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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
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 Commission only (as permitted by Rule
14a-6(e)(2))
[X] Definitive proxy statement
[_] Definitive additional materials
[_] Soliciting material under Rule 14a-12
WESTBANK CORPORATION
------------------------------------------------
(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 is 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 of Registration Statement No.:
3) Filing Party:
4) Date filed:
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NOTICE OF
ANNUAL MEETING
OF SHAREHOLDERS
APRIL 20, 2005
AND
PROXY STATEMENT
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
WESTBANK CORPORATION
225 Park Avenue
West Springfield, MA 01089-3310
March 18, 2005
Dear Shareholder:
You are cordially invited to attend the 2005 Annual Meeting of Shareholders of
Westbank Corporation, the holding company for Westbank, which will be held on
April 20, 2005 at 9:00 AM, local time, at the Storrowton Tavern located at 1305
Memorial Avenue, West Springfield, Massachusetts 01089-3310 (the "Annual
Meeting").
The attached Notice of Annual Meeting and Proxy Statement describes the formal
business that we will transact at the Annual Meeting. In addition to the formal
items of business, management will report on the operations and activities of
Westbank Corporation and Westbank, and you will have an opportunity to ask
questions. Directors and officers of the Westbank Corporation will be present to
respond to any questions shareholders may have.
The Board of Directors of Westbank Corporation has determined that an
affirmative vote on each matter to be considered at the Annual Meeting is in the
best interests of Westbank Corporation and its shareholders and unanimously
recommends a vote "FOR" each of these matters.
Please complete, sign and return the enclosed proxy card promptly, whether or
not you plan to attend the Annual Meeting. YOUR VOTE IS IMPORTANT REGARDLESS OF
THE NUMBER OF SHARES YOU OWN. VOTING BY PROXY WILL NOT PREVENT YOU FROM VOTING
IN PERSON AT THE ANNUAL MEETING BUT WILL ASSURE THAT YOUR VOTE IS COUNTED IF YOU
CANNOT ATTEND.
On behalf of the Board of Directors and the employees of Westbank Corporation
and Westbank, we thank you for your continued support and look forward to seeing
you at the Annual Meeting.
Sincerely yours,
Donald R. Chase
PRESIDENT AND CHIEF EXECUTIVE OFFICER
1
WESTBANK CORPORATION
225 PARK AVENUE
WEST SPRINGFIELD, MA 01089-3310
NOTICE OF 2005 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, APRIL 20, 2005
MARCH 18, 2005
TO THE SHAREHOLDERS OF WESTBANK CORPORATION:
Notice is hereby given that the 2005 Annual Meeting of Shareholders of Westbank
Corporation (the "Corporation") will be held at 9:00 AM on Wednesday, April 20,
2005, at the Storrowton Tavern, 1305 Memorial Avenue, West Springfield,
Massachusetts, for the following purposes, as set forth in the Proxy Statement
accompanying this notice:
1. Elect three directors, each of which would serve for a
three-year term expiring at the 2008 annual meeting. The
following three individuals are the Board of Directors'
nominees:
o Mark A. Beauregard
o Robert J. Perlak
o James E. Tremble
2. 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, February 28, 2005.
By order of the Board of Directors
Robert J. Perlak
Clerk
West Springfield, Massachusetts
March 18, 2005
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.
2
PROXY STATEMENT
Approximate date of mailing:
March 18, 2005
WESTBANK CORPORATION
225 PARK AVENUE
WEST SPRINGFIELD, MASSACHUSETTS 01089-3310
(413) 747-1400
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 2005 Annual Meeting of
Shareholders of the Corporation (the "Annual Meeting") to be held at the
Storrowton Tavern, 1305 Memorial Avenue, West Springfield, Massachusetts, on
Wednesday, April 20, 2005 at 9:00 AM and at any adjournments thereof.
The close of business on February 28, 2005 has been fixed as the record date for
determination of shareholders of the Corporation entitled to notice of and to
vote at the Annual Meeting. 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 Annual Meeting is 4,734,674. Each share of Common
Stock is entitled to one vote.
The affirmative vote of a plurality of the shares of Common Stock of the
Corporation represented at the Annual Meeting is required to elect Directors.
Execution of the enclosed proxy will not affect a shareholder's right to attend
the Annual 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.
3
ELECTION OF DIRECTORS
The Bylaws of the Corporation provide that the Board of Directors shall be
divided into three (3) 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 (9) members.
Five (5) Directors will continue to serve after the 2005 Annual Meeting of
Shareholders. In accordance with the Bylaws of the Corporation, the
Corporation's Board of Directors has nominated three (3) persons for election as
Directors at the Annual Meeting. If elected, they will serve a three (3)-year
term, until the 2008 Annual Meeting of Shareholders, or 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 2005 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.
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.
The following individuals are nominees for election as a Director of the
Corporation at the 2005 Annual Meeting to serve for a three(3)-year term until
the 2008 Annual Meeting of Shareholders:
CORPORATE
NOMINEES AGE DIRECTOR SINCE OFFICES HELD TERM EXPIRES
-------- --- -------------- ------------ ------------
Mark A. Beauregard 53 1986 Director 2008
Robert J. Perlak 69 1987 Director and Clerk 2008
James E. Tremble 66 1986 Director 2008
4
The following Directors will continue to serve after the Annual Meeting.
DIRECTOR CORPORATE TERM
CONTINUING DIRECTORS AGE SINCE OFFICES HELD EXPIRES
- -------------------- --- ----- ------------ -------
David R. Chamberland 66 1989 Director 2006
Donald R. Chase 58 1990 Director, Vice Chairman 2007
of the Board, President
and Chief Executive
Officer
Ernest N. Laflamme, Jr. 73 1987 Director, Chairman 2006
of the Board
G. Wayne McCary 62 1999 Director 2006
George R. Sullivan 51 1997 Director 2007
The following Director will retire immediately after the Annual Meeting.
DIRECTOR CORPORATE
RETIRING DIRECTOR AGE SINCE OFFICES HELD TERM EXPIRES
----------------- --- ----- ------------ ------------
Roland O. Archambault 72 1989 Director 2005
The principal occupation and business experience of each nominee for election as
Director and each continuing Director are set forth below. Unless otherwise
indicated, each of the following persons has held his or her present position
for the last five (5) years.
NOMINEES
- --------
MARK A. BEAUREGARD, Age 53, a resident of South Hadley, Massachusetts, has
served on the Board of Directors of Westbank since 1986 and on the Board of
Directors of Westbank Corporation since 1991. Mr. Beauregard joined the law firm
of Resnic, Beauregard, Waite & Driscoll, P.C., in 1977 and became a partner in
the firm in 1979.
ROBERT J. PERLAK, Age 69, a resident of Chicopee, Massachusetts, has served on
the Board of Directors for Westbank Corporation since 1987 and on the Board of
Directors for Westbank since 1991. Mr. Perlak is a former Assistant Chief
Probation Officer for Hampden County and, in 1993, retired from that position
after 27 years. Mr. Perlak currently is the Clerk of the Corporation of Westbank
Corporation.
JAMES E. TREMBLE, Age 66, a resident of Longmeadow, Massachusetts, has served on
the Board of Directors for Westbank since 1986 and was appointed to the Board of
Directors of Westbank Corporation in 1991. Mr. Tremble is the President of
Valley Communication Systems, Inc., a family-owned communications business,
where he has been employed since January 1976.
5
CONTINUING DIRECTORS
- --------------------
DAVID R. CHAMBERLAND, Age 66, a resident of West Springfield, Massachusetts has
served on the Board of Directors for Westbank since 1990 and was appointed to
the Westbank Corporation Board in 1991. Since 1979, Mr. Chamberland has been the
President/owner of Chicopee Building Supply, specializing in cedar and mahogany
building materials.
DONALD R. CHASE, Age 58, a resident of West Springfield, Massachusetts, has been
employed by Westbank since 1972, holding a variety of positions of increasing
responsibility throughout the years. Mr. Chase was appointed to serve on the
Board of Directors for Westbank in 1987, and was named President and Chief
Executive Officer in December 1988. In September 1990, Mr. Chase was appointed
to the Board of Directors for Westbank Corporation, and named President and
Chief Executive Officer of the Corporation.
ERNEST N. LAFLAMME, JR., Age 73, a resident of Chicopee, Massachusetts, has
served on the Board of Directors for Westbank Corporation since 1987 and on the
Board of Directors for Westbank since 1991. Mr. Laflamme began his career as an
Assessor for the City of Chicopee in 1964 and has held the position of Treasurer
for the past twenty-nine years. Mr. Laflamme currently is the Chairman of the
Board of Westbank Corporation and Westbank.
G. WAYNE MCCARY, Age 62, a resident of Longmeadow, Massachusetts, has served on
the Board of Directors for Westbank Corporation and Westbank since February
1999. Mr. McCary has been employed by Eastern States Exposition (State
Fairgrounds) for approximately twenty-five years and was named President in
1991.
GEORGE R. SULLIVAN, Age 51, a resident of Longmeadow, Massachusetts, was
appointed to the Board of Directors for Westbank Corporation and Westbank in May
1997. Mr. Sullivan is the Chief Executive Officer of Sullivan Paper Company,
where he has been employed since 1971. Mr. Sullivan is Assistant Clerk of the
Corporation.
RETIRING DIRECTOR
- -----------------
ROLAND O. ARCHAMBAULT, Age 72, a resident of Chicopee, Massachusetts, has served
on the Board of Directors for Westbank Corporation since 1989 and on the Board
of Directors for Westbank since 1991. Mr. Archambault is the former
President/owner of Park Supply Company, a brick/masonry supply business, from
which he retired in 1998 after thirty-eight years of service. Mr. Archambault
currently is the President/owner of Pinnacle Raceway.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
- ----------------------------------------
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
listed below. Each executive officer serves for a one(1)-year term or until his
successor is appointed and qualified.
GARY L. BRIGGS, Age 54, has held a variety of positions in the lending area of
the Bank since 1979. In December 1988, Mr. Briggs was appointed Executive Vice
President of Lending at the Bank. Prior to coming to Westbank, he was employed
at Household Finance Corporation from 1973-1979.
JOHN M. LILLY, Age 56, has been employed by Westbank for thirty-one years in a
variety of positions in the finance and audit areas. In December 1988, Mr. Lilly
was appointed Executive Vice President and Treasurer of Westbank. In December
1991, he was appointed Treasurer and Chief Financial Officer of Westbank
Corporation.
6
INFORMATION ABOUT THE BOARD OF DIRECTORS
The total number of special and regular meetings of the Board of Directors of
the Corporation during the fiscal year ended December 31, 2004 was thirteen
(13). Each Director attended at least 75% of all Board of Directors meetings
held in 2004 during the period for which each was a Director. All Directors are
encouraged to attend the Annual Meeting of Shareholders. Nine (9) Directors
attended the 2004 Annual Meeting of Shareholders.
All members of the Board of Directors, with the exception of Mr. Chase, are
"independent" as that term is defined by the applicable listing standards of the
Nasdaq Stock Market as set forth in the National Association of Securities
Dealers (the "NASD Manual"), as those standards have been modified or amended.
Mr. Chase is considered an inside Director due to his employment as an executive
officer of the Corporation.
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 2004 were Messrs. Laflamme,
Beauregard, Chase, McCary, Sullivan and Tremble. The Executive Committee meets
monthly and, pursuant to the bylaws of the Corporation, may act on behalf of the
Board of Directors except for such matters as declaration of dividends, changes
to the Corporation's charter or bylaws, or other material issues as defined in
the bylaws. The Executive Committee met twelve (12) times during 2004.
COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors consists of five (5)
Directors. Current members of the Committee are Messrs. Laflamme, Beauregard,
McCary, Sullivan and Tremble. Each of the members of the Compensation Committee
meets the definition of an "independent director" as defined in the NASD Manual,
as those standards have been modified or amended. The Compensation Committee
determines compensation for executive officers of the Company and the Bank,
which determinations are approved by the Board of Directors. The Compensation
Committee met four (4) times during 2004.
7
NOMINATING COMMITTEE
The Nominating Committee of the Board of Directors consists of three (3)
Directors. Current members of the Nominating Committee are Messrs. Chamberland,
Laflamme and Sullivan. The Board of Directors has adopted a written charter for
the Nominating Committee, a copy of which is available at the Corporation's Web
site, www.westbankcorponline.com. Each current member of the Nominating
Committee meets the definition of an "independent director" as defined in the
NASD Manual, as such standard has been modified or amended. The Nominating
Committee met one (1) time during 2004.
The Nominating Committee identifies candidates for the Board of Directors and
recommends individuals to be presented for shareholder approval at the Annual
Meeting and to fill any vacancies on the Board. Prospective nominees are
evaluated by the Nominating Committee on the basis of a subjective review of the
background of each prospective nominee and the current needs of the Corporation.
Factors considered by the Committee include:
o the candidate's background, including, but not limited to, education
and employment experience;
o the candidate's standards of integrity, work ethic and commitment;
o the candidate's ability to devote sufficient time and effort to the
duties of a Director, including, but not limited to, the candidate's
service on other boards of directors; and
o The candidate's specific skills and experience in light of the needs
of the corporation and the Board of Directors, including, but not
limited to, the need for specific expertise to serve on committees of
the Board.
The Committee may also consider other factors it deems appropriate. The
Committee may determine to interview candidates, either in person or by
telephone. Upon completion of the evaluation process, the Committee recommends
candidates for election to the Board of Directors.
The policy of the Nominating Committee is to consider any Director candidate
recommended by the shareholders on the same basis that the Committee considers
candidates identified by the Committee. Such recommendations must be made in
writing to Clerk, Westbank Corporation, 225 Park Avenue, Post Office Box 149,
West Springfield, Massachusetts 01090-0149, with whatever supporting material
the shareholders deems appropriate. All requests must be received at the above
address on or between December 21, 2005 and February 4, 2006 for consideration
at the 2006 Annual Meeting of Shareholders.
8
AUDIT COMMITTEE
The members of the Audit Committee are Messrs. Archambault, Chamberland,
Laflamme, McCary and Sullivan. All members of the Audit Committee are
"independent", as required by the applicable listing standards of Nasdaq and the
Securities Exchange Act of 1934, as amended, and the rules promulgated
thereunder. The Board of Directors has determined that George R. Sullivan, a
member of the Board of Directors and the Audit Committee, is qualified as an
Audit Committee Financial Expert within the meaning of SEC regulations.
The Audit Committee of the Board of Directors has developed a charter for the
Committee that was approved by the full Board on May 15, 2003. The complete text
of the charter, which reflects standards set forth in SEC regulations and NASD
rules, was attached as an appendix to the Company's 2004 Proxy Statement and is
available on the Corporation's Web site, www.Westbankcorponline.com.
As set forth in more detail in the charter, the Audit Committee's primary
responsibilities fall into three (3) broad categories:
o First, the Audit 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 Audit 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).
o Third, the Audit 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
interest; and review of the activities and recommendations of the
Corporation's internal and external auditing programs.
The Audit Committee has implemented procedures to ensure that during the course
of each fiscal year it devotes the attention it deems necessary or appropriate
to each of the matters assigned to it under the Committee's charter. To carry
out its responsibilities, the Audit Committee met seven (7) times during Fiscal
Year 2004.
9
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 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. 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).
The Committee has received the written disclosures and the letter form the
independent auditors made to the Committee as required by the INDEPENDENCE
STANDARDS BOARD STANDARD NO. 1 (INDEPENDENCE DISCUSSIONS WITH AUDIT COMMITTEES).
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, 2004, for filing with the Securities and
Exchange Commission.
Respectfully submitted by:
George R. Sullivan Roland O. Archambault
CHAIRMAN David R. Chamberland
Ernest N. Laflamme, Jr.
G. Wayne McCary
THE AUDIT COMMITTEE
10
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Grant Thornton LLP served as the Corporation's independent certified public
accountants for the fiscal year ended December 31, 2004. Representatives of
Grant Thornton LLP are expected to be present at the Annual Meeting. The
representatives will have the opportunity to make a statement, if they desire to
do so, and it is expected that they will be available to respond to appropriate
questions.
The Corporation is presently conducting a search to select its independent
certified public accountants for the fiscal year ending December 31, 2005.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
During the fiscal years ended December 31, 2004 and December 31, 2003,
respectively, the Corporation retained and paid Grant Thornton LLP to provide
audit and other services as follows:
FOR THE FISCAL YEAR ENDED
AUDIT FEES DECEMBER 31, 2004 DECEMBER 31, 2003
---------- ----------------- -----------------
Audit $166,750 $105,521
Tax Fees 27,260 30,301
All Other Fees (reviews of SEC filings) 3,500 ---
----------------- -----------------
TOTAL $197,510 $136,122
================= =================
AUDIT COMMITTEE PRE-APPROVAL POLICY
PRE-APPROVAL OF SERVICES. The Audit Committee shall pre-approve all auditing
services and permitted non-audit services (including the fees and terms) to be
performed for the Company by its independent certified public accountants,
subject to the de minimis exception for non-audit services described below which
are approved by the Committee prior to completion of the audit.
EXCEPTION. The pre-approval requirement set forth above shall not be applicable
with respect to non-audit services if:
o The aggregate amount of all such services provided constitutes no more
than five percent of the total amount of revenues paid by the Company
to its public accountants during the fiscal year in which the services
are provided;
o Such services were not recognized by the Company at the time of the
engagement to be non-audit services; and
o Such services are promptly brought to the attention of the Audit
Committee and approved prior to completion of the audit by the
Committee or by one or more members of the Committee who are members
of the Board of Directors to whom authority to grant such approvals
has been delegated by the Committee.
DELEGATION. The Audit Committee may delegate to one or more designated members
of the Committee the authority to grant required pre-approvals. The decisions of
any member to whom authority is delegated under this paragraph to pre-approve
activities under this subsection shall be presented to the full Committee at its
next scheduled meeting.
The Audit Committee approved all services performed by Grant Thornton LLP
pursuant to the policies outlined above.
11
CODE OF ETHICS
The Corporation has adopted a Code of Ethics applicable to the members of the
Board of Directors, all employees of the Corporation, the Chief Executive
Officer, the Chief Financial Officer and persons performing similar functions. A
copy of the Code of Ethics, which meets the requirements of Item 406 of
Regulation S-K, was filed with the Corporation's 2004 Proxy Statement and is
available on the Corporation's Web site, www.westbankcorponline.com. The
Corporation will report amendments to, or waivers from, its Code of Ethics as
such apply to the Corporation's Chief Executive Officer and Chief Financial
Officer in a manner consistent with Item 5.05 of Form 8-K of the Securities and
Exchange Commission.
SHAREHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Shareholders may communicate directly with the Chairman of the Board of
Directors or the Board of Directors as a group by writing to the Chairman of the
Board of Directors, Westbank Corporation, 225 Park Avenue, Post Office Box 149,
West Springfield, Massachusetts 01090-0149. Shareholders may communicate with
any committee of the Board of Directors by writing to the Chairman of such
committee at the address listed above. All correspondence will be reviewed by
the Clerk of the Corporation, who shall forward the correspondence to the
appropriate Director or committee.
12
BENEFICIAL OWNERSHIP OF STOCK
The following table contains common stock ownership information for persons
known to the Corporation to "beneficially own" 5% or more of the Corporation's
common stock as of December 31, 2004. In general, beneficial ownership includes
those shares that a person has the power to vote, sell, or otherwise dispose.
Beneficial ownership also includes that number of shares which an individual has
the right to acquire within 60 days (such as stock options) after December 31,
2004. Two or more persons may be considered the beneficial owner of the same
shares. We obtained the information provided in the following table from filings
with the SEC and with the Corporation.
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF OUTSTANDING
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) COMMON STOCK
- ------------------- ----------------------- ------------
Richard S. Sullivan
Carol B. Sullivan
96 Prynwood Road
Longmeadow, MA 01106 394,746 8.34%
Donald R. Chase
Diana L. Chase
39 Timber Ridge Road
West Springfield, MA 01089 351,507 7.42%
(1) Included in the shares beneficially owned by Mr. Chase are 243,933
unexercised stock options.
The following table shows the number of shares of the Corporation's common stock
beneficially owned by each director and each executive officer of the
Corporation and the Association, whose annual salary and bonus for 2004 was at
least $100,000 (the "named executive officers"), and all directors and executive
officers of the Corporation as a group, as of December 31, 2004. Except as
otherwise indicated, each person and each group shown in the table has sole
voting and investment power with respect to the shares of common stock listed
next to their name.
PERCENT OF
NAME OF INDIVIDUAL AMOUNT AND NATURE OF OUTSTANDING
OR PERSONS IN GROUP BENEFICIAL OWNERSHIP(1)(2)(3) COMMON STOCK
- ------------------- ----------------------------- ------------
Roland O. Archambault 26,456 0.56%
Mark A. Beauregard 30,622(4) 0.65%
David R. Chamberland 26,501 0.56%
Donald R. Chase 351,507(5) 7.42%
Ernest N. Laflamme 71,597 1.51%
G. Wayne McCary 16,573 0.35%
Robert J. Perlak 58,301(4) 1.23%
George R. Sullivan 38,442 0.81%
James E. Tremble 30,997(4) 0.65%
All Directors, nominees and
executive officers as a group
(11 persons, including those
named above)(3)(5) 886,488 18.72%
(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 sixty (60)
days.
(3) The information in the table includes all shares under stock options that
were exercisable on the record date or sixty (60) days thereafter. As of
that date, Mr. Chase owned exercisable options to purchase 243,933 shares,
and all Directors and officers as a group owned exercisable options to
purchase 485,610 shares.
(4) Indicates a nominee for election as a Director of the Corporation at the
2005 Annual Meeting of Shareholders.
(5) For the purpose of the table, "Executive Officer" means any individual
elected as an executive officer of the Corporation.
13
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 ten percent (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. Based solely on its review of such forms received by it, or
written representatives from certain reporting process, the Corporation believes
that, during the fiscal year ended December 31, 2004, all such persons complied
with all Section 16(a) filing requirements.
TRANSACTIONS INVOLVING OFFICERS AND DIRECTORS
From time to time, the Corporation, through the Bank, enters into banking
transactions, in the ordinary course of business, with certain of the executive
officers and Directors of the Corporation, their immediate families or entities
in which such persons may have a ten percent (10%) beneficial interest or for
which such persons may serve as executive officers. All loans made to such
persons are on substantially the same terms as comparable transactions and do
not involve more than the normal risk of collection. The aggregate amount of
such loans at December 31, 2004 was $10,817,000. As of the date of this Proxy
Statement, all of the loans described herein are performing loans in accordance
with their original terms.
14
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 or 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 four (4)
primary components: base salary, cash incentive compensation, stock options and
restricted stock awards, 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 plan 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 Retirement 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.
During 2001, the Compensation Committee engaged Thomas Warren & Associates,
Inc., to assist in establishing 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.
At the Corporation's 2004 Annual Meeting, shareholders approved the adoption of
the Westbank Corporation 2004 Recognition and Retention Plan, which functions as
a long-term incentive plan.
During 2004, the Chief Executive Officer, Donald R. Chase, received a salary
increase of $32,017, an increase of seven percent (7%) of his base salary. The
increase was recommended by the
15
Compensation Committee following its evaluation of Mr. Chase's performance as
Chief Executive Officer and the overall performance of the Corporation for 2004.
The Compensation Committee believes that the 2004 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
THE COMPENSATION COMMITTEE
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 $100,000 in cash compensation
during 2004.
SUMMARY COMPENSATION TABLE
Long-Term Compensation
------------------------------------------------
Annual Compensation Award Payouts
--------------------------------------- ----------------------- ----------------------
Other
Annual Restricted All Other
Name and Compen- Stock Options/ LTIP Compen-
Principal Position Year Salary Bonus sation($) Awards($)(1) SAR's(#) Payouts sation($)(2)
------------------ ---- ------ ----- --------- ------------ -------- ------- ------------
Donald R. Chase 2004 $472,214 N/A N/A $555,840 N/A N/A $306,974
PRESIDENT AND 2003 $440,197 $171,694 N/A N/A N/A N/A $233,594
CHIEF EXECUTIVE OFFICER 2002 $406,100 $158,986 N/A N/A 102,375 N/A $194,916
Gary L. Briggs 2004 $239,882 N/A N/A $185,288 N/A N/A $ 78,061
EXECUTIVE VICE 2003 $223,803 $ 38,579 N/A N/A N/A N/A $ 67,207
PRESIDENT, LENDING 2002 $206,758 $ 71,442 N/A N/A 31,500 N/A $ 55,056
John M. Lilly 2004 $241,405 N/A N/A $185,288 N/A N/A $111,885
TREASURER AND CHIEF 2003 $225,959 $ 77,158 N/A N/A N/A N/A $ 88,257
FINANCIAL OFFICER 2002 $208,995 $ 71,442 N/A N/A 31,500 N/A $ 72,971
(1) Pursuant to the Westbank Corporation 2004 Recognition and Retention Plan,
Messrs. Chase, Briggs and Lilly were granted 28,800, 9,600 and 9,600 shares
of restricted stock, respectively, effective May 25, 2004. These awards
vest in approximately 12.5% increments each year. Dividends attributed to
such awards are distributed to participants from the trust account holding
such plan shares. The dollar amount shown is based on the fair market value
of a share of common stock on May 25, 2004, which was $19.30 per share. The
value of aggregate restricted stock awards as of December 31, 2004 was
$555,840, $185,288, and $185,288 for Messrs. Chase, Briggs and Lilly,
respectively. Accelerated vesting occurs in the case of death or disability
and upon retirement or a change of control.
(2) The items included for 2004 consist of the following: annual contribution
on behalf of the Money Purchase Pension Plan amounting to $21,025 for each
executive; annual allocation under the Corporation's supplemental pension
plans of $277,950, $49,161 and $83,797 for the accounts of Messrs. Chase,
Briggs and Lilly respectively; annual contribution on behalf of the
Corporation's 401K plan of $7,999, $7,875 and $7,063 for Messrs. Chase,
Briggs and Lilly respectively.
16
EMPLOYMENT AGREEMENT
The Corporation has entered into an employment agreement with Mr. Donald R.
Chase to secure his services as President and Chief Executive Officer. This
employment agreement has a term of three (3) years, beginning on December 17,
2003, and may be renewed annually after a review of the executive's performance.
This agreement provides for an initial minimum annual salary of $429,235,
discretionary cash bonuses and participation on generally applicable terms and
conditions in other compensation and fringe benefit plans. It also guarantees
customary corporate indemnification, and errors and omissions insurance
coverage, throughout the employment term and for so long as the executive is
subject to suit for claims deriving from service to the Corporation and the Bank
after termination. The Corporation and the Bank may terminate the executive's
employment, and the executive may resign, at any time with or without cause.
However, in the event of termination during the term without cause, the
executive will be owed severance benefits generally equal to the value of the
cash compensation and fringe benefits (including the value of accruals under
both tax-qualified and non-qualified benefit plans in which he participates)
that the executive would have received if he had continued working for the
remaining unexpired term of the agreement. The same severance benefits would be
payable if the executive resigns during the term following: a loss of title,
office or membership on the Board of Directors; material reduction in duties,
functions or responsibilities; or other material breach of contract by the
Corporation or the Bank that is not cured within thirty (30) days. For ninety
(90) days after a change in control, the executive may resign for any reason and
collect severance benefits as if he had been discharged without cause,
calculated as if the remaining unexpired term of the agreement were three (3)
years. If the Corporation or the Bank experiences a change in ownership, a
change in effective ownership or control, or a change in the ownership of a
substantial portion of their assets as contemplated by Section 280G of the
Internal Revenue Code, a portion of any severance payments under the employment
agreement might constitute an "excess parachute payment" under current federal
tax laws. Federal tax laws impose a twenty percent (20%) excise tax, payable by
the executive, on excess parachute payments. Under the employment agreement, the
Corporation would reimburse the executive for the amount of this excise tax and
would make an additional gross-up payment so that, after payment of the excise
tax and all income and excise taxes imposed on the reimbursement and gross-up
payments, the executive will retain approximately the same net-after-tax amounts
under the employment agreement that he would have retained if there were no
twenty percent (20%) excise tax. The effect of this provision is that the
Corporation, rather than the executive, bears the financial cost of the excise
tax. Neither the Corporation nor the Bank could claim a federal income tax
deduction for an excess parachute payment, excise tax reimbursement payment or
gross-up payment.
CHANGE OF CONTROL AGREEMENTS
The Corporation and the Bank have jointly entered into thirty (30)-month change
of control agreements with each of Messrs. Briggs and Lilly. The term of these
agreements is perpetual until the Bank gives notice of non-extension, at which
time the term is fixed for thirty (30) months. Generally, the Bank may terminate
the employment of any officer covered by these agreements, with or without
cause, at any time prior to a change of control without obligation for severance
benefits.
However, if the Bank or the Corporation signs a merger or other business
combination agreement, or if a third party makes a tender offer or initiates a
proxy contest, it could not terminate an officer's employment without cause
without liability for severance benefits. The severance benefits would generally
be equal to the value of the cash compensation and fringe benefits that the
officer would have received if he or she had continued working for an additional
thirty months. The Bank would pay the same severance benefits if the officer
resigns after a change of control. If the Bank or the Corporation experiences a
change in ownership, a change in effective ownership or control, or a change in
the ownership of a substantial portion of their assets as contemplated by
Section 280G of the Internal Revenue Code, a portion of any severance payments
under the change of control agreements might constitute an "excess parachute
payment" under current federal tax laws. Federal taw laws impose a 20% excise
tax, payable by the officer, on excess parachute payments. Under the change of
control agreement, the Corporation would reimburse the officers for the amount
of this excise tax and would make an additional gross-up payment so that, after
payment of the excise tax and all income and excise taxes imposed on the
reimbursement and gross-up payments, the officers would retain approximately the
same net-after-tax amounts under the
17
change of control agreement that they would have retained if there were no
twenty percent (20%) excise tax. Neither the Corporation nor the Bank would
claim a federal income tax deduction for an excess parachute payment, excise tax
reimbursement payment or gross-up payment.
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 ten (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 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 2004.
A total of 4,796 options were exercised in 2004. No options were terminated
during 2004 and all options granted under the 1985 Stock Plan have been
exercised.
18
1996 STOCK INCENTIVE PLAN
On February 21, 1996, the Board of Directors unanimously adopted the 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 by 200,000 the number of
shares reserved for issuance thereunder.
The 1996 Plan is administered by the Compensation 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 one hundred percent (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 ten (10) years after the date of the grant.
Options are exercisable in such installments as may be determined by the
Committee. Payment for 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 the Corporation's
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.
No stock options were granted during 2004, while 65,055 options were exercised
and no options were terminated. A total of 448,488 options remain unexercised as
of the record date and 20,948 options are available for future grants.
AGGREGATED EXERCISES AND FISCAL YEAR-END OPTIONS/SAR VALUES
NUMBER OF SECURITIES VALUE(2) 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 13,500 $154,950 243,933 -- $ 1,855,556 --
Gary L. Briggs 90,404 -- $ 740,397 --
John M. Lilly 26,250 $284,075 62,842 -- $ 436,388 --
(1) Based on the difference between the exercise price and the closing price of
the Common Stock on the date the options were exercised.
(2) Based on the difference between the exercise price and the closing price of
the Common Stock as of December 31, 2004.
19
2004 RECOGNITION AND RETENTION PLAN
The 2004 Recognition and Retention Plan (the "RRP") was adopted by the Board of
Directors of the Corporation, approved by its shareholders and became effective
on April 21, 2004. The RRP functions as a long-term incentive plan and enables
certain members of the Compensation Committee of the Board of Directors of the
Corporation (the "RRP Committee") to grant awards of restricted Common Stock to
key officers, employees, Directors and affiliates of the Corporation and the
Bank. Each restricted stock award shall vest annually in equal installments over
an eight (8)-year period, commencing on the first anniversary of the grant,
unless a vesting schedule is otherwise determined by the RRP Committee, and may
be subject to other terms and conditions consistent with the RRP. A restricted
stock award shall become one hundred percent (100%) vested upon the award
recipient's death, disability, retirement or after a change of control of the
Corporation, as each term is defined in the RRP. Restricted stock awards are
non-transferable. Award recipients have the right to receive all dividend
payments on their restricted stock awards and may vote such shares, whether or
not vested. The RRP is not subject to the Employee Retirement Income Security
Act of 1974, as amended, and is not a tax-qualified plan under the Internal
Revenue Code.
As required by the terms of the RRP, the Corporation has established a trust and
contributed certain amounts of money or property as determined by the Board of
Directors at its discretion. No contributions by participants are permitted. The
trustee will invest the assets of the trust primarily in shares of the
Corporation's Common Stock that will be used to make the restricted stock
awards. The trust was originally authorized to purchase up to 88,100 shares of
Common Stock, which number increased to 92,505 due solely to a five percent (5%)
stock dividend paid on May 18, 2004, and cannot purchase more than this limit.
All of the authorized shares of Common Stock were granted as restricted stock
awards in 2004.
The Board of Directors has the authority to suspend or terminate the RRP in
whole or in part at any time, by giving written notice to the RRP Committee,
provided there are no outstanding restricted stock awards that have not yet
become vested. Upon termination of the RRP, the trustee will make distributions
from the trust as directed by the RRP Committee and will return any remaining
assets of the trust to the Corporation.
20
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
years 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 Bank's annual contribution to each participant's
account for 2004 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.
DIRECTOR COMPENSATION
During 2004, Directors of the Corporation who are not salaried employees
received Directors' fees of $14,000. The Chairman of the Board of Directors
received annual remuneration of $19,500, while the Clerk of the Corporation
received an annual fee of $16,500. Directors who are also salaried employees
receive no additional compensation for their services as Directors of the
Corporation.
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 date of the 1995 Plan, each eligible Director is granted an
option to purchase one thousand (1,000) shares of the Corporation's Common
Stock. Each stock option terminates not more than ten (10) years after the date
of the grant. Payment for 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 14,838 options were exercised during 2004.
The Plan expired as of February 15, 2005.
21
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 non-qualified 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 the Corporation'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 the Corporation's shareholders.
No Director stock option may be exercisable later than twenty (20) years and one
(1) 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 that are
otherwise exercisable shall terminate on the earlier of three (3) years after
such cessation date or the expiration date, whichever comes first. A total of
5,520 Director stock options were exercised and 8,000 options were cancelled
during 2004.
The Directors' portion of the plan has expired.
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 operates 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 3,363 options
were exercised during 2004, while no options terminated and 6,091 options remain
unexercised. No options are available for future grants.
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.
22
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 2004, 34,076 shares of the Corporation's Treasury Stock
were reissued through the Dividend Reinvestment and Common Stock Purchase Plan.
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 each of the following on December 31, 1999:
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 $400 million and $1 billion. The members of the Peer Group are:
Bancorp Rhode Island, Inc. LSB Corporation Northeast Bancorp
Bar Harbor Bankshares MASSBANK Corp. Northway Financial, Inc.
Central Bancorp, Inc. Merchants Bancshares, Inc. Slade's Ferry Bancorp
First National Lincoln Corporation New Hampshire Thrift Bancshares, Inc. Wainwright Bank & Trust
Hingham Institution for Savings NewMil Bancorp, Inc.
12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04
- ----------------------------------------------------------------------------------------
Westbank Corporation $ 100.00 $ 85.80 $ 123.18 $ 180.50 $ 259.03 $ 282.36
- ---------------------- ---------- ---------- ---------- ---------- ---------- ----------
Custom Peer Group $ 100.00 $ 102.73 $ 141.02 $ 165.03 $ 238.34 $ 249.94
- ---------------------- ---------- ---------- ---------- ---------- ---------- ----------
S&P 500 $ 100.00 $ 89.86 $ 78.14 $ 59.88 $ 75.68 $ 82.49
- ----------------------------------------------------------------------------------------
23
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 2005 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.
SOLICITATION OF PROXIES
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 Annual Meeting, officers and employees of
the Corporation may personally, by telephone or 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.
SHAREHOLDER PROPOSALS
Any shareholder proposals (including Director nominations) submitted pursuant to
Rule 14a-8 promulgated under the Securities Exchange Act of 1934 (the "Exchange
Act") and intended to be presented at the Corporation's 2006 Annual Meeting of
Shareholders must be received by the Corporation by November 15, 2005 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 also must 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 Bylaws provide that any shareholder proposals (including
Director nominations) intended to be presented at the Corporation's 2006 Annual
Meeting, other than a shareholder 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 21, 2005 and February 4, 2006,
together with all supporting documentation required by the Corporation's Amended
Bylaws. However, if the 2006 Annual Meeting is scheduled to be held on a date
more than thirty (30) days before April 20, 2006 or more than sixty (60) days
after April 20, 2006, a shareholder's notice shall be timely filed if delivered
to, or received by, the Corporation at its principal executive office not late
than the close of business on the later of (1) seventy-five (75) days prior to
the date of such rescheduled Meeting or (5) the fifteenth (15th) day following
the day on which public announcement of the date of such Annual Meeting is first
made by the Corporation.
24
ANNUAL REPORT
A copy of the Corporation's Annual Report for 2004, 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
West Springfield, Massachusetts
March 18, 2005
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, WESTBANK CORPORATION, 225 PARK AVENUE, WEST SPRINGFIELD,
MASSACHUSETTS 01089-3310.
25
WESTBANK CORPORATION
PROXY FOR 2005 ANNUAL SHAREHOLDERS MEETING - APRIL 20, 2005
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 2005 Annual Meeting of Shareholders of Westbank Corporation
to be held at 9:00 A.M., April 20, 2005, at the Storrowton Tavern, 1305 Memorial
Avenue, 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 2008 Annual Meeting of Shareholders.
Mark A. Beauregard [ ] FOR [ ] WITHHELD
Robert J. Perlak [ ] FOR [ ] WITHHELD
James E. Tremble [ ] FOR [ ] WITHHELD
(over)
2. 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:
------------------------------
------------------------------------
(Signature of Shareholder)
------------------------------------
(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.