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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[_] Definitive Additional Materials by Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to
sec.240.14a-11(c) or sec.240.14a
WESTBANK CORPORATION
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(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):
[_] 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.
[_] 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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NOTICE OF
ANNUAL MEETING
OF SHAREHOLDERS
APRIL 16, 2003
AND
PROXY STATEMENT
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Your Vote Is Important
You are urged to exercise your right to vote by indicating
your choices on the enclosed proxy card. Please date,
sign and promptly return your proxy card in the
enclosed postage-paid envelope. You may,
nevertheless, vote in person if you attend the meeting.
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WESTBANK CORPORATION
225 PARK AVENUE
WEST SPRINGFIELD, MASSACHUSETTS 01089-3310
NOTICE OF 2003 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, APRIL 16, 2003
MARCH 17, 2003
TO THE SHAREHOLDERS OF WESTBANK CORPORATION:
Notice is hereby given that the 2003 Annual Meeting of Shareholders of Westbank
Corporation (the "Corporation") will be held at 9:00 AM on Wednesday, April 16,
2003, at the Best Western Sovereign Hotel & Conference Center, 1080 Riverdale
Street, West Springfield, Massachusetts, for the following purposes, all as set
forth in the Proxy Statement accompanying this notice:
1. Election of the individuals listed as nominees in the Proxy Statement
accompanying this notice of meeting.
2. Ratification of the appointment of the firm of Grant Thornton LLP as
the Corporation's independent public accountants for the fiscal year
ending December 31, 2003.
3. To act upon such other matters as may properly be brought before the
meeting or any adjournment thereof.
The record date and hour for determining shareholders entitled to notice of, and
to vote at, the meeting has been fixed at 5:00 PM, March 3, 2003.
By order of the Board of Directors
Robert J. Perlak
Clerk
West Springfield, Massachusetts
March 17, 2003
PLEASE SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT PROMPTLY
IN THE ENVELOPE ENCLOSED FOR THAT PURPOSE.
YOU MAY, NEVERTHELESS, VOTE IN PERSON IF YOU DO ATTEND THE MEETING.
1
PROXY STATEMENT
Approximate date of mailing
March 17, 2003
WESTBANK CORPORATION
225 PARK AVENUE
WEST SPRINGFIELD, MASSACHUSETTS 01089-3310
(413) 747-1400
NOTICE OF 2003 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 16, 2003
INTRODUCTION
This Proxy Statement is furnished to shareholders in connection with the
solicitation of proxies on behalf of the Board of Directors of Westbank
Corporation (the "Corporation") to be used at the 2003 Annual Meeting of
Shareholders of the Corporation to be held at the Best Western Sovereign Hotel &
Conference Center, 1080 Riverdale Street, West Springfield, Massachusetts, on
Wednesday, April 16, 2003 at 9:00 AM and at any adjournments thereof.
The close of business on March 3, 2003 has been fixed as the record date for
determination of shareholders of the Corporation entitled to notice of and to
vote at the 2003 Annual Meeting of Shareholders. The only class of issued and
outstanding voting securities of the Corporation is the $2.00 par value Common
Stock (the "Common Stock"). As of the record date, the number of shares of
Common Stock outstanding and entitled to vote at the 2003 Annual Meeting of
Shareholders is 4,378,206. Each share of Common Stock is entitled to one vote.
The affirmative vote of a majority of the shares of Common Stock of the
Corporation represented at the 2003 Annual Meeting is required to appoint the
auditor of the Corporation. The affirmative vote of a plurality of the votes
cast by shareholders is required to elect Directors.
Execution of the enclosed proxy will not affect the shareholder's right to
attend the meeting and vote in person. A shareholder that has given a proxy has
the power to revoke it at any time before it is exercised by delivering notice
of revocation, or a duly executed proxy bearing a later date, to the Treasurer
of the Corporation.
2
ELECTION OF DIRECTORS
The By-Laws of the Corporation provide, in substance, that the Board of
Directors shall be divided into three classes as nearly equal in number as
possible and that the term of office of one class shall expire and a successor
class shall be elected at each Annual Meeting of the Shareholders. The
Corporation's Board of Directors presently consists of nine members.
Six Directors will continue to serve after the 2003 Annual Meeting of
Shareholders. In accordance with the By-Laws of the Corporation, three (3)
nominees shall be elected to serve a three(3)-year term, until the 2006 Annual
Meeting of Shareholders, and for such further time as may be required for the
election and qualification of their successors. Unless returned proxies properly
indicate that authority to vote for any of the nominees named herein is
withheld, all proxies received by the Corporation in time for the 2003 Annual
Meeting of Shareholders will be voted in favor of the election of the nominees
listed below. In the event any of the nominees named herein becomes unable or
unwilling to accept nomination for election, the persons identified as proxies
in the accompanying form of proxy will vote the shares represented by executed
proxies in favor of the nomination and election of such substitute nominees as
the Board of Directors of the Corporation may select.
The following tables name the individuals nominated for Director and those
Directors of the Corporation who will continue to serve after the Meeting, and
indicate their age, the period of time they have served as Director of the
Corporation or its predecessor, their position with the Corporation, and their
principal occupation or employment. No nominee or Director holds a directorship
in any corporation, other than the Corporation, with a class of securities
registered pursuant to Section 12 of the Securities and Exchange Act of 1934 or
subject to the requirements of Section 15(d) of such Act or any corporation
registered as an investment company under the Investment Company Act of 1940.
3
The following individuals are nominees for election as a Director of the
Corporation at the 2003 Annual Meeting to serve for a three-year term until the
2006 Annual Meeting of Shareholders:
NOMINEE AND CURRENT OCCUPATION HAS SERVED ON BOARD OF
OR EMPLOYMENT; BUSINESS DIRECTORS OF THE CORPORATION CORPORATE
EXPERIENCE DURING THE PAST 5 YEARS AGE OR ITS PREDECESSOR SINCE OFFICES HELD
- ---------------------------------- --- ------------------------ ------------
David R. Chamberland
President
Chicopee Building Supply, Inc. 64 1989 Director
Ernest N. Laflamme, Jr.
Treasurer Director,
City of Chicopee 71 1987 Chairman of the Board
G. Wayne McCary
President and Chief Executive Officer
Eastern States Exposition 60 1999 Director
The following Directors will continue to serve after the meeting:
DIRECTOR AND CURRENT OCCUPATION HAS SERVED ON BOARD OF
OR EMPLOYMENT; BUSINESS DIRECTORS OF THE CORPORATION CORPORATE
EXPERIENCE DURING THE PAST 5 YEARS AGE OR ITS PREDECESSOR SINCE OFFICES HELD TERM EXPIRES IN
- ---------------------------------- --- ------------------------ ------------ ---------------
Roland O. Archambault
President and Owner
Pinnacle Raceway 70 1989 Director 2004
Mark A. Beauregard
Attorney
Resnic, Beauregard,
Waite and Driscoll 51 1986 Director 2005
Donald R. Chase
President and
Chief Executive Officer
Westbank Corporation;
President and Director, Vice Chairman of
Chief Executive Officer the Board, President and
Westbank 56 1990 Chief Executive Officer 2004
Robert J. Perlak
Corporate Clerk
Westbank Corporation;
Private Investor 67 1987 Director and Clerk 2005
George R. Sullivan
Chief Executive Officer
Sullivan Paper Company, Inc. 49 1997 Director 2004
James E. Tremble
President
Valley Communications
Systems, Inc. 64 1986 Director 2005
4
The total number of special and regular meetings of the Board of Directors of
the Corporation during the fiscal year ended December 31, 2002 was twelve (12).
Each Director attended at least 75% of all Board of Directors meetings held in
2002 during the period for which each was a Director.
COMMITTEES
The Board of Directors each year appoints Directors to serve on standing
committees of the Board of Directors, including the Executive Committee, the
Compensation Committee, the Nominating Committee and the Audit Committee. The
members of the Executive Committee, the Compensation Committee, the Nominating
Committee and the Audit Committee of the Corporation also make up these same
committees for Westbank ("the Bank"), the wholly owned subsidiary of the
Corporation. All Directors attended at least 75% of the meetings of committees
of which they were a member during the period each was a Director.
EXECUTIVE COMMITTEE
The members of the Executive Committee in 2002 were Messrs. Laflamme,
Beauregard, Chase, Sullivan and Tremble. The Executive Committee met twelve (12)
times during 2002.
COMPENSATION COMMITTEE
The members of the Compensation Committee in 2002 were Messrs. Laflamme,
Beauregard, McCary, Sullivan and Tremble. The Compensation Committee met two (2)
times in 2002.
NOMINATING COMMITTEE
The members of the nominating Committee in 2002 were Messrs. Chamberland, Chase,
Laflamme and Sullivan. The Committee nominates Directors for election by
shareholders at the Annual Meeting, reports to the Board of Directors on or
before December 31 of each year its nominations and submits its nominees for
Directors for publication in the Notice of Annual Meeting of Shareholders and
Proxy Statement. The Committee met one (1) time during 2002. The Nominating
Committee will consider nominees recommended by the Corporation's shareholders
prior to December 1 of each year.
5
REPORT OF THE AUDIT COMMITTEE
THE FOLLOWING REPORT OF THE AUDIT COMMITTEE DOES NOT CONSTITUTE SOLICITING
MATERIAL AND SHOULD NOT BE DEEMED FILED OR INCORPORATED BY REFERENCE INTO ANY
OTHER CORPORATION FILING UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES
EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT THE CORPORATION SPECIFICALLY
INCORPORATES THIS REPORT BY REFERENCE THEREIN.
The Audit Committee of the Board of Directors has developed a charter for the
Committee, which was approved by the full Board on May 16, 2001. The complete
text of the charter, which reflects standards set forth in SEC regulations and
Nasdaq rules, was included in the 2001 Proxy Statement.
As set forth in more detail in the charter, the Audit Committee's primary
responsibilities fall into three (3) broad categories:
o first, the Committee is charged with monitoring the preparation of
quarterly and annual financial reports by the Corporation's
management, including discussions with management and the
Corporation's outside auditors about the annual financial statements
and key accounting and reporting matters;
o second, the Committee is responsible for matters concerning the
relationship between the Corporation and its outside auditors,
including recommending their appointment or removal; reviewing the
scope of their audit services and related fees, as well as any other
services being provided to the Corporation; and determining whether
the outside auditors are independent (based in part on the annual
letter provided to the Corporation by the outside auditors pursuant to
INDEPENDENCE STANDARDS BOARD STANDARD NO. 1); and
o third, the Committee oversees management's implementation of an
effective system of internal controls, including review of policies
relating to legal and regulatory compliance, ethics and conflicts of
interests; and review of the activities and recommendations of the
Corporation's internal and external auditing programs.
The Committee has implemented procedures to ensure that during the course of
each fiscal year it devotes the attention that it deems necessary or appropriate
to each of the matters assigned to it under the Committee's charter. To carry
out its responsibilities, the Committee met five (5) times during Fiscal Year
2002.
In overseeing the preparation of the Corporation's financial statements, the
Committee met with both management and the Corporation's outside auditors to
review and discuss all financial statements prior to their issuance and to
discuss significant accounting issues. Management advised the Committee that all
financial statements were prepared in accordance with generally accepted
accounting principles, and the Committee discussed the statements with both
management and the outside auditors. The Committee's review included discussion
with the outside auditors of matters required to be discussed pursuant to
STATEMENT ON AUDITING STANDARDS NO. 61 (COMMUNICATION WITH AUDIT COMMITTEES).
6
With respect to the Corporation's outside auditors, the Committee, among other
things, discussed with Deloitte & Touche, LLP matters relating to its
independence, including the disclosures made to the Committee as required by the
INDEPENDENCE STANDARDS BOARD STANDARD NO. 1 (INDEPENDENCE DISCUSSIONS WITH AUDIT
COMMITTEES). Listed below are aggregate fees billed to the Corporation for the
fiscal year ended December 31, 2002 by the Corporation's principal accounting
firm, Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu and
their respective affiliates (collectively, "Deloitte"):
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Audit Fees $146,000
All Other Fees $ 21,095 (a)(b)
(a) Includes fees for tax, compliance, consulting and other non-audit
services.
(b) The Audit Committee has considered whether the provision of these
services is compatible with maintaining the principal
accountant's independence.
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Finally, the Committee continued to monitor the scope and adequacy of the
Corporation's internal auditing program, including proposals for adequate
staffing and to strengthen internal procedures and controls where appropriate.
On the basis of these reviews and discussions, the Committee recommended to the
Board of Directors that the Board approve the inclusion of the Corporation's
audited financial statements in the Corporation's Annual Report on Form 10-K for
the fiscal year ended December 31, 2002, for filing with the Securities and
Exchange Commission.
Respectfully submitted by:
Roland O. Archambault David R. Chamberland
CHAIRMAN G. Wayne McCary
George R. Sullivan
THE AUDIT COMMITTEE
EXECUTIVE OFFICERS
In addition to the President of the Corporation, who is a Director and is listed
in the tables above, the other executive officers of the Corporation are as
follows: Gary L. Briggs, age 52, is Executive Vice President of the Corporation
and the Bank; John M. Lilly, age 54, is Treasurer and Chief Financial Officer of
the Corporation and is also Executive Vice President and Treasurer of the Bank.
Each executive officer serves for a one-year term or until their successor is
elected and qualified.
7
BENEFICIAL OWNERSHIP OF STOCK
The following table sets forth certain information as of the record date with
respect to all individuals known to the Corporation to be the beneficial owner
of more than 5% of the outstanding Common Stock of the Corporation:
NUMBER OF SHARES PERCENT OF
NAME AND ADDRESS OF OWNER BENEFICIALLY OWNED (1) OUTSTANDING SHARES
- ------------------------- ---------------------- ------------------
Richard S. Sullivan
Carol B. Sullivan
96 Prynwood Road 370,077 8.5%
Longmeadow, MA 01106
Donald R. Chase
Diana L. Chase
39 Timber Ridge Road 318,338 (2) 7.3%
West Springfield, MA 01089
8
- ---------------
(1) Under regulations of the Securities and Exchange Commission, a person is
treated as the beneficial owner of a security if the person directly or
indirectly (through contract, arrangement, understanding, relationship or
otherwise) has or shares (a) voting power, including the power to vote or
to direct the voting, of such security, or (b) investment power with
respect to such security, including the power to dispose or direct the
disposition of such security. A person is also deemed to have beneficial
ownership of any security that such person has the right to acquire within
60 days.
(2) Included in the shares beneficially owned by Mr. Chase are 211,050
unexercised stock options.
The following table and related notes set forth information as of the record
date regarding the Corporation's Common Stock beneficially owned by each
Director and nominee and by Directors, nominees and officers of the Corporation:
NAME OF INDIVIDUAL NUMBER OF SHARES PERCENT OF
OR PERSONS IN GROUP BENEFICIALLY OWNED (1)(2)(3) OUTSTANDING SHARES
- ------------------- ---------------------------- ------------------
Roland O. Archambault 24,253 .6%
Mark A. Beauregard 27,397 .6
David R. Chamberland 23,825(4) .5
Donald R. Chase 318,338(5) 7.3
Ernest N. Laflamme, Jr. 64,224(4) 1.5
G. Wayne McCary 11,025(4) .3
Robert J. Perlak 55,393 1.3
George R. Sullivan 33,810 .8
James E. Tremble 25,792 .6
All Directors, nominees and
Executive Officers as a group
(11 persons, including those 825,585 18.9
named above)(3) (5)
Section 16(a) of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Corporation's Directors, Executive Officers and
holders of more than 10% of the Corporation's Common Stock to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the
Corporation. The Corporation believes that, during the fiscal year ended
December 31, 2002, all such persons complied with all Section 16(a) filing
requirements. In making this statement, the Corporation has relied upon the
written representations of its Directors and Executive Officers.
9
- ---------------
(1) Based upon information provided to the Corporation by the indicated
persons.
(2) Under regulations of the Securities and Exchange Commission, a person is
treated as the beneficial owner of a security if the person directly or
indirectly (through contract, arrangement, understanding, relationship or
otherwise) has or shares (a) voting power, including the power to vote or
to direct the voting of such security, or (b) investment power with respect
to such security, including the power to dispose or direct the disposition
of such security. A person is also deemed to have beneficial ownership of
any security that such person has the right to acquire within 60 days.
(3) The information in the table includes all shares under stock options that
were exercisable on the record date or 60 days thereafter. As of that date,
Mr. Chase owned exercisable options to purchase 211,050 shares, and all
Directors and Officers as a group owned exercisable options to purchase
468,300 shares.
(4) Indicates a nominee for election as a Director of the Corporation at the
2003 Annual Meeting of Shareholders.
(5) For the purposes of the above table, the term "Executive Officer" means any
individual elected as an Executive Officer of the Corporation.
EXECUTIVE MANAGEMENT COMPENSATION
Compensation decisions for executive officers of the Corporation are made by the
Compensation Committee and approved by the full Board of Directors. Mr. Chase,
who is a member of the Board of Directors, as well as an executive officer of
the Corporation, is not a member of the Compensation Committee and neither
participated in the discussion of nor voted upon his compensation package as a
member of the Board of Directors.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE MANAGEMENT COMPENSATION
Set forth below is the report of the Compensation Committee of the Corporation
regarding executive management compensation, as required by applicable rules of
the Securities and Exchange Commission.
The executive compensation program of the Corporation consists of three (3)
primary components: base salary, cash incentive compensation and stock options,
all of which are administered by the Compensation Committee.
Decisions by the Compensation Committee relating to the compensation of the
Corporation's executive officers are approved by the full Board of Directors,
except as otherwise set forth herein. In determining the proper amount of
compensation for each executive officer, the Compensation Committee considers
various factors, including, inter alia:
o the performance of the Corporation;
o the individual's performance as an executive officer of the
Corporation;
o the amount of compensation paid to similarly situated executive
officers in similar sized corporations; and
o the length of service with the Corporation.
During 2001, the Corporation engaged the firm of Kaeding, Ernst & Company to
review the Bank's retirement plans for executive officers, including the 1995
Westbank Executive Supplemental Retirement Plan. As a result of this review, the
Compensation Committee adopted the 2001 Supplemental Retirement Plan. The
purpose of the supplemental plans is to provide executives with retirement
benefits that are comparable to those provided to its other employees.
Supplemental retirement benefits are provided to all of the executive officers
and certain other participants under various non-qualified plans. The 2001
Supplemental Plan is designed to provide a retirement benefit at normal
retirement (age 65) equal to seventy-five percent (75%) of the participant's
compensation at retirement, less fifty percent (50%) of the Social Security
benefit and the simple life annuity value of the participant's account balances
derived from employer-provided contributions under all qualified and
non-qualified defined contribution plans maintained by the Corporation.
Supplemental retirement benefits are provided to certain employees, including
each executive officer, whose benefits under the Westbank Money Purchase Plan
are limited in amount under federal tax laws and regulations.
10
During 2001, the Compensation Committee engaged Thomas Warren & Associates, Inc.
to assist in establishing salary levels and an incentive compensation plan for
the Corporation's senior executives pursuant to the Corporation's Incentive
Compensation Plan, which is used by the Compensation Committee as a guide in
determining executive officer compensation.
The Corporation also maintains the 1996 Incentive Stock Option Plan ("the 1996
Plan"). The 1996 Plan was established to promote the growth and profitability of
the Corporation and provide key employees with an incentive to achieve corporate
goals.
During 2002, the Chief Executive Officer, Donald R. Chase, received a salary
increase of $29,556, an increase of eight percent (8%) of his base salary. The
increase was recommended by the Compensation Committee following its evaluation
of Mr. Chase's performance as Chief Executive Officer and the overall
performance of the Corporation for 2001. In addition, as a result of The
Incentive Compensation Plan, Mr. Chase received a cash bonus, payable in 2003,
of $158,986 based on the Corporation's 2002 performance.
During 2002, the Compensation Committee, with ratification by the full Board of
Directors, granted stock option awards to Mr. Chase totaling 102,375 shares that
vest, at 34,125 shares each year, over a three(3)-year period beginning in 2002.
The Compensation Committee believes that the 2002 compensation of executive
officers was reasonable, given the Corporation's performance and utilizing the
criteria listed above.
Respectfully submitted by:
Ernest N. Laflamme, Jr. Mark A. Beauregard
CHAIRMAN G. Wayne McCary
George R. Sullivan
James E. Tremble
COMPENSATION INFORMATION
The following table sets forth the cash compensation paid, as well as long-term
compensation paid, for each of the last three fiscal years to all executive
officers of the Corporation who received over $100,000.00 in cash compensation
during 2002.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
AWARD PAYOUTS
----- -------
OTHER
ANNUAL RESTRICTED ALL OTHER
NAME AND COMPEN- STOCK OPTIONS/ LTIP COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS SATION ($) AWARD(S)($) SAR'S(#) PAYOUTS SATION ($)(1)
- ------------------ ---- -------- -------- ---------- ----------- -------- ------- -------------
Donald R. Chase 2002 $406,100 $158,986 N/A N/A 102,375 N/A $194,909
President and 2001 $376,544 $ 58,880 N/A N/A N/A N/A $115,916
Chief Executive Officer 2000 $323,271 $ 51,200 N/A N/A N/A N/A $ 51,234
Gary L. Briggs 2002 $206,758 $ 71,442 N/A N/A 31,500 N/A $ 55,056
Executive Vice President- 2001 $192,761 $ 26,460 N/A N/A N/A N/A $ 38,813
Lending 2000 $166,136 $ 23,100 N/A N/A N/A N/A $ 25,417
John M. Lilly 2002 $208,995 $ 71,442 N/A N/A 31,500 N/A $ 72,971
Treasurer and 2001 $194,765 $ 26,400 N/A N/A N/A N/A $ 47,283
Chief Financial Officer 2000 $167,496 $ 23,100 N/A N/A N/A N/A $ 25,697
11
(1) The items included for 2002 consist of the following: annual contribution
on behalf of the Money Purchase Pension Plan amounting to $20,612 for each
executive; annual allocation under the company's supplemental pension plans
of $168,797, $29,444 and $46,694 for the accounts of Messrs. Chase, Briggs
and Lilly respectively; annual contribution on behalf of the company's 401K
plan of $5,500, $5,000 and $5,665 for Messrs. Chase, Briggs and Lilly
respectively.
1985 INCENTIVE STOCK OPTION PLAN FOR KEY EMPLOYEES
In February, 1985, the Board of Directors of the Corporation unanimously adopted
the 1985 Incentive Stock Option Plan for Key Employees (the "1985 Stock Plan"),
which was approved by the shareholders at the Annual Meeting in April, 1985.
The 1985 Stock Plan is administered by the Board of Directors. The Board of
Directors was authorized to grant stock options to the professional and
supervisory employees of the Corporation and its subsidiaries at any time until
February 19, 1995.
All options were granted at 100% of the fair market value of the Common Stock of
the Corporation on the date of the grant. Each stock option terminates not more
than 10 years after the date of the grant. Options are exercisable in such
installments as may be determined by the Board of Directors. Payment of stock
purchased on the exercise of a stock option must be made in full at the time the
stock option is exercised. Options may not be assigned or transferred, other
than by will or the laws of descent or distribution.
As of February 19, 1995, the 1985 Stock Plan expired. No options were granted or
available for granting during 2002.
A total of 19,715 options were exercised in 2002. A total of 2,215 options were
terminated during 2002 and a total of 10,998 options remain unexercised as of
the record date.
1996 STOCK INCENTIVE PLAN
On February 21, 1996, the Board of Directors unanimously adopted the Westbank
Corporation 1996 Stock Incentive Plan (the "1996 Plan"), which was approved by
the shareholders at the Annual Meeting in April, 1996. The 1996 Plan was amended
at the 2002 Annual Meeting of Shareholders to increase the number of shares
reserved for issuance thereunder by 200,000.
The 1996 Plan is administered by the Compensation Committee (the "Committee").
The Committee is authorized to grant Employee Awards under the 1996 Plan to any
employee. In practice, Employee Awards are made to a group of management
employees.
All options are granted at 100% of the fair market value of the Common Stock of
the Corporation on the date of the grant. Each stock option terminates not more
than 10 years after the date of the grant. Options are exercisable in such
installments as may be determined by the Committee. Payment of stock purchased
on the exercise of a stock option must be made in full at the time the stock
option is exercised. Options may not be assigned or transferred, other than by
will or the laws of descent or distribution.
The Board of Directors may, at any time, terminate and, from time to time, may
amend or modify the 1996 Plan, without approval of Westbank shareholders, except
to the extent that such shareholder approval is required by applicable law or
regulation. There is no set termination date for the 1996 Plan.
A total of 199,900 stock options were granted during 2002, while 5,500 options
were exercised and 1,500 options were terminated. A total of 549,000 options
remain unexercised as of the record date and 19,100 options are available for
future grants.
12
OPTIONS/STOCK APPRECIATION RIGHTS (SAR) GRANTS IN LAST FISCAL YEAR
The charts below disclose information regarding options granted pursuant to the
1996 Stock Incentive Plan as the same apply to the named executives.
INDIVIDUAL GRANTS
POTENTIAL REALIZABLE VALUE
AT ASSUMED RATES OF
STOCK PRICE APPRECIATION
PERCENT OF TOTAL FOR OPTION TERM
OPTION/SARS OPTIONS/SARS GRANTED TO EXERCISE OR ----------------------
NAME GRANTED (#) EMPLOYEES IN FISCAL YEAR BASE PRICE ($/SH) EXPIRATION DATE 5% 10%
- --------------- ----------- ------------------------ ----------------- --------------- -------- --------
Donald R. Chase 34,125 46% $12.94 June 19, 2012 $277,778 $703,657
34,125 * 46% 12.94 January 1, 2013 313,609 818,317
34,125 ** 55% 12.94 January 1, 2014 351,488 944,238
Gary L. Briggs 10,500 14% 12.94 June 19, 2012 85,470 216,510
10,500 * 14% 12.94 January 1, 2013 96,495 251,790
10,500 ** 17% 12.94 January 1, 2014 108,150 290,535
John M. Lilly 10,500 14% 12.94 June 19, 2012 85,470 216,510
10,500 * 14% 12.94 January 1, 2013 96,495 251,790
10,500 ** 17% 12.94 January 1, 2014 108,150 290,535
* Options vest as of January 1, 2003
** Options vest as of January 1, 2004
AGGREGATED EXERCISES AND FY-END OPTION/SAR VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END (#) AT FY-END ($)
SHARES ACQUIRED VALUE (1) ---------------------------- ----------------------------
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- ------------ ----------- ------------- ----------- -------------
Donald R. Chase 0 0 176,925 68,250 $419,285 $21,905
Gary L. Briggs 0 0 65,100 21,000 184,644 6,740
John M. Lilly 18,000 $123,840 65,100 21,000 184,644 6,740
(1) Based on the difference between the options exercise price and the closing
price of the common stock on the date the options were exercised.
LONG-TERM INCENTIVE PLANS AND RETIREMENT PLANS
As set forth below, executive officers and employees are eligible to participate
in the Westbank Money Purchase Pension Plan.
The Bank maintains a Money Purchase Pension Plan (the "Plan") available to
employees of the Corporation and the Bank. Full-time employees become eligible
to participate in the Plan when they have both (i) reached the age of 20-1/2 and
(ii) completed six (6) months of service (as defined in the Plan).
Contributions to the Plan may be made by both the Bank and a participant. The
Bank's contributions will be made to the Plan whether or not a participant
chooses to contribute. The annual contribution by the Bank to each participant's
account for 2002 equals 7% of a participant's annual compensation, plus 5.7% of
a participant's annual compensation in excess of the participant's Social
Security Taxable Wage Base.
13
DIRECTOR COMPENSATION
During 2002, Directors of the Corporation who are not salaried employees
received Directors' fees of $12,000. The Chairman of the Board of Directors
received annual remuneration of $17,500, while the Clerk of the Corporation
received an annual fee of $14,500. Directors who are also salaried employees
receive no additional compensation for their services as Directors of the
Corporation.
The Westbank Directors Supplemental Retirement Plan ("the Directors Retirement
Plan") was established during 2001. Under the Directors Retirement Plan, the
Bank provides post-retirement benefits for non-employee Directors who retire
from the Board after reaching age seventy-two (72). The retirement benefit is in
the amount of seventy-five percent (75%) of the Director's final compensation at
retirement and is payable for the life of the Director. Expenses recognized for
Directors under the Directors Retirement Plan were $134,411 in 2002.
1995 DIRECTORS STOCK OPTION PLAN
In February, 1995, the Board of Directors of the Corporation unanimously adopted
the 1995 Directors Stock Option Plan (the "1995 Plan"), which was approved by
the shareholders at the Annual Meeting in April, 1995.
The 1995 Plan is administered by the non-employee Directors. The purpose of the
1995 Plan is to enhance the Corporation's ability to attract and retain highly
qualified individuals to serve as members of the Corporation's Board of
Directors and to provide additional incentives to non-employee Directors to
promote the success of the Corporation.
On each anniversary of the effective date of the 1995 Plan, each eligible
Director is granted an option to purchase 1,000 shares of the Corporation's
Common Stock. A total of 8,000 options were granted on February 15, 2003 at an
option price of $13.92 per share. A total of 13,000 shares remain available for
future grants under the 1995 Plan.
Each stock option terminates not more than 10 years after the date of the grant.
Payment of stock purchased on the exercise of an option must be made in full at
the time the stock option is exercised. Options may not be assigned or
transferred, other than by will or the laws of descent or distribution. A total
of 3,000 options were exercised during 2002.
14
1996 STOCK INCENTIVE PLAN
On February 21, 1996, the Board of Directors adopted the Westbank Corporation
1996 Stock Incentive Plan (the "1996 Plan"), which was approved by the
shareholders at the Annual Meeting in April 1996.
The 1996 Plan authorizes the automatic grant of nonqualified stock options
("Director Stock Options") to non-employee Directors ("Eligible Directors") upon
the terms and conditions set forth in the 1996 Plan. The 1996 Plan is intended
to provide incentives and rewards for employees and Eligible Directors (i) to
support Westbank's business and human resource strategies and the achievement of
its goals, and (ii) to associate the interests of employees and Eligible
Directors with those of Westbank's shareholders. Under the 1996 Plan, no
Director stock options were granted in 2002.
No Director Stock Option may be exercisable later than twenty years and one day
from the date of its grant. However, if an Eligible Director ceases to be an
Eligible Director for any reason, all Director Stock Options which are otherwise
exercisable shall terminate on the earlier of three years after such cessation
date or the expiration date, whichever first occurs. A total of 4,875 Director
Stock Options were exercised and 2,000 Options were terminated during 2002.
CARGILL BANK DIRECTORS AND OFFICERS STOCK OPTION PLAN
On September 7, 2001, Cargill Bank, a wholly owned subsidiary of the
Corporation, merged with and into Park West Bank and Trust Company, a wholly
owned subsidiary of the Corporation, and presently operate under the name
Westbank.
During 1992, Cargill Bancorp, Inc., adopted a Stock Option Plan for its
Directors and officers, which plan is now administered by the Corporation. All
options expire fifteen (15) years after the date of the grant. A total of 20,965
options were exercised during 2002, while no options terminated and 11,966
options remain unexercised. No options are available for future grants.
EMPLOYMENT AND TERMINATION AGREEMENTS
Donald R. Chase has entered into a Termination Agreement with the Bank regarding
termination of employment subsequent to a "change in control" of the Bank as
defined in the Termination Agreement. Following the occurrence of a change in
control, if Mr. Chase's employment is terminated (except because of retirement,
death, disability or for "cause" as defined in the Termination Agreement) or is
voluntarily terminated by Mr. Chase for "good reason" as defined in the
Termination Agreement, then Mr. Chase shall be entitled to a lump sum payment
approximately equal to three (3) times his average annual compensation for the
previous five (5) years.
15
PERFORMANCE COMPARISON GRAPH
Set forth below is a graph illustrating the return that would have been realized
(assuming reinvestment of dividends) by an investor who invested $100 in common
stock of the Corporation on December 31, 1997, in each of the following:
a. The Standard & Poor's 500 Index
b. A hypothetical fund with investments in the stock of peer corporations
(the "Peer Group")
c. Westbank Corporation
The Peer Group consists of New England financial institutions with assets
totaling between $300 million and $1 billion. The members of the Peer Group are:
Abington Bancorp, Inc. First National Lincoln Corporation
Alliance Bancorp of New England Hingham Institution for Savings Northeast Bancorp
Bancorp Rhode Island, Inc. LSB Corporation Northway Financial, Inc.
Bar Harbor Bank Shares Merchants Bancshares, Inc. Slade's Ferry Bancorp
Central Bancorp, Inc. New Hampshire Thrift Bancshares, Inc. Union Bankshares, Inc.
Community Bancorp, Inc. NewMil Bancorp, Inc. Wainwright Bank & Trust Company
Year Westbank Peer S&P 500
---- -------- ---- -------
1997 100 100 100
1998 103.07 101.86 126.67
1999 71.55 81.10 151.40
2000 61.39 83.89 136.05
2001 88.14 118.65 118.31
2002 135.61 141.09 90.66
MISCELLANEOUS
During 2002, certain of the Corporation's executive officers, Directors and
nominees for Director, beneficial owners of more than 5% of the outstanding
common stock of the Corporation and members of their immediate family and
associates have had, and expect to have in the future, transactions in the
ordinary course of business with the Bank, including borrowings, on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons, and not
involving more than normal risk of collectibility or presenting other
unfavorable features.
16
EMPLOYEE STOCK OWNERSHIP PLAN
On January 1, 1989, the Corporation's Employee Stock Ownership Plan (the "ESOP")
became effective. The ESOP is administered and otherwise governed by the
provisions of the ESOP and a related Trust Agreement. Pursuant to the terms of
the ESOP, the Trustee may invest the ESOP's Trust Assets in, among other
investments, shares of the Common Stock of the Corporation. As of the record
date, no shares of the Common Stock of the Corporation were owned by the ESOP
Trust.
DIVIDEND REINVESTMENT PLAN
In 1989, the Corporation implemented a Dividend Reinvestment and Common Stock
Purchase Plan (the "Dividend Reinvestment Plan"), which was amended during 1995
and the amendment was approved by the shareholders at the 1995 Annual Meeting.
Pursuant to the amended Dividend Reinvestment Plan, shareholders of the
Corporation's Common Stock may invest all or a portion of that shareholder's
quarterly cash dividend, plus up to $10,000 per calendar quarter, in additional
shares of the Corporation's Common Stock. The Dividend Reinvestment Plan was
amended in 2002 to increase by 500,000 the number of shares reserved for
issuance thereunder. The 2002 amendment was approved by shareholders at the 2002
Annual Meeting. During 2002, 42,310 shares of the Corporation's Treasury Stock
were reissued through the Dividend Reinvestment and Common Stock Purchase Plan.
17
RATIFICATION OF THE SELECTION OF
CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has solicited proposals from various accounting firms to
act as the Corporation's certifying accountants for the fiscal year ending
December 31, 2003. After reviewing the proposals received, the Board of
Directors approved a recommendation of the Audit Committee that the Corporation
change its certifying accountants from the firm of Deloitte & Touche LLP
("Deloitte") to Grant Thornton LLP ("Grant"). If ratified by the shareholders,
the client/auditor relationship between the Corporation and Deloitte will be
terminated effective with the completion of the 2002 financial audit. Deloitte's
audit duties for the Corporation will conclude after the preparation of the 2002
Annual Report of the Corporation and the presentation of the 2002 Annual Report
of the Corporation to the 2003 Annual Meeting of Shareholders.
Deloitte's report on the Corporation's financial statements during the two most
recent fiscal years preceding the date hereof contain no adverse opinion or
disclaimer of opinions, and was not qualified as to audit scope or accounting
principles.
During the last two fiscal years and the subsequent interim periods preceding
the date hereof, there were no disagreements between the Corporation and
Deloitte on any matters of accounting principle or practices, financial
statements disclosure, or auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of Deloitte, would have caused Deloitte to make
a reference to the subject matter of disagreements in connection with its
reports.
None of the "reportable events" described under Item 304(a)(1)(v) of Regulation
S-K promulgated under the Securities Exchange Act of 1934 ("Regulation S-K")
occurred within the Corporation's two most recent fiscal years and any
subsequent interim periods preceding the date hereof.
During the last two fiscal years and the subsequent interim periods preceding
the 2003 fiscal year, the Corporation did not consult Deloitte regarding any of
the matters or events set forth in Item 304(a)(2)(I) and (ii) of Regulation S-K.
Representatives of Deloitte and Grant are expected to attend the 2003 Annual
Meeting of Shareholders and will be available to respond to appropriate
questions.
The Board of Directors recommends a vote FOR ratification of the selection of
Grant Thornton LLP as the Corporation's auditors and, unless otherwise directed,
proxies will be voted in favor of this selection.
18
OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors of the
Corporation is not aware of any business to be presented at the 2003 Annual
Meeting other than matters referred to in the Notice of Annual Meeting and this
Proxy Statement. If any other matters properly come before the meeting, or any
adjournment thereof, the enclosed Proxy will be voted on such matters in
accordance with the recommendations of the Corporation's Board of Directors.
MISCELLANEOUS
The expense of this solicitation on behalf of the Board of Directors will be
paid by the Corporation. To the extent necessary in order to assure sufficient
representation of shareholders at the Meeting, officers and employees of the
Corporation may personally, by telephone or by other means, contact shareholders
to request the return of proxies. Banks, brokerage houses and other
institutions, nominees or fiduciaries will be requested to forward the proxy
material to beneficial owners in order to solicit authorizations for the
execution of proxies. The Corporation may, upon request, reimburse such banks,
brokerage houses and other institutions, nominees and fiduciaries for their
expenses in forwarding such material.
STOCKHOLDER PROPOSALS
Any stockholder proposals (including Director nominations) submitted pursuant to
Exchange Act Rule 14a-8 and intended to be presented at the Corporation's 2004
Annual Meeting of Stockholders must be received by the Corporation by November
21, 2003 to be eligible for inclusion in the Proxy Statement and Form of Proxy
to be distributed by the Board of Directors in connection with such meeting.
Such proposals must also comply with the requirements as to form and substance
established by the SEC if such proposals are to be included in the Proxy
Statement and Form of Proxy.
The Corporation's By-Laws provide that any stockholder proposals (including
Director nominations) intended to be presented at the Corporation's 2004 Annual
Meeting, other than a stockholder proposal submitted pursuant to Exchange Act
Rule 14a-8, must be received in writing at the principal executive office of the
Corporation on or between the dates of December 30, 2003 and February 2, 2004,
together with all supporting documentation required by the Corporation's Amended
By-Laws. However, if the 2004 Annual Meeting is scheduled to be held on a date
more than thirty (30) days before April 16, 2004, or more than sixty (60) days
after April 16, 2004, a stockholder's notice shall be timely filed if delivered
to, or received by, the Corporation at its principal executive office not later
than the close of business on the later of (a) seventy-five (75) days prior to
the date of such rescheduled Meeting or (b) the fifteenth (15th) day following
the day on which public announcement of the date of such Annual Meeting is first
made by the Corporation.
19
ANNUAL REPORT
A copy of the Corporation's Annual Report for 2002, including financial
statements, is enclosed. The Annual Report is not to be regarded as proxy
soliciting material.
By order of the Board of Directors
Robert J. Perlak
Clerk
Dated: March 17, 2003
NOTICE
A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K, FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, MAY BE OBTAINED WITHOUT CHARGE BY ANY
SHAREHOLDER OF THE CORPORATION UPON WRITTEN REQUEST ADDRESSED TO JOHN M. LILLY,
TREASURER, 225 PARK AVENUE, WEST SPRINGFIELD, MASSACHUSETTS 01089-3310.
20
WESTBANK CORPORATION
PROXY FOR 2003 ANNUAL SHAREHOLDERS MEETING - APRIL 16, 2003
I, the undersigned holder of common stock of Westbank Corporation, hereby
appoint Gary L. Briggs and Kathleen A. Jalbert, or either of them, with the
power of substitution, proxies of the undersigned to vote the shares of the
undersigned at the 2003 Annual Meeting of Shareholders of Westbank Corporation
to be held at 9:00 A.M., April 16, 2003, at the Best Western Sovereign Hotel &
Conference Center, 1080 Riverdale Street, West Springfield, Massachusetts, and
at any adjournment thereof, with all the powers the undersigned would possess if
personally present. Said proxies are specifically authorized to vote as
indicated below.
THIS PROXY CONFERS AUTHORITY TO VOTE "FOR" EACH PROPOSITION LISTED BELOW
UNLESS AUTHORITY IS WITHHELD OR OTHERWISE INDICATED. ALL PROXIES EXECUTED
CORRECTLY WILL BE VOTED AS DIRECTED. IF ANY OTHER BUSINESS IS PRESENTED AT THE
MEETING, THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE
BOARD OF DIRECTORS.
1. ELECTION OF DIRECTORS: To elect the following Directors of the Corporation
for a three-year term until the 2006 Annual Meeting of Shareholders.
David R. Chamberland FOR [ ] AGAINST [ ] ABSTAIN [ ]
Ernest N. Laflamme, Jr. FOR [ ] AGAINST [ ] ABSTAIN [ ]
G. Wayne McCary FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. SELECTION OF CERTIFIED PUBLIC ACCOUNTANTS: To ratify the appointment, by
the Board of Directors, of Grant Thornton LLP as the Corporation's
independent public accountants for the fiscal year ending December 31,
2003.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(over)
3. OTHER BUSINESS: In their discretion, to act upon the transaction of such
other business as may properly come before the meeting and any adjournment
thereof.
Date:
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(Signature of Shareholder)
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(Signature, if jointly held)
When signing as Attorney, Executor,
Administrator, Trustee or Guardian,
please give full title. IF MORE THAN
ONE TRUSTEE, ALL SHOULD SIGN. ALL
JOINT OWNERS MUST SIGN.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.