SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (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 Rule 14a-11(c) or Rule 14a-12
Norwood Financial Corp.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the filing
fee is calculated and state how it was determined.)
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[NORWOOD FINANCIAL CORP. LETTERHEAD]
March 23, 2000
To Our Stockholders:
We are pleased to invite you to attend the Annual Meeting of
Stockholders (the "Meeting") of Norwood Financial Corp. (the "Company") to be
held at the administrative office of Wayne Bank, 717 Main Street, Honesdale,
Pennsylvania 18431, on Tuesday, April 25, 2000, at 11:00 a.m.
The enclosed Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted at the Meeting. During the Meeting, we will
also report on the operations of the Company. Directors and officers of the
Company, as well as a representative of our independent auditors, Beard &
Company, Inc., are expected to be present to respond to any questions that
stockholders may have.
Also enclosed for your reference is the Annual Report to Stockholders
for the fiscal year ending December 31, 1999, which contains detailed
information concerning the activities and operating performance of the Company.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN
AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE, OR VOTE
BY TELEPHONE OR INTERNET (INSTRUCTIONS ARE ON YOUR PROXY CARD), AS PROMPTLY AS
POSSIBLE. This will not prevent you from attending the meeting and voting in
person but will assure that your vote is counted if you are unable to attend the
Meeting. YOUR VOTE IS VERY IMPORTANT.
Sincerely,
/s/William W. Davis, Jr.
-------------------------------------
William W. Davis, Jr.
President and Chief Executive Officer
<PAGE>
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NORWOOD FINANCIAL CORP.
717 MAIN STREET
P.O. BOX 269
HONESDALE, PENNSYLVANIA 18431
(717) 253-1455
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 25, 2000
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Norwood Financial Corp. (the "Company") will be held at the
administrative office of Wayne Bank, 717 Main Street, Honesdale, Pennsylvania
18431, on Tuesday, April 25, 2000, at 11:00 a.m. The Meeting is for the purpose
of considering and acting upon:
1. The election of three directors of the Company; and
2. The transaction of such other business as may properly come
before the Meeting or any adjournments thereof.
The Board of Directors is not aware of any other business to come
before the Meeting. Pursuant to the Bylaws, the Board of Directors has fixed the
close of business on March 16, 2000, as the record date for determination of the
stockholders entitled to vote at the Meeting and any adjournments thereof.
You are requested to complete and sign the enclosed form of proxy which
is solicited by the Board of Directors and to return it promptly in the enclosed
envelope. The proxy will not be used if you attend the Meeting and vote in
person.
EACH STOCKHOLDER, WHETHER OR NOT HE OR SHE PLANS TO ATTEND THE MEETING,
IS REQUESTED TO COMPLETE, SIGN, DATE, AND PROMPTLY RETURN THE ENCLOSED PROXY
CARD IN THE ENCLOSED ENVELOPE, OR VOTE BY TELEPHONE OR INTERNET (INSTRUCTIONS
ARE ON YOUR PROXY CARD). ANY PROXY GIVEN BY THE STOCKHOLDER MAY BE REVOKED BY
FILING WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR A DULY EXECUTED
PROXY BEARING A LATER DATE. ANY STOCKHOLDER PRESENT AT THE MEETING MAY REVOKE
HIS OR HER PROXY AND VOTE IN PERSON ON EACH MATTER BROUGHT BEFORE THE MEETING.
HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN
NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER TO VOTE IN
PERSON AT THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
/s/John E. Marshall
----------------------------------
JOHN E. MARSHALL
SECRETARY
Honesdale, Pennsylvania
March 23, 2000
<PAGE>
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PROXY STATEMENT
OF
NORWOOD FINANCIAL CORP.
717 MAIN STREET
HONESDALE, PENNSYLVANIA 18431
(717) 253-1455
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ANNUAL MEETING OF STOCKHOLDERS
April 25, 2000
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GENERAL
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This Proxy Statement is furnished to holders of common stock, $0.10 par
value per share ("Common Stock"), of Norwood Financial Corp. (the "Company")
which acquired all of the outstanding common stock of Wayne Bank (the "Bank") in
connection with the Bank's holding company reorganization completed on March 29,
1996. Proxies are being solicited by the Board of Directors of the Company to be
used at the Annual Meeting of Stockholders of the Company (the "Meeting"), which
will be held at the administrative office of Wayne Bank, 717 Main Street,
Honesdale, Pennsylvania 18431, on Tuesday, April 25, 2000, at 11:00 a.m. The
accompanying Notice of Annual Meeting of Stockholders and this Proxy Statement
are being first mailed to stockholders on or about March 23, 2000.
At the Meeting, stockholders will consider and vote upon election of
three directors. The Board of Directors knows of no additional matters that will
be presented for consideration at the Meeting. Execution of a proxy, however,
confers on the designated proxyholder the discretionary authority to vote the
shares represented by such proxy in accordance with their best judgment on such
other business, if any, that may properly come before the Meeting or any
adjournment thereof.
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VOTING AND REVOCABILITY OF PROXIES
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Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by signed proxies will be voted
at the Meeting and all adjournments thereof. Proxies may be revoked by written
notice delivered in person or mailed to the Secretary of the Company at the
address of the Company shown above or by the filing of a later-dated proxy prior
to a vote being taken on a particular proposal at the Meeting. A proxy will not
be voted if a stockholder attends the Meeting and votes in person. Proxies
solicited by the Board of Directors will be voted in accordance with the
directions given therein. Where no instructions are indicated, signed proxies
will be voted "FOR" the proposal set forth in this Proxy Statement for
consideration at the Meeting or any adjournment thereof.
Furthermore, you can vote by telephone or by the internet. Instructions
are on the proxy card.
The proxy confers discretionary authority on the persons named therein
to vote with respect to the election of any person as a director should the
nominee be unable to serve, or for good cause, will not serve, and matters
incident to the conduct of the Meeting.
<PAGE>
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
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Stockholders of record as of the close of business on March 16, 2000
(the "Voting Record Date") are entitled to one vote for each share then held. As
of the Voting Record Date, the Company had 1,743,935 shares of Common Stock
outstanding.
The presence in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote is necessary to constitute a
quorum at the Meeting. In the event there are not sufficient votes for a quorum
or to approve any proposals at the time of the Meeting, the Meeting may be
adjourned in order to permit further solicitation of proxies.
As to the election of directors as stated under "Proposal I -- Election
of Directors," the proxy card being provided by the Board enables a stockholder
to vote for the election of the nominees proposed by the Board, or to withhold
authority to vote for one or more of the nominees being proposed. Directors are
elected by a plurality of votes cast, without respect to either (i) broker
non-votes or (ii) proxies as to which authority to vote for one or more of the
nominees being proposed is withheld.
As to all other matters that may properly come before the Meeting,
unless otherwise required by law, the Articles, or the Bylaws, a majority of the
votes cast by stockholders shall be sufficient to pass on the matter.
Directors Marshall, Ridd and Shook serve as the members of the ESOP
Committee and as the ESOP Trustees. The ESOP Committee, as administrators of the
ESOP, may instruct the ESOP Trustees regarding investments of funds contributed
to the ESOP. The ESOP Trustees must vote all allocated shares held in the ESOP
in accordance with the instructions of the participating employees. Unallocated
shares and allocated shares for which no timely direction is received will be
voted by the ESOP Trustees as directed by the ESOP Committee.
Persons and groups owning in excess of 5% of the Common Stock are
required to file certain reports regarding such ownership pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act"). Other than as
noted below, management knows of no person or entity, including any "group" as
that term is used in ss.13(d)(3) of the 1934 Act, who or which is the beneficial
owner of more than 5% of the outstanding shares of Common Stock on the Voting
Record Date. Information concerning the security ownership of management is
included under "Proposal I - Election of Directors."
Name and Address Amount and Nature of Percent of Shares of
of Beneficial Owner Beneficial Ownership Common Stock Outstanding
- ------------------- -------------------- ------------------------
Wayne Bank Trust Department 141,362(1) 8.11%
717 Main Street
Honesdale, Pennsylvania 18431
- -----------------
(1) The Wayne Bank Trust Department ("WBTD") is trustee to and has sole
voting power for seven trust accounts that include among their
investments the Common Stock. Does not include another 16 accounts
holding an aggregate of 153,968 shares of the Common Stock among their
investments for which WBTD holds no voting power.
2
<PAGE>
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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The Common Stock is registered pursuant to Section 12(g) of the 1934
Act. The executive officers and directors of the Company and beneficial owners
of greater than 10% of the Common Stock ("10% beneficial owners") are required
to file reports on Forms 3, 4, and 5 with the Securities and Exchange Commission
("SEC") disclosing changes in beneficial ownership of the Common Stock. Based
solely on the Company's review of such ownership reports no director, executive
officer, or 10% beneficial owners failed to file such ownership reports on a
timely basis during the fiscal year ended December 31, 1999.
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PROPOSAL I - ELECTION OF DIRECTORS
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Directors
The Company currently has nine directors serving on its Board. The
Articles require that directors be divided into three classes, as nearly equal
in number as possible, each class to serve for a term of three years, with
approximately one-third of the directors elected annually. Three directors will
be elected at the Meeting to serve for a three-year period.
Charles E. Case, William W. Davis, Jr. and John E. Marshall have been
nominated by the Board of Directors each to serve for a three-year term. If any
nominee is unable to serve, the shares represented by all valid proxies will be
voted for the election of such substitute as the Board of Directors may
recommend or the size of the Board may be reduced to eliminate the vacancy. At
this time, the Board knows of no reason why any nominee might be unavailable to
serve.
3
<PAGE>
The following table sets forth for the nominees and the directors
continuing in office, such individual's name, age, the year the nominee first
became a director of the Company or the Bank, and the number of shares and
percentage of the Common Stock beneficially owned. Each director of the Company
is also a director of the Bank.
<TABLE>
<CAPTION>
SHARES OF
YEAR FIRST CURRENT COMMON STOCK PERCENT
ELECTED OR TERM BENEFICIALLY OF
NAME AGE(1) APPOINTED EXPIRES OWNED(2)(3) CLASS
- ---- ------ --------- ------- ----------- -----
<S> <C> <C> <C> <C> <C>
Board Nominees For Terms To Expire In 2003
Charles E. Case 65 1970 2000 45,960 2.6%
William W. Davis, Jr. 55 1996 2000 24,481(4) 1.4%
John E. Marshall 62 1983 2000 17,440(5) 1.0%
THE BOARD OF DIRECTORS RECOMMENDS THAT ITS NOMINEES BE ELECTED AS DIRECTORS
Directors Continuing In Office
Russell L. Ridd 70 1980 2001 50,961(5) 2.9%
Harold A. Shook 61 1988 2001 4,068(5) *
Richard L. Snyder 59 2000 2001 1,000 *
Daniel J. O'Neill 62 1985 2002 1,494 *
Dr. Kenneth A. Phillips 49 1988 2002 1,202 *
Gary P. Rickard 58 1978 2002 10,310 *
All Executive Officers and
Directors as a Group
(13 persons) 200,918(6)(7) 11.5%
</TABLE>
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* Less than 1.0%.
(1) As of December 31, 1999.
(2) As of the Voting Record Date.
(3) Unless otherwise noted, all shares are owned directly by the named
individual or by their spouses and minor children, over which shares the
named individuals effectively exercise sole voting and investment power.
(4) Includes options to purchase 16,000 shares of Common Stock within 60 days
of the Record Date and 2,468 shares allocated pursuant to the ESOP.
(5) Excludes 82,220 unallocated shares of Common Stock held under the ESOP for
which such individual serves as one of three ESOP trustees. Beneficial
ownership is disclaimed with respect to such ESOP shares held in a
fiduciary capacity.
(6) Includes options to purchase 51,850 shares of Common Stock within 60 days
of the Record Date.
(7) Includes 7,889 shares allocated to executive officer participants' accounts
under the ESOP.
4
<PAGE>
Executive Officers
The following individuals hold the offices in the Company set forth
below opposite their names.
Name Age(1) Positions Held With the Company
- ---- ------- --------------------------------
Russell L. Ridd 70 Chairman of the Board
William W. Davis, Jr. 55 President and Chief Executive Officer
Lewis J. Critelli 40 Executive Vice President and Chief
Financial Officer
Edward C. Kasper 52 Senior Vice President
John H. Sanders 42 Senior Vice President
Joseph A. Kneller 53 Senior Vice President
John E. Marshall 62 Secretary
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(1) At December 31, 1999.
The executive officers of the Company are elected annually and hold
office until their respective successors have been elected and qualified or
until death, resignation, or removal by the Board of Directors.
Biographical Information
The principal occupation during the past five years of each director,
nominee for director, and executive officer of the Company is set forth below.
All directors, nominees, and executive officers have held their present
positions for five years unless otherwise stated.
Directors
---------
Charles E. Case is Vice President at CR Case and Sons, Inc., Honesdale,
Pennsylvania, an automotive/tire services store.
William W. Davis, Jr. became President and Chief Executive Officer of
the Bank and the Company on August 26, 1996. Prior to that, Mr. Davis was senior
vice president and area executive of Corestates Bank N.A., Scranton,
Pennsylvania ("Corestates") from November 1994 to August, 1996. Prior to the
merger of Third National Bank and Trust Company, Scranton, Pennsylvania ("Third
National") with and into Corestates, Mr. Davis served as Chairman, President and
Chief Executive Officer from July 1993 through November 1994 and as President
and Chief Operating Officer from April 1985 at Third National.
John E. Marshall is president of Marshall Machinery Inc., Honesdale,
Pennsylvania, a farm equipment and sales company.
Daniel J. O'Neill is the retired Superintendent of the Wayne Highlands
School District, Honesdale, Pennsylvania.
5
<PAGE>
Dr. Kenneth A. Phillips is an optometrist in Waymart, Pennsylvania.
Gary P. Rickard is a partner of Clearfield Farms, Honesdale,
Pennsylvania, a dairy farm.
Russell L. Ridd is Chairman of the Board.
Harold A. Shook is president of Shooky's Distributors, Hawley,
Pennsylvania, a food and beverage distributor.
Richard L. Snyder, CPA is a retired executive having been employed by
Price Waterhouse Coopers, CFO of Bell Equipment/Alcom Combustion Company,
Corporate Treasurer then CFO-International Wheelabrator-Frye and finally in a
number of executive positions with Phillip Morris Companies, Inc., the last of
which was Executive Vice President-Europe/Middle East/Africa-International,
retiring in 1999. Mr. Snyder resides in Milford where he has a number of
business interests.
Executive Officers Who Are Not Directors
----------------------------------------
Lewis J. Critelli has been Executive Vice President and Chief Financial
Officer of the Bank and the Company since December 8, 1998. Mr. Critelli had
been Senior Vice President and Chief Financial Officer of the Bank and the
Company since December 10, 1996. Mr. Critelli had been Vice President and Chief
Financial Officer of the Bank since January 1995 and of the Company since its
formation in March 1996. Prior to that, Mr. Critelli had been Vice President,
Treasurer and Comptroller of First Valley Bank from June 1991 to December 1994.
Edward C. Kasper has been Senior Vice President of the Bank and Company
since December 9, 1997. Mr. Kasper had been Vice President of the Company since
its formation and Senior Lending Officer of the Bank since 1993 and Vice
President of the Bank since 1986.
John H. Sanders has been Senior Vice President of the Company and
Senior Vice President and head of Retail Banking for the Bank since December
1997. Mr. Sanders had been Vice President of the Bank from February 1995. Prior
to joining the Bank, Mr. Sanders was Assistant Vice President of PNC Bank, N.A.
from 1993 to 1995.
Joseph A. Kneller has been Senior Vice President of the Company since
December 1998 and Senior Vice President - Information Systems for the Bank since
December 1998. Mr. Kneller had been Vice President of the Bank since July 1997.
Prior to joining the Bank, Mr. Kneller was Senior Vice President of Operations
for Farmers & Merchants Bank & Trust, Hagerstown, Maryland from April 1995 to
July 1997. Mr. Kneller was President of Independence Resources, Inc., subsidiary
of Independence Bancorp from January 1990 to February 1993.
Nominations for Directors
Nomination of candidates for election as directors at any annual
meeting of stockholders may be made (a) by, or at the direction of, a majority
of the Board of Directors or (b) by any stockholder entitled to vote at such
annual meeting. Only persons nominated in accordance with the procedures set
forth in the Articles and Bylaws may be eligible for election as directors at an
annual meeting.
Nominations, other than those made by or at the direction of the Board
of Directors, must be made pursuant to timely notice in writing to the Secretary
of the Company. To be timely, a stockholder's notice
6
<PAGE>
shall be delivered to, or mailed and received at, the principal executive
offices of the Company not less than 60 days prior to the anniversary date of
the immediately preceding annual meeting of stockholders of the Company. The
Board may reject any nomination by a stockholder not timely made in accordance
with the requirements of the Articles and Bylaws. A stockholder may be given the
opportunity to correct a notice not meeting the requirements of the Articles and
Bylaws as provided in the Bylaws.
Meetings and Committees of the Board of Directors
The Board of Directors of the Company conducts its business through
meetings of the Board and through activities of its committees. All committees
act for both the Company and the Bank. During the fiscal year ended December 31,
1999, the Board of Directors of the Company held seven regular meetings and no
special meetings and the Board of Directors of the Bank held 12 regular meetings
and no special meetings. No director attended fewer than 75% of the total
meetings of the Boards of Directors of the Company and the Bank and committees
on which such director served during the fiscal year ended December 31, 1999.
The Audit Committee of the Company and the Bank is comprised of
Directors Case, Marshall, Phillips and Shook. The committee reviews audit
reports, meets with external auditors, reviews and approves the audit schedule
and engagement of outside auditors. The committee also reviews Bank examination
reports. The Audit Committee met four times in 1999.
The Nominating Committee is comprised of the entire Board of Directors.
The Committee meets annually to nominate directors for the upcoming year.
Stockholder Nominations
Pursuant to Article 7.F of the Company's Articles of Incorporation
("Articles"), nominations, other than those made by or at the direction of the
Board of Directors, shall be made pursuant to timely notice in writing to the
Secretary of the Company. To be timely, a stockholder's notice shall be
delivered to, or mailed and received at, the principal executive offices of the
Company not less than 60 days prior to the anniversary date of the immediately
preceding annual meeting of stockholders of the Company. The notice must include
such information as required by the Articles.
The Board of Directors may reject any nomination by a stockholder not
timely made in accordance with the requirements of the Articles. If the
presiding officer at the meeting determines that a nomination was not made in
accordance with the terms of the Articles, he shall so declare at the annual
meeting, and the defective nomination shall be disregarded.
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DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
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Director Compensation
Board Fees. The Company does not presently compensate its directors.
Each director of the Company is also a director of the Bank and receives fees
accordingly. Mr. William W. Davis, Jr., President and Chief Executive Officer of
the Company and the Bank, does not receive board or committee fees for his
participation thereon.
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<PAGE>
Each member of the Board of Directors receives a retainer of $1,000 per
month. In addition, fees are paid for various committee meetings as follows:
Trust Committee ($250); Audit Committee ($250); Compensation Committee ($250).
For the fiscal year ended December 31, 1999, fees paid to all directors totaled
approximately $107,500, all of which were paid by the Bank.
Stock Options. On December 14, 1999 the board of directors of the
Company approved the 1999 Directors Stock Compensation (the "1999 Option Plan").
A total of 17,600 shares of Common Stock were reserved for future issuance. On
December 14, 1999, options to purchase 500 shares of Common Stock were granted
to each non-employee director at that time (7 persons). The options granted to
these directors are exercisable at a rate of $22.25 annually commencing on the
date of grant.
Executive Compensation
Summary Compensation Table. The following table sets forth for the
fiscal years ended December 31, 1999, 1998 and 1997, certain information as to
the total remuneration received by the chief executive officer as well as one
other executive officer whose total annual salary and bonus exceeded $100,000
for the year ended December 31, 1999.
<TABLE>
<CAPTION>
Long Term
Annual Compensation(1) Compensation Awards
----------------------------------------- -------------------------------
Securities
Restricted Underlying
Name and Principal Other Annual Stock Options/ All Other
Position Year Salary Bonus Compensation(2) Award(s) SARs(#) Compensation(5)
- ------------------------ ---- ------ ----- --------------- -------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
William W. Davis, Jr. 1999 $175,783 $35,000 -- -- 3,000 $29,077(3)(4)
President and Chief 1998 150,000 30,000 -- -- 4,000 28,763(3)(4)
Executive Officer 1997 140,837 20,000 -- -- 6,000 16,042(3)(4)
Lewis J. Critelli 1999 113,862 28,500 -- -- 2,000 18,833(3)(4)
Executive Vice President 1998 100,000 20,000 -- -- 3,000 19,175(3)(4)
and Chief Financial 1997 89,750 15,000 -- -- 4,000 14,364(3)(4)
Officer
Edward C. Kasper 1999 95,465 12,000 -- -- 1,500 15,791(6)
Senior Vice President
</TABLE>
- -----------------------------
(1) All compensation was paid by the Bank. Compensation deferred at election of
executive is includable in category and year earned.
(2) For the listed individuals, for the year ended December 31, 1999, there
were no (a) perquisites and other benefits for which the aggregate value
exceeded the lesser of $50,000 or 10% of total salary and bonus; (b)
payments of above-market preferential earnings on deferred compensation;
(c) payments of earnings with respect to long-term incentive plans prior to
settlement or maturation; (d) tax payment reimbursements; or (e)
preferential discounts on stock.
(3) Includes matching and discretionary contributions of $10,547, $9,000 and
$1,952 allocated to the account of Mr. Davis; and $6,831, $6,000 and $5,384
to the account of Mr. Critelli by the Bank under its 401(k) Plan during
1999, 1998 and 1997, respectively.
(4) Includes 893, 888 and 687 shares of Common Stock allocated to Mr. Davis and
578, 592 and 438 shares of Common Stock allocated to Mr. Critelli during
1999, 1998 and 1997, respectively, pursuant to the ESOP and based upon a
stock price of $20.75, $22.25 and $20.50 on December 31, 1999, 1998 and
1997, respectively.
(5) Does not include accruals during 1999 under salary continuation plans of
$11,670, $2,547 and $4,551 for Messrs. Davis, Critelli and Kasper,
respectively.
(6) Includes: matching and discretionary contributions of $5,728 to the account
of Mr. Kasper by the Bank under its 401(k) Plan; and 485 shares of Common
Stock allocated to Mr. Kasper pursuant to the ESOP and based upon a stock
price of $20.75 at December 31,1999.
8
<PAGE>
Employment Agreements. On September 15, 1999, the Company and the Bank
entered into new five-year employment agreements with Messrs. Davis and
Critelli. Mr. Davis' base compensation under the Agreement is $170,000. The
Agreement provides that upon review of the Board, Mr. Davis' base salary will
increase not less than $6,000 per year for five years. Mr. Critelli has a base
salary under the Agreement of $110,000, with increases not less than $3,000 per
year for five years upon Board review. Under the Agreements, Mr. Davis' and Mr.
Critelli's employment may be terminated by the Company or the Bank for "just
cause" as defined in the Agreement. If the Company or the Bank terminated
Messrs. Davis and Critelli ("Employees") without just cause, Messrs. Davis and
Critelli would be entitled to a continuation of their salaries for the remaining
term of the agreement with a minimum of one year from the date of termination as
well as the continuation of other benefits. In the event there is an involuntary
termination of employment in connection with any change in control of the
Company or the Bank during the term of the Agreement, Messrs. Davis and Critelli
will be paid in a lump sum an amount equal to 2.99 times the five year average
of his annual compensation. In the event there was a change in control at
December 31, 1999, Mr. Davis would have been entitled to a lump sum payment of
approximately $465,065 and Mr. Critelli would have been entitled to a lump sum
payment of approximately $287,122.
Salary Continuation Plan. On October 1, 1999, the Bank entered into
salary continuation agreements with Messrs. Davis, Critelli and Kasper (the
"Executives"). The agreements provide that upon termination of employment on or
after reaching the age of 62, the Executives will be entitled to maximum annual
retirement benefits equal to $46,000, $61,000 and $29,000, respectively, payable
for 15 years. These amounts are adjusted for early retirement. The Executives
are entitled to full payment at age 62 under a change in control of the Company.
The Executives are not entitled to such benefits in the event they voluntarily
leave the Company or are terminated for cause. The plan, which also includes two
other executive officers, is funded by the purchase of a $3.0 million life
insurance policy with the Bank as the beneficiary.
Severance Agreements. Furthermore, the Bank entered into
change-in-control severance agreements with nine key officers of the Bank
("Severance Agreements"). The Severance Agreements have terms of three years and
severance protection upon a termination of employment following a change in
control, with such payment equaling one or two times the current annual
compensation of such individuals. The Bank and the Company can renew the
original terms of the agreements each year. Upon a change in control, funding of
the Grantor Trust as described in the Severance Agreement for all executive
officers as a group (nine persons) as of December 31, 1999 would have been
approximately $616,250 with $184,000 attributed to Mr. Kasper.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee consists of Directors Ridd, Marshall and
Shook. The Compensation Committee met two times during fiscal 1999.
The Company had no "interlocking" relationships existing on or after
January 1, 1999 in which (i) any executive officer is a member of the Board of
Directors/Trustees of another entity, one of whose executive officers is a
member of the Company's Board of Directors, or where (ii) any executive officer
is a member of the compensation committee of another entity, one of whose
executive officers is a member of the Company's Board of Directors.
9
<PAGE>
Report of the Compensation Committee
The Compensation Committee of the Company is responsible for the
administration of the compensation program of the President and Chief Executive
Officer, Executive Vice President and Chief Financial Officer and all other
Executive Officers. The Committee is entirely composed of Directors of the
Company. The Committee has access to various surveys of executive compensation
packages of banks of similar size and complexity. The Compensation package for
executive officers consists of base salary, annual cash bonus and incentive
stock options and is structured so as to provide a competitive package that
allows the company to retain key executives.
The Committee determines executive base salaries by level of
responsibility, individual contribution to the Company and Company performance
including overall profitability, core growth in loans and deposits and loan
quality issues. The Chief Executive Officer makes recommendations to the
Committee concerning base salary of other executive officers after reviewing
individual and company performance. Using a similar process, the Committee makes
recommendations to Board regarding the President and Chief Executive Officer
base salary.
Annual cash bonuses and incentive stock options are used to focus on
attainment of goals and to reward executive officers for individual
contributions to the performance of the Company and overall success of the
Company. The Committee makes recommendations to the Board for executive bonuses
and incentive stock options, including those for the President and Chief
Executive Officer.
The Compensation Committee:
John E. Marshall
Russell L. Ridd
Harold A. Shook
Other Benefits
Incentive Stock Option Plan. Pursuant to the Incentive Stock Option
Plan, the Compensation Committee of the Board of Directors may grant Incentive
stock options to certain key employees of the Bank. The plan is intended to
provide for the grant of "Incentive Stock Options" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended. The price per share at
which each Incentive Stock Option granted under the plan may be exercised is not
less than the fair market value of the common stock at the time the option is
granted. The plan shall continue in effect for 10 years from the effective date.
No option granted pursuant to the plan shall have a term more then 10 years from
date the option is granted. The aggregate number of shares with respect to which
awards may be made pursuant to plan will not exceed 500,000 shares. In granting
options to an employee, the Compensation Committee considers the nature of
services rendered by the employee, the employee's current and potential
contribution to the Bank and such other factors as the Committee may, in it's
sole discretion deem relevant. The purpose of the Stock Option Plan is to
attract and retain the best available personnel for positions of substantial
responsibility and to provide additional incentive to officers of the Bank to
promote the success of its business.
10
<PAGE>
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(Individual Grants)
- -------------------------- -------------- ---------------- ------------- ---------------- -----------------------
Percent of Potential Realizable
Number of Total Value at Assumed
Securities Options/ SARs Annual Rate of Stock
Underlying Granted Price Appreciation for
Name Option/SARs to Employees Exercise or Expiration Option Term(1)
Granted (#) in Fiscal Year Base Price Date -----------------------
($/Sh) 5%($) 10%($)
- -------------------------- -------------- ---------------- ------------- ---------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
William W. Davis, Jr. 3,000 18.2% 22.25 12/15/09 $34,650 $94,710
Lewis J. Critelli 2,000 12.1 22.25 12/15/09 23,100 63,140
Edward C. Kasper 1,500 9.1 22.25 12/15/09 17,325 47,355
</TABLE>
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES
- --------------------------- ----------------- ---------------- ------------------------------ -------------------------------
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options/SARs in-the-Money Options/SARs
Acquired on Value at Fiscal Year-End at Fiscal Year-End
Exercise Realized (#) ($)
Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
- --------------------------- ----------------- ---------------- ------------------------------ -------------------------------
<S> <C> <C> <C> <C>
William W. Davis, Jr. -- -- 16,000 / 3,000 $47,622 / 0(2)
Lewis J. Critelli -- -- 12,740 / 2,000 40,001 / 0(3)
Edward C. Kasper -- -- 10,740 / 1,500 34,095 / 0(4)
</TABLE>
- ------------
(1) Based upon the hypothetical increased value of the Common Stock less the
option exercise price multiplied by the number of options granted.
(2) Based upon an exercise prices per share of $16.438 for 6,000 options;
$17.125 for 6,000 options; $24.00 for 3,000 options; and $22.25 for 3,000
options. Also based on a closing stock price of $20.75 per share as of
December 31, 1999.
(3) Based upon an exercise price per share of $16.54 for 5,740 options; $17.125
for 4,000 options; $24.00 for 3,000 options; and $22.25 for 2,000 options.
Also based on closing stock price of $20.75 per share as of December 31,
1999.
(4) Based upon an exercise price of $16.54 for 5.240 options; $17.125 for 3,000
options; $24.00 for 2,500 options; and $22.25 for 1,500 options. Also based
on a closing stock price of $20.75 per shares as of December 31, 1999.
11
<PAGE>
- --------------------------------------------------------------------------------
PERFORMANCE GRAPH
- --------------------------------------------------------------------------------
Set forth below is a stock performance graph comparing the cumulative
total shareholder return on the Common Stock with (a) the cumulative total
stockholder return on stocks included in the Nasdaq Stock Market index and (b)
the cumulative total stockholder return on stocks included in the Nasdaq Bank
index, as prepared for Nasdaq by the Center for Research in Securities Prices
("CRSP") at the University of Chicago. All three investment comparisons assume
the investment of $1,000 as of the close of June 28, 1996, (the date on which
the Company became subject to the Securities Exchange Act of 1934, as amended).
All of these cumulative total returns are computed assuming the reinvestment of
dividends. In the graph below, the periods compared were June 28, 1996 and the
Company's fiscal years ending of December 31, 1996, 1997, 1998 and 1999.
There can be no assurance that the Company's future stock performance
will be the same or similar to the historical performance shown in the graph
below. The Company neither makes nor endorses any predictions as to stock
performance.
[GRAPHICS OMITTED]
- ------------------------ ----------- ----------- --------- ---------- ----------
6/28/96 12/31/96 12/31/97 12/31/98 12/31/99
- ------------------------ ----------- ----------- --------- ---------- ----------
CRSP Nasdaq U.S. Index $1,000 $1,087 $1,332 $1,876 $3,390
- ------------------------ ----------- ----------- --------- ---------- ----------
CRSP Nasdaq Bank Index $1,000 $1,250 $2,092 $2,076 $1,997
- ------------------------ ----------- ----------- --------- ---------- ----------
Norwood Financial Corp. $1,000 $990 $1,305 $1,426 $1,464
- ------------------------ ----------- ----------- --------- ---------- ----------
12
<PAGE>
- --------------------------------------------------------------------------------
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------------------------------
The Company had no "interlocking" relationships existing on or after
January 1, 1999 in which (i) any executive officer is a member of the Board of
Directors/Trustees of another entity, one of whose executive officers is a
member of the Board of Directors of the Company, or where (ii) any executive
officer is a member of the compensation committee of another entity, one of
whose executive officers is a member of Board of Directors of the Company.
The Bank, like many financial institutions, has followed a policy of
offering residential mortgage loans for the financing of personal residences,
consumer loans, and overdraft protection to its officers, directors, and
employees. The loans are made in the ordinary course of business and are made on
substantially the same terms and conditions, including interest rate and
collateral, as those of comparable transactions prevailing at the time with
other persons, and do not include more than the normal risk of collectibility or
present other unfavorable features. At December 31, 1999 loans to executive
officers and directors of the Company and the Bank, and their immediate family
members, amounted to $3,339,000 or 12.5% of the Company's stockholders' equity.
- --------------------------------------------------------------------------------
ANNUAL REPORTS
- --------------------------------------------------------------------------------
The Company's Annual Report to Stockholders for the fiscal year ending
December 31, 1999, including financial statements, has been mailed to all
persons who were listed as stockholders of record as of the close of business on
the Voting Record Date. Any stockholder who has not received a copy of such
Annual Report may obtain a copy by writing the Company. Such Annual Report is
not to be treated as a part of the proxy solicitation material or as having been
incorporated herein by reference.
A Copy of the Form 10-K as filed with the SEC will be furnished without
charge to stockholders as of the record date upon written request to Lewis J.
Critelli, Executive Vice President and Chief Financial Officer, Norwood
Financial Corp., 717 Main Street, P.O. Box 269, Honesdale, Pennsylvania 18431.
Such Form 10-K is not to be treated as a part of the proxy solicitation material
or as having been incorporated herein by reference.
- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be eligible for inclusion in the Company's proxy materials
for next year's Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at the Company's main office at 717 Main
Street, P.O. Box 269, Honesdale, Pennsylvania 18431, no later than November 23,
2000. Any such proposals shall be subject to the requirements of Rule 14a-8
under the 1934 Act. In the event the Company receives notice of a stockholder
proposal to take action at next year's annual meeting of stockholders that is
not submitted for inclusion in the Company's proxy material, or is submitted for
inclusion but is properly excluded from the proxy material, the persons named in
the proxy sent by the Company to its stockholders intend to exercise their
discretion to vote on the stockholder proposal in accordance with their best
judgment if notice of the proposal is not received at the Company's main office
by February 26, 2001.
13
<PAGE>
- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Meeting, including
any adjournments thereof, it is intended that proxies in the accompanying form
will be voted in respect thereof in accordance with the judgment of the person
or persons voting the proxies. The Company did not have notice of any other
matter on or before February 28, 1999 and therefore the persons named in the
accompanying proxy will exercise discretionary authority when voting on any
other matter to come before the Meeting.
- --------------------------------------------------------------------------------
MISCELLANEOUS
- --------------------------------------------------------------------------------
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees, and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers, and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without payment of additional
compensation.
BY ORDER OF THE BOARD OF DIRECTORS
/s/John E. Marshall
----------------------------------
JOHN E. MARSHALL
SECRETARY
Honesdale, Pennsylvania
March 23, 2000
14
<PAGE>
APPENDIX
- --------------------------------------------------------------------------------
______________________________ TO VOTE BY MAIL ________________________________
To vote by mail, complete both sides, sign and date the proxy card below. Detach
the card below and return it in the envelope provided.
___________________________ TO VOTE BY TELEPHONE ______________________________
Your telephone vote is quick, confidential and immediate. Just follow these easy
steps:
1. Read the accompanying Proxy Statement.
2. Using a Touch-Tone telephone, call toll Free 1.800.565.8140 and follow the
instructions.
3. When asked for your Voter Control Number, enter the number printed just
above your name on the front of the proxy card below.
Please note that all votes cast by telephone must be submitted prior to midnight
Central Time, April 23, 2000.
Your Telephone vote authorizes the named parties to vote your shares to the same
extent as if you marked, signed, dated and returned the proxy card.
If You Vote By TELEPHONE, Please Do Not Return York Proxy Card By Mail.
__________________________ TO VOTE BY INTERNET ______________________
Your Internet vote is quick, confidential and your vote is immediately
submitted. Just follow these easy steps.
1. Read the accompanying Proxy Statement.
2. Visit our Internet voting Site at and follow the instructions on the screen
3. When prompted for your Voter Control Number, enter the number printed just
above your name on the front of the proxy card.
Please note that all votes cast by Internet must be submitted prior to midnight
Central Time, April 23, 2000.
Your Internet vote authorizes the named parties to vote your shares to the same
extent as if you marked, signed, dated and returned the proxy card.
This is a "secured" web page site. Your software and/or Internet provider must
be "enabled" to access this site.
Please call your software or Internet provider for further information.
If You Vote By INTERNET, Please Do Not Return York Proxy Card By Mail.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NORWOOD FINANCIAL CORP.
ANNUAL MEETING OF STOCKHOLDERS
April 25, 2000
- --------------------------------------------------------------------------------
The undersigned hereby appoints the official proxy committee of the
Board of Directors of the Norwood Financial Corp. (the "Company") with full
powers of substitution to act, as attorneys and proxies for the undersigned, to
vote all shares of common stock of the Company that the undersigned is entitled
to vote at the Annual Meeting of Stockholders (the "Meeting"), to be held at the
administrative office of Wayne Bank, 717 Main Street, Honesdale, Pennsylvania
18431, on Tuesday, April 25, 2000, at 11:00 a.m. and at any and all adjournments
thereof, as follows:
FOR WITHHELD
---- --------
1. The election as director of all nominees
listed below: [ ] [ ]
Charles E. Case
William W. Davis, Jr.
John E. Marshall
INSTRUCTIONS: To withhold your vote for any individual nominee, insert the
- ------------ nominee's name on the line provided below.
------------------------------------
In their discretion, such attorneys and proxies are authorized to vote upon such
other business as may properly come before the Meeting or any adjournments
thereof.
The Board of Directors recommends a vote "FOR" all of the listed
propositions. ---
- --------------------------------------------------------------------------------
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, A
SIGNED PROXY WILL BE VOTED FOR THE PROPOSITION STATED. IF ANY OTHER BUSINESS IS
PRESENTED AT THE MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY
IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO
OTHER BUSINESS TO BE PRESENTED AT THE MEETING. THIS PROXY ALSO CONFERS
DISCRETIONARY AUTHORITY ON THE OFFICIAL PROXY COMMITTEE TO VOTE WITH RESPECT TO
MATTERS INCIDENT TO THE CONDUCT OF THE MEETING.
- --------------------------------------------------------------------------------
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Please complete, date, sign and mail the detached
proxy card in the enclosed postage-prepaid envelope.
- --------------------------------------------------------------------------------
PROXY VOTING
You can vote in one of three ways: 1) By mail, 2) By Phone, 3) By Internet.
See the reverse side of this sheet for instructions.
IF YOU ARE NOT VOTING BY TELEPHONE OR BY INTERNET, COMPLETE BOTH SIDES OF
---
THIS PROXY AND RETURN IN THE ENCLOSED ENVELOPE TO:
Illinois Stock Transfer Co.
209 West Jackson Boulevard, Suite 903
Chicago, Illinois 60605
- --------------------------------------------------------------------------------
Should the undersigned be present and elects to vote at the Meeting, or at
any adjournment thereof, and after notification to the Secretary of the Company
at the Meeting of the stockholder's decision to terminate this proxy, the power
of said attorneys and proxies shall be deemed terminated and of no further force
and effect. The undersigned may also revoke this proxy by filing a subsequently
dated proxy or by written notification to the Secretary of the Company of his or
her decision to terminate this proxy.
The undersigned acknowledges receipt from the Company, prior to the
execution of this proxy, of Notice of the Meeting, a proxy statement dated
March 23, 2000 and an Annual Report to Stockholders.
[ ] Please check here if you plan to attend the Meeting.
------------------------------
NORWOOD
-------
Financial Corp
Signature: If you plan to personally
---------------------------------- attend the Annual Meeting
of Stockholders, please
Signature: check the box below and
---------------------------------- list names of attendees
on reverse side.
Return this stub in the
Date: enclosed envelope with
--------------------- your completed proxy card.
I/We do plan to attend [ ]
the 2000 meeting.
------------------------------
Please sign exactly as your name appears on the enclosed card. When signing as
attorney, executor, administrator, trustee, or guardian, please give your full
title. If shares are held jointly, each holder should sign.
