<PAGE>
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
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
SIS Bancorp, Inc.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________
(5) Total fee paid:
________________________________________________________________________
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
________________________________________________________________________
(3) Filing Party:
________________________________________________________________________
(4) Date Filed:
________________________________________________________________________
<PAGE>
SIS BANCORP
- -------------------------------------------------------------------------------
SIS Bancorp, Inc.
1441 Main Street
Springfield, MA 01103
March 19, 1997
Telephone (413) 748-8000
Dear Stockholder:
You are cordially invited to attend the 1997 Annual Meeting of the
Stockholders (the "Annual Meeting") of SIS Bancorp, Inc. (the "Company") to be
held on Wednesday, April 30, 1997 at 10:00 a.m. local time, at the Springfield
Marriott Hotel, Springfield, Massachusetts.
The Annual Meeting has been called for the following purposes:
1. To elect two Directors for a three-year term;
2. To transact such other business as may properly come before the meeting
or any adjournments or postponements thereof.
The accompanying Proxy Statement for Annual Meeting of SIS Bancorp, Inc.
Shareholders provides detailed information concerning the matters to be voted
on at the Annual Meeting. Also, enclosed is the Company's 1996 SEC Form 10-K
and 1996 Annual Report to Stockholders, which contain additional information
and review of results for the fiscal year ended December 31, 1996.
It is important that your shares be represented at the Annual Meeting. Whether
or not you plan to attend the Annual Meeting, you are requested to complete,
date, sign and return the enclosed proxy card in the enclosed postage paid
envelope.
Thank you for returning your proxy. We appreciate the support you have given
the Company.
Sincerely,
/s/ John M. Naughton
John M. Naughton
Chairman of the Board
<PAGE>
SIS BANCORP, INC.
1441 MAIN STREET
SPRINGFIELD, MASSACHUSETTS 01102
TELEPHONE: (413) 748-8000
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, APRIL 30, 1997
----------------
Springfield,
Massachusetts
March 19, 1997
To the Holders of Common Stock of
SIS Bancorp, Inc.
Notice is Hereby Given that the Annual Meeting of Stockholders of SIS
Bancorp, Inc. will be held at the Springfield Marriott Hotel, 1500 Main
Street, Springfield, Massachusetts at 10:00 a.m. local time on Wednesday,
April 30, 1997 for the following purposes:
1. Election of Directors: To elect two Directors, each for a three-year
term (Proposal 1);
2. Other Business: To transact such other business as may properly come
before the meeting or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on March 14, 1997 as
the record date for determination of stockholders entitled to notice of, and
to vote at, the Annual Meeting and any adjournments or postponements thereof.
By Order of the Board of Directors
/s/ Michael E. Tucker
Michael E. Tucker, Esquire
Clerk
REGARDLESS OF HOW MANY SHARES YOU OWN, YOUR VOTE IS VERY IMPORTANT. WHETHER OR
NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE, SIGN AND DATE
THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
IF YOU ATTEND THE MEETING, YOU MAY WITHDRAW ANY PROXY GIVEN BY YOU AND VOTE
YOUR SHARES IN PERSON.
<PAGE>
[SIS BANCORP LOGO APPEARS HERE]
1441 MAIN STREET
SPRINGFIELD, MASSACHUSETTS 01102
----------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SIS BANCORP, INC. SHAREHOLDERS
TO BE HELD ON APRIL 30, 1997
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of SIS Bancorp, Inc., a Massachusetts
corporation (the "Company") from the holders of outstanding shares of Company
common stock, par value $.01 per share (the "Common Stock") for use at the
1997 Annual Meeting of Stockholders of the Company (the "Annual Meeting"), to
be held on Wednesday, April 30, 1997 at 10:00 a.m. local time, at the
Springfield Marriott Hotel, 1500 Main Street, Springfield, Massachusetts, and
at any adjournments or postponements thereof. At the Annual Meeting,
shareholders will be asked to elect two members of the Board of Directors
(Proposal 1), and to transact such other business as may properly come before
the meeting or any adjournments or postponements thereof. This Proxy
Statement, together with the accompanying Notice of Annual Meeting and the
accompanying proxy card are first being mailed to stockholders on or about
March 19, 1997.
On June 21, 1996, the Company, which was organized by Springfield
Institution for Savings, a Massachusetts stock savings bank (the "Bank"), for
the purpose of reorganizing the Bank into a holding company structure,
acquired 100% of the outstanding shares of the Bank's common stock, par value
$1.00 per share, in a 1:1 exchange for shares of the Company's Common Stock.
Upon the effectiveness of such share-for-share exchange on June 21, 1996 (the
"Reorganization"), the Bank became a wholly-owned subsidiary of the Company
and the Bank's former stockholders became stockholders of the Company. The
Company Common Stock is included in the NASDAQ National Market system under
the symbol "SISB".
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
The Board of Directors has set March 14, 1997 as the record date (the
"Record Date"), for determining the stockholders entitled to notice of, and to
vote at, the Annual Meeting. As of February 28, 1997, the most recent
practicable date, there were approximately 1,136 holders of record of
5,707,200 shares of Common Stock of the Company outstanding which would be
entitled to vote at the Annual Meeting. A majority of the outstanding shares
of Common Stock will constitute a quorum for transaction of business at the
Annual Meeting. Each share of Common Stock will be accorded one vote. The
affirmative vote of the holders of a plurality of the shares voted at the
Annual Meeting is required to elect the Directors in Proposal 1. Shareholders'
votes will be tabulated by the persons appointed by the Board of Directors to
act as inspectors of election for the Annual Meeting. Abstentions and broker
non-votes will be treated as shares that are present, or represented, and
entitled to vote for purposes of determining the presence of a quorum at the
Annual Meeting. Abstentions and broker non-votes will not be counted as "votes
cast" for the purposes of electing Directors and, therefore, will not affect
the election of Directors at the Annual Meeting. A "broker non-vote" is a
proxy from a broker or other nominee indicating that such person has not
received instructions from the beneficial owner or other person entitled to
vote the shares which are the subject of the proxy on a particular matter with
respect to which the broker or other nominee does not have discretionary
voting power.
Stockholders of the Company are requested to complete, sign, date and return
the accompanying proxy card in the enclosed envelope. Shares represented by
proxies in the enclosed form will be voted as stockholders direct.
1
<PAGE>
Executed proxies that contain no directions to the contrary will be voted in
favor of the election of the two nominees of the Board of Directors to serve
as Directors of the Company. At the time of preparation of this Proxy
Statement, the Board of Directors knows of no other matters to be presented
for action at the Annual Meeting. If other business should come before the
Annual Meeting, the persons named as proxies have discretionary authority to
vote the shares according to their best judgment.
A shareholder who executes a proxy card may revoke it at any time before it
has been exercised by (i) delivering a revocation in writing to the Clerk of
the Company, Michael E. Tucker, at the address listed above, (ii) delivering a
later-dated proxy or (iii) by voting in person at the Annual Meeting.
Attendance at the Annual Meeting will not in and of itself constitute
revocation of a proxy.
The cost of soliciting proxies in the form enclosed herewith will be borne
by the Company. The solicitation of proxies by mail may be followed by
telephonic or other oral solicitation of certain stockholders by officers or
regular employees of the Company. The Company has also retained Morrow & Co.,
Inc. to assist in the solicitation of proxies. The Company has agreed to pay
Morrow & Co., Inc. a fee of approximately $4,500.00 for services, and to
reimburse Morrow & Co., Inc. for its reasonable expenses incurred in
connection with the solicitation of stockholders.
The Company is required to file an Annual Report for the fiscal year ended
December 31, 1996 on Form 10-K with the Securities and Exchange Commission
(the "SEC"). A copy of the Annual Report to the Shareholders for the fiscal
year ended December 31, 1996 along with the Form 10-K (without exhibits)
accompanies this Proxy Statement.
PROPOSAL 1--ELECTION OF A CLASS OF DIRECTORS
At the Company's Annual Meeting, two directors will be elected, each for a
three year term. Unless otherwise specified on the proxy, it is the intention
of the persons named in the proxy to vote the shares represented by each
properly executed proxy for the election as directors of the persons named
below as nominees.
Under the Company's By-Laws, the number of Directors shall be set by a
majority vote of the entire Board of Directors, which has set the number at 7.
Under the Company's Articles of Organization and By-Laws, this number shall be
divided into three classes, as nearly equal in number as possible, with the
Directors in each class serving a term of three years and until their
respective successors are duly elected and qualified, or until his or her
earlier resignation, death or removal. As the term of one class expires, a
successor class is elected at the annual meeting of stockholders for that
year. At the 1997 Annual Meeting, there are two (2) Directors to be elected to
serve until the 2000 annual meeting of the Company's stockholders and until
their respective successors are duly elected and qualified, or until his or
her earlier resignation, death or removal.
It is intended that, if no contrary specification is made, the persons named
as proxies shall vote for the nominees named below. The Board of Directors
believes that all of the nominees will be available and able to serve as
Directors, but if for any reason any of the nominees named below should not be
available or able to serve, the proxies may exercise discretionary authority
to vote for a substitute or substitutes. THE AFFIRMATIVE VOTE OF THE HOLDERS
OF A PLURALITY OF THE SHARES OF COMMON STOCK VOTED AT THE ANNUAL MEETING IS
REQUIRED TO ELECT THE NOMINEES AS DIRECTORS.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE ELECTION
FOR THE TWO (2) NOMINEES LISTED BELOW.
2
<PAGE>
INFORMATION REGARDING DIRECTORS AND NOMINEES
The following table sets forth certain information as of January 31, 1997
for each of the two nominees for election as Directors at the Annual Meeting
and for those continuing Directors whose terms expire at the annual meetings
of the Company's stockholders in 1998 and 1999. Each individual has been
engaged in his or her principal occupation for at least five years, except as
otherwise indicated.
<TABLE>
<CAPTION>
DIRECTOR OR
NAME, AGE & PRINCIPAL TRUSTEE EXPIRATION OF CURRENT POSITION HELD
OCCUPATION SINCE(1) THREE YEAR TERM WITH COMPANY
- --------------------- ----------- ----------------------- ------------------------
<S> <C> <C> <C>
NOMINEES
Sr. Mary Caritas 1980 1997--Nominee for term Director
(Geary), S.P., 73 to expire in Year 2000
Retired, former
President &
CEO of Mercy Hospital
John M. Naughton, 60 1991 1997--Nominee for term Chairman of the
Retired, former to expire in Year 2000 Board of Directors
Executive
Vice President,
Massachusetts Mutual
Life Insurance Co.
CONTINUING DIRECTORS
Charles L. Johnson, 58 1983 1998 Director
Consultant--Associated
Energy Managers,
investment management
firm(2)
F. William Marshall, 1993 1998 Director, President and
Jr., 54 Chief Executive Officer
President & CEO,
SIS Bancorp, Inc. and
SIS Bank(3)
Thomas O'Brien, 57 1996 1999 Director
Dean, School of
Management
University of
Massachusetts
William B. Hart, Jr., 53 1996 1999 Director
President, the Dunfey
Group,
an investment
corporation
Stephen A. Shatz, 54 1986 1999 Director
Attorney, partner in
Shatz, Schwartz &
Fentin, P.C.
</TABLE>
- --------
(1) Each of the present Directors (including the named nominees) of the
Company listed above with service as a Director prior to 1996 was also a
Director of the Bank prior to the Reorganization. Any service noted prior
to 1995 indicates the Director was a Trustee of the Bank before the Bank
converted from mutual to stock form of organization in February 1995.
(2) Prior to June, 1995, Mr. Johnson was the Associate Treasurer of Smith
College, Northampton, MA. He is also a Visiting Professor at Mount Holyoke
College, South Hadley, MA.
(3) Prior to joining the Bank in 1993, Mr. Marshall served as Chairman and
Chief Executive Officer of the Bank of Ireland First Holdings, Inc. and
First NH Bank. Mr. Marshall is also on the board of MML Series Investment
Fund and Mass Mutual Institutional Funds, which are investment companies
registered under the Investment Company Act of 1940.
3
<PAGE>
STOCK OWNED BY DIRECTORS AND MANAGEMENT
The following table sets forth information as of January 31, 1997 with
respect to the shares of Company Common Stock beneficially owned by each
director, nominee for director and each of the named executive officers, and
by all directors and executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND PERCENT OF
NATURE OF COMMON STOCK
NAME AND POSITION(S) WITH COMPANY BENEFICIAL OWNERSHIP(1) OUTSTANDING(2)
- --------------------------------- ----------------------- --------------
<S> <C> <C>
Sister Mary Caritas (Geary), S.P.--
Director............................... 5,395(3) *
John M. Naughton--Director, Chairman of
the Board.............................. 17,000 *
Charles L. Johnson--Director............ 8,520 *
F. William Marshall, Jr.--Director,
President & CEO of the Company and the
Bank................................... 101,512 1.76%
Thomas O'Brien--Director................ 7,200 *
William B. Hart, Jr.--Director.......... 4,800(4) *
Stephen A. Shatz--Director.............. 19,470(5) *
B. John Dill, Jr.--Executive Vice
President of the Bank, President of
Colebrook Corporation.................. 48,137(6) *
John F. Treanor--Executive Vice
President, Treasurer & Chief Financial
Officer of the Company and Bank........ 46,512 *
Frank W. Barrett--Executive Vice
President of the Bank.................. 53,637(7) *
Gilbert Ehmke--Senior Vice President &
Chief Investment Officer of the Company
and the Bank........................... 16,307 *
All Nominee, Continuing Directors, Named
Executive Officers and principal
officers of SIS Bancorp, Inc. and SIS
Bank as a group (24 persons)(8)........ 515,044(8) 8.70%(8)
</TABLE>
- --------
(1) Unless otherwise noted in the footnotes to this table, each of the
nominees, continuing Directors and Named Executive Officers have sole
voting and investment power over the shares of Common Stock beneficially
owned by them. The number reported includes shares, both vested and
unvested, of Restricted Stock which were granted through the Restricted
Stock Plan. The number also includes the following number of shares that
the above listed Directors and/or officers have the right to acquire
within 60 days through the exercise of options granted pursuant to the
Company's Stock Option Plan: Sr. Mary Caritas--1,320 shares;
Mr. Naughton--2,000 shares; Mr. Johnson--1,320 shares; Mr. Marshall--
48,000 shares; Mr. Shatz--1,320 shares; Mr. Dill--16,000 shares; Mr.
Treanor--24,000 shares; Mr. Barrett--24,000 shares; Mr. Ehmke--8,000
shares. The number also includes the following shares allocated to
Executive Officers under the Company's Employee Stock Ownership Plan:
1,512.5 shares for each of Messrs. Marshall, Dill, Treanor, and Barrett
and 707.0 shares for Mr. Ehmke.
(2) * indicates less than 1.00% of the Company's outstanding shares of Common
Stock.
(3) Includes 1,850 shares owned jointly with Sr. Marie Thaddeus.
(4) Includes 600 shares owned by Mr. Hart's spouse as to which Mr. Hart
disclaims beneficial ownership.
(5) Includes 12,500 shares owned by Mr. Shatz jointly with his spouse and
3,000 shares owned solely by his spouse.
(6) Includes 2,500 shares held by Mr. Dill's children and 3,125 held by the
Anne M. Dill Trust, of which Mr. Dill is a co-Trustee and 1/3 beneficiary.
(7) Includes 625 shares held by Mr. Barrett's children.
(8) Reflects the inclusion in the calculation of all 194,680 shares that this
group has the right to acquire within 60 days through the exercise of
options granted pursuant to the Company's Stock Option Plan.
4
<PAGE>
BOARD OF DIRECTORS AND COMMITTEES MEETINGS
Board of Directors: The Board of Directors of the Company consisted of the
following seven (7) individuals: John M. Naughton (Chairperson), Sister Mary
Caritas (Geary) S.P., William B. Hart, Jr., Charles L. Johnson, F. William
Marshall, Jr., Thomas O'Brien, and Stephen A. Shatz. Following the
Reorganization into a Holding Company form of organization, the Directors of
the Company met 7 times in 1996.
The Board of Directors of the Bank consisted of the following thirteen (13)
individuals: John M. Naughton (Chairperson), Teresita Alicea, Mary Boland,
Sister Mary Caritas (Geary) S.P., Donald F. Collins, William B. Hart, Jr.,
Paulette Henderson-Johnson, Charles L. Johnson, F. William Marshall, Jr.,
Thomas O'Brien, Gary P. Shannon, Stephen A. Shatz, John H. Southworth. The
Board of Directors of the Bank met 11 times in 1996.
Each of the committees of the Board of Directors of the Company is described
below. Prior to the consummation of the Reorganization on June 21, 1996, the
Board of Directors was of the Bank and the committees were of the Bank as
noted below. All Director and Committee meetings noted for the Company were
held after the June 21, 1996 Reorganization date. No Director attended fewer
than 75% of the total number of applicable Board of Director meetings (both
Bank and Company) held during its 1996 fiscal year and the total number of
meetings held by committees on which he or she served during that time.
Executive Committee. The Executive Committee of the Bank's Board of
Directors in 1996 consisted of the following six Directors: F. William
Marshall, Jr. (Chairperson); John M. Naughton; Sister Mary Caritas (Geary)
S.P.; Gary P. Shannon; Stephen A. Shatz; and John H. Southworth. This
committee meets approximately twice per month to review large loan proposals,
the investment portfolio, and any off-balance sheet exposures of the Bank, and
to generally exercise control and supervision in all matters pertaining to the
interests of the Bank, subject at all times to the direction of the Board of
Directors. This committee met 25 times in 1996. Since June 21, 1996, the
Company's Executive Committee is made up of the entire Company Board of
Directors, which are as listed above.
Audit Committee. The Audit Committee of the Bank's Board of Directors in
1996 consisted of the following five members: Sister Mary Caritas (Geary) S.P.
(Chairperson); Teresita Alicea; William B. Hart, Jr.; Charles L. Johnson; and
Gary P. Shannon. This committee meets at least quarterly to review and audit
functions in asset quality, corporate controls, corporate governance, and
financial reporting controls. This committee met 5 times in 1996. The
Company's Audit Committee consisted of the following three individuals: Sister
Mary Caritas (Geary) S.P. (Chairperson), Charles L. Johnson, and William B.
Hart, Jr. Following the Reorganization, the Company Audit Committee met 3
times in 1996.
Compensation Committee. The Compensation Committee of the Bank's Board of
Directors in 1996 consisted of the following four outside directors: John H.
Southworth (Chairperson); Donald F. Collins; John M. Naughton; and Thomas
O'Brien. The Compensation Committee meets on at least a semi-annual basis to
exercise a broad oversight of human resource strategies, to examine and
analyze the competitiveness of compensation programs, including short- and
long-term incentive programs such as the stock option allocations and
restricted stock grants. This committee met 4 times in 1996. The Company's
Compensation Committee consisted of the following three outside Directors:
Thomas O'Brien (Chairperson); John M. Naughton and Sr. Mary Caritas (Geary)
S.P. Following the Reorganization, the Company Compensation Committee met 2
times in 1996.
CRA/Fair Lending Committee. The CRA/Fair Lending Committee of the Bank's
Board of Directors in 1996 consisted of the following four outside directors:
Mary E. Boland (Chairperson); Donald F. Collins; Paulette Henderson-Johnson;
and Charles L. Johnson. This committee meets at least 3 times per year to
review the Bank's performance in ascertaining community needs, evaluate CRA
performance, and generally assist the Bank in meeting its obligations under
the Community Reinvestment Act. This committee met 3 times in 1996.
Nominating Committee. The Nominating Committee of the Bank's Board of
Directors in 1996 consisted of the following four outside directors: Gary P.
Shannon (Chairperson); Mary E. Boland; Paulette Henderson- Johnson; John M.
Naughton; and Stephen A. Shatz. This committee meets at least semi-annually to
identify,
5
<PAGE>
with the approval of the full Board of Directors, candidates for Directors to
be elected at each annual meeting of stockholders and also to consider
stockholder proposals for such nominations. This committee met 2 times in
1996. The Company's Nominating Committee consisted of the following two
outside Directors: John M. Naughton and Stephen A. Shatz. Following the
Reorganization, this Committee did not meet during 1996.
For information regarding procedures for submitting stockholder proposals,
see "STOCKHOLDER PROPOSALS."
COMPENSATION FOR DIRECTORS
Directors' Fees. The members of the Company's Board of Directors receive an
annual retainer of $10,000.00 (including amounts paid by the Bank) while the
Chairman of the Board receives an additional retainer of $2,500. Directors are
also paid $400 (including amounts paid by the Bank) for each committee meeting
attended, and if a Director attends more than one committee meeting
immediately following the previous meeting on the same day, the initial
meeting fee is $400 and the additional meeting fee is $200. The Chairperson of
each committee will receive an additional $150 for each meeting attended.
There is also a pro-rata deduction for any director's meetings not attended by
a director. Directors who are employees of the Company are not eligible to
receive any fees otherwise paid to Directors.
Stock Option Grants to Directors. The Director Stock Option Plan for the
Bank was adopted and assumed by the Company pursuant to the terms of the
Reorganization. Under the terms of the Director Stock Option Plan, each non-
employee Director of the Bank has been granted an option to acquire 6,600
shares of the Common Stock (except that the Chairman of the Board has been
granted an option to acquire 10,000 shares) at the market price at the close
of business on the effective date of the grant. Also under the Director Stock
Option Plan new non-employee Directors of the Company and the Bank may receive
options for 6,600 shares, subject to the availability of options. The option
exercise price of options granted under the Director Stock Option Plan may not
be less than 100% of the fair market value of the Common Stock on the date of
grant of the option, as determined in accordance with the Director Stock
Option Plan. See "Executive Compensation--Stock Option Plan."
Restricted Stock Grants to Directors. The Director Restricted Stock Plan of
the Bank was adopted and assumed by the Company pursuant to the terms of the
Reorganization. Under the terms of the Director Restricted Stock Plan, each
non-employee Director of the Company and Bank was granted 2,200 shares of
restricted Common Stock (except that the Chairman of the Board received a
grant of 3,500 shares of restricted Common Stock). Also under the Director
Restricted Stock Plan new non-employee Directors of the Company and the Bank
may be awarded 2,200 shares of restricted Common Stock, subject to the
availability of shares of such restricted Common Stock. See "Executive
Compensation--Restricted Stock Plan."
6
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY AND ITS SUBSIDIARIES
The following table sets forth certain information regarding the executive
officers of the Company and its subsidiaries. Each individual has occupied his
or her office for at least the last five years, except as otherwise indicated.
<TABLE>
<CAPTION>
NAME AGE POSITION AND OFFICE WITH THE COMPANY SINCE
---- --- ------------------------------------ -----
<S> <C> <C> <C>
F. William Marshall, 54 President & Chief Executive Officer, Director-- 1993
Jr.(1)................. SIS BANCORP, INC. and SIS BANK
Frank W. Barrett(2)..... 57 Executive Vice President/Credit & Commercial 1994
Lending Group--SIS BANK
B. John Dill............ 45 Executive Vice President--SIS BANK; President of 1987
Colebrook Corporation
John F. Treanor(3)...... 49 Executive Vice President, Treasurer & Chief 1994
Financial Officer--SIS BANCORP, INC. and SIS
BANK
Gilbert F. Ehmke(4)..... 37 Senior Vice President & Chief Investment 1995
Officer--
SIS BANCORP, INC. and SIS BANK
Henry J. McWhinnie(5)... 53 Senior Vice President/Human Resources Group-- 1994
SIS BANK
Jeanne Rinaldo.......... 47 Senior Vice President/Residential Mortgage 1992
Group--
SIS BANK
Christopher A. 52 Senior Vice President/Retail Banking Group--SIS 1995
Sinton(6).............. BANK
Michael E. Tucker(7).... 40 Senior Vice President, General Counsel & Clerk-- 1993
SIS BANCORP, INC. and SIS BANK
</TABLE>
- --------
(1) Mr. Marshall joined the Bank in May, 1993. He formerly served as Chairman
and Chief Executive Officer of the Bank of Ireland First Holdings, Inc.
and First NH Bank. Mr. Marshall served as a Trustee of the Bank from May,
1993 until the Conversion of the Bank to stock form on February 8, 1995.
(2) Mr. Barrett joined the Bank in January, 1994. He formerly served as Senior
Vice President of Bank of Ireland First Holdings and First NH Bank.
(3) Mr. Treanor joined the Bank in August, 1994. He formerly served as
Executive Vice President, Treasurer and Chief Financial Officer of
Sterling Bancshares Corporation.
(4) Mr. Ehmke joined the Bank in February, 1995. He formerly served as Senior
Vice President and Treasurer of Northeast Savings, F.A. in Hartford,
Connecticut.
(5) Mr. McWhinnie joined the Bank in September, 1994. He formerly served as
Senior Vice President Human Resources of Bristol Savings Bank in Bristol,
Connecticut.
(6) Mr. Sinton joined the Bank in January, 1995. He formerly was Executive
Vice President--Retail Banking Division of United Jersey Bank.
(7) Mr. Tucker has served as Clerk since 1995 and as Senior Vice President &
General Counsel since December, 1993. Prior to that, he was Vice President
and General Counsel since 1990.
7
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth the compensation
paid by the Company and its subsidiaries for services rendered in all
capacities during the fiscal year ended December 31, 1996 to the Chief
Executive Officer and each of the four most highly compensated executive
officers of the Company and its subsidiaries (collectively, the "Named
Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
-------------------- ----------------------
RESTRICTED # OPTIONS
STOCK /SARS ALL OTHER
NAME & PRINCIPAL POSITION YEAR SALARY BONUS(1) AWARDS $(2) AWARDED(3) COMPENSATION(4)
- ------------------------- ---- --------- ---------- ----------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
F. William Marshall, 1996 352,894 160,000 0 46,800 18,698
Jr. ................... 1995 332,856 100,725 428,750 80,000 24,808
President & Chief 1994 313,462 109,750 N/A N/A 11,171
Executive Officer of
the Company and Bank
B. John Dill, Jr. ...... 1996 195,000 39,000 0 0 32,676
Executive Vice 1995 193,370 30,000 153,125 40,000 35,149
President of the Bank, 1994 189,551 35,000 N/A N/A 21,748
President of Colebrook
Corporation, a wholly-
owned subsidiary of the
Bank
John F. Treanor(5)...... 1996 174,327 55,000 62,563 21,500 18,698
Executive Vice 1995 157,308 40,000 153,125 40,000 13,082
President & Chief 1994 50,769 25,000 N/A N/A 13,968
Financial Officer
Treasurer of the
Company and Bank
Frank W. Barrett........ 1996 166,827 50,000 0 21,000 18,698
Executive Vice 1995 157,308 35,000 183,750 40,000 21,145
President Credit and 1994 148,846 37,000 N/A N/A 6,953
Commercial Lending
Division of the Bank
Gilbert F. Ehmke(6)..... 1996 128,615 30,000 32,750 18,400 17,153
Senior Vice President & 1995 103,315 20,000 24,500 6,000 N/A
Chief Investment 1994 N/A N/A N/A N/A N/A
Officer of the Company
and Bank
</TABLE>
- --------
(1) Amounts shown include cash compensation earned and received by the Named
Executive Officers as well as amounts earned but deferred at the election
of those officers. Bonuses shown for 1996 were allocated in 1996 and paid
in 1997; for 1995 were allocated in 1995 and paid in 1996; for 1994 were
allocated in 1994 and paid in 1995.
(2) Dollar amount shown for restricted stock awards in any year equals the
number of shares of restricted stock awarded in such year multiplied by
the market price for the Company's unrestricted stock on the applicable
award date. This valuation does not take into account the diminution of
value attributable to the restrictions applicable to the restricted
shares. The restricted shares ordinarily vest over a 5 year period at a
rate of 20% per year, commencing upon the first anniversary of the grant
date; provided however that such vesting may be accelerated in the
discretion of the Compensation Committee of the Company's Board of
Directors if certain performance criteria are met. In addition to the
ordinary 20% vesting, which occurred on June 1, 1996, with respect to
shares awarded on June 1, 1995 to Messrs. Marshall, Barrett, Treanor, Dill
and Ehmke, an additional 20% of such shares, and 40% of certain additional
restricted shares awarded to Mr. Treanor on January 31, 1996 and Mr. Ehmke
on January 1, 1996, vested on December 26, 1996 as a result of a decision
of the Compensation Committee in connection with the satisfaction of such
performance criteria. See "Compensation Committee Report". The number and
dollar value of shares of restricted stock held by Named Executive
Officers on December 31, 1996 which would normally vest within 3 years,
absent any acceleration of such vesting, based on a closing price for the
Company's common stock on December 31, 1996 of $22.875 per share, were as
follows: (i) Mr. Marshall--21,000 shares ($480,375); (ii) Mr. Dill-- 7,500
shares ($171,562); (iii) Mr. Barrett--9,000 shares ($205,875); (iv) Mr.
Treanor--9,600 shares
8
<PAGE>
($219,600); (v) Mr. Ehmke--2,400 shares ($54,900). Dividends paid by the
Company on shares of common stock will be paid on all restricted shares at
the same rate as paid on unrestricted shares.
(3) The outstanding options become exercisable as follows: (i) options granted
under the Company's long term incentive program to purchase shares granted
to: Mr. Marshall--22,800; Mr. Barrett--9,000; Mr. Treanor--9,500; and Mr.
Ehmke--5,400, will become fully exercisable on the third anniversary date
of the grant, if certain performance criteria are satisfied; (ii) options
granted on an ad-hoc basis (a) on January 31, 1996, granted to: Mr.
Marshall--24,000; Mr. Barrett--12,000; Mr. Treanor--12,000, will become
exercisable, provided certain criteria are met, at a rate of 33 1/3% on
the grant date and 33 1/3% on each subsequent anniversary of the grant
date, and (b) on January 1, 1996 granted to Mr. Ehmke--4,000, will become
exercisable at a rate of 50% per year commencing upon the first
anniversary of the grant date; and (iii) with respect to all other options
outstanding, the underlying shares ordinarily become exercisable over a 5
year period at a rate of 20% per year, commencing upon the first
anniversary date of grant; provided, however, that the ordinary five-year
vesting schedule may be accelerated in the discretion of the Compensation
Committee of the Company's Board of Directors if certain performance
criteria are satisfied. In addition to the ordinary 20% vesting, which
occurred on June 1, 1996, with respect to options granted on June 1, 1995
to Messrs. Marshall, Barrett, Treanor, Dill and Ehmke, such options,
together with certain additional options granted to Mr. Ehmke on January
1, 1996, became exercisable with respect to an additional 20% of the
underlying shares on December 26, 1996 as a result of a decision of the
Compensation Committee in connection with the satisfaction of such
performance criteria. See: "Compensation Committee Report".
Notwithstanding any other terms of the grant of an option under the
Management Stock Option Plan, all options granted thereunder shall become
fully exercisable in any case, if not sooner becoming fully exercisable,
upon the seventh anniversary of the date of grant.
(4) Amounts included here in 1996 include employer's match to the Bank's or
subsidiary 401(k) Plan (Mr. Marshall--$2,375, Mr. Dill--$4,730, Mr.
Treanor--$2,375, Mr. Barrett--$2,375, and Mr. Ehmke--$981); life insurance
premiums under a split-dollar plan for Mr. Dill--$11,623-1996); relocation
assistance (Mr. Treanor--$13,968-1994); and the value of shares allocated
to the account of each Named Executive Officer under the Company's
Employee Stock Ownership Plan (Mssrs. Marshall, Dill, Treanor, and
Barrett--$16,323, and Mr. Ehmke--$16,172)
(5) Mr. Treanor joined the Bank in August, 1994.
(6) Mr. Ehmke joined the Bank in February, 1995.
Stock Option Plans. The Company maintains a Management Stock Option Plan and
a Directors Stock Option Plan (collectively the "Stock Option Plan"), which
were originally approved by the Directors of the Bank and by the shareholders
of the Bank at their 1995 annual meeting. Additional options for shares under
the Management Stock Option Plan were authorized by the shareholders at their
1996 annual meeting. The Stock Option Plan was adopted and assumed by the
Company, pursuant to the terms of the Reorganization. During 1996, changes to
the Securities and Exchange Commission's regulations under Section 16(b)(3) of
the Securities Exchange Act of 1934 prompted the Board of Directors of the
Company to amend the Stock Option Plan to require the full Board to ratify
options granted by the Compensation Committee under the Management Stock
Option Plan.
The Directors' portion of the Stock Option Plan authorizes the granting of
stock options for 111,250 shares for issuance to non-employee Directors of the
Company and the Bank. Under the terms of the Director Stock Option Plan, each
non-employee Director of the Company and Bank has been granted an option to
acquire 6,600 shares of Common Stock (except that the Chairman of the Board of
the Company has been granted an option to acquire 10,000 shares) at a fair
market price set as of the close of business on the date of each grant. The
Management portion of the Stock Option Plan authorizes the granting of stock
options for 695,000 shares for issuance to any officer or other employee of
the Company and its subsidiaries as the Compensation Committee may determine,
subject to ratification by the full Board of Directors of the Company. Subject
to availability, additional awards may be made to officers or non-employee
directors from time to time.
The option exercise price of options granted under the Stock Option Plan may
not be less than 100% of the fair market value of the Common Stock on the date
of grant of the option, as determined in accordance with the Stock Option
Plan. The maximum option term is 10 years. Each option granted to a non-
employee Director of
9
<PAGE>
the Company or Bank under the Director Stock Option Plan will be exercisable
in installments of 20% per year commencing on the first anniversary of the
date of grant. The Compensation Committee of the Company may establish the
terms under which options granted under the Management Stock Option Plan
become exercisable. Options granted under the Management Stock Option Plan,
therefore, may be granted under the Company's long-term incentive program, in
which case options will become fully exercisable on the third anniversary of
the date of grant if certain performance criteria are satisfied (and otherwise
on the seventh anniversary of the date of grant), or on an ad-hoc basis in
which the terms of the option, including vesting schedules and conditions, if
any, for vesting, may be as determined by the Compensation Committee (except
that all such options must become fully exercisable in any case not later than
the seventh anniversary of the date of grant). In addition, upon a change in
control of the Company, all options granted under the Stock Option Plan will
become immediately vested. No person may receive any incentive stock option
if, at the time of grant, such person owns directly or indirectly more than
10% of the total combined voting power of the Company unless the option price
is at least 110% of the fair market value of the Common Stock and the exercise
period of such incentive option is by its terms limited to five years.
Payment for shares purchased under the Stock Option Plan may be made either
in cash or cash equivalents, or, if permitted by the option agreement, by
exchanging shares of Common Stock of the Company with a fair market value
equal to or less than the total option price plus cash for any difference, or
by a combination of the foregoing. Options generally also may be exercised by
the optionee directing that certificates for the shares purchased be delivered
to a licensed broker acceptable to the Company as agent for the optionee,
provided that the broker tenders to the Company cash or cash equivalents equal
to the option exercise price plus the amount of any taxes that the Company may
be required to withhold in connection with the exercise of the option. No
fractional shares will be issued by the Company on exercise of options and no
cash will be paid in lieu of any fractional shares.
Options granted under the Stock Option Plan are not transferable and may be
exercised only by the optionee during his or her lifetime. Options granted to
non-employee Directors of the Company or Bank terminate upon the expiration of
one year following the date on which the non-employee Director ceases to be a
member of the Board by reason of death or permanent and total disability, or
retirement at the maximum retirement age and otherwise on the date on which
the non-employee Director ceases to be a member of the Board of Directors for
any other reason. Options granted to employees of the Company and its
subsidiaries terminate in accordance with the terms of the option as specified
by the Compensation Committee in the grant, but in any case, not more than ten
years after the date of grant.
If the outstanding shares of the Common Stock are exchanged for a different
number or kind of shares or securities of the Company, by reason of any
reorganization, recapitalization, exchange of shares, stock split, combination
of shares or dividend payable in capital stock, an appropriate adjustment will
be made by the Compensation Committee in the number and kind of shares subject
to the Stock Option Plan, and for which options may be granted under the Stock
Option Plan. Any such adjustment to outstanding options, however, will be made
without a change in the total price applicable to the unexercised portion of
the option but with a corresponding adjustment in the per-share option price.
If the Company merges or consolidates with one or more corporation(s), or if
the Company is liquidated or sells all or substantially all of its assets to
another entity while any options remain outstanding, then the Compensation
Committee in its discretion shall amend the terms of all outstanding options
so that either (i) after the merger, consolidation or sale, each optionee is
entitled to receive shares of common stock of the new entity to which he or
she would have been entitled if he or she were a stockholder of the Company at
the time of the merger, consolidation or sale, or (ii) all outstanding options
shall be canceled as of the effective date of any such merger, consolidation
or sale, provided that each optionee receives 20 days following the effective
date of such transaction to exercise his or her options in accordance with
their respective terms.
The Board may amend the Stock Option Plan with respect to shares of Common
Stock as to which options have not been granted; however, the Company's
stockholders must approve any amendment that would
10
<PAGE>
(i) increase the number of shares of Common Stock as to which options may be
granted under the Stock Option Plan, (ii) change the requirements as to
eligibility to receive options or price, amount, timing or vesting under
awards to non-employee Directors, (iii) change the requirements as to
eligibility to receive options for all other participants, (iv) reduce the
minimum option price, or (v) increase the maximum term of options.
The Board at any time may terminate or suspend the Stock Option Plan. Unless
previously terminated, the Stock Option Plan will terminate automatically on
May 31, 2005, the day before the tenth anniversary of the effective date of
the Stock Option Plan. No termination, suspension or amendment of the Stock
Option Plan may, without the consent of the optionee to whom an option has
been granted, adversely affect the rights of the holder of the option.
Restricted Stock Plan. The Company maintains a Management Restricted Stock
Plan and a Directors Restricted Stock Plan (collectively the "Restricted Stock
Plan"). The Restricted Stock Plan was approved by the shareholders of the Bank
at their 1995 annual meeting. The Restricted Stock Plan was adopted and
assumed by the Company pursuant to the terms of the Reorganization. During
1996, changes to the Securities and Exchange Commission's regulations under
Section 16(b)(3) of the Securities Exchange Act of 1934 prompted the Board of
Directors of the Company to amend the Restricted Stock Plan to require the
full Board to ratify awards of restricted shares granted by the Compensation
Committee under the Management Restricted Stock Plan.
Under the terms of the Restricted Stock Plan, 222,500 shares of authorized
but unissued Common Stock, or approximately 4% of the shares of Common Stock
issued in connection with the conversion, were reserved for issuance under the
Restricted Stock Plan. Of such shares, 55,625 shares were reserved for
issuance to non-employee Directors of the Company. As described below,
restricted share awards made to employees of the Company and its subsidiaries
will be based on the overall performance of the Company and evaluated as a
component of the overall compensation to be paid to the such employees on an
annual basis. Under the terms of the Restricted Stock Plan, each non-employee
Director of the Company has been awarded 2,200 shares of Common Stock (except
that the Chairman of the Board of the Company who was awarded 3,500 shares).
Subject to availability, additional awards to either employees of the Company
and its subsidiaries may be made by the Compensation Committee subject to
ratification by the full Board of Directors of the Company from time to time.
The shares awarded to a non-employee Director of the Company under the
Restricted Stock Plan vest in installments of 20% per year commencing on the
first anniversary of the date of grant. No non-employee Director may receive
any restricted stock award if, at the time of the award, such non-employee
Director owns directly or indirectly more than 10% of the total combined
voting power of the Company. The Compensation Committee of the Company,
subject to ratification by the full Board of Directors of the Company, may
establish the terms under which shares awarded under the Management Restricted
Stock Plan may vest.
All shares of Common Stock awarded under the Restricted Stock Plan to non-
employee Directors of the Company which have not yet vested terminate on the
date the non-employee Director ceases to be a Director of the Company, except
that if a non-employee Director ceases to be a Director as a result of
reaching maximum retirement age, permanent disability or death, all shares
become immediately vested. In addition, upon a change of control of the
Company, all shares awarded under the Restricted Stock Plan will also become
immediately vested.
11
<PAGE>
OPTION/STOCK APPRECIATION RIGHTS ("SAR")
GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------------------------
PERCENT OF TOTAL
NUMBER OF SECURITIES OPTIONS/SARS GRANTED EXERCISE OR GRANT DATE
UNDERLYING OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION PRESENT VALUE
/SARS GRANTED(5) FISCAL YEAR ($/SH) DATE ($)(6)
(A) (B) (C) (D) (E) (F)
--- -------------------- -------------------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
F. William Marshall,
Jr..................... 24,000(1) 12.33% $17.875 1/31/2006 110,028
22,800(2) 11.71% $ 17.00 5/09/2006 99,410
B. John Dill............ -- -- -- -- --
John F. Treanor......... 12,000(1) 6.16% $17.875 1/31/2006 55,014
9,500(2) 4.88% $ 17.00 5/09/2006 41,421
Frank W. Barrett........ 12,000(1) 6.16% $17.875 1/31/2006 55,014
9,000(2) 4.62% $ 17.00 5/09/2006 39,241
Gilbert F. Ehmke........ 9,000(3) 4.62% $16.375 1/1/2006 37,798
5,400(2) 2.77% $ 17.00 5/09/2006 23,544
4,000(4) 2.05% $ 17.00 5/09/2006 17,440
</TABLE>
- --------
(1) Options granted on 1/31/96 under the Stock Option Plan are under an ad-hoc
program and will become exercisable at a rate of 33 1/3% effective on the
1/31/96 grant date and thereafter 33 1/3% per year commencing on the first
anniversary of the grant date, provided certain criteria are satisfied.
(2) Options granted on 5/9/96 under the Stock Option Plan are under the
Company's long-term incentive program and will become fully exercisable on
the third anniversary date of the grant, if certain performance criteria
are satisfied
(3) Options granted on 1/1/96 under the Stock Option Plan will ordinarily
become exercisable over a 5 year period at a rate of 20% per year,
commencing upon the first anniversary date of grant, provided certain
criteria are satisfied.
(4) Options granted on 5/9/96 under the Stock Option Plan are under an ad-hoc
program and will become exercisable at a rate of 50% per year commencing
on the first anniversary date of the grant, provided certain criteria are
satisfied.
(5) In any event, all outstanding options must become fully exercisable no
later than 7 years after the date of grant.
(6) The values assigned to each reported option grant shown on this table are
computed using the Black-Scholes option pricing model. The calculated
value assumes the following: risk-free rate of return of 6.42%; volatility
of 24% calculated based on the 250 trading days prior to December 31,
1996; expected life of option of 5 years; an exercise price ranging from
$16 3/8 to $17 7/8; and a dividend yield of 2 1/2%. It is important to
note that the values shown are theoretical and the actual value of the
option will depend upon the market value of the stock at the time it is
exercised.
12
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARS
OPTIONS/SARS AT FY-
AT FY-END (#) END ($)(1)
-------------------- --------------------
SHARES ACQUIRED ON EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE
(A) (B) (C) (D) (E)
---- ------------------ ------------------ -------------------- --------------------
<S> <C> <C> <C> <C>
F. William Marshall,
Jr..................... 0 0 40,000/86,800 379,699/723,298
B. John Dill, Jr........ 0 0 16,000/24,000 169,879/254,820
John F. Treanor......... 0 0 20,000/41,500 189,849/350,499
Frank W. Barrett........ 0 0 20,000/41,000 189,849/347,566
Gilbert F. Ehmke........ 0 0 4,200/20,200 37,168/140,123
</TABLE>
- --------
(1) The value of unexercised, in-the-money options at December 31, 1996 is the
difference between the closing price of the Common Stock on December 31,
1996 ($22.875 ) and the various per share exercise prices (ranging from
$12.25 to $17.875) under such outstanding options, multiplied by the
number of shares of the Common Stock subject to such options.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee for the Company for fiscal 1996 is comprised of
three disinterested non-employee directors, Mr. Thomas O'Brien (chairman), Sr.
Mary Caritas (Geary) S.P., and Mr. John M. Naughton. Mr. Naughton is also the
Chairman of the Board of the Directors of the Company. Prior to the
Reorganization, the Compensation Committee was that of the Bank and consisted
of the following four disinterested non-employee directors: Mr. John H.
Southworth (chairman), Mr. John M. Naughton, Mr. Donald F. Collins and Mr.
Thomas O'Brien. All of the members of both the Company's and the Bank's
Compensation Committees were also "outside" directors within the meaning of
Section 162(m) of the Internal Revenue Code of 1986, as amended.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of SIS Bancorp has responsibility for reviewing
all aspects of the compensation program for executive officers of the Company
and Bank. The Compensation Committee is comprised of three members of the
Company's Board of Directors who are not employees of the Company and who do
not receive additional renumeration for other services provided to the
Company. The three non-employee members are listed above.
The Compensation Committee's primary objective in the area of executive
compensation is to provide a means of attracting and retaining executives with
the experience and capabilities necessary for the Company to compete in a
rapidly changing economic, competitive and regulatory environment. Specific
responsibilities of the Compensation Committee are to establish policies and
procedures for the compensation of executive officers, including the
relationship of corporate performance to executive compensation and to approve
the compensation programs for the Chief Executive Officer and describe the
underlying rationale for such programs.
The executive compensation program has three major components--base salary,
annual incentive compensation, and long-term incentive compensation. Each of
these components has a separate purpose and may have a different relative
value depending on the particular executive position.
Base salary is the fixed component of the package. Executives will be paid a
base salary that is intended to be competitive with the external marketplace
and to reflect the internal value of the position. The marketplace,
13
<PAGE>
as determined by the Compensation Committee, consists of banking and thrift
institutions of similar size and complexity which compete for similar
executive talent. In order to establish competitive arrangements, compensation
data is compiled from published surveys and other available sources. This data
provides a competitive range within which base compensation is managed.
In addition to base salary, executive officers receive normal benefits
pursuant to the Bank's pension plan, 401(k) Plan and the ESOP which are
similar to all other employees.
Annual incentive compensation is intended to reward an executive for
achieving critical annual business objectives and/or meritorious performance.
If performance meets or exceeds the annual business plan, total cash
compensation (base plus annual incentive) may be greater than when the annual
performance objectives are not met. By managing base compensation to the
market and using annual incentive compensation to reward for performance, the
Company should not overpay when performance falls below plan, but will be able
to reinforce performance when the Company performs well. The amount of annual
incentive award is earned on the basis of the Company's performance. For
fiscal year 1997, the award will be tied to the level of net income realized.
The actual award paid to the executive is dependent on the levels of Company
performance and the assessment of each executive's individual plan. The
Compensation Committee reviews and approves the performance plan and measures
each year.
The Compensation Committee believes that long-term compensation is vital in
aligning management's and shareholders' interests in the creation of
shareholder value, and to attract and retain the necessary executive talent.
The long-term compensation program is composed of stock options and management
restricted stock. Options and restricted shares are intended to signify the
key roles of the executives in rebuilding and expanding the franchise,
retaining these executives, and directly linking their compensation to the
success of the Company. The Compensation Committee is responsible for
overseeing the administration of the Management Stock Option Plan and
Management Restricted Stock Plan. The Compensation Committee has, subject to
final ratification of the full Board of Directors, the ability to allocate
stock options and restricted shares among the Company's and Bank's executive
officers and employees, and subject to certain conditions, accelerate the
normal vesting schedule of outstanding options and restricted shares.
Following a review of the Company's 1996 performance, and as a result of the
Company's meeting certain performance goals previously set by this Committee,
the Compensation Committee recommended and the full Board ratified a partial
acceleration of outstanding options and restricted stock as of December 26,
1996, as more fully described with respect to the Named Executive Officers in
notes (2) and (3) to the Summary Compensation Table above. It is expected that
the primary vehicle to reward executive officers for long-term performance in
the future will be through stock options.
The Compensation Committee believes that its approach to executive
compensation provides incentive to the Company's executive officers in
accomplishing short- and long-term goals. At the same time, by establishing an
effective mix between base salary and variable compensation, executive
officers are encouraged to manage the business so as to protect the interests
of the customer as well as the shareholders.
The Chief Executive Officer's compensation package includes the elements
discussed above. A formal annual incentive plan is in place under which the
CEO is eligible to receive an annual incentive award of 30% of base salary at
target. Depending upon bank performance, the CEO is eligible for a maximum
award of 60% of base salary. For the year ending December 31, 1996, the Bank's
performance exceeded the performance target and the Chief Executive Officer
received an award equal to 46% of base salary.
The Compensation Committee believes the CEO's compensation is consistent
with the overall compensation strategy of the Company and serves to focus
attention on creating shareholder value.
The Compensation Committee is aware that Section 162(m) of the Internal
Revenue Code prohibits the Company from deducting compensation in excess of
$1,000,000 paid in any single year to any of the Named Executive Officers,
unless the excess compensation qualifies as "performance based" compensation.
The Compensation Committee believes that the deductibility of compensation
paid to the Company's executives is
14
<PAGE>
an important, but not the most important, factor in setting its executive
compensation policy. Therefore, certain awards comprised in the executive
compensation package (such as options awarded under the Management Stock
Option Plan) are designed with the intention of qualifying as "performance
based" compensation which will be deductible by the Company. Where certain
components of the compensation package may not qualify as "performance based"
and thereby may fail to be deductible (such as awards under the Management
Restricted Stock Plan), the Compensation Committee has weighed that factor
along with the effectiveness of the incentives provided by that component, and
has determined that, taken as a whole, that component is an appropriate and
integral part of the executive compensation package.
Respectfully submitted
Thomas O'Brien, Chairman
Sr. Mary Caritas, S.P.
John M. Naughton
COMPARATIVE PERFORMANCE GRAPH
The Securities and Exchange Commission requires the Company to present a
chart comparing the cumulative total return on the Common Stock with the
cumulative total return of (i) a broad based equity market index, and (ii) a
published industry index or peer group. The following graph shows the changes
over the past two-year period (since the conversion of the Bank from a mutual
to a stockholder-owned bank on 2/7/95) in the value of $100 invested in (a)
the Company's Common Stock; (b) an industry peer group; and (c) the Standard
and Poor's 500 Index.
[COMPARATIVE PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
02/08/95 03/31/95 06/30/95 09/29/95 12/29/95 03/29/96 06/29/96 09/30/96 12/31/96
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Springfield Savings $100 $114.94 $135.71 $159.74 $170.13 $177.92 $188.31 $233.77 $237.66
S&P 500 Index $100 $106.96 $117.17 $126.49 $134.11 $141.30 $147.65 $152.21 $164.90
New England Banks $100 $109.17 $128.99 $142.31 $155.57 $161.57 $168.36 $185.09 $216.90
</TABLE>
15
<PAGE>
EMPLOYMENT AGREEMENTS
The Bank has entered into an employment and severance agreement (the
"Employment Agreement") with Mr. F. William Marshall, Jr., President and Chief
Executive Officer of the Bank (the "Executive"), and into employment and
severance agreements (collectively, the "Agreements") with the executive vice
presidents and senior vice presidents of the Bank which provide for the
respective terms discussed below. The Employment Agreement and the Agreements
establish, among other things, the compensation and/or severance compensation
of these individuals and are intended to ensure that the Company and its
subsidiaries will be able to maintain stable and competent management.
The Employment Agreement provides for a three year term of employment which
began in August 1994 with an automatic one-year extension at the end of each
year unless prior written notice is provided by the Bank to the Executive or
by the Executive to the Bank. Under the Employment Agreement, the Executive
received a base salary of $325,000 beginning on April 1, 1994, which may be
increased on an annual basis at the sole discretion of the Board of Directors
of the Bank. In addition to such base salary, the Employment Agreement
provides for, among other things, participation in annual bonus payments,
disability pay, and participation in other welfare and employee benefit plans
of the Bank.
The Employment Agreement provides for termination by the Bank or the
Executive with or without cause at any time. In the event the Bank chooses to
terminate the Executive's employment without cause or if the Executive resigns
from the Bank as result of a "change of control" (as defined below) or "for
good reason," (defined to include (i) the failure of the Board of Directors to
appoint or reappoint the officer to his or her stated offices, (ii) a material
change in such officer's functions, duties or responsibilities causing the
officer's position with the Bank to become one of lesser responsibility,
importance, or scope, (iii) any reduction in base salary or a material
reduction in other benefits, or (iv) a material breach of the Employment
Agreement by the Bank), the Executive will be entitled to a lump sum severance
payment equal to approximately three times for a "change in control" and two
times, for "good reason" respectively, his highest base salary and bonus
payment at any time during the term of employment. The Bank will also be
required to continue the Executive's insurance and health coverage for up to
three years, as well as other among things for which the Executive is entitled
to receive reimbursement, and any other compensation or benefits under the
Bank's plans to which is otherwise entitled (the "Standard Entitlements"). The
Executive is also entitled to certain indemnification rights upon termination
without cause. In the event of death, disability or retirement, the Executive
(or his beneficiaries) is entitled to receive a specified portion of his base
salary and bonus for limited periods of time, and/or the continuation of
welfare benefits and the Standard Entitlements. In the event of a termination
for cause (as defined in the Employment Agreement), the Executive will only be
entitled to the Standard Entitlements and to certain indemnification rights.
In the event of a voluntary termination (as defined in the Employment
Agreement) by the Executive prior to the end of the employment term, he will
only be entitled to such payments or benefits as he would have received if
terminated for cause by the Bank.
As an alternative to the termination and Standard Entitlements arrangements
specified above, in the event that the Bank terminates the Executive's
employment by not extending the term of the Employment Agreement in the manner
specified therein, the Executive will be entitled to receive a lump sum
severance payment equal to the greater of the amount to which he would have
been entitled during the balance of his employment under the Employment
Agreement, or his base salary and benefits for a period of six months.
Under the Employment Agreement, the Bank has agreed to indemnify the
Executive and hold him harmless, to the fullest extent permitted by law, as a
consequence of his being involved in a legal action by reason of the fact that
he is or was a trustee, Director or officer of the Bank. Such indemnification
shall continue after the Executive shall cease to be an officer, trustee or
Director of the Bank. In the event any payment or benefit received by the
Executive in connection with a change of control would constitute "excess
parachute payments" (as defined in Section 280G of the Code), the Bank would
pay the Executive an additional sum equal to such excise tax as well as the
Executive's federal, state and local income tax and payroll taxes imposed on
such additional sum.
16
<PAGE>
The Agreements entered into by the Bank with all of its executive vice
presidents and with all of its senior vice presidents provide for a one-year
term with an automatic one year extension unless prior written notice is
provided by the Bank to such officer or by such officer to the Bank. Under the
Agreements, if, following a "change of control", the Bank chooses to terminate
the officer's employment other than for cause or if the officer resigns from
the Bank for "good reason," the officer will be entitled to a lump sum
severance payment equal to (a) with respect to the senior vice presidents,
such person's then applicable annual salary and (b) with respect to the
executive vice presidents, two times such person's then-applicable annual
salary. In the event of an involuntary termination of the officer other than
for cause prior to the occurrence of a "change of control,"the officer will be
entitled to a lump sum severance payment equal to, with respect to both the
senior vice presidents and executive vice presidents, one year's salary at
such officer's then-applicable annual salary.
Under the Agreements, the Bank has agreed to indemnify each senior or
executive vice president and hold him or her harmless (i) against reasonable
costs, including legal fees, incurred by such officer in connection with such
officer's consultation with legal counsel or arising out of any legal action
in which such officer may be involved as a result of the Agreements and (ii)
for all acts or omissions taken or not taken by such officer in good faith
while performing services for the Bank to the same extent as other similarly-
situated officers and Directors of the Bank or Company.
For purposes of the Employment Agreement and the Agreements, a "change of
control" of the Company would include the occurrence of any of the following
events: (i) an event which would be required to be reported under Item 1 of
Form 8-K with the Securities and Exchange Commission; (ii) certain events
which would constitute a change in control for purposes of certain federal
statutes and regulations; (iii) certain events which would have the effect of
replacing a majority of the members constituting the Board of Directors; (iv)
the approval by the Company's stockholders to become a party to certain
mergers, reorganizations or consolidations; (v) the approval by the Company's
stockholders of certain liquidation or dissolution proceedings or the sale of
all or substantially all of the assets of the Company, or (vi) the
solicitation of proxies from the Company's stockholders by someone other than
the current management of the Company and without the approval of the Board,
which person seeks to acquire the Company.
BENEFITS UNDER PLANS
Employee Stock Ownership Plan. In connection with the conversion to a
stockholder-owned entity on February 7, 1995 (the "Conversion"), the Bank
established an employee stock ownership plan ("ESOP"), and it maintains the
ESOP for all eligible employees of the Bank and its affiliates who are at
least 21 years of age and are credited with at least 1,000 hours of service
with the Bank or its affiliates. The ESOP currently has 443,737 shares of
Common Stock available for distribution to participants in accordance with the
terms of the ESOP (the "ESOP Shares"). Under the ESOP, the ESOP Shares will be
allocated in the proportion that each participant's compensation bears to the
aggregate compensation for all eligible participants, provided, however, that
compensation for this purpose is deemed to be capped at $150,000 (subject to
cost of living adjustments) and an employee's total allocation for the year
under the ESOP and the Company's 401(k) plan cannot exceed $30,000.
Each participant becomes vested in their ESOP account in installments of 20%
for each year of service with the Bank and its affiliates after the effective
date of the ESOP. Amounts forfeited by participants who fail to vest in their
accounts will be reallocated to remaining participants in proportion to their
compensation.
Participants will be entitled to distribution of their vested benefits only
following termination of employment or retirement, or attainment of age 70
1/2. Distributions will ordinarily be made in ESOP Shares, but a participant
entitled to a distribution of fewer than 150 ESOP Shares may receive his or
her distribution in cash.
A committee appointed by the Board of Directors of the Bank administers the
ESOP. The trustee of the ESOP is State Street Bank & Trust Company, Boston,
Massachusetts. Under the ESOP, the Trustee is directed to vote all allocated
ESOP Shares held in the ESOP in accordance with the instructions of the
participants to
17
<PAGE>
whom such shares have been allocated and to vote unallocated shares and
allocated shares for which voting instructions have not been received in
proportion to the voting instructions received with respect to allocated
shares. In addition, the trustee is directed under the ESOP to accept or
reject tender offers with regard to allocated ESOP Shares in accordance with
the instructions of the participants to whom such shares have been allocated
and to follow such instructions on the same proportional basis with regard to
both unallocated ESOP shares and those allocated ESOP shares with respect to
which no instructions are received from the participants.
As of January 1, 1997, 108,641 ESOP Shares have been allocated.
The ESOP Shares were acquired in the Conversion with the proceeds of a
$3,560,000 loan (the "ESOP Loan") made to the ESOP by Mechanics Savings Bank,
a Connecticut stock savings bank ("Mechanics"). The ESOP Loan is scheduled to
mature on January 31, 2005 and accrues interest at the "prime rate" as
published in The Wall Street Journal from time to time. The principal of the
ESOP Loan is payable semi-annually in 20 equal payments, and interest is
payable quarterly during the term of the ESOP Loan. The ESOP Loan is secured
by a pledge of all ESOP Shares, by a standby letter of credit issued by the
Bank for the account of the Trustee naming Mechanics as beneficiary, and by a
security interest in certain investment securities of the Bank. The Bank
intends to make cash contributions to the ESOP from time to time in an amount
at least equal to the debt service requirement of the ESOP Loan, to the extent
that dividends paid by the Company on ESOP Shares and other earnings of the
ESOP that may be so applied under applicable law and are so applied, are
insufficient to meet the ESOP's debt service requirements. Each year, as the
ESOP Loan is repaid, ESOP shares will be released for allocation to
participant accounts in proportion to the amount of the ESOP Loan repaid for
that year to the aggregate principal and interest to be paid over the entire
term of the ESOP Loan.
401(k) Plan. The Bank maintains a qualified 401(k) salary deferral plan for
all eligible employees of the Bank and Colebrook Corporation who are at least
21 years of age and are credited with at least 1,000 hours of service with the
Bank or its affiliates in a year. Each participant may elect to make salary
deferral contributions to the 401(k) plan on a pre-tax basis. The Bank
contributes a 25% match on contributions up to 6% of salary made by Bank
employees, including Messrs. Marshall, Barrett, Treanor and Ehmke. Colebrook
Corporation contributes a 50% match on contributions up to 6% of salary made
by its employees, including Mr. Dill. Compensation for purposes of the 401(k)
plan is deemed to be capped at $150,000 (subject to cost of living
adjustments) annually. Employee salary deferral contributions to the 401(k)
plan are immediately fully vested. The employer matching contribution for Bank
employees vests in installments of 20% for each year of service with the Bank.
The employer matching contribution for Colebrook employees vests in
installments of 25% for each year of service with the Bank or its affiliates
after the employee begins participation in the plan. Aggregate contributions
to the accounts of an employee under the ESOP described above and the 401(k)
plan cannot exceed $30,000 (subject to cost-of-living adjustments) annually.
Pension Plan. The Bank provides a retirement plan for all eligible employees
through the Savings Banks Employees Retirement Association ("SBERA"), an
unincorporated association of savings banks operating within Massachusetts and
other organizations providing services to or for savings banks. SBERA's sole
purpose is to enable the participating employers to provide pensions and other
benefits for their employees. Each employee reaching the age of 21 and having
completed at least 1,000 hours in a twelve month period beginning with such
employee's date of employment automatically becomes a participant in the
retirement plan. Benefits under the retirement plan are 100% vested after five
years of service. The Bank's pension plan is subject to the requirements of
the Employee Retirement Income Security Act of 1974, as amended, and is
intended to constitute a qualified pension plan under the applicable
provisions of the Internal Revenue Code of 1986, as amended (the "Code").
The retirement plan is a qualified defined benefit plan under which an
employee is not required to make any contributions to become a participant or
to earn benefits under the plan. The benefits provided at age 65 to any
participant will be based on the average of the participant's highest three
consecutive years of cash compensation up to $150,000, as adjusted for cost-
of-living increases ("Average Compensation"). The benefits provided at age 65
will equal 1.25% of Average Compensation plus 0.6% of Average Compensation in
excess of Social
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<PAGE>
Security covered compensation for each year of service with the Bank up to a
maximum of 25 years. Normal retirement age under the plan is 65; a reduced
early retirement benefit is payable from age 50 to age 64 under certain
circumstances. At January 1, 1997, the latest date for which information is
available, the present value of accrued benefits was fully funded by the
market values of related available assets.
The following table illustrates annual pension benefits at age 65 for
various levels of compensation and years of service. The average compensation
shown reflects an average of the three highest consecutive years of
compensation. Pension benefits are currently subject to the statutory annual
maximum of $150,000, subject to cost-of-living adjustments. In addition, for
the plan years beginning on or after January 1, 1995, annual compensation
earned after that date in excess of $150,000.00 (subject to cost of living
adjustments, which increased the limit to $160,000 for 1997) may not be used
in the calculation of retirement benefits.
ANNUAL PENSION BENEFIT BASED ON YEARS OF SERVICE(1)
<TABLE>
<CAPTION>
AVERAGE 10 15 20 25 YEARS
COMPENSATION YEARS YEARS YEARS AND AFTER(2)
------------ ------ ------ ------ ------------
<S> <C> <C> <C> <C>
$60,000....................................... 9,445 14,168 18,891 23,614
$80,000....................................... 13,145 19,718 26,291 32,864
$100,000...................................... 16,845 25,268 33,691 42,114
$120,000...................................... 20,545 30,818 41,091 51,364
$125,000...................................... 21,470 32,206 42,941 53,676
$140,000...................................... 24,245 36,368 48,491 60,614
$150,000(3)................................... 26,095 39,143 52,191 65,239
</TABLE>
- --------
(1) The annual pension benefit is computed on the basis of a single life
annuity.
(2) Maximum number of years of service recognized under the retirement plan is
25.
(3) Federal law does not permit benefit pension plans to recognize
compensation in excess of $150,000 (subject to cost of living
adjustments), for plan years beginning in 1994 and thereafter.
The years of credited service for Mr. Marshall, Mr. Barrett, Mr. Treanor,
and Mr. Ehmke are 3.25 years, 2.50 years, 2.0 years, and 1.5 years,
respectively. Mr. Dill is not an active participant in this plan, but has 5.0
years of credited service from previous participation.
Supplemental Executive Retirement Plan. The Supplemental Executive
Retirement Plan of the Bank (the "SERP") provides a select group of executive
officers with a level of retirement benefit generally commensurate with that
received by executives of similar banking organizations with similar
responsibilities, under circumstances where such executive officer's qualified
pension benefit is reduced or restricted by limitations imposed under the
Internal Revenue Code, by virtue of such executive officer's transfer to
employment with the Bank in mid-career, or otherwise. The eligible executive
officers under the SERP are the Chief Executive Officer of the Bank, and such
other executive officers as the Compensation Committee of the Board of
Directors, upon the recommendation of the Chief Executive Officer, may select
from time to time.
The SERP provides an annual benefit at age 65 equal to 2.5% of the
participant's final average earnings (averaged over the five years preceding
his or her termination) multiplied by his or her years of service credited
under the SERP, reduced by his or her Social Security benefit, his or her
benefit under the Bank's qualified pension plan, and by benefits under any
other plan or arrangement specified by the Compensation Committee (the
"Offsetting Benefits"); however, when combined with the Offsetting Benefits
and any other benefits specified by the Compensation Committee (such as
benefits under a former employer's plans), the maximum benefit under the SERP
cannot exceed 60% of the participant's final average earnings. Service is
generally credited under the SERP for each year the participant is employed by
the Bank or its subsidiaries, but the Compensation Committee may credit a
participant with additional service (which may be conditional on the
occurrence of certain events, such as a change in control), or may limit
credit for years of service with the Bank prior to participation in the SERP.
Messrs. Marshall and Barrett have been credited with five years of additional
service under the SERP, at the time the SERP was adopted, to compensate them
for the negative impact of a
19
<PAGE>
mid-career transfer to employment with the Company on their qualified benefit
entitlements. In each case, their SERP benefit is subject to Offsetting
Benefits from former employer's plans. Each member of the initial group of
SERP participants will be credited with five years of additional service in
the event of a change in control. In addition, the SERP provides for the
funding of all benefits accrued for each participant through grantor trusts
upon a change in control of the Bank.
ANNUAL BENEFIT PROVIDED BY SERP
(LIMITED TO 60% OF AVERAGE COMPENSATION)
<TABLE>
<CAPTION>
AVERAGE
COMPENSATION 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$125,000.................. 31,250 46,875 62,500 75,000 75,000 75,000
$150,000.................. 37,500 56,250 75,000 90,000 90,000 90,000
$175,000.................. 43,750 65,625 87,500 105,000 105,000 105,000
$200,000.................. 50,000 75,000 100,000 120,000 120,000 120,000
$250,000.................. 62,500 93,750 125,000 150,000 150,000 150,000
$300,000.................. 75,000 112,500 150,000 180,000 180,000 180,000
$400,000.................. 100,000 150,000 200,000 240,000 240,000 240,000
$450,000.................. 112,500 168,750 225,000 270,000 270,000 270,000
$500,000.................. 125,000 187,500 250,000 300,000 300,000 300,000
</TABLE>
The average compensation for purposes of this table is based on the highest
average of the five consecutive years of service preceding retirement. The
estimated credited years of service at retirement for each of the Named
Executive Officers are as follows: Mr. Marshall--19 years; Mr. Barrett--15
years; and Mr. Treanor--18 years. Mr. Dill and Mr. Ehmke do not participate in
the SERP.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
The Company's policies do not prohibit loans to executive officers or
Directors of the Company or its subsidiaries. Loans by the Bank are made in
the ordinary course of business on substantially the same terms, including
interest rates and collateral, as to those prevailing at the time for
comparable transactions to other persons. All loans to executive officers and
Directors must be approved by the Executive Committee of the Bank Board, and,
if the credit request is greater than $500,000, by a majority of the Board of
Directors of the Bank.
CERTAIN BUSINESS RELATIONSHIPS
The Company and its subsidiaries have from time to time entered into
transactions with businesses and other organizations which are affiliated with
the Company's Directors. The terms and rates for all such transactions have
been negotiated on an arms-length basis and are no less favorable than
comparable transactions with other businesses or other organizations.
During fiscal year 1996, the Company and its subsidiaries retained the law
firm of Shatz, Schwartz & Fentin P.C. in which Mr. Shatz is a partner, to
perform certain legal work for the Company and its subsidiaries. Fees and
expenses paid directly by the Company or its subsidiaries to Shatz, Schwartz &
Fentin P.C. during this period totaled approximately $296,180.76. The Company
intends to continue to retain Shatz, Schwartz & Fentin P.C. for future legal
work. The Bank has also engaged in transactions in which the fees and costs
were paid by the borrowers of the Bank.
In addition, the Company and its subsidiaries retained the law firm of
Doherty, Wallace, Pillsbury & Murphy, P.C. ("DWPM") in which Mr. Shannon is a
partner, to perform certain legal work for the Company and its subsidiaries
during fiscal year 1996. Fees and expenses paid directly by the Company or its
subsidiaries to Doherty, Wallace, Pillsbury & Murphy, P.C. during this period
totaled approximately $412,135.00. This amount includes amounts reimbursed to
DWPM for out-of-pocket expenses incurred on behalf of the Company
20
<PAGE>
by DWPM for payment for third party auctioneers, newspaper advertising and
publication costs, etc. that are routinely involved in foreclosures. In cases
involving foreclosure work on loans serviced by the Bank for secondary market
investors, the Bank is reimbursed by those investors. In 1996, the amount
reimbursed was $163,780.59. The Company intends to continue to retain Doherty,
Wallace, Pillsbury & Murphy, P.C. for future legal work. The Bank has also
engaged in transactions in which the fees and costs were paid by the borrowers
of the Bank.
PROHIBITION ON BENEFICIAL OWNERSHIP OF FIVE PERCENT OF COMMON STOCK
The Articles of Organization of the Company prohibits the ownership of more
than 4.9% of the outstanding shares of any class of equity securities of the
Company for a three-year period following the Conversion. Accordingly, as of
February 28, 1997, the Company is not aware of any person or group acting in
concert who owned in excess of 4.9% of the Company's Common Stock other than
the ESOP, which holds approximately 8% of such outstanding shares.
STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company intended to be presented at the
1998 Annual Meeting of the Company must be received by the Company no later
than November 19, 1997 to be included in the Company's proxy statement and
form of proxy relating to that meeting. In addition, the Company's By-Laws
contain certain requirements as to timing and information that any stockholder
wishing to have any director nominations or a stockholder proposal considered
at an annual meeting must comply with.
INDEPENDENT PUBLIC ACCOUNTANTS
Representatives of Price Waterhouse LLP, the Company's independent Certified
Public Accountants, are expected to be present at the Meeting. They will be
accorded the opportunity to make a statement if they desire to do so and will
be available to respond to appropriate questions. Price Waterhouse became the
auditors of the Company for the fiscal year ending December 31, 1996 upon the
approval of the Audit committee.
STOCKHOLDERS' ANNUAL REPORT; FORM 10-K
The Company's Annual Report (Form 10-K) for the fiscal year ended December
31, 1996 accompanies this Proxy Statement.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations thereunder. In accordance therewith, the Company files reports,
proxy statements and other information with the SEC. Copies, after they are
filled with the SEC, may be obtained without charge by any stockholder of the
Company upon written request to Ting Chang, Vice President--Investor
Relations, SIS Bancorp, Inc., 1441 Main Street, Springfield, Massachusetts
01102.
OTHER MATTERS
Shares represented by proxies in the enclosed form will be voted as
stockholders direct. Proxies that contain no directions to the contrary will
be voted in favor of the election of the two nominees to serve as Directors of
the Company. At the time of preparation of this Proxy Statement, the Board of
Directors of the Company knows of no other matters to be presented for action
at the Meeting. As stated in the accompanying proxy card, if any other
business should come before the Meeting, proxies have discretionary authority
to vote the shares according to their best judgment.
21
<PAGE>
SECTION 16(A) COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who own more than ten percent of a registered class
of a Company's equity securities, to file reports of ownership and changes in
ownership with the SEC. Officers, directors and greater than ten percent
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file. Based solely upon written
representations of its directors and executive officers and copies of the
reports that they have been required to file with the SEC the Company believes
that during fiscal 1996, all filing requirements applicable to its executive
officers, directors and greater than ten percent owners were complied with
other than for Mr. Stephen A. Shatz, an outside director of the Company, who
inadvertently failed to file with the SEC on a timely basis one required
report covering the purchase by his spouse of 1,000 shares of Company common
stock in July, 1996.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE,
SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY WITHDRAW ANY PROXY GIVEN BY YOU
AND VOTE YOUR SHARES IN PERSON.
March 19, 1997
22
<PAGE>
SIS BANCORP, Inc.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF SIS BANCORP,
INC.. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1. THIS PROXY, WHEN
PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED. IF NO DIRECTION IS GIVEN, THIS PROXY, IF OTHERWISE PROPERLY
EXECUTED, WILL BE VOTED FOR PROPOSAL 1.
The undersigned, a stockholder of SIS Bancorp, Inc. (the "Company"), revoking
all prior proxies, hereby appoints F. William Marshall, Jr., John M. Naughton
and Michael E. Tucker and each of them with full power of substitution, the
attorneys, agents and proxies of the undersigned to represent and vote all
shares of stock of the Company which the undersigned would be entitled to vote
if personally present at the annual meeting of stockholders of the Company and
any adjournments thereof, to be held at the Springfield Marriott Hotel, 1500
Main Street, Springfield, Massachusetts, on Wednesday, April 30, 1997, at 10:00
a.m. local time, as specified herein as to each Proposal.
- --------------------------------------------------------------------------------
*FOLD AND DETACH HERE*
<PAGE>
Please mark
your vote as [X]
indicated in
this example
PROPOSAL 1: Election of Directors For All Withheld From
Nominees: Sr. Mary Caritas (Geary) S.P. Nominees All Nominees
John Naughton [_] [_]
FOR ALL NOMINEES Except as Noted Below (write name(s) of nominee(s) In the
space provided below):
- --------------------------------------------------------------------------------
I plan to attend the Meeting. Mark here for address change
[_] Please note address change below. [_]
PROPOSAL 2: In their discretion, the proxies named herein are authorized to
vote upon such other matters as may properly come before the meeting
or any adjustments or postponements thereof.
PLEASE DATE AND SIGN EXACTLY AS NAME APPEARS HEREIN AND RETURN IN THE ENCLOSED
ENVELOPE. WHEN SHARES ARE HELD BY JOINT OWNERS, BOTH SHOULD SIGN. EXECUTORS,
ADMINISTRATORS, TRUSTEES, AND OTHERS SIGNING IN A REPRESENTATIVE CAPACITY SHOULD
GIVE THEIR FULL TITLE AS SUCH. IF A CORPORATION, PLEASE SIGN IN FULL CORPORATE
NAME BY PRESIDENT OR AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED OFFICER.
SIGNATURE SIGNATURE DATE
------------------------- ------------------------- --------
- --------------------------------------------------------------------------------
*FOLD AND DETACH HERE*
