<PAGE>
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Northway Financial, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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>
[logo]
NORTHWAY
- ---------
FINANCIAL
- --------- NORTHWAY FINANCIAL, INC.
April 3, 2000
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Northway Financial, Inc., to be held on Tuesday, May 16, 2000 at 2:00 p.m. at
The Town and Country Motor Inn, Route 2, Shelburne, New Hampshire 03581.
At the annual meeting you will be asked to consider and act upon the
following:
(1) to elect four (4) class III directors to serve until the 2003
Annual Meeting of Shareholders or until their successors are duly
elected and qualified; and
(2) to transact such other business as may come properly before the
meeting.
I, along with the other members of the Board of Directors, look forward
to greeting you personally at the Annual Meeting. However, whether or not you
plan to attend personally and regardless of the number of shares you own, it is
important that your shares be represented. YOU ARE URGED TO PROMPTLY SIGN, DATE
AND MAIL THE ENCLOSED PROXY IN THE POSTAGE-PAID ENVELOPE PROVIDED FOR YOUR
CONVENIENCE.
This will not prevent you from voting in person but will assure that
your vote is counted if you are unable to attend.
Very truly yours,
William J. Woodward
Chairman of the Board
9 Main Street, Berlin, New Hampshire 03570/Telephone 603-752-1171
<PAGE>
[logo]
NORTHWAY
---------
FINANCIAL
---------
NORTHWAY FINANCIAL, INC.
9 MAIN STREET
BERLIN, NEW HAMPSHIRE 03570
TELEPHONE 603-752-1171
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, MAY 16, 2000
NOTICE IS HEREBY GIVEN THAT the Annual Meeting of Stockholders of
Northway Financial, Inc. will be held on Tuesday, May 16, 2000 at 2:00 p.m. at
The Town and Country Motor Inn, Route 2, Shelburne, New Hampshire 03581 for the
following purposes:
(1) To elect four (4) class III directors to serve until the 2003
Annual Meeting of Stockholders or until their successors are
elected and qualified; and
(2) To transact such other business as may come properly before the
meeting and any adjournments or postponements thereof.
The foregoing items are more fully described in the Proxy Statement
accompanying this Notice.
The Board of Directors has fixed the close of business on March 17,
2000 as the record date for determining stockholders entitled to notice of and
to vote at the Annual Meeting and any adjournments or postponements thereof.
Only holders of Common Stock of record at the close of business on that date
will be entitled to notice of and to vote at the Annual Meeting and any
adjournments or postponements thereof.
By Order of the Board of Directors
Joseph N. Rozek
Assistant Secretary
Berlin, New Hampshire
April 3, 2000
YOUR VOTE IS IMPORTANT
----------------------
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE
REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF
YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU
HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
<PAGE>
NORTHWAY FINANCIAL, INC.
9 MAIN STREET
BERLIN, NEW HAMPSHIRE 03570
TELEPHONE 603-752-1171
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, MAY 16, 2000
This Proxy Statement and accompanying form of proxy are furnished in
connection with the solicitation of proxies on behalf of the Board of Directors
of Northway Financial, Inc., a New Hampshire corporation (the "Company"), for
use in voting at the Annual Meeting of Stockholders (the "Meeting") to be held
at 2:00 p.m. on May 16, 2000, at The Town and County Motor Inn, Route 2,
Shelburne, New Hampshire 03581 and at any postponements or adjournments thereof.
This proxy statement and accompanying form of proxy were mailed to stockholders
of the Company on or about April 3, 2000 to stockholders of record at the close
of business on March 17, 2000 in connection with the solicitation.
At the close of business on March 17, 2000, there were outstanding and
entitled to vote 1,602,569 shares of Northway Financial, Inc. common stock, par
value of $1.00 per share.
Each stockholder is entitled to one vote per share upon each matter
submitted at the Meeting. Only stockholders of record at the close of business
on March 17, 2000 shall be entitled to vote at the meeting.
The proxies of holders of common stock are being solicited by the Board
of Directors. Stockholders are requested to complete, date, sign and promptly
return the accompanying proxy card in the enclosed envelope. Shares represented
by a properly executed proxy received prior to the vote at the Meeting and not
revoked will be voted at the Meeting as directed in the proxy. IF A PROXY IS
SUBMITTED AND NO DIRECTIONS ARE GIVEN, THE PROXY WILL BE VOTED "FOR" THE
APPROVAL OF THE PROPOSALS TO BE CONSIDERED AT THE MEETING.
A person giving the enclosed proxy may revoke it by filing an
instrument of revocation with Joseph N. Rozek, Assistant Secretary, Northway
Financial, Inc., 9 Main Street, Berlin, New Hampshire 03570. Any such person may
also revoke a proxy by filing a duly executed proxy bearing a later date, or by
appearing at the meeting in person, notifying the Assistant Secretary, and
voting by ballot at the Meeting. Any stockholder of record attending the Meeting
may vote in person whether or not a proxy has been previously given, but the
mere presence (without notifying the Assistant Secretary) of a stockholder at
the Meeting will not constitute revocation of a previously given proxy.
The Company will bear the cost of soliciting proxies from the
stockholders, including mailing costs, and will pay all printing costs in
connection with this Proxy Statement. In addition to the use of the mails,
proxies may be solicited by the directors, officers, and certain employees of
the Company, and by personal interview, telephone and facsimile. Such directors,
officers and employees will not receive additional compensation for such
solicitation but may be reimbursed for reasonable out-of-pocket expenses
incurred in connection therewith. The Company may also make arrangements with
brokerage houses and other custodians, nominees, and fiduciaries for the
forwarding of solicitation material to the beneficial owners of its common
stock. The Company may reimburse such custodians, nominees, and fiduciaries for
reasonable out-of-pocket expenses incurred in connection therewith.
The presence in person or by proxy of the holders of a majority of the
issued and outstanding shares entitled to vote at the Meeting is required to
constitute a quorum. Abstentions and "broker non-votes" (as defined below) will
be counted as present for purposes of determining the presence or absence of a
quorum for the transaction of business at the Meeting, but as unvoted for
purposes of determining the approval of any matter submitted to the stockholders
for a vote. 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.
The Company is a New Hampshire corporation and the parent of The Berlin
City Bank, a New Hampshire-chartered bank based in Berlin, New Hampshire ("BCB")
and Pemigewasset National Bank, a national bank based in Plymouth, New Hampshire
("PNB").
PROPOSAL ONE
ELECTION OF DIRECTORS
NOMINEES AND DIRECTORS CONTINUING IN OFFICE
The Company's Board of Directors is currently composed of eleven
members. The Company's Amended and Restated Articles of Incorporation provide
that directors are to be divided into three classes; with all classes as nearly
equal as possible in size. Each director is elected for three years and the
terms are staggered so that only one class is elected by the stockholders
annually.
At the Meeting, four directors will be elected to serve until the 2003
Annual Meeting and until their successors are duly elected and qualified. The
Board of Directors has nominated Peter H. Bornstein, Charles H. Clifford, Jr.,
Bruce W. Keough and John D. Morris, all of whom are current members of the Board
of Directors. It is the intention of the persons named in the accompanying form
of proxy or their substitutes to vote for the election of the foregoing nominees
unless instructed to the contrary. 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 above should not be available or able to serve,
the proxies may exercise discretionary authority to vote for one or more
substitutes as the Board of Directors may recommend, or in the alternative, the
Board of Directors may, if permitted by law and the Amended and Restated
Articles of Incorporation and Bylaws, amend the Bylaws if necessary and reduce
the size of the Board to eliminate the resulting vacancy. The affirmative vote
of a plurality of the votes cast is required for the election of directors.
Abstentions and broker non-votes will not be counted as "votes cast" for
purposes of electing directors and, therefore, will not affect the election of
the directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" ALL OF THE
NOMINEES FOR DIRECTOR OF THE COMPANY.
INFORMATION CONCERNING DIRECTORS AND NOMINEES
The following table sets forth the name and ages, other positions held
with the Company, term of office and period served, business experience, and
certain other information, as of March 17, 2000, with respect to each nominee
and for each director continuing in office. The information was provided by the
persons named.
<TABLE>
<CAPTION>
Shares of
Year Common Stock Percent
First Term Beneficially of Common
Elected To Owned at Stock
Name Age Director Expire Mar. 17, 2000(1) Ownership(1)
- --------------------------------------------------------------------------------------------------------------------
NOMINEES OF THE BOARD
<S> <C> <C> <C> <C> <C>
Bornstein, Peter H. 46 1997 2003 5,392 (2) ****
Attorney and Partner,
Bergeron Hanson, Bornstein
& Carlson
Clifford, Jr., Charles H. 64 1997 2003 2,500 ****
President, Clifford-Nicols
Printing
+Keough, Bruce W. 43 1999 2003 500 ****
Private Investor
Morris, John D. 69 1997 2003 9,856 ****
Retired Businessman
DIRECTORS CONTINUING IN OFFICE
Adams, Fletcher W. 63 1997 2001 54,500 (3) 3.40%
Vice-Chairman of the Board,
Northway Financial, Inc.;
Chairman of the Board,
Pemigewasset National Bank
Hanson, Jr., Arnold P. 50 1997 2001 46,312 (4) 2.89%
President, Isaacson Structural
Steel, Inc.
Noyes, John H. 53 1997 2001 11,825 ****
President, Noyes Insurance
Agency, Inc.; President,
Central Square Insurance, Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Shares of
Year Common Stock Percent
First Term Beneficially of Common
Elected To Owned at Stock
Name Age Director Expire Mar. 17, 2000(1) Ownership(1)
- --------------------------------------------------------------------------------------------------------------------
DIRECTORS CONTINUING IN OFFICE
<S> <C> <C> <C> <C> <C>
Woodward, William J. 54 1997 2001 80,588 5.03%
Chairman of the Board,
President, Chief Executive
Officer, Northway Financial,
Inc.; Chairman of the Board,
President, Chief Executive
Officer, The Berlin City Bank
Boucher, Stephen G. 53 1999 2002 250 ****
President, Airmar
Technology Corp.
Kelley, Barry J. 50 1997 2002 37,844 (5) 2.36%
President, White
Mountain Lumber, Co.
Labnon, Randall, G. 46 1997 2002 3,072 ****
General Manager,
Town & Country Motor Inn
</TABLE>
- ---------------------------
****Owns less than 1% of the Company's outstanding common stock.
+ Attended fewer than 75% of the scheduled meetings of the Board of Directors
(1) Included in the shares listed as "beneficially owned" are the following
shares which the persons listed have the right to acquire prior to the
Expiration Date of June 15, 2009 pursuant to stock options under the 1999
stock option and grant plan - Mr.
Woodward (7,500) and Mr. Adams (3,500).
(2) Includes 3,632 shares owned jointly with spouse, 320 shares owned by spouse
for which Mr. Bornstein may be deemed the beneficial owner,12 shares owned
jointly with son and 1,056 shares held in an account for which Mr.
Bornstein is the conservator.
(3) Includes 23,000 shares held in a trust for which Mr. Adams serves as
trustee.
(4) Includes 46,000 shares held in a trust for which Mr. Hanson serves as
trustee and 312 shares owned jointly with spouse.
(5) Includes 32,276 shares owned jointly with spouse.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Northway's
executive officers, directors and 10% stockholders to file reports of ownership
and changes in ownership with the Securities and Exchange Commission. Executive
officers and directors are required by SEC regulation to furnish Northway with
copies of all Section 16(a) filings. Each of the following individuals failed to
file Form 4s with respect to transactions in Northway's common stock on a timely
basis: Fletcher W. Adams, Vice Chairman of the Board, one occasion representing
one transaction; Arnold P. Hanson, Jr., Director, one occasion representing one
transaction; and Barry J. Kelley, Director, four occasions representing four
transactions. Form 4s relating to each of the foregoing transactions were
subsequently filed.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held thirteen (13) meetings during
the calendar year ended December 31, 1999.
Directors of the Company are paid an annual fee of $8,000 and directors who
also serve on the Executive Committee receive an additional annual fee of
$12,000. Directors who are officers of the Company do not receive any of these
fees.
The following sets forth the members of each of the standing committees of
the Board of Directors together with a brief description of the function of each
such committee.
EXECUTIVE COMMITTEE
MEMBERS: William J. Woodward, Chairman; Fletcher W. Adams, John D. Morris;
and John H. Noyes
FUNCTION: The Executive Committee generally has the power to exercise the
power of the full Board during intervals between meetings of the
Board.
NUMBER OF
MEETINGS: This Committee meets on a weekly basis.
AUDIT AND COMPLIANCE COMMITTEE
MEMBERS: Arnold P. Hanson, Jr., Chairman; Peter H. Bornstein; Charles H.
Clifford, Jr.; and Barry J. Kelley.
FUNCTION: This Committee oversees the activities of the Company's Internal
Auditor, its independent certified public accounting firm, and
activities of other accounting firms used on a project basis. This
Committee also reviews the results of each regulatory examination.
The Committee also provides oversight for all compliance activities
of the Company, including those of the corporate compliance
officer.
NUMBER OF
MEETINGS: This Committee met four (4) times during the 1999 fiscal year.
<PAGE>
HUMAN RESOURCES AND COMPENSATION COMMITTEE
MEMBERS: The full Board of Directors serves as the Human Resources and
Compensation Committee (Arnold P. Hanson, Jr., Chairman).
FUNCTION: This Committee conducts annual and periodic reviews of director,
officer, and employee compensation in order to ensure that the
Company has the programs necessary to attract and retain competent
professionals at all levels.
NUMBER OF
MEETINGS: This Committee met five (5) times during the 1999 fiscal year.
NOMINATING COMMITTEE
MEMBERS: The full Board of Directors serves as the Nominating Committee of
the Company.
FUNCTION: This Committee selects nominees for election as directors of the
Company. This Committee nominated the persons standing for election
at the 2000 Annual Meeting.
NUMBER OF
MEETINGS: The Board of Directors meets monthly and, as appropriate, discusses
nominations.
EXECUTIVE OFFICERS
The following sets forth information regarding the executive and key
officers of the Company and/or its subsidiaries, the position or office held by
each of them, and the date from which they have continually served as executive
officers.
Executive
Officer
Name Age Since
William J. Woodward 54 1989
Chairman, President, and Chief Executive Officer
Northway Financial, Inc. and The Berlin City Bank
George L. Fredette 40 1999
Senior Vice President and Chief Financial Officer
Northway Financial, Inc. and The Berlin City Bank
Paul M. Ferguson 46 1998
President and Chief Executive Officer, Pemigewasset
National Bank
Lawrence J. Bessinger 55 1999
Senior Vice President, Northway Financial, Inc.
James R. Brannen 39 1999
Senior Vice President, Northway Financial, Inc.
Richard T. Brunelle 58 1999
Senior Vice President, The Berlin City Bank
John H. Stratton, Jr. 54 1990
Senior Vice President, The Berlin City Bank
Robert I. Walker 61 1999
Senior Vice President, Pemigewasset National Bank
William J. Woodward has served as Chairman of the Board of Directors,
President and Chief Executive Officer of Northway since 1997. In addition, he
has served as President and Chief Executive Officer of BCB since 1994 and has
served as Chairman of the Board of Directors of BCB since 1989. He became a
Director of BCB in 1975.
George L. Fredette has served as Senior Vice President and Chief Financial
Officer of Northway and BCB since March 1999. Prior to joining the Company he
served as Executive Vice President and Chief Financial Officer of Evergreen
Bancorp, Inc. and Evergreen Bank, N. A. from December 1995 until January 1999.
From 1993 to 1995 he served as Vice President, Finance, of Evergreen Bancorp,
Inc. and Evergreen Bank, N. A.
Paul M. Ferguson has served as President and Chief Executive Officer of PNB
since July 1999. From February 1999 through July 1999, he served as President
and Chief Operating Officer. Mr. Ferguson joined PNB in September 1998 as
Executive Vice President and Chief Operating Officer. Prior to joining PNB, he
served as Executive Vice President and Chief Credit Officer of CFX Corporation
from 1997 to 1998. From 1991 to 1997 Mr. Ferguson served as Executive Vice
President of Banking Services for Community Bankshares, Inc.
Lawrence J. Bessinger has served as Senior Vice President of Northway
Financial since July 1999 and is responsible for the technology and deposit
services banking divisions. Prior to this promotion, Mr. Bessinger had served as
Vice President-Chief Information Officer for BCB since 1990.
James R. Brannen has served as Senior Vice President of Northway Financial
since July 1999 and is responsible for the loan operations division. From
November 1993 until July 1999, Mr. Brannen served as Vice President of Retail
Loan Operations for BCB.
Richard T. Brunelle has served as Senior Vice President of The Berlin City
Bank since March 1996 and is responsible for the commercial lending division.
From 1991 until his promotion, Mr. Brunelle served BCB as Vice President and
Senior Commercial Lender.
John H. Stratton, Jr. has served as Senior Vice President of BCB since 1990
and is responsible for the retail banking division.
Robert I. Walker has served as Senior Vice President of PNB since June 1999
and is responsible for the retail and marketing divisions. Prior to joining PNB,
Mr. Walker served as Senior Vice President of Vermont National Bank from 1998 to
1999. From 1996 to 1998 Mr. Walker served as Director of Marketing and Retail
Banking for Community Bankshares, Inc. From 1992 to 1996 he served as Regional
Manager and Branch Administrator for First New Hampshire Bank.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of March 17, 2000, the beneficial
ownership of common stock by (i) each of the executive officers named under
"Executive Compensation" below (other than Mr. Woodward), and (ii) all directors
and executive officers as a group. See "Information Concerning Directors and
Nominees" above for the beneficial ownership of common stock by Mr. Woodward and
other directors of the Company. As of March 17, 2000, no person owned
beneficially more than 5% of the Company's outstanding common stock except for
Mr. Woodward.
<TABLE>
<CAPTION>
Shares of Common Percent of Shares of
Name Stock Beneficially Owned(1) Common Stock Ownership(1)
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Richard T. Brunelle 2,050 ****
Paul Ferguson 2,230 ****
George L. Fredette 2,500 ****
John H. Stratton, Jr. 3,072 ****
Directors and executive officers 265,671 16.58%
as a group (18 persons)
</TABLE>
**** Owns less than 1% of the Company's common stock.
(1) Included in the shares listed as "beneficially owned" are the following
shares which the persons listed have the right to acquire prior to the
Expiration Date of June 15, 2009 pursuant to stock options under the 1999
stock option and grant plan - Mr. Woodward (7,500), Mr. Adams (3,500), Mr.
Ferguson (2,000), Mr. Fredette (2,000), Mr. Brunelle (2,000), Mr. Stratton
(2,000), Mr. Bessinger (1,500), and Mr. Brannen (1,500)
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation for services rendered in all capacities to the Company
during the fiscal years ended December 31, 1999, 1998 and 1997, of those persons
who were, at December 31, 1999: (i) the chief executive officer of the Company
and (ii) the other executive officers of the Company whose total annual salary
and bonus exceeded $100,000 (collectively, the "Named Executive Officers").
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
------------------------------ ------------------------
Other Annual(1) Securities Underlying
Name and Principal Position Year Salary Bonus Compensation Options/SARs (#)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
William J. Woodward 1999 $225,000 $ 39,921 $ 6,901 7,500
Chairman, President and Chief 1998 179,922 35,000 -- --
Executive Officer 1997 43,343 23,996 112,500(2) --
Paul M. Ferguson 1999 132,750 18,725 4,124 3,000
President and Chief Executive 1998 39,168 5,034 20,290 --
Officer, PNB
George L. Fredette 1999 95,830 16,381 25,362 3,000
Senior Vice President and
Chief Financial Officer
Richard T. Brunelle 1999 101,255 6,249 3,632 2,000
Senior Vice President 1998 87,413 5,765 1,125 --
Berlin City Bank 1997 79,500 3,750 900 --
John H. Stratton, Jr 1999 104,330 6,020 3,177 2,000
Senior Vice President 1998 100,880 3,023 720 --
Berlin City Bank 1997 97,890 4,902 720 --
</TABLE>
(1) The compensation reported in this column is composed of: (a) the
following amounts allocated to accounts in the 401(k) Plan, as an employer
matching contribution: Mr. Woodward - $3,375; Mr. Ferguson - $2,220; Mr.
Fredette - $863; Mr. Brunelle - $1,515; and Mr. Stratton - $1,504; (b) the
following amounts allocated to accounts in the Profit Sharing Plan: Mr. Woodward
- - $2,461; Mr. Ferguson - $1,363; Mr. Fredette - $1,190; Mr. Brunelle - $1,041;
and Mr. Stratton - $1,003; (c) the following amounts paid as group term life
insurance premiums: Mr. Woodward - $1,065; Mr. Ferguson - $541; Mr. Fredette -
$109; Mr. Brunelle - $1,076; and Mr. Stratton - $670; (d) the following amounts
paid as relocation expense: Mr. Fredette - $23,200.
(2) In June 1994, Mr. Woodward assumed executive management responsibility
with respect to BCB upon the resignation of BCB's President and Chief Executive
Officer pending possible selection of a successor. Through September 30, 1997,
Mr. Woodward was not a salaried employee of BCB and did not receive any pension,
insurance or other benefits. Mr. Woodward received the fees set forth above for
1997 in lieu of salary and benefits through September 30, 1997.
On September 30, 1997, Mr. Woodward entered into an employment agreement
with the Company and BCB. See "Employment Contracts" below. For 1997, $43,343
and $23,996 represent the amounts paid to Mr. Woodward in salary and bonus,
respectively, pursuant to such agreement.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
The following table provides details regarding stock options granted to
the individuals named in the Summary Compensation Table. In addition, in
accordance with Securities and Exchange Commission rules, there are shown the
hypothetical gains or "option spreads" that would exist for the respective
options. These gains are based on assumed rates of annual compound stock price
appreciation of 5% and 10% from the date the options were granted over the full
option term.
<TABLE>
<CAPTION>
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price Expiration
Name Granted (#) Fiscal Year ($/Sh) Date 5% ($)(1) 10%($)(1)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
William J. Woodward 7,500 26.79 28.00 06/15/09 132,068 334,686
Paul M. Ferguson 3,000 10.71 28.00 06/15/09 52,827 133,874
George L. Fredette 3,000 10.71 28.00 06/15/09 52,827 133,874
Richard T. Brunelle 2,000 7.14 28.00 06/15/09 35,218 89,250
John H. Stratton, Jr. 2,000 7.14 28.00 06/15/09 35,218 89,250
</TABLE>
(1)Potential Realizable Value is based on an assumed annual growth rate for
each of the grants shown over their ten-year term.
The potential values are set forth to comply with applicable regulations of
the Securities and Exchange Commission, and Northway cannot predict whether
these values can be achieved. Actual gains, if any, on stock option exercises
are dependent on the future performance of Northway common stock.
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table shows stock option exercises by the individuals named
in the Summary Compensation Table. In addition, this table includes the number
of shares covered by both exercisable and unexercisable options as of April 1,
2000. Also reported are the values for "in-the money" options, which represent
the positive spread between the exercise price of any such existing options and
the year-end closing price of Northway common stock.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/
Options/SARs at FY- SARs at FY-End ($)
Shares Acquired Value Realized End(#) Exercisable/ Exercisable/
Name On Exercise (#) ($) Unexercisable Unexercisable
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
William J. Woodward 0 0 7,500/0 0/0
Paul M. Ferguson 0 0 2,000/1,000 0/0
George L. Fredette 0 0 2,000/1,000 0/0
Richard T. Brunelle 0 0 2,000/0 0/0
John H. Stratton, Jr. 0 0 2,000/0 0/0
</TABLE>
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Common Stock (assuming $100 was invested on September 30, 1997, the date when
Northway common stock became publicly traded, and all dividends were reinvested)
against (i) the cumulative total return of the S&P Composite 500 Stock Index,
and (ii) the NASDAQ Bank Stock Index.
[graphic omitted]
- -------------------------------------------------------------------------------
09/30/97 12/31/97 12/31/98 12/31/99
- -------------------------------------------------------------------------------
NWFI $100.00 $103.33 $90.83 $86.67
- -------------------------------------------------------------------------------
S&P 500 100.00 102.44 129.76 155.10
- -------------------------------------------------------------------------------
NASDAQ BANK STOCKS 100.00 109.97 97.03 89.28
- -------------------------------------------------------------------------------
EMPLOYMENT CONTRACTS
Messrs. Woodward, Adams, Ferguson and Fredette have entered into employment
agreements with the Company. Pursuant to the employment agreements, each
executive provides ongoing services to the Company on a full-time basis for
periods of three years, in the case of Messrs. Woodward and Adams, and two years
in the case of Messrs. Ferguson and Fredette. These terms are automatically
renewed for periods of one year commencing on each anniversary of the respective
agreements unless either the executive or the Company gives written notice to
the other electing not to extend the term. The employment agreements provide for
annual base salaries that are subject to increase from time to time in the
discretion of the Board of Directors. The employment agreements also provide
that each of the executives is entitled to participate in any incentive or bonus
program established by the Board of Directors, as well as other employee benefit
plans which the Company may from time to time have in effect for all or most of
its senior executives.
In addition to certain confidentiality and non-compete provisions, the
agreements provide that if an executive is terminated from full-time employment
with the Company without cause prior to the end of the respective term, then he
will be entitled to receive his base salary at the rate then in effect and
certain group health benefits for the remainder of such term (the "Termination
Benefits Period"); provided, that in the event such executive commences any
employment or self-employment during the period during which he is entitled to
receive the termination benefits, the remaining amount of base salary due, for
the period from the commencement of such employment or self-employment to the
end of the Termination Benefit Period, will be reduced by one-half of the salary
such executive receives from such employment or self-employment. In addition, if
such executive receives benefits from such employment or self-employment
comparable to those benefits provided by the Company, the continuation of group
health benefits shall cease effective as of the date of commencement of such
employment or self-employment.
The employment agreements also provide for termination benefits if the
executives' employment with the Company is terminated under certain
circumstances following a "change of control." If within 18 months following a
change of control, in the case of Messrs. Woodward and Adams, or twelve months
in the case of Messrs. Ferguson and Fredette, such executive's employment is
terminated by the Company or by such executive following the occurrence of
certain adverse actions taken with respect to such executive's employment, or if
such executive's employment is terminated without cause, the Company must, in
lieu of any other termination benefits described above, pay to such executive
(or such executive's estate, if applicable) a lump-sum payment, in the case of
Messrs. Woodward and Adams, equal to 2.99 times such executive's "base amount"
(within the meaning of section 280G of the Internal Revenue Code of 1986, as
amended) and, in the case of Messrs. Ferguson and Fredette, two times such "base
amount".
KEY EMPLOYEE AGREEMENTS
The Company and its subsidiaries have entered into Key Employee agreements
with certain officers. These agreements provide for payments, under certain
circumstances, to the officer upon the officer's termination after a change in
control. The amount of such payments is set forth in their individual key
employee agreements.
PENSION PLANS
The Company maintains a noncontributory defined benefit pension plan
covering all full-time and part-time employees who work at least 1,000 hours,
have completed one year of service and have attained the age of 21. Vesting will
occur after 5 years, and age 65 will be the normal retirement age. Early
retirement may be taken, however, after age 55.
The following table illustrates estimated annual pension benefits for
retirement at age 65 under the most advantageous plan provisions available for
the various levels of compensation and years of service. The figures in this
table are calculated based on 1.00% of the final 5 years average total W-2
earnings plus .65% of compensation in excess of covered compensation times the
number of years of service. Covered compensation for the purpose of this
calculation is currently $32,940.
AVERAGE
COMPENSATION YEARS OF SERVICE
- --------------------------------------------------------------------------------
15 20 25 30 35
- -------------------------------------------------------------------------------
$125,000 27,700 37,000 46,200 55,500 64,700
$150,000 33,900 45,200 56,500 67,800 79,100
$160,000 36,400 48,500 60,600 72,800 84,900
$175,000 36,400 48,500 60,600 72,800 84,900
$200,000 36,400 48,500 60,600 72,800 84,900
$225,000 36,400 48,500 60,600 72,800 84,900
$250,000 36,400 48,500 60,600 72,800 84,900
REPORT OF THE HUMAN RESOURCES AND COMPENSATION COMMITTEE ON EXECUTIVE
COMPENSATION
GENERAL POLICIES
The Human Resources and Compensation Committee (the "Committee") is
comprised of the full Board of Directors. The Committee's responsibility is to
set policy and oversee the administration of the Company's compensation and
benefits. Working with an outside bank compensation consultant, the Committee
recommends the approval of the salary program for the entire organization. It
also oversees the compensation of the Chief Executive Officer ("CEO") and
certain other senior officers.
The base salary of these senior executive officers is set at an amount
within an established salary range that reflects the executive's position,
duties and level of responsibility. The salary range consists of minimum and
maximum levels distributed around an average of base salaries paid to executives
who hold substantially similar positions within a selected peer group. Any
bonuses are designed to reward executives for performance and are based
primarily on the Company's financial results.
CEO COMPENSATION
In connection with Mr. Woodward's employment agreement described above, the
Company engaged a bank compensation consultant to act as its advisor in the
matter of executive compensation. This consultant specializes in compensation
matters for New England financial institutions, and maintains an extensive data
base for banks in various asset size groups.
Using a variety of established surveys concerning bank salaries, the
Company's consultant recommended a set of competitive and current salary grades
and ranges for Mr. Woodward. In connection with Mr. Woodward's employment
agreement, the consultant's recommended structure was subsequently approved by
the Board.
Submitted by the outside directors of the Human Resources and
Compensation Committee.
Arnold P. Hanson, Jr., Chairperson Barry J. Kelley
Fletcher W. Adams Bruce W. Keough
Peter H. Bornstein Randall G. Labnon
Stephen G. Boucher John D. Morris
Charles H. Clifford, Jr. John H. Noyes
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has, during its ordinary course of business, made loans to
directors and executive officers. Loans are made on substantially the same
terms, including rates and collateral, as those prevailing at the time for
comparable transactions with other persons and do not involve more than the
normal risk of collectibility or present other unfavorable features. The Company
has had (and expects to have in the future) banking transactions with directors,
executive officers, principal stockholders, and their associates on the same
terms (including interest rates and collateral on loans) as those prevailing at
the same time for comparable transactions with others, and do not involve more
than the normal risk of collectibility or present other unfavorable features.
The largest aggregate amount of such extensions of credit to directors,
executive officers, principal stockholders, and their associates during the
period of January 1, 1999 through December 31, 1999 was $1,121,000 The aggregate
amount owing to the Company from such individuals on December 31, 1999 was
$800,224, or 2.04% of stockholders' equity. As mentioned above, these loans were
made on the same terms for comparable transactions with others.
There were no executive officers or directors whose direct or indirect
liability to the Company exceeded 10% of stockholders' equity at any time during
the year.
During 1999 the Company received services from certain directors and their
affiliates, which either totaled $60,000 or represented more than 5% of that
firm's gross revenue, as follows: Vaillancourt & Woodward, Inc., of which
William J. Woodward is a part owner, provided insurance services totaling
$118,268 and Peter H. Bornstein of Bergeron, Hanson, Bornstein & Carlson
provided legal services totaling $24,938.
RELATIONSHIP WITH INDEPENDENT AUDITORS
Shatswell, MacLeod and Company was the Company's independent auditing firm
for 1999. Representatives of Shatswell, MacLeod and Company are expected to be
present at the meeting to respond to stockholders' questions and will have the
opportunity to make a statement if they so desire. The firm of Shatswell,
MacLeod and Company has served as the Company's independent auditing firm since
September 30, 1997.
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, 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.
MISCELLANEOUS
A copy of the Company's Annual Report to Stockholders, including financial
statements has been mailed to all stockholders of record as of the close of
business on March 17, 2000. Any stockholder who has not received a copy of such
Annual Report or would like to obtain a copy of the Company's Annual Report on
Form 10-K may do so by writing George L. Fredette, Senior Vice President & CFO
c/o Northway Financial, Inc., 9 Main Street, Berlin, NH 03570. Such Annual
Report is not to be treated as a part of the proxy solicitation material or as
having been incorporated herein by reference.
STOCKHOLDER PROPOSALS
The Company's By-Laws provide that any director nominations and new
business proposals intended to be submitted by stockholders in connection with
an Annual Meeting of Stockholders must be filed, delivered to, or mailed to and
received by, the Company at its principal executive office not less than 75 days
nor more than 120 days prior to the anniversary date of the immediately
preceding Annual Meeting (the "Anniversary Date") or, in other words, no later
than March 3, 2001 and no earlier than January 17, 2001 ; provided, however,
that in the event the annual Meeting is scheduled to be held on a date more than
30 days before the Anniversary Date or more than 60 days after the Anniversary
Date, a stockholder's notice shall be timely if delivered to, or mailed to and
received by, the Company at its principal executive office not later than the
close of business on the later of (1) the 75th day prior to the scheduled date
of such annual Meeting or (2) the 15th day following the day on which public
announcement of the date of such Annual Meeting is first made by the Company. A
copy of the applicable Bylaw provisions may be obtained, without charge, upon
written request to Joseph N. Rozek, Assistant Secretary, of the Company at its
principal executive office in Berlin, New Hampshire.
In addition to the foregoing, in accordance with the rules of the
Securities and Exchange Commission, any proposal that a stockholder intends to
present at the annual meeting of stockholders in 2001 must be received by the
Company not less than 120 days prior to the Anniversary Date, or January 17,
2001, to be eligible for inclusion in the proxy statement and form of proxy
relating to such meeting.
By Order of the Board of Directors
Joseph N. Rozek
Assistant Secretary
Berlin, New Hampshire
April 3, 2000
<PAGE>
NWF31 B
DETACH HERE
PROXY
NORTHWAY FINANCIAL, INC.
9 Main Street, Berlin, New Hampshire 03570
Proxy for Common Stock
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints William J. Woodward and George L. Fredette,
and each of them, proxies with full power of substitution to vote for and on
behalf of the undersigned at the Annual Meeting of Stockholders of Northway
Financial, Inc. ("Northway"), to be held at the Town & Country Motor Inn, Route
2, Shelburne, New Hampshire, on May 16, 2000, at 2:00 p.m., and at any
adjournment or postponements thereof, hereby granting full power and authority
to act on behalf of the undersigned at said meeting or any adjournment or
postponement therof. The undersigned revokes any proxy previously given in
connection with such meeting and acknowledges receipt of Notice of the Annual
Meeting of Stockholders and Northway's 1998 Annual Report to Stockholders.
- ------------- -------------
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
- ------------- -------------
<PAGE>
NORTHWAY FINANCIAL, INC.
c/o EquiServe
P.O. Box 9398
Boston, MA 02205-9398
NWF31A
DETACH HERE
Please mark
[X] votes as in
this example.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no instructions are indicated, the
undersigned's votes will be cast "FOR" each of such matters. PLEASE SIGN AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
1. Proposal to elect (01) Peter H. 2. Such other business as may properly
Bornstein, (02) Charles H. come before the meeting or any
Clifford, Jr., (03) Bruce W. adjournments or postponements
Keough and (04) John D. Morris thereof.
for a three year term to
continue until the 2003 Annual
Meeting of Stockholders, and until
the successor of each is duly elected
and qualified.
FOR WITHHELD
[ ] ALL [ ] FROM ALL
NOMINEES NOMINEES
[ ] _____________________________________
For all nominees except as noted above
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
For joint accounts, each owner should sign.
Executors, administrators, trustees, corporate
officers, and others acting in a representative
capacity should give full title or authority.
Signature: _____________ Date: ________ Signature: _____________ Date: ________
