SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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
NORTHEAST BANCORP
(Name of Registrant as Specified in Its Charter)
(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)(1) 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:___________________________________________________________
NORTHEAST BANCORP
232 Center Street
Auburn, Maine 04210
October 2, 2000
Dear Shareholder:
On behalf of the Board of Directors, we cordially invite you to attend the
Annual Meeting of Shareholders of Northeast Bancorp (the "Company") which will
be held at the Martindale Country Club located at 527 Beech Hill Road, Auburn,
Maine on Tuesday, November 14, 2000, at 6:00 p.m., local time.
At the Annual Meeting, shareholders will be asked (i) to elect twelve
directors as members of the Board of Directors of the Company, (ii) to ratify
the appointment of Baker Newman & Noyes, Limited Liability Company, as the
Company's independent auditors for fiscal year 2001, and (iii) to transact such
other business as may properly come before the Annual Meeting or any
adjournment thereof. On the following pages you will find the Notice of the
Annual Meeting of Shareholders and the Proxy Statement giving information
concerning matters to be acted upon at the meeting. Of course, we will be
present at the Annual Meeting to answer any questions you might have.
YOUR VOTE IS IMPORTANT! The Company's management would greatly appreciate
your attendance at the Annual Meeting. HOWEVER, WHETHER OR NOT YOU ARE ABLE TO
ATTEND THE ANNUAL MEETING, IT IS VERY IMPORTANT THAT YOUR SHARES BE
REPRESENTED. Accordingly, please sign, date, and return the enclosed proxy card
which will indicate your vote upon the various matters to be considered. If you
do attend the meeting and desire to vote in person, you may do so by
withdrawing your proxy at that time.
We thank you for your continued support and look forward to seeing you at
the Annual Meeting of Shareholders.
Very truly yours,
/S/ James D. Delamater
James D. Delamater
President and Chief Executive
Officer
NORTHEAST BANCORP
232 Center Street
Auburn, Maine 04210
---------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on November 14, 2000
---------------------------
TO THE SHAREHOLDERS OF NORTHEAST BANCORP:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders of
Northeast Bancorp, a Maine corporation (the "Company"), will be held at the
Martindale Country Club located at 527 Beech Hill Road, Auburn, Maine on
Tuesday, November 14, 2000, at 6:00 p.m., local time, for the following
purposes:
1. To elect twelve directors to serve on the Board of Directors of
the Company;
2. To ratify the appointment of Baker Newman & Noyes, Limited
Liability Company, as the Company's independent auditors for the
fiscal year ending June 30, 2001; and
3. To transact such other business as may properly come before the
meeting or adjournment thereof.
Only shareholders of record at the close of business on September 27, 2000
are entitled to receive notice of, and to vote at, the Annual Meeting or any
adjournments thereof. Each shareholder, even though he or she may presently
intend to attend the Annual Meeting, is requested to execute and date the
enclosed proxy card and to return it without delay in the enclosed postage-paid
envelope. Any shareholder present at the Annual Meeting may withdraw his or her
proxy and vote in person on each matter brought before the Annual Meeting.
By Order of the Board of Directors
and the President
/s/ Suzanne M. Carney
Suzanne M. Carney
Clerk
Auburn, Maine
October 2, 2000
NORTHEAST BANCORP
232 Center Street
Auburn, Maine 04210
-----------------------------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To Be Held November 14, 2000
-----------------------------------------------
INTRODUCTION
This Proxy Statement is being furnished in connection with the
solicitation by the Board of Directors of Northeast Bancorp, a Maine
corporation (the "Company"), of proxies to be voted at the Annual Meeting of
Shareholders to be held on Tuesday, November 14, 2000, at 6:00 p.m. (the
"Annual Meeting"), and at any adjournment thereof. The Annual Meeting will be
held at the Martindale Country Club located at 527 Beech Hill Road, Auburn,
Maine.
At the Annual Meeting, shareholders will be asked to consider and vote on
the election of twelve directors to serve on the Board of Directors of the
Company, and to ratify the appointment of Baker Newman & Noyes, Limited
Liability Company, as the Company's auditors for fiscal year ending June 30,
2001.
This Proxy Statement and the enclosed form of proxy are first being sent
to shareholders, together with the Notice of Annual Meeting, on or about
October 9, 2000.
A copy of the Company's Annual Report to Shareholders on Form 10-K for the
fiscal year ended June 30, 2000 (the "2000 Annual Report"), including financial
statements, accompanies this Proxy Statement, but is not part of the proxy
solicitation materials.
Shareholders are urged to complete, date, and sign the accompanying form
of proxy and return it promptly in the envelope provided with these materials.
No postage is necessary if the proxy is mailed in the United States in the
accompanying envelope.
PROXIES AND VOTING AT THE MEETING
Record Date and Voting Rights
The Board of Directors has fixed the close of business on September 27,
2000 as the record date (the "Record Date") for the determination of the
shareholders of record entitled to receive notice of, and to vote at, the
Annual Meeting or any adjournment thereof. As of the Record Date, the Company
had issued 2,786,095 shares of common stock, $1.00 par value per share ("Common
Stock"), of which 2,678,579 shares were outstanding and 107,516 shares were
held as treasury stock. The Common Stock is the Company's only class of voting
securities outstanding and entitled to vote at the Annual Meeting. Each share
of Common Stock outstanding on the Record Date entitles the record holder to
cast one vote with respect to each matter to be voted upon at the Annual
Meeting. The presence of a majority of the Company's outstanding Common Stock
as of the Record Date, in person or represented by proxy, will constitute a
quorum at the Annual Meeting.
With respect to the election of directors, directors are elected by a
plurality of the votes cast at a meeting in which a quorum is present. In
connection with the election of directors, votes may be cast in favor of or
withheld from each nominee. Votes withheld from director nominees will be
counted in determining whether a quorum has been reached. However, since
directors are elected by a plurality, a vote against a director nominee and
votes withheld from a nominee or nominees generally will not affect the outcome
of the election and will be excluded entirely from the vote.
Approval of other matters submitted to shareholders at a meeting where a
quorum is present requires a majority of the votes which are cast at the
meeting by holders of shares entitled to vote on the subject matter, unless the
Company's articles of incorporation or bylaws or state law requires a greater
number of votes.
In the event of a broker non-vote or any abstentions with respect to any
proposal coming before the Annual Meeting, the proxy will be counted as present
for purposes of determining the existence of a quorum; but since it is neither
a vote cast in favor of nor a vote cast opposing a proposed action, broker
non-votes and abstentions typically will not be counted as a vote cast on any
routine matter and therefore will have no impact on the outcome of the vote. A
broker non-vote generally occurs when a broker who holds shares in street name
for a customer does not have authority to vote on certain non-routine matters
because its customer has not provided any voting instructions on the matter.
Therefore, abstentions and broker non-votes generally have no effect under
Maine law.
Voting and Revocation of Proxies
All properly executed proxies received prior to or at the Annual Meeting
will be voted in accordance with the instructions indicated on such proxies, if
any. If no instructions are indicated with respect to any shares for which
properly executed proxies have been received, such proxies will be voted FOR
the election of the Board of Directors' nominees for directors and FOR the
ratification of Baker Newman & Noyes, Limited Liability Company, as its
auditors. The Company is not aware of any matter to be presented at the Annual
Meeting other than those matters described in the Notice of Annual Meeting. If,
however, any other matters are properly brought before the Annual Meeting for
consideration, the persons appointed as proxies will have the discretion to
vote or act thereon according to their best judgment.
Any shareholder giving a proxy may revoke it at any time before it is
exercised by duly executing and submitting a later-dated proxy, by delivering
written notice of revocation to the Company which is received at or before the
Annual Meeting, or by voting in person at the Annual Meeting (although
attendance at the Annual Meeting will not, in and of itself, constitute a
revocation of the proxy). Any written notice revoking a proxy should be sent to
the Clerk of the Company at the Company's principal executive offices, located
at the address set forth above.
PROPOSAL I
ELECTION OF DIRECTORS
In accordance with the Company's Articles of Incorporation, the Board of
Directors has fixed the number of directors to be elected at the Annual Meeting
at twelve. All of the Company's current directors are standing for election as
directors of the Company to hold office until the 2001 Annual Meeting of
Shareholders and until their successors have been duly elected and qualified.
It is intended that the proxies received from shareholders, unless
contrary instructions are given therein, will be voted FOR the election of the
nominees named below, each of whom has consented to being named herein and has
indicated his or her intention to serve if elected. If any nominee for any
reason should become unavailable for election or if a vacancy should occur
before the election, it is intended that the shares represented by the proxies
will be voted for such other person as the Company's Board of Directors shall
designate to replace such nominee. The Board of Directors has no reason to
believe that any of the nominees will not be available or prove unable to serve
if so elected.
2
Nominees for Director
The age of each nominee, their positions and offices with the Company and
its wholly-owned subsidiary, Northeast Bank, F.S.B. (the "Bank"), their term of
office as a director, their business experience during the past five years or
more, and additional biographical data is set forth below. Information with
respect to the nominees is as of August 31, 2000, except as otherwise stated.
Director
Name of Nominee Age Position with Company Since
- ---------------------------------- ----- ---------------------------------------------------- ---------
John W. Trinward, D.M.D. ......... 75 Chairman of the Board 1987
James D. Delamater ............... 49 President, Chief Executive Officer, and Director 1987
John B. Bouchard ................. 64 Director 1996
A. William Cannan ................ 58 Executive Vice President, Chief Operating Officer 1996
and Director
Ronald J. Goguen ................. 55 Director 1990
Judith W. Hayes .................. 44 Director 1994
Philip C. Jackson ................ 56 Senior Vice President of Bank-Trust Operations and 1987
Director
Ronald C. Kendall ................ 68 Director 1987
John Rosmarin .................... 52 Director 1997
John Schiavi ..................... 60 Director 1998
Stephen W. Wight ................. 56 Director 1987
Dennis A. Wilson ................. 65 Director 1989
All directors of the Company hold office until the earlier of the next
annual meeting of shareholders and until their successors have been duly
elected and qualified, or their death, resignation, or removal.
John W. Trinward, D.M.D., has been Chairman of the Board of Directors of
the Company and a director of the Bank since 1987. Dr. Trinward is a retired
dentist.
James D. Delamater has been President, Chief Executive Officer, and a
director of the Company and the Bank since 1987.
John B. Bouchard has served as a director of the Company and the Bank
since 1996. Mr. Bouchard is the owner of John B. Bouchard Builder, a
construction contractor.
A. William Cannan has been Executive Vice President and Chief Operating
Officer of the Company and the Bank since 1993, and a director of the Company
and the Bank since 1996. From 1991 to 1993 Mr. Cannan served as President of
Casco Northern Bank, N.A., located in Portland, Maine.
Ronald J. Goguen has been a director of the Company and the Bank since
1990. Since 1980, he has been the President and Chief Executive Officer, and a
director of Major Drilling Group International Inc., a Canadian corporation
that provides contract drilling services primarily to companies in the mineral
and metals industries ("Major Drilling"). Major Drilling common shares are
traded on the Toronto Stock Exchange. Mr. Goguen also serves on the board of
directors of Roycefield Resources, a public mining company, whose shares are
listed on the Toronto Stock Exchange.
Judith W. Hayes has been a director of the Company and the Bank since
1994. Ms. Hayes is the President of Consumers Maine Water Company, a water
utility serving various communities in Maine.
Philip C. Jackson has been a director of the Company and the Bank since
1987. Mr. Jackson also has served as the Senior Vice President of the Bank's
Trust Operations since 1997. From 1991 to 1994, Mr. Jackson served as President
of Bethel Savings, the predecessor to the Bank.
Ronald C. Kendall has been a director of the Company and the Bank since
1987. He is the current Chairman of the Board of Directors of the Bank and has
served as a vice president of Northeast Financial Services Corporation, a
wholly-owned subsidiary of the Bank, since 1997. Mr. Kendall also is the
President and sole owner of Kendall Insurance, Inc.
3
John Rosmarin has been a director of the Company and the Bank since 1997.
Mr. Rosmarin has been the President and Chief Executive Officer of Saunders
Manufacturing Company, Inc., an office products manufacturer and distributor,
since 1982.
John Schiavi has been a director of the Company and the Bank since 1997.
Mr. Schiavi has been the President and sole owner of Schiavi Enterprises, a
real estate development firm, since 1962. He also serves on the boards of
directors of both Major Drilling and Roycefield Resources.
Stephen W. Wight has been a director of the Company and the Bank since
1987. Mr. Wight is the Manager of Sunday River Inn, LLC, a resort hotel
operator, and the Manager of Wight Enterprises LLC, a property management
company.
Dennis A. Wilson has been a director of the Company and the Bank since
1989. Mr. Wilson is the President and sole owner of D.A. Wilson & Co., a
trucking company.
Each of the Company's directors serve the Bank in the same capacities
indicated above, except that Mr. Kendall serves as the Chairman of the Board of
the Bank.
There is no family relationship between any of the Company's directors,
nominees to serve as director, or executive officers. There are no arrangements
between any director or director nominee of the Company and any other person
pursuant to which he or she was, or will be, selected as a director.
Director Meetings and Committees
During the fiscal year ended June 30, 2000 (the "2000 fiscal year"), the
Board of Directors of the Company held a total of 14 meetings. In addition,
certain directors attended meetings of standing committees. Except for Mr.
Goguen, all directors attended at least 75% of the total number of meetings of
the Board of Directors and the respective committees on which they serve. The
Board of Directors of the Company maintains three standing committees: an Audit
Committee, a Personnel and Compensation Committee, and an Executive Committee.
The Audit Committee of the Board of Directors is responsible for
recommending to the Board of Directors the engagement or discharge of the
independent public accountants, meeting with the independent public accountants
to review the plans and results of the audit engagement, reviewing the
activities of the subsidiary Bank's examining committees, maintaining direct
reporting responsibility and regular communication with the Company's internal
audit staff, reviewing the scope and results of the internal audit procedures
of the Company and its subsidiary, approving the services to be performed by
the independent public accountants, considering the range of the audit and
non-audit fees, and reviewing the adequacy of the Company's system of internal
accounting. The Audit Committee which is comprised of Messrs. Bouchard, Goguen,
Schiavi, and Rosmarin, and Ms. Hayes, met 5 times during the 2000 fiscal year.
The Personnel and Compensation Committee of the Board of Directors, which
also serves as the nominating committee and compensation committee, makes
recommendations to the Board of Directors with respect to the Company's
compensation policies and the compensation of executive officers. In addition,
the Personnel and Compensation Committee is responsible for selecting and
recommending to the Board of Directors nominees for election as directors.
Shareholders also may nominate persons for election as directors at an annual
shareholders' meeting if such nominations are made in accordance with the
procedures set forth in the Company's Articles of Incorporation. The Articles
of Incorporation require, among other things, that written notice of such
nominees must be given to the Company not less than 30 nor more than 60 days
prior to such meeting (with certain exceptions). For a description of the full
procedure governing such nominations, reference is made to the Articles of
Incorporation, a copy of which is available from the Clerk of the Company. The
Personnel and Compensation Committee which is comprised of Messrs. Bouchard,
Goguen, Wight, and Wilson, met 3 times during the 2000 fiscal year.
4
The Executive Committee of the Board of Directors is empowered to act on
behalf of, and to exercise all the powers of, the full Board of Directors in
the management of the business and affairs of the Company when the Board of
Directors is not in session, except to the extent limited by the Company's
Articles of Incorporation or Bylaws, or by Maine law. The Executive Committee,
which is comprised of Dr. Trinward and Messrs. Bouchard, Cannan, Delamater, and
Kendall, did not meet during the 2000 fiscal year.
Compensation of Directors
Directors of the Company also are directors of the Bank. Each director
receives a combined annual retainer from the Company and the Bank in the amount
of $1,000. In addition, each director receives $700 for each meeting of the
Board of Directors of the Company or the Bank that they attend, and an
additional $200 for each committee meeting that they attend (only if such
committee meeting is held on a day other than one on which a Board of
Directors' meeting is held). Directors receive only one meeting fee when
meetings of the Board of Directors of the Company and the Bank are held on the
same day. The Chairman of the Board of the Company and the Bank each receives
an additional annual retainer of $1,000 for services rendered in such capacity.
The Board of Directors recommends a vote FOR
the election of all 12 nominees.
--------------------
5
PROPOSAL II
APPROVAL AND RATIFICATION OF APPOINTMENT
OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected the firm of Baker Newman & Noyes,
Limited Liability Company, independent public accountants, to be the Company's
auditors for the fiscal year ending June 30, 2001 and recommends that
shareholders vote to ratify that appointment. Although submission of this
matter to shareholders is not required by law, in the event of a negative vote
the Board of Directors will reconsider its selection. Ratification of the
appointment will require approval by a majority of the votes cast at the Annual
Meeting, assuming a quorum is present. Baker Newman & Noyes, Limited Liability
Company, is expected to have a representative at the Annual Meeting who will be
available to respond to appropriate questions from shareholders attending the
meeting.
The Board of Directors recommends a vote FOR this proposal.
------------------
6
COMPENSATION OF EXECUTIVE OFFICERS
Executive Compensation
The following summary compensation table sets forth the cash and non-cash
compensation paid to or accrued for the past three fiscal years for the
Company's Chief Executive Officer, and all other executive officers whose total
compensation exceeded $100,000 for the fiscal year ended June 30, 2000
(collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
Compensation
Awards (1)
Annual Compensation -------------
---------------------- Securities
Name and Fiscal Underlying All Other
Principal Occupation Year Salary Bonus Options (#) Compensation (2)
- ---------------------------- -------- ------------ ------- ------------- -----------------
James D. Delamater ......... 2000 $ 149,432 $ 0 8,500 $ 5,545
President and Chief 1999 149,432 0 1,500 8,754
Executive Officer 1998 145,000 0 2,000 12,199
A. William Cannan .......... 2000 $ 136,733 $ 0 7,000 $ 6,188
Executive Vice 1999 136,733 0 1,500 7,779
President and Chief 1998 132,750 0 2,000 11,053
Operating Officer
- --------
(1) The Company does not have a long-term compensation program that includes
long-term incentive payments. However, the Company's stock option plans
provide participants with performance-based compensation in the form of
incentive stock options. See " -- Stock Option Plans".
(2) These amounts include payments made in 2000, 1999, and 1998, respectively,
as follows: (i) term life insurance premiums of $735, $646, and $530 for
Mr. Delamater and $658, $592, and $500 for Mr. Cannan, (ii) profit sharing
contributions of $ -0-, $4,695, and $8,972 for Mr. Delamater, and $ -0-,
$4,248, and $8,102 for Mr. Cannan, (iii) matching 401(k) contributions of
$3,276, $3,413, and $2,697 for Mr. Delamater, and $4,122, $2,939, and
$2,451 for Mr. Cannan, and (iv) additional performance based compensation
paid only in the 2000 fiscal year of $1,534 to Mr. Delamater and $1,408 to
Mr. Cannan.
As of June 30, 2000, the Company did not have any long-term incentive
plans nor had it awarded any restricted shares. The table set forth below
contains information with respect to the award of stock options during the
fiscal year ended June 30, 2000 to the Named Executive Officers covered by the
Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
---------------------------------------------------------------------------------
% of Total
Number of Securities Options Granted
Underlying to Employees in Exercise Price Expiration Grant Date
Name Options Granted (1) 2000 Fiscal Year (2) or Base Price Date Present Value (3)
- -------------------- ---------------------- ---------------------- ---------------- ------------ ------------------
James D. Delamater 7,500(4) 25.9% $ 8.875 09/17/09 $ 20,985
1,000(5) 3.4% $ 8.000 12/17/09 $ 2,521
A. William Cannan 6,000(4) 24.1% $ 8.875 09/17/09 $ 16,788
1,000(5) 3.4% $ 8.000 12/17/09 $ 2,521
- --------
(1) These options were granted to employees under the Northeast Bancorp 1999
Stock Option Plan (the "1999 Stock Option Plan"). The material terms of
all options granted during the 2000 fiscal year are as follows: (i) all
options are incentive stock options, (ii) all have an exercise price equal
to the fair market value on
7
the date of grant, (iii) all have a ten year term and are fully
exercisable, (iv) no options will be exercisable more than three months
following the termination of employment (except in the case of disability,
in which case such options will be exercisable for up to one year
thereafter), and (v) all options are otherwise subject to the 1999 Stock
Option Plan.
(2) During the fiscal year ended June 30, 2000, employees of the Company were
granted an aggregate of 29,000 options under the Company's 1999 Stock
Option Plan. See " -- Stock Option Plans" below for a description of these
plans.
(3) Hypothetical value using the Black-Scholes option pricing model based on
the following assumptions: (i) an expected stock price volatility of
0.279, (ii) an expected dividend yield of 2.85%, (iii) a risk free rate of
return of 6.03%, (iv) an option term of 8 years, and (v) no discounts for
non-transferability or risk of forfeiture. This is a theoretical value for
the options developed solely for the purpose of comparison disclosures as
required by applicable SEC rules and regulations, and does not reflect the
Company's views of the appropriate value or methodology for financial
reporting purposes, or the future price of the Common Stock. The actual
value of the options will depend on the market value of the Common Stock
on the date the options are exercised.
(4) Granted on September 17, 1999.
(5) Granted on December 17, 1999.
Aggregated Options Exercised in Last Fiscal Year and Fiscal Year-End Option
Values
The following table sets forth, for each of the Named Executive Officers
in the Summary Compensation Table above who holds stock options, the number of
shares of Common Stock acquired pursuant to the exercise of stock options
during fiscal 2000, the number of the stock options held at June 30, 2000, and
the realizable gain of the stock options that are "in-the-money." The
in-the-money stock options are those with exercise prices that are below the
year-end stock price because the stock value grew since the date of the grant.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTIONS VALUES
Number of
Securities Underlying Value of Unexercised
Unexercised Options In-the-Money Options
at Fiscal Year End at Fiscal Year End (1)
Shares ------------------------------- ------------------------------
Acquired on Value Exercisable Unexercisable Exercisable Unexercisable
Name Exercised (#) Realized (#) (#) ($) ($)
- ---------------------------- --------------- ---------- ------------- --------------- ------------- --------------
James D. Delamater ......... 15,000 $93,750 19,500 0 $ 3,441 0
A. William Cannan .......... 0 0 42,000 0 $16,593 0
- --------
(1) Based upon the closing price of the Common Stock as quoted by the American
Stock Exchange on June 30, 2000 of $8.063 per share.
(2) Value represents fair market value at exercise minus exercise price.
Employment Agreements
The Company has no employment agreements with any of the Named Executive
Officers.
401(k) Plan Employees Savings Plan
The Company maintains a tax-deferred profit sharing plan (the "401(k)
Plan") for its employees. All employees who work at least 1,000 hours per year
and are at least 21 years of age may elect to participate in the 401(k) Plan
once he or she has completed one year of service. Under the 401(k) Plan, a
participating employee is given an opportunity to make an elective contribution
under a salary deferral savings arrangement of up to a maximum of 15% of the
participant's pre-tax compensation up to a maximum of $10,000 per year. Each
such contribution is fully vested in the participant. In addition, the Company
may, in its sole discretion, make a separate matching contribution on behalf of
employees who elect to participate in the plan by contributing a portion of
their compensation to the plan. Messrs. Delamater and Cannan participated in
the 401(k) Plan at approximately 9% and 6% of their
8
salaries, respectively. For the year ended June 30, 2000, the Company made
401(k) matching contributions on behalf of its employees in the amount of
approximately $96,615. No profit sharing contributions were paid under the plan
for the fiscal year ended June 30, 2000.
REPORT ON EXECUTIVE COMPENSATION
Overview
The Personnel and Compensation Committee of the Board of Directors (the
"Compensation Committee") is comprised entirely of outside directors, none of
whom is a current officer or employee of the Company or any of its
subsidiaries. The Compensation Committee is responsible for the establishment
of policies governing and for the implementation, administration, and
interpretation of all aspects of executive compensation, which includes base
salary, bonuses, and stock option grants. Executives also participate in
benefit programs that are generally available to employees of the Company,
including medical benefits and a 401(k) Plan and profit sharing plan. The
Compensation Committee also evaluates executive performance.
Objectives of the Executive Compensation Program
The objectives of the compensation program are to attract and retain a
high quality executive team and to encourage that team to achieve profitable
growth and thereby increase shareholder value. To meet these objectives, the
Company's compensation packages are intended to provide (i) an overall level of
compensation that is competitive, and (ii) bonuses and stock-related
compensation that reflect business results. The Compensation Committee believes
that a recognition of, and reward for, individual and collective contributions
maximizes shareholder value by encouraging and fostering consistently improving
financial performance.
Base Salaries
The Compensation Committee regularly reviews the base salary of its
executives, including its Chief Executive Officer and Executive Vice President,
with a view to providing both a competitive compensation package and to
providing appropriate incentives to seek long-term growth in shareholder
values. Base salaries are targeted at market levels and are determined by
evaluating the executive's levels of responsibility, prior experience, breadth
of knowledge, internal equity issues, and external pay practices. In evaluating
the compensation packages provided to its executives, the Compensation
Committee reviews compensation and financial data provided in annual surveys
conducted by the American Bankers' Association and by Executive Compensation
Services to compare its compensation practices with those provided to
executives performing similar jobs as the Company's executives. Base salaries
offer security to executives and allow the Company to attract competent
executive talent and maintain a stable management team.
Increases to base salaries, when given, are driven primarily by individual
performance, evaluated based on sustained levels of individual contribution to
the Company. The Compensation Committee considers the executive's efforts in
promoting the Company objectives, continuing educational and management
training, improving product quality, developing relationships with customers,
vendors, and employees, and demonstrating leadership abilities and other goals.
Bonus Program
On an annual basis, the Compensation Committee has the discretion to
propose and recommends to the Board of Directors the payment of bonuses to the
Chief Executive Officer and Executive Vice President of the Company. These
awards are to be based upon job responsibilities, attainment of corporate
financial goals, contributions to the business and other goals of the Company,
including overall performance. The payment of a bonus to such individuals is
subject to the sole discretion of the Compensation Committee and the Board of
Directors of the Company. There is no specific formula, performance target, or
other required performance measures that must be achieved in order to receive a
bonus. On the other hand, achievement of certain financial results will not
ensure the payment of bonuses either. Instead, bonuses are used as a tool for
maintaining the competitiveness of the overall compensation paid to its Chief
Executive Officer and Executive Vice President in light of current
9
market conditions, and the Company's overall performance. To the extent that
the base salary or adjustments in base salary are sufficient for these
purposes, bonuses may not be recommended despite a strong performance, and vice
versa.
Stock Option Plans
The key officers and employees of the Company, including the Named
Executive Officers, are eligible to receive stock option awards under the
Company's stock option plans. Stock options are granted at an option exercise
price equal to the fair market value of the Common Stock on the date of the
grant. Accordingly, stock options have value only if the stock price
appreciates in value from the date that the options are granted. The stock
option plans focus executives and other participants on the creation of
shareholder value over the long-term and encourage equity ownership in the
Company. Individual grants in the 2000 fiscal year were based on corporate
performance and on individual levels of responsibility, performance, and
contributions to the Company. This determination was made based on the
Compensation Committee's assessment of the performance of each individual.
Compensation of Chief Executive Officer
The Company's Board of Directors relies on its Chief Executive Officer to
provide effective leadership and to successfully execute the Company's business
plan and strategies. Subject to the approval of the Board of Directors, the
Compensation Committee establishes Mr. Delamater's base salary, bonuses, and
stock option grants in accordance with the Company's compensation philosophy.
In making its determination of the appropriate base salary, the Compensation
Committee reviewed and analyzed surveys of compensation paid to chief executive
officers of similarly sized institutions, and it evaluated the performance of
Mr. Delamater. The Compensation Committee determined that an increase in Mr.
Delamater's base salary was warranted in order to maintain the competitiveness
of the Company's compensation package and to reflect Mr. Delamater's
contributions to the Company's growth and operating results. Overall, the Chief
Executive Officer's compensation is in keeping with the average compensation
paid to chief executive officers at similarly sized financial institutions. In
addition, the Compensation Committee determined that, based on Mr. Delamater's
past and continued performance, it was appropriate to award incentive stock
options to Mr. Delamater. The grant of such stock options are viewed by the
Compensation Committee as both an award for prior business results and as an
incentive to achieve future positive results which directly enhance shareholder
value.
Conclusion
The Compensation Committee believes that its executive compensation
policies and programs effectively serve the interests of the Company and its
shareholders. The compensation packages are appropriately balanced to provide
security and competitive levels of compensation to its executives while
simultaneously providing increased motivation to contribute to the Company's
overall future success and long-term enhancement of shareholder value. We will
continue to monitor the effectiveness of our total compensation policies and
programs to insure that they continue to meet the needs of the Company.
This report is respectfully
submitted by:
PERSONNEL AND COMPENSATION
COMMITTEE
John B. Bouchard, Chairman
Ronald J. Goguen
Stephen W. Wight
Dennis A. Wilson
10
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the 2000 fiscal year, Messrs. Bouchard, Goguen, Wight, and Wilson
served on the Personnel and Compensation Committee which, among other things,
functions as the Company's compensation committee. None of the individuals is,
or has been, an officer or an employee of the Company or the Bank.
Messrs. Goguen and Schaivi, directors of Northeast Bancorp, each hold a
22.5% equity interest, or an aggregate of 45%, in Saratoga Capital Management
("SCM"), a Delaware general partnership, which serves as the investment manager
of Saratoga Advantage Trust ("SAT"). SAT, an investment company organized under
the Investment Company Act of 1940, operates several mutual fund investments.
SCM has granted a license to the Bank's trust department to use the Saratoga
Capital Management Asset Allocation Software which assists its customers in
selecting an asset allocation mix which is tailored to the customers' specific
needs and investment goals. In addition, the SAT mutual funds are offered to
the trust department's customers on a non-exclusive basis. As a result of this
relationship, through June 30, 2000, the trust department had placed
approximately $16 million in SAT mutual fund investments, which are indirectly
under management by SCM. SCM receives an annual asset allocation fee of 15
basis points, based on the aggregate placement of funds in SAT portfolios, for
the trust department's use of its asset allocation software.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Bank has had, and expects to have in the future, various loans and
other banking transactions in the ordinary course of business with the
directors, executive officers, and principal shareholders of the Bank and the
Company (or associate of such person). All such transactions: (i) have been and
will be made in the ordinary course of business; (ii) have been and will be
made on substantially the same terms, including interest rates and collateral
on loans, as those prevailing at the time for comparable transactions with
unrelated persons; and (iii) in the opinion of management do not and will not
involve more than the normal risk of collectability or present other
unfavorable features. At June 30, 2000 and 1999, the total dollar amount of
extensions of credit to directors and executive officers identified above, and
their associates (excluding extensions of credit which were less than $60,000
to any one such person and their associates) were $3,436,000 and $3,476,000,
respectively, which represented approximately 12% and 13% respectively, of
total shareholders' equity.
In providing the Bank's customers with investment and insurance products,
certain directors of Northeast Bancorp have an interest in businesses which
have furnished such products to the Bank's customers on a non-exclusive basis.
Except as described in this Proxy Statement, outside of normal customer
relationships none of the directors or officers of the Company, and no
shareholder holding over 5% of the Company's common stock and no corporations
or firms with which such persons or entities are associated, currently
maintains or has maintained since the beginning of the last fiscal year, any
significant business or personal relationship with the Company or the Bank,
other than such as arises by virtue of such position or ownership interest in
the Company or the Bank.
11
STOCK PRICE PERFORMANCE GRAPH
Set forth below is a graph comparing the yearly percentage change in the
cumulative total return of the Company's Common Stock, including stock and cash
dividends, against the cumulative total return of the S&P 500 Composite Index
and the KBW 50 Bank Index for the last five years. The KBW Bank Index, compiled
by Keefe, Bruyette & Woods, Inc., is comprised of fifty American banking
companies, including all money-center and most major regional banks. This
presentation assumes that $100 was invested on June 30, 1995 in the Common
Stock and all other indices, and that all dividends were reinvested.
[GRAPH APPEARS HERE]
Fiscal Years Ended June 30
1995 1996 1997 1998 1999 2000
------ ------ ------ ------ ------ -------
Northeast Bancorp .......... $100 $120 $137 $216 $141 $121
S&P 500 Index .............. $100 $123 $162 $208 $252 $267
KBW 50 Bank Index .......... $100 $133 $196 $264 $277 $226
12
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the
beneficial ownership of the Company's outstanding Common Stock as of August 31,
2000, by: (i) each director and nominee for director of the Company, (ii) each
of the Named Executive Officers covered by the Summary Compensation Table,
(iii) all directors and executive officers of the Company as a group, and (iv)
each person known to the Company beneficially owning more than 5% of the
outstanding Common Stock. Except as otherwise indicated, the persons named in
the table have sole voting and investment power with respect to all of the
Common Stock owned by them.
Current Beneficial Ownership
-------------------------------------------
Number Percent
Name of Beneficial Owner of Shares (1) of Class (2)
- ----------------------------------------------------------------------- --------------------------- -------------
Directors and Certain Executive Officers
John W. Trinward, D.M.D. ............................................. 15,801 (3)(4) *
James D. Delamater ................................................... 80,020 (5) 2.96%
John B. Bouchard ..................................................... 10,100 (4) *
A. William Cannan .................................................... 45,608 (6) 1.67%
Ronald J. Goguen ..................................................... 347,313 (4)(7) 12.95%
Judith W. Hayes ...................................................... 6,000 (4) *
Philip C. Jackson .................................................... 52,960 (8) 1.97%
Ronald C. Kendall .................................................... 46,666 (4)(9) 1.74%
John Rosmarin ........................................................ 5,000 (4)(10) *
John Schiavi ......................................................... 2,500 (11) *
Stephen W. Wight ..................................................... 20,750 (4)(12) *
Dennis A. Wilson ..................................................... 45,800 (4) 1.71%
All directors and executive officers as a group (16 persons) ......... 710,305 (13) 25.23%
Other Beneficial Holders
Albert H. Desnoyers (14) ............................................. 199,041 7.43%
210 Washington Drive
Watchung, NJ 07060
Claude E. Savoie (15) ................................................ 152,550 5.70%
550 Sheldiac Road
Moncton, New Brunswick, Canada
E1C 1T7
- --------
*Less than 1%
(1) In accordance with Rule 13d-3 promulgated pursuant to the Securities
Exchange Act of 1934, a person is deemed to be the beneficial owner of a
security for purposes of the rule if he or she has or shares voting power
or dispositive power with respect to such security or has the right to
acquire such ownership within sixty days. As used herein, "voting power"
is the power to vote or direct the voting of shares, and "dispositive
power" is the power to dispose or direct the disposition of shares,
irrespective of any economic interest therein.
(2) In calculating the percentage ownership for a given individual or group,
the number of shares of Common Stock outstanding includes unissued shares
subject to options, warrants, rights or conversion privileges exercisable
within sixty days held by such individual or group, but are not deemed
outstanding by any other person or group.
(3) Includes 801 shares of Common Stock held by Dr. Trinward's spouse as to
which Dr. Trinward disclaims beneficial ownership.
(4) Includes 3,500 shares of Common Stock which may be acquired pursuant to
currently exercisable options held by such person.
13
(5) Includes 22,500 shares of Common Stock which may be acquired pursuant to
currently exercisable options.
(6) Includes 45,000 shares of Common Stock which may be acquired pursuant to
currently exercisable options.
(7) Includes (i) the 341,488 shares of Common Stock beneficially owned by
Square Lake Holding Corporation ("Square Lake"), a Maine corporation,
which is a wholly-owned subsidiary of a New Brunswick corporation which,
in turn, is wholly-owned by Mr. Goguen, and (ii) amounts also include
2,325 shares of Common Stock held by Blue Chip Investments, Inc., a New
Brunswick corporation wholly-owned by Mr. Goguen.
(8) Includes 14,000 shares of Common Stock which may be acquired pursuant to
currently exercisable options, 5,850 shares of Common Stock held by Mr.
Jackson's spouse, as to which Mr. Jackson disclaims beneficial ownership,
and 1,350 shares of Common Stock held by his children.
(9) Includes 41,166 shares of Common Stock held in trusts in which Mr.
Kendall either serves as a trustee or is a beneficiary (as to which Mr.
Kendall disclaims beneficial ownership of 20,007 of such shares).
(10) Includes 875 shares of Common Stock held by Mr. Rosmarin's spouse as to
which Mr. Rosmarin disclaims beneficial ownership.
(11) Includes 2,500 shares of Common Stock which may be acquired pursuant to
currently exercisable options.
(12) Includes 7,350 shares of Common Stock held by Mr. Wight's spouse as to
which Mr. Wight disclaims beneficial ownership, and 2,250 shares of
Common Stock held by his children.
(13) Includes 136,750 shares of Common Stock subject to options which may be
acquired by such directors and executive officers as a group pursuant to
currently exercisable options.
(14) The ownership information set forth herein is based in its entirety on
material contained in a Schedule 13D, dated March 6, 1995, filed with the
SEC by Mr. Desnoyers, as adjusted to reflect the payment of a 50% stock
dividend in December 1997.
(15) The ownership information set forth herein is based in its entirety on
material contained in a Schedule 13D, dated June 5, 1995, filed with the
SEC by Mr. Savoie, as adjusted to reflect the payment of a 50% stock
dividend in December 1997.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended
("Exchange Act"), requires all executive officers, directors, and persons who
are the beneficial owner of more than 10% of the Common stock of the Company to
file reports of ownership with the Securities and Exchange Commission (the
"SEC") indicating their ownership of the Company's equity securities and to
report any changes in that ownership. Specific due dates for these reports have
been established, and the Company is required to report in this Proxy Statement
any failure to comply therewith during the fiscal year ended June 30, 2000. The
Company believes that all of these filing requirements were satisfied by its
executive officers, directors, and by the beneficial owners of more than 10% of
the Common Stock. In making this statement, the Company has relied on copies of
the reporting forms received by it or on the written representations from
certain reporting persons that no Forms 5 (Annual Statement of Changes in
Beneficial Ownership) were required to be filed under applicable rules of the
SEC.
SHAREHOLDER PROPOSALS
Eligible shareholders who wish to present proposals for action at the 2001
Annual Meeting of Shareholders should submit their proposals in writing to the
Clerk of the Company at the address of the Company set forth on the first page
of this Proxy Statement. Proposals must be received by the Secretary no later
than June 11, 2001 for inclusion in next year's proxy statement and proxy card.
A shareholder is eligible to present proposals if, at the time he or she
submits the proposals, the shareholder owns at least 1% or $2,000 in market
value of Common Stock and has held such shares for at least one year, and the
shareholder continues to own such shares through the date of the 2001 Annual
Meeting.
14
SOLICITATION COSTS
The Company will bear the costs of preparing, assembling, and mailing the
Proxy Statement, the form of proxy, and the 2000 Annual Report in connection
with the Annual Meeting. In addition to solicitation by use of mail, employees
of the Company may solicit proxies personally or by telephone, by facsimile
copy, or telegraph, but will not receive additional compensation therefor.
Arrangements may be made with banks, brokerage houses, and other institutions,
nominees, and fiduciaries to forward the solicitation materials to beneficial
owners and to obtain authorizations for the execution of proxies. The Company
will, upon request, reimburse those persons and entities for expenses incurred
in forwarding proxy materials for the Annual Meeting to beneficial owners.
ANNUAL REPORT
The Company's 2000 Annual Report for the fiscal year ended June 30, 2000,
which includes financial statements, was mailed to shareholders together with
the Notice of the Annual Meeting of Shareholders and Proxy Statement.
OTHER MATTERS
At the time of the preparation of this Proxy Statement, the Board of
Directors of the Company had not been informed of any matters which would be
presented for action at the Annual Meeting other than the proposals
specifically set forth in the Notice of Annual Meeting and referred to herein.
If any other matters are properly presented for action at the Annual Meeting,
it is intended that the persons named in the accompanying proxy card will vote
or refrain from voting in accordance with their best judgment on such matters
after consultation with the Board of Directors.
The Company will provide without charge to any shareholder upon written
request, a copy of the Company's Annual Report on Form 10-K, including
financial statements and schedules thereto for the fiscal year ended June 30,
2000, as filed with the Securities and Exchange Commission (without exhibits).
All such requests should be delivered to Suzanne Carney, Clerk, Northeast
Bancorp, 232 Center Street, Auburn, Maine 04210. Copies of exhibits will be
provided upon written request and payment of a reasonable fee to cover the
costs of reproduction and mailing.
By Order of the Board of Directors
and President
/S/ Suzanne M. Carney
Suzanne M. Carney
Clerk
Auburn, Maine
October 2, 2000
15
Appendix A
NORTHEAST BANCORP
Annual Meeting of Shareholders, November 14, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder of shares of common stock of Northeast Bancorp
("Northeast"), a Maine corporation, does hereby appoint John W. Trinward,
D.M.D., and James D. Delamater, and each of them, as due and lawful
attorneys-in-fact (each of whom shall have full power of substitution), to
represent and vote as designated below all of the Northeast common stock that
the undersigned held of record at 5:00 p.m., local time, on September 27, 2000,
at the Annual Meeting of Shareholders of Northeast Bancorp to be held at the
Martindale Country Club located at 527 Beech Hill Road, Auburn, Maine on
Tuesday, November 14, 2000 at 6:00 p.m. or any adjournment thereof, on the
following matters, and on such other business as may properly come before the
meeting:
1. ELECTION OF DIRECTORS
Nominees: John W. Trinward, D.M.D., James D. Delamater, John
B. Bouchard, A. William Cannan, Ronald J. Goguen, Judith W.
Hayes, Philip C. Jackson, Ronald C. Kendall, John Rosmarin,
John Schiavi, Stephen W. Wight, Dennis A. Wilson
[ ] FOR ALL NOMINEES LISTED ABOVE [ ] WITHHOLD AUTHORITY TO VOTE FOR
(except as marked to the contrary below) ALL NOMINEES LISTED ABOVE
(Instructions: to withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.)
-----------------------------------------------------------------------
2. Ratification of Appointment of Auditors. Proposal to ratify
the appointment of Baker Newman & Noyes, Limited Liability
Company, as the Company's auditors for the fiscal year ending
June 30, 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, on such other business as may properly
come before the meeting (the Board of Directors is not aware
of any matter other than the above proposals which is to be
presented for action at the Annual Meeting).
All of the above proposals are described in greater detail in the
accompanying Proxy Statement dated October 2, 2000, which descriptions
are incorporated herein by reference.
(Please Sign and Date on Reverse Side)
(Continued from other side)
PLEASE SIGN AND RETURN PROMPTLY.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE SHAREHOLDER. If no direction is given, this proxy will be voted FOR the
election of all nominees as directors and FOR the ratification of the Company's
auditors.
PLEASE ENTER THE NUMBER OF SHARES OF NORTHEAST COMMON STOCK YOU OWN:___________
(Please sign, date, and return this proxy form exactly as your name or names
appear below whether or not you plan to attend the meeting.)
[ ] I plan to attend the Annual Meeting.
[ ] I do not plan to attend the Annual
Meeting.
Date___________________________________, 2000
Signature(s):_______________________________
____________________________________________
____________________________________________
____________________________________________
Title or Authority (if applicable)
Please sign your name here exactly as it
appears hereon. Joint owners should each
sign. When signing as an attorney, executor,
administrator, trustee, guardian, corporate
officer or other similar capacity, so
indicate. If the owner is a corporation, an
authorized officer should sign for the
corporation and state his or her title. If
shares are held in more than one capacity,
this Proxy shall be deemed valid for all
shares held in all capacities.