whether or not you plan
to attend personally and regardless of the number of shares you own, it is
important that your shares be represented. YOU ARE URGED TO PROMPTLY SIGN, DATE
AND MAIL THE ENCLOSED PROXY IN THE POSTAGE-PAID ENVELOPE PROVIDED FOR YOUR
CONVENIENCE.
This will not prevent you from voting in person but will assure that your
vote is counted if you are unable to attend.
Very truly yours,
William J. Woodward
Chairman of the Board
9 Main Street, Berlin, New Hampshire 03570/Telephone 603-752-1171
{NORTHWAY FINANCIAL LOGO}
NORTHWAY FINANCIAL, INC.
9 MAIN STREET
BERLIN, NEW HAMPSHIRE 03570
TELEPHONE 603-752-1171
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, MAY 15, 2001
NOTICE IS HEREBY GIVEN THAT the Annual Meeting of Stockholders of Northway
Financial, Inc. will be held on Tuesday, May 15, 2001 at 2:00 p.m. at The Town
and Country Motor Inn, Route 2, Shelburne, New Hampshire 03581 for the following
purposes:
(1) To elect four (4) class I directors to serve until the 2004 Annual
Meeting of Stockholders or until their successors are duly elected and
qualified; and
(2) To transact such other business as may come properly before the
meeting and any adjournments or postponements thereof.
The foregoing items are more fully described in the Proxy Statement
accompanying this Notice.
The Board of Directors has fixed the close of business on March 16, 2001
as the record date for determining stockholders entitled to notice of and to
vote at the Annual Meeting and any adjournments or postponements thereof. Only
holders of common stock of record at the close of business on that date will be
entitled to notice of and to vote at the Annual Meeting and any adjournments or
postponements thereof.
By Order of the Board of Directors
Joseph N. Rozek
Assistant Secretary
Berlin, New Hampshire
April 2, 2001
YOUR VOTE IS IMPORTANT
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WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE
REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF
YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU
HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
NORTHWAY FINANCIAL, INC.
9 MAIN STREET
BERLIN, NEW HAMPSHIRE 03570
TELEPHONE 603-752-1171
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, MAY 15, 2001
This Proxy Statement and accompanying form of proxy are furnished in
connection with the solicitation of proxies on behalf of the Board of Directors
of Northway Financial, Inc., a New Hampshire corporation (the "Company"), for
use in voting at the Annual Meeting of Stockholders (the "Meeting") to be held
at 2:00 p.m. on May 15, 2001, at The Town and County Motor Inn, Route 2,
Shelburne, New Hampshire 03581 and at any postponements or adjournments thereof.
This proxy statement and accompanying form of proxy were mailed on or about
April 2, 2001 to stockholders of record at the close of business on March 16,
2001 in connection with the solicitation.
At the close of business on March 16, 2001, there were outstanding and
entitled to vote 1,532,823 shares of the Company's common stock, par value of
$1.00 per share.
Each stockholder is entitled to one vote per share upon each matter
submitted at the Meeting. Only stockholders of record at the close of business
on March 16, 2001 shall be entitled to vote at the Meeting.
The proxies of holders of common stock are being solicited by the Board of
Directors. Stockholders are requested to complete, date, sign and promptly
return the accompanying proxy card in the enclosed envelope. Shares represented
by a properly executed proxy received prior to the vote at the Meeting and not
revoked will be voted at the Meeting as directed in the proxy. IF A PROXY IS
SUBMITTED AND NO DIRECTIONS ARE GIVEN, THE PROXY WILL BE VOTED "FOR" THE
APPROVAL OF THE PROPOSALS TO BE CONSIDERED AT THE MEETING.
A person giving the enclosed proxy may revoke it by filing an instrument
of revocation with Joseph N. Rozek, Assistant Secretary, Northway Financial,
Inc., 9 Main Street, Berlin, New Hampshire 03570. Any such person may also
revoke a proxy by filing a duly executed proxy bearing a later date, or by
appearing at the Meeting in person, notifying the Assistant Secretary, and
voting by ballot at the Meeting. Any stockholder of record attending the Meeting
may vote in person whether or not a proxy has been previously given, but the
mere presence (without notifying the Assistant Secretary) of a stockholder at
the Meeting will not constitute revocation of a previously given proxy.
The Company will bear the cost of soliciting proxies from the
stockholders, including mailing costs, and will pay all printing costs in
connection with this Proxy Statement. In addition to the use of the mails,
proxies may be solicited by the directors, officers, and certain employees of
the Company, and by personal interviews, telephone and facsimile. Such
directors, officers and employees will not receive additional compensation for
such solicitation but may be reimbursed for reasonable out-of-pocket expenses
incurred in connection therewith. The Company may also make arrangements with
brokerage houses and other custodians, nominees, and fiduciaries for the
forwarding of solicitation material to the beneficial owners of its common
stock. The Company may reimburse such custodians, nominees, and fiduciaries for
reasonable out-of-pocket expenses incurred in connection therewith.
The presence in person or by proxy of the holders of a majority of the
issued and outstanding shares entitled to vote at the Meeting is required to
constitute a quorum. Abstentions and "broker non-votes" (as defined below) will
be counted as present for purposes of determining the presence or absence of a
quorum for the transaction of business at the Meeting, but as unvoted for
purposes of determining the approval of any matter submitted to the stockholders
for a vote. A "broker non-vote" is a proxy from a broker or other nominee
indicating that such person has not received instructions from the beneficial
owner or other person entitled to vote the shares which are the subject of the
proxy on a particular matter and with respect to which the broker or other
nominee does not have discretionary voting power.
The Company is a New Hampshire corporation and the parent of The Berlin
City Bank, a New Hampshire-chartered bank based in Berlin, New Hampshire
("BCB"), and Pemigewasset National Bank, a national bank based in Plymouth, New
Hampshire ("PNB").
PROPOSAL ONE
ELECTION OF DIRECTORS
NOMINEES AND DIRECTORS CONTINUING IN OFFICE
The Company's Board of Directors is currently composed of eleven members.
The Company's Amended and Restated Articles of Incorporation provide that
directors are to be divided into three classes, with all classes as nearly equal
as possible in size. Each director is elected for three years and the terms are
staggered so that only one class is elected by the stockholders annually.
At the Meeting, four directors will be elected to serve until the 2004
Annual Meeting and until their successors are duly elected and qualified. The
Board of Directors has nominated for election Fletcher W. Adams, Arnold P.
Hanson, Jr., John H. Noyes, and William J. Woodward, all of whom are current
members of the Board of Directors. It is the intention of the persons named in
the accompanying form of proxy or their substitutes to vote for the election of
the foregoing nominees unless instructed to the contrary. The Board of Directors
believes that all of the nominees will be available and able to serve as
directors, but if for any reason any of the nominees named above should not be
available or able to serve, the proxies may exercise discretionary authority to
vote for one or more substitutes as the Board of Directors may recommend. In the
alternative, the Board of Directors may, if permitted by law and the Amended and
Restated Articles of Incorporation and Bylaws, amend the Bylaws if necessary and
reduce the size of the Board to eliminate the resulting vacancy. The affirmative
vote of a plurality of the votes cast is required for the election of directors.
Abstentions and broker non-votes will not be counted as "votes cast" for
purposes of electing directors and, therefore, will not affect the election of
the directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" ALL OF THE
NOMINEES FOR DIRECTOR OF THE COMPANY.
INFORMATION CONCERNING DIRECTORS AND NOMINEES
The following table sets forth the name and ages, other positions held
with the Company, term of office and period served, business experience, and
certain other information, as of March 16, 2001, with respect to each nominee
and each director continuing in office. The information was provided by the
persons named.
Shares of
Common Stock Percent
Term Beneficially of Common
Director To Owned at Stock
Name Age Since Expire Mar. 16, 2001(1) Ownership(1)
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NOMINEES OF THE BOARD
Adams, Fletcher W 64 1997 2004 54,500(2) 3.56%
Vice-Chairman of the Board,
Northway Financial, Inc.;
Chairman of the Board, President,
Pemigewasset National Bank
Hanson, Jr., Arnold P 51 1997 2004 24,312(3) 1.59%
President, Isaacson Structural
Steel, Inc.
Noyes, John H 54 1997 2004 11,825 ****
President, Noyes Insurance
Agency, Inc.; President,
Central Square Insurance, Inc.
Woodward, William J 55 1997 2004 82,713 5.40%
Chairman of the Board,
President, Chief Executive
Officer, Northway Financial,
Inc. and The Berlin City Bank
DIRECTORS CONTINUING IN OFFICE
Boucher, Stephen G 54 1999 2002 250 ****
President, Airmar
Technology Corp.
Kelley, Barry J 51 1997 2002 40,744(4) 2.66%
President, White
Mountain Lumber, Co.
Labnon, Randall, G 47 1997 2002 3,072 ****
General Manager,
Town & Country Motor Inn
Bornstein, Peter H 47 1997 2003 5,392(5) ****
Attorney and Partner, Bergeron
Hanson, Bornstein & Carlson
Clifford, Jr., Charles H 65 1997 2003 2,500 ****
Retired Businessman
Keough, Bruce W 44 1999 2003 500 ****
Private Investor
Morris, John D 70 1997 2003 9,856 ****
Retired Businessman
**** Owns less than 1% of the Company's outstanding common stock.
(1) Included in the shares listed as "beneficially owned" and in the calculation of common stock
ownership are the following shares which the persons listed have the right to acquire prior to the
expiration date shown pursuant to vested stock options granted under the 1999 stock option and
grant plan - Mr. Woodward (7,500 prior to June 15, 2009 and 2,125 prior to October 17, 2010) and
Mr. Adams (3,500 prior to June 15, 2009).
(2) Includes 23,000 shares held in a trust for which Mr. Adams serves as trustee.
(3) Includes 24,000 shares held in a trust for which Mr. Hanson serves as trustee and 312 shares owned
jointly with spouse.
(4) Includes 32,276 shares owned jointly with spouse and 2,900 shares owned by spouse for which Mr.
Kelley may be deemed the beneficial owner.
(5) Includes 3,632 shares owned jointly with spouse, 320 shares owned by spouse for which Mr. Bornstein
may be deemed the beneficial owner,12 shares owned jointly with son and 1,056 shares held in an
account for which Mr. Bornstein is the conservator.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held fourteen (14) meetings during
the calendar year ended December 31, 2000.
Directors of the Company are paid an annual fee of $10,000 and directors
who also serve on the Executive Committee receive an additional annual fee of
$12,000. Directors who are officers of the Company do not receive any of these
fees with the exception of Mr. Adams, who receives an annual fee in lieu of
salary of $32,000.
The following sets forth the members of each of the standing committees of
the Board of Directors together with a brief description of the function of each
such committee.
EXECUTIVE COMMITTEE
MEMBERS: William J. Woodward, Chairman; Fletcher W. Adams, John D. Morris;
and John H. Noyes
FUNCTION: The Executive Committee generally has the power to exercise the
power of the full Board during intervals between meetings of the
Board.
NUMBER OF
MEETINGS: This Committee meets on a weekly basis.
AUDIT AND COMPLIANCE COMMITTEE
MEMBERS: Arnold P. Hanson, Jr., Chairman; Stephen G. Boucher; Barry J.
Kelley; and John H. Noyes.
FUNCTION: This Committee oversees the activities of the Company's Internal
Auditor, its independent certified public accounting firm, and
activities of other accounting firms used on a project basis. This
Committee also reviews the results of each regulatory examination.
The Committee also provides oversight for all compliance activities
of the Company, including those of the corporate compliance officer.
The Audit and Compliance Committee operates under a written charter
adopted by the Board of Directors of the Company, a copy of which is
attached as Appendix A to this proxy statement.
NUMBER OF
MEETINGS: This Committee met five (5) times during the 2000 fiscal year.
HUMAN RESOURCES AND COMPENSATION COMMITTEE
MEMBERS: Bruce W. Keough, Chairman; Stephen G. Boucher; Arnold P. Hanson,
Jr.; Randall G. Labnon; and John H. Noyes.
FUNCTION: This Committee conducts annual and periodic reviews of director,
officer, and employee compensation in order to ensure that the
Company has the programs necessary to attract and retain competent
professionals at all levels.
NUMBER OF
MEETINGS: This Committee met five (5) times during the 2000 fiscal year.
NOMINATING COMMITTEE
MEMBERS: The full Board of Directors serves as the Nominating Committee of
the Company.
FUNCTION: This Committee selects nominees for election as directors of the
Company. This Committee nominated the persons standing for election
at the 2001 Annual Meeting. The committee will consider directors
nominees recommended by Stockholders. See Stockholder Proposals on
page 14 for more information.
NUMBER OF
MEETINGS: The Board of Directors meets monthly and, as appropriate, discusses
nominations.
EXECUTIVE OFFICERS
The following sets forth information regarding the executive and key
officers of the Company and/or its subsidiaries, the position or office held by
each of them, and the date from which they have continually served as executive
officers.
Executive
Officer
Name Age Since
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William J. Woodward 55 1989
Chairman, President, and Chief Executive Officer
Northway Financial, Inc. and The Berlin City Bank
Fletcher W. Adams 64 1990
Vice Chairman, Northway Financial, Inc.; Chairman
of the Board and President, Pemigewasset National Bank
George L. Fredette 41 1999
Senior Vice President and Chief Financial Officer
Northway Financial, Inc. and The Berlin City Bank
Lawrence J. Bessinger 56 1999
Senior Vice President, Northway Financial, Inc.
James R. Brannen 40 1999
Senior Vice President, Northway Financial, Inc.
Richard T. Brunelle 59 1996
Senior Vice President, The Berlin City Bank
John H. Stratton, Jr. 55 1990
Senior Vice President, The Berlin City Bank
Robert I. Walker 62 1999
Senior Vice President, Pemigewasset National Bank
William J. Woodward has served as Chairman of the Board of Directors,
President and Chief Executive Officer of the Company since 1997. In addition, he
has served as President and Chief Executive Officer of BCB since 1994 and has
served as Chairman of the Board of Directors of BCB since 1989. He became a
Director of BCB in 1975.
Fletcher W. Adams has served as Vice Chairman of the Board of Directors of
the Company since 1997. He has also served as Chairman of the Board of PNB since
February 1999. In addition, he served as President and Chief Executive Officer
of PNB from January 1990 until February 1999. In July 2000, he resumed the
position of President of PNB.
George L. Fredette has served as Senior Vice President and Chief Financial
Officer of the Company and BCB since March 1999. Prior to joining the Company he
served as Executive Vice President and Chief Financial Officer of Evergreen
Bancorp, Inc. and Evergreen Bank, N. A. from December 1995 until January 1999.
Lawrence J. Bessinger has served as Senior Vice President of the Company
since July 1999 and is responsible for the technology and deposit services
banking divisions. Prior to this promotion, Mr. Bessinger had served as Vice
President-Chief Information Officer for BCB since 1990.
James R. Brannen has served as Senior Vice President of the Company since
July 1999 and is responsible for the loan operations division. From November
1993 until July 1999, Mr. Brannen served as Vice President of Retail Loan
Operations for BCB.
Richard T. Brunelle has served as Senior Vice President of The Berlin City
Bank since April 1996 and is responsible for the commercial lending division.
From 1991 until his promotion, Mr. Brunelle served BCB as Vice President and
Senior Commercial Lender.
John H. Stratton, Jr. has served as Senior Vice President of BCB since
1990 and is responsible for the retail banking division.
Robert I. Walker has served as Senior Vice President of PNB since June
1999 and is responsible for the retail and marketing divisions. Prior to joining
PNB, Mr. Walker served as Senior Vice President of Vermont National Bank from
1998 to 1999. From 1996 to 1998 Mr. Walker served as Director of Marketing and
Retail Banking for Community Bankshares, Inc. From 1992 to 1996 he served as
Regional Manager and Branch Administrator for First New Hampshire Bank.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of March 16, 2001, the beneficial
ownership of common stock by (i) each of the executive officers named under
"Executive Compensation" below (other than Mr. Woodward), and (ii) all directors
and executive officers as a group. See "Information Concerning Directors and
Nominees" above for the beneficial ownership of common stock by Messrs. Woodward
and Adams and other directors of the Company. As of March 16, 2001, no person
owned beneficially more than 5% of the Company's outstanding common stock except
for Mr. Woodward.
Shares of Common Percent of Shares of
Name Stock Beneficially Owned(1) Common Stock Ownership(1)
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Richard T. Brunelle 2,800 ****
George L. Fredette 4,375 ****
John H. Stratton, Jr. 3,822 ****
Directors and executive 251,341 16.40%
officers as a group (17
persons)
**** Owns less than 1% of the Company's common stock.
(1) Included in the shares listed as "beneficially owned" and in the
calculation of common stock ownership are the following shares which the
persons listed have the right to acquire prior to the expiration date shown
pursuant to vested stock options granted under the 1999 stock option and
grant plan - Mr. Fredette (3,000 prior to June 15, 2009 and 875 prior to
October 17, 2010), Mr. Brunelle (2,000 prior to June 15, 2009 and 750 prior
to October 17, 2010), and Mr. Stratton (2,000 prior to June 15, 2009 and
750 prior to October 17, 2010).
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and long-term
compensation for services rendered in all capacities to the Company during the
fiscal years ended December 31, 2000, 1999, and 1998, of those persons who were,
at December 31, 2000: (i) the chief executive officer of the Company and (ii)
the other executive officers of the Company whose total annual salary and bonus
exceeded $100,000 (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
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Other Annual(1) Securities Underlying Other(2)
Name and Principal Position Year Salary Bonus Compensation Options/SARs (#) Compensation
William J. Woodward 2000 $240,000 $ 41,500 $ 5,211 2,125 $5,536
Chairman, President and 1999 225,000 39,921 2,461 7,500 3,375
Chief Executive Officer 1998 179,922 35,000 -- -- --
George L. Fredette 2000 120,923 2,365 2,373 875 2,344
Senior Vice President and 1999 95,830 16,381 24,390 3,000 863
Chief Operating Officer
Richard T. Brunelle 2000 107,250 7,507 2,114 750 2,063
Senior Vice President 1999 101,255 6,249 1,041 2,000 1,515
Berlin City Bank 1998 87,413 5,765 -- -- --
John H. Stratton, Jr 2000 111,616 7,813 2,120 750 2,232
Senior Vice President 1999 104,330 6,020 1,003 2,000 1,504
Berlin City Bank 1998 100,880 3,023 -- -- --
(1) The compensation reported in this column for 2000 is comprised of amounts allocated to the accounts of the Named Executive
Officers in connection with the Company's Profit Sharing Plan.
(2) The compensation reported in this column for 2000 is composed of : (a) the following amounts allocated to the accounts of the
Named Executive Officers in connection with the Company's 401(k) Plan, as an employer matching contribution: Mr. Woodward -
$4,800; Mr. Fredette - $2,344; Mr. Brunelle - $2,063; and Mr. Stratton - $2,232; (b) $736 which represents imputed income to
Mr. Woodward associated with the term portion of a split dollar life insurance arrangement.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
The following table provides details regarding stock options granted to Named Executive Officers during the fiscal year
ended December 31, 2000. In addition, in accordance with Securities and Exchange Commission ("SEC") rules, there are shown the
hypothetical gains or "option spreads" that would exist for the respective options assuming the Company's stock price appreciated
at assumed annual compound rates of 5% and 10% from the date the options were granted over the full option term.
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or Potential Realizable Value
Options/SARs Employees in Base Price Expiration --------------------------
Name Granted (#) Fiscal Year ($/Sh) Date 5% ($)(1) 10%($)(1)
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William J. Woodward 8,500 29.82 22.625 10/17/10 120,944 306,497
George L. Fredette 3,500 12.28 22.625 10/17/10 49,801 126,204
Richard T. Brunelle 3,000 10.53 22.625 10/17/10 42,686 108,175
John H. Stratton, Jr. 3,000 10.53 22.625 10/17/10 42,686 108,175
(1) Potential Realizable Value is based on an assumed annual growth rate for each of the grants shown over their ten-year term.
The potential values are set forth to comply with applicable regulations of the SEC, and the Company cannot predict whether
these values can be achieved. Actual gains, if any, on stock option exercises are dependent on the future performance of the
Company's common stock.
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table shows stock option exercises by the Named Executive
Officers during the fiscal year ended December 31, 2000. In addition, this table
includes the number of shares covered by both exercisable and unexercisable
options as of December 31, 2000. Also reported are the values for "in-the money"
options, which represent the positive spread between the exercise price of any
such existing options and the year-end closing price of the Company's common
stock.
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/
Options/SARs at FY- SARs at FY-End ($)
Shares Acquired Value Realized End(#) Exercisable/ Exercisable/
Name On Exercise (#) ($) Unexercisable Unexercisable
- ------------------------------------------------------------------------------------------------------------
William J. Woodward 0 0 9,625/6,375 1,859/5,578
George L. Fredette 0 0 3,875/2,625 766/2,297
Richard T. Brunelle 0 0 2,750/2,250 656/1,969
John H. Stratton, Jr. 0 0 2,750/2,250 656/1,969
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on
the Company's common stock (assuming $100 was invested on September 30, 1997,
the date when the Company's common stock became publicly traded, and all
dividends were reinvested) against (i) the cumulative total return of the S&P
Composite 500 Stock Index, and (ii) the NASDAQ Bank Stock Index.
9/30/97 12/31/97 12/31/98 12/31/99 12/31/00
NWFI $100.00 $103.33 $ 90.83 $ 86.67 $ 78.33
S&P 500 100.00 102.44 129.76 155.10 139.38
NASDAQ Bank Stocks 100.00 109.97 97.03 89.28 102.38
EMPLOYMENT CONTRACTS
Messrs. Woodward and Fredette have entered into employment agreements with
the Company. Pursuant to the employment agreements, each executive provides
ongoing services to the Company on a full-time basis for periods of three years
in the case of Mr. Woodward and two years in the case of Mr. Fredette. These
terms are automatically renewed for periods of one year commencing on each
anniversary of the respective agreement unless either the executive or the
Company gives written notice to the other electing not to extend the term. The
employment agreements provide for annual base salaries that are subject to
increase from time to time in the discretion of the Board of Directors. The
employment agreements also provide that each of the executives is entitled to
participate in any incentive or bonus program established by the Board of
Directors, as well as other employee benefit plans which the Company may from
time to time have in effect for all or most of its senior executives.
In addition to certain confidentiality and non-compete provisions, the
agreements provide that if an executive is terminated from full-time employment
with the Company without cause prior to the end of the respective term, then he
will be entitled to receive his base salary at the rate then in effect and
certain group health benefits for the remainder of such term (the "Termination
Benefits Period"); provided, that in the event such executive commences any
employment or self-employment during the period during which he is entitled to
receive the termination benefits, the remaining amount of base salary due, for
the period from the commencement of such employment or self-employment to the
end of the Termination Benefit Period, will be reduced by one-half of the salary
such executive receives from such employment or self-employment. In addition, if
such executive receives benefits from such employment or self-employment
comparable to those benefits provided by the Company, the continuation of group
health benefits shall cease effective as of the date of commencement of such
employment or self-employment.
The employment agreements also provide for termination benefits if the
executives' employment with the Company is terminated under certain
circumstances following a "change of control." If within 18 months following a
change of control in the case of Mr. Woodward or twelve months in the case of
Mr. Fredette, such executive's employment is terminated by the Company or its
successor or by such executive following the occurrence of certain adverse
actions taken with respect to such executive's employment, or if such
executive's employment is terminated without cause, the Company must, in lieu of
any other termination benefits described above, pay to such executive (or such
executive's estate, if applicable) a lump-sum payment, in the case of Mr.
Woodward, equal to 2.99 times such executive's "base amount" (within the meaning
of section 280G of the Internal Revenue Code of 1986, as amended) and, in the
case of Mr. Fredette, two times such "base amount".
KEY EMPLOYEE AGREEMENTS
The Company and its subsidiaries have entered into Key Employee agreements
with certain officers. These agreements provide for payments, under certain
circumstances, to the officer upon the officer's termination after a change in
control. The amount of such payments is set forth in their individual key
employee agreements.
PENSION PLANS
The Company maintains a noncontributory defined benefit pension plan
covering all full-time and part-time employees who work at least 1,000 hours,
have completed one year of service and have attained the age of 21. Vesting will
occur after 5 years, and age 65 will be the normal retirement age. Early
retirement may be taken, however, after age 55.
The following table illustrates estimated annual pension benefits for
retirement at age 65 under the most advantageous plan provisions available for
the various levels of compensation and years of service, limited to 30. The
figures in this table are calculated based on 1.00% of the final 5 years average
total W-2 earnings plus .65% of compensation in excess of covered compensation
times the number of years of service. Covered compensation for the purpose of
this calculation is currently $37,212.
AVERAGE
COMPENSATION YEARS OF SERVICE
- ---------------------------------------------------------------------------
15 20 25 30 35
- ---------------------------------------------------------------------------
$125,000 27,309 36,412 45,516 54,619 54,619
$150,000 33,497 44,662 55,828 66,994 66,994
$170,000 35,972 47,962 59,953 71,944 71,944
$175,000 35,972 47,962 59,953 71,944 71,944
$200,000 35,972 47,962 59,953 71,944 71,944
$225,000 35,972 47,962 59,953 71,944 71,944
$250,000 35,972 47,962 59,953 71,944 71,944
Compensation used in determining retirement benefits under the pension
plan is on the same basis as included in the Summary Compensation Table.
Benefits payable under the plan are not offset by social security benefits. The
officers named in the Summary Compensation Table have been credited with the
following years of service: Mr. Woodward, three years; Mr. Fredette, two years;
Mr. Brunelle, ten years; and Mr. Stratton, eleven years.
REPORT OF THE AUDIT AND COMPLIANCE COMMITTEE
The Board of Directors has established an Audit and Compliance Committee,
whose members during 2000 were Arnold P. Hanson, Jr., Chairman; Stephen G.
Boucher; Barry J. Kelly; and John H. Noyes. The Board of Directors has
determined that the members of the Audit and Compliance Committee are
"independent" under the rules of the Nasdaq Stock Market.
During 2000, the Audit and Compliance Committee: reviewed and discussed
the audited financial statements with the Company's management; discussed with
the Company's independent auditors the matters required to be discussed by SAS
No. 61; and discussed with the auditors their independence and received from the
auditors disclosures regarding their independence.
The Audit and Compliance Committee has recommended to the Board of
Directors that the audited financial statements be included in the Company's
Annual Report on Form 10-K for the year ended December 31, 2000, based on its
review and the discussions described above.
During the year ended December 31, 2000, the Company paid the following
fees to Shatswell, MacLeod & Company, P.C., the Company's principal accountants:
FEES PAID TO INDEPENDENT AUDITORS
Audit Fees $99,000
Financial Information Systems Design and Implementation Fees --
All Other Fees 16,000
The Company's Audit and Compliance Committee considered whether the
provision of the non-audit services above is compatible with maintaining the
auditor's independence.
Submitted by the members of the Audit and Compliance Committee.
Arnold P. Hanson, Jr., Chairman
Stephen G. Boucher
Barry J. Kelley
John H. Noyes
REPORT OF THE HUMAN RESOURCES AND COMPENSATION COMMITTEE ON EXECUTIVE
COMPENSATION
GENERAL POLICIES
The Human Resources and Compensation Committee is comprised of five
outside Directors. The Human Resources and Compensation Committee's
responsibility is to set policy and oversee the administration of the Company's
compensation and benefits. Working with an outside bank compensation consultant,
the committee recommends the approval of the salary program for the entire
organization. It also oversees the compensation of the Chief Executive Officer
("CEO") and certain other senior officers.
The base salary of these senior executive officers is set at an amount
within an established salary range that reflects the executive's position,
duties and level of responsibility. The salary range consists of minimum and
maximum levels distributed around an average of base salaries paid to executives
who hold substantially similar positions within a selected peer group. Any
bonuses are designed to reward executives for performance and are based
primarily on the Company's financial results.
CEO COMPENSATION
In connection with Mr. Woodward's employment agreement described above,
the Company engaged a bank compensation consultant to act as its advisor in the
matter of executive compensation. This consultant specializes in compensation
matters for New England financial institutions, and maintains an extensive data
base for banks in various asset size groups.
Using a variety of established surveys concerning bank salaries, the
Company's consultant recommended a competitive salary range for Mr. Woodward. In
connection with Mr. Woodward's employment agreement, the consultant's
recommendation was subsequently approved by the Board.
Submitted by the members of the Human Resources and Compensation Committee.
Bruce W. Keough, Chairman
Stephen G. Boucher
Arnold P. Hanson, Jr.
Randall G. Labnon
John H. Noyes
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has, during its ordinary course of business, made loans to
directors and executive officers. Loans are made on substantially the same
terms, including rates and collateral, as those prevailing at the time for
comparable transactions with other persons and do not involve more than the
normal risk of collectibility or present other unfavorable features. The Company
has had (and expects to have in the future) banking transactions with directors,
executive officers, principal stockholders, and their associates on the same
terms (including interest rates and collateral on loans) as those prevailing at
the same time for comparable transactions with others, and do not involve more
than the normal risk of collectibility or present other unfavorable features.
The largest aggregate amount of such extensions of credit to directors,
executive officers, principal stockholders, and their associates during the
period of January 1, 2000 through December 31, 2000 was $1,000,521. The
aggregate amount owing to the Company from such individuals on December 31, 2000
was $1,000,521, or 2.41% of stockholders' equity. As mentioned above, these
loans were made on the same terms for comparable transactions with others.
There were no executive officers or directors whose direct or indirect
liability to the Company exceeded 10% of stockholders' equity at any time during
the year.
During 2000 the Company received services from certain directors and their
affiliates, which either totaled $60,000 or represented more than 5% of that
firm's gross revenue, as follows: Vaillancourt & Woodward, Inc., of which
William J. Woodward is a part owner and treasurer, provided insurance services
totaling $153,130.
RELATIONSHIP WITH INDEPENDENT AUDITORS
Shatswell, MacLeod & Company, P.C. was the Company's independent auditing
firm for 2000. Representatives of Shatswell, MacLeod & Company, P.C. are
expected to be present at the meeting to respond to stockholders' questions and
will have the opportunity to make a statement if they so desire. The firm of
Shatswell, MacLeod & Company, P.C. has served as the Company's independent
auditing firm since September 30, 1997.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Meeting, it is
intended that proxies in the accompanying form will be voted in respect thereof
in accordance with the judgment of the person or persons voting the proxies.
MISCELLANEOUS
A copy of the Company's Annual Report to Stockholders, including financial
statements has been mailed to all stockholders of record as of the close of
business on March 16, 2001. Any stockholder who has not received a copy of such
Annual Report or would like to obtain a copy of the Company's Annual Report on
Form 10-K may do so by writing George L. Fredette, Senior Vice President & Chief
Financial Officer, c/o Northway Financial, Inc., 9 Main Street, Berlin, NH
03570. Such Annual Report is not to be treated as a part of the proxy
solicitation material or as having been incorporated herein by reference.
STOCKHOLDER PROPOSALS
The Company's By-Laws provide that any director nominations and new
business proposals intended to be submitted by stockholders in connection with
an Annual Meeting of Stockholders must be filed, delivered to, or mailed to and
received by, the Company at its principal executive office not less than 75 days
nor more than 120 days prior to the anniversary date of the immediately
preceding Annual Meeting (the "Anniversary Date") or, in other words, no later
than March 2, 2002 and no earlier than January 16, 2002 ; provided, however,
that in the event the Annual Meeting is scheduled to be held on a date more than
30 days before the Anniversary Date or more than 60 days after the Anniversary
Date, a stockholder's notice shall be timely if delivered to, or mailed to and
received by, the Company at its principal executive office not later than the
close of business on the later of (1) the 75th day prior to the scheduled date
of such Annual Meeting or (2) the 15th day following the day on which public
announcement of the date of such Annual Meeting is first made by the Company.
Any proposal should be sent to, and a copy of the applicable Bylaw provisions
may be obtained, without charge, upon written request to, Joseph N. Rozek,
Assistant Secretary, of the Company at its principal executive office in Berlin,
New Hampshire. The proposal must also comply with the other requirements of the
Company's Bylaws. 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.
In addition to the foregoing, in accordance with the rules of the SEC, any
proposal that a stockholder intends to present at the annual meeting of
stockholders in 2002 must be received by the Company not less than 120 days
prior to the anniversary date of the immediately preceding proxy statement, or
January 16, 2002, to be eligible for inclusion in the proxy statement and form
of proxy relating to such meeting. These proposals must also comply with the
rules of the SEC governing the form and content of proposals in order to be
included in the Company's proxy statement and form of proxy.
By Order of the Board of Directors
Joseph N. Rozek
Assistant Secretary
Berlin, New Hampshire
April 2, 2001
APPENDIX A
NORTHWAY FINANCIAL, INC BOARD OF DIRECTORS AUDIT COMMITTEE CHARTER
I. General Statement of Purpose
The Audit Committee of the Board of Directors (the "Audit Committee") of
Northway Financial, Inc. (the "Company") oversees on behalf of the Board of
Directors (the "Board") management's and the independent auditor's
participation in the Company's financial reporting process. The primary
objective of the Audit Committee in exercising its oversight function is to
promote and preserve the integrity of the Company's financial statements
and the independence of the Company's external independent auditor.
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 annually and submit it
to the Board for approval.
B Audited Financial Statements and Annual Audit
Review the overall audit plan with the independent auditor and the
members of management who are responsible for 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 auditor:
|X| 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;
|X| the adequacy of the Company's internal financial reporting
controls that could significantly affect the integrity of the
Company's financial statements;
|X| major changes in and other questions regarding accounting and
auditing principles and procedures.
Review and discuss with the independent auditor (outside of the
presence of management) how the independent auditor plans to handle its
responsibilities under the Private Securities Litigation Reform Act of
1995;
Review and discuss with the independent auditor (outside of the
presence of management) any problems or difficulties that the auditor
may have encountered with management or others and any management
letter provided by the auditor and the Company's response to that
letter. This review shall include considering any difficulties
encountered by the auditor in the course of performing its audit work,
including any restrictions on the scope of its activities or its access
to information;
Review and discuss with the independent auditor such issues as may be
brought to the Audit Committee's attention by the independent auditor
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 auditor of the matters required to be discussed by SAS 61,
and (3) with the independent auditor concerning the independent
auditor's 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.
Prepare the Audit Committee report required by Item 306 of Regulation
S-K of the Securities Exchange Act of 1934 (or any successor provision)
to be included in the Company's annual proxy statement.
C Unaudited Quarterly Financial Statements
Review and discuss with management and the independent auditor such
issues as may be brought to the Audit Committee's attention by the
independent auditor pursuant to Statement on Auditing Standards No. 71.
D Matters Relating to Selection, Performance and Independence of
Independent Auditor
Recommend to the Board the appointment of the independent auditor.
Instruct the independent auditor that the independent auditor's
ultimate accountability is to the Board and the Audit Committee as
representatives of the Company's Stockholderss.
Evaluate on an annual basis the performance of the independent auditor
and, if necessary in the judgement of the Audit Committee, recommend
that the Board replace the independent auditor.
Recommend to the Board on an annual basis the fees to be paid to the
independent auditor.
Request that the independent auditor provide the Audit Committee with
the written disclosures and the letter required by Independence
Standards Board Standard No. 1, as may be modified or supplemented,
discuss with the independent auditor any disclosed relationships or
services that may impact the objectivity and independence of the
independent auditor, and based on such discussion take or recommend
that the Board take appropriate action to oversee the independence of
the independent auditor.
E 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.
Perform such other oversight functions as may be requested by the
Board.
In performing its oversight function, the Audit Committee shall be
entitled to rely upon advice and information that it receives in its
discussions and communications with management, the independent auditor
and such experts, advisors and professionals consulted with by the
Audit Committee. The Audit Committee shall have the authority to retain
special legal, accounting or other experts, advisors or professionals
to render advice to the committee. The Audit Committee shall have
authority to request that any officer or employee of the Company, the
Company's outside legal counsel, the Company's independent auditor 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 auditor's
audit responsibilities, the independent auditor. It also is not the
duty of the Audit Committee to resolve disagreements, if any, between
management and the independent auditor or to ensure compliance with
laws, regulations or Company policies.
NWF31 B
DETACH HERE
PROXY
NORTHWAY FINANCIAL, INC.
9 Main Street, Berlin, New Hampshire 03570
Proxy for Common Stock
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints William J. Woodward and George L. Fredette,
and each of them, proxies with full power of substitution to vote for and on
behalf of the undersigned at the Annual Meeting of Stockholders of Northway
Financial, Inc. ("Northway"), to be held at the Town & Country Motor Inn, Route
2, Shelburne, New Hampshire, on May 15, 2001, at 2:00 p.m., and at any
adjournment or postponements thereof, hereby granting full power and authority
to act on behalf of the undersigned at said meeting or any adjournment or
postponement therof. The undersigned revokes any proxy previously given in
connection with such meeting and acknowledges receipt of Notice of the Annual
Meeting of Stockholders and Northway's 2000 Annual Report to Stockholders.
- ------------- -------------
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
- ------------- -------------
NORTHWAY FINANCIAL, INC.
c/o EquiServe
P.O. Box 9398
Boston, MA 02205-9398
NWF31A
DETACH HERE
Please mark
[X] votes as in
this example.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no instructions are indicated, the
undersigned's votes will be cast "FOR" each of such matters. PLEASE SIGN AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
1. Proposal to elect (01) Fletcher W. Such other business as may properly
Adams (02) Arnold P. Hanson, Jr. come before the meeting or any
(3) John H. Noyes (4) William adjournments or postponements
J. Woodward for a three year term thereof.
to continue until the 2004 Annual
Meeting of Stockholders, and until
the successor of each is duly elected
and qualified.
FOR WITHHELD
[ ] ALL [ ] FROM ALL
NOMINEES NOMINEES
[ ] _____________________________________
For all nominees except as noted above
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
For joint accounts, each owner should sign.
Executors, administrators, trustees, corporate
officers, and others acting in a representative
capacity should give full title or authority.
Signature: _____________ Date: ________ Signature: _____________ Date: ________