SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, For Use of the
[x] Definitive Proxy Statement Commission Only (as permitted
[_] Definitive Additional Materials by Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
Bay State Bancorp, Inc.
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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)(1) and 0-11.
________________________________________________________________________________
1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it 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>
BAY STATE BANCORP, INC.
1299 Beacon Street
Brookline, Massachusetts 02446
June 16, 2000
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders of
Bay State Bancorp, Inc. The meeting will be held at the Double Tree Guest
Suites, 550 Winter Street, Waltham, Massachusetts, on Thursday, July 27, 2000,
at 2:00 p.m., local time.
The notice of annual meeting and proxy statement appearing on the following
pages 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 Shatswell, MacLeod &
Company, P.C., the Company's independent auditors, will be present to respond to
appropriate questions of stockholders.
It is important that your shares are represented at this meeting, whether
or not you attend the meeting in person and regardless of the number of shares
you own. To make sure your shares are represented, we urge you to complete and
mail the enclosed proxy card. If you attend the meeting, you may vote in person
even if you have previously mailed a proxy card.
We look forward to seeing you at the meeting.
Sincerely,
/s/ JOHN F. MURPHY
John F. Murphy
Chairman of the Board, President and
Chief Executive Officer
<PAGE>
BAY STATE BANCORP, INC.
1299 Beacon Street
Brookline, Massachusetts 02446
(617) 739-9500
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On July 27, 2000
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NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of Bay State
Bancorp, Inc. (the "Company") will be held at the Double Tree Guest Suites, 550
Winter Street, Waltham, Massachusetts, on Thursday, July 27, 2000, at 2:00 p.m.,
local time, for the following purposes:
1. To elect two directors to serve for a term of three years;
2. To ratify the appointment of Shatswell, MacLeod & Company, P.C. as
independent auditors for the Company for the fiscal year ending March
31, 2001; and
3. To transact any other business that may properly come before the
meeting.
NOTE: The Board of Directors is not aware of any other business to come
before the meeting.
Only stockholders of record at the close of business on May 30, 2000 are
entitled to receive notice of the meeting and to vote at the meeting and any
adjournment or postponement of the meeting.
Please complete and sign the enclosed form of proxy, which is solicited by
the Board of Directors, and mail it promptly in the enclosed envelope. The proxy
will not be used if you attend the meeting and vote in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ JILL W. LACY
Jill W. Lacy
Corporate Secretary
Brookline, Massachusetts
June 16, 2000
IMPORTANT: The prompt return of proxies will save the Company the expense of
further requests for proxies in order to ensure a quorum. A self-addressed
envelope is enclosed for your convenience. No postage is required if mailed in
the United States.
<PAGE>
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PROXY STATEMENT
OF
BAY STATE BANCORP, INC.
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ANNUAL MEETING OF STOCKHOLDERS
July 27, 2000
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This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Bay State Bancorp, Inc. (the "Company") to
be used at the annual meeting of stockholders of the Company. The Company is the
holding company for Bay State Federal Savings Bank ("Bay State Federal" or the
"Bank"). The annual meeting will be held at the Double Tree Guest Suites, 550
Winter Street, Waltham, Massachusetts, on Thursday, July 27, 2000, at 2:00 p.m.,
local time. This proxy statement and the enclosed proxy card are being first
mailed to stockholders on or about June 16, 2000.
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VOTING AND PROXY PROCEDURE
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Who Can Vote at the Meeting
You are entitled to vote your Company common stock if the records of the
Company show that you held your shares as of the close of business on May 30,
2000. If your shares are held in a stock brokerage account or by a bank or other
nominee, you are considered the beneficial owner of shares held in "street
name," and these proxy materials are being forwarded to you by your broker or
nominee. As the beneficial owner, you have the right to direct your broker how
to vote. Your broker or nominee has enclosed a voting instruction card for you
to use in directing the broker or nominee how to vote your shares.
As of the close of business on May 30, 2000, a total of 1,956,280 shares of
Company common stock was outstanding. Each share of common stock has one vote.
As provided in the Company's Certificate of Incorporation, no record owner of
the Company's common stock which is beneficially owned, either directly or
indirectly, by a person who beneficially owns in excess of 10% of the Company's
outstanding shares, is entitled to any vote in respect of the shares held in
excess of that limit.
Attending the Meeting
If you hold your shares in street name, you will need proof of ownership to
be admitted to the meeting. A recent brokerage statement or letter from a bank
or broker are examples of proof of ownership. If you want to vote your shares of
Company common stock held in street name in person at the meeting, you will have
to get a written proxy in your name from the broker, bank or other nominee who
holds your shares.
Vote Required
A majority of the outstanding shares of common stock entitled to vote is
required to be represented at the meeting in order to constitute a quorum for
the transaction of business. If you return valid proxy instructions or attend
the meeting in person, your shares will be counted for purposes of determining
whether there is a quorum, even if you abstain from voting. Broker non-votes
also will be counted for purposes of determining the existence of a quorum. A
broker non-vote occurs when a broker, bank or other nominee holding shares for a
beneficial owner does not vote on a particular proposal because the nominee does
not
<PAGE>
have discretionary voting power with respect to that item and has not received
voting instructions from the beneficial owner.
In voting on the election of directors, you may vote in favor of all
nominees, withhold votes as to all nominees, or withhold votes as to specific
nominees. Directors are elected by a plurality of the votes cast. This means
that the nominees receiving the greatest number of votes will be elected. Votes
that are withheld and broker non-votes will have no effect on the outcome of the
election. In voting on the ratification of the appointment of Shatswell, MacLeod
& Company, P.C. as independent auditors, you may vote in favor of the proposal,
vote against the proposal or abstain from voting. The ratification of Shatswell,
MacLeod & Company, P.C. as independent auditors will be decided by the
affirmative vote of a majority of the votes cast. Broker non-votes and
abstentions will not be counted as votes cast and will have no effect on the
voting on this matter.
Voting by Proxy
The Company's Board of Directors requests that you allow your shares of
Company common stock to be represented at the annual meeting by the persons
named in the enclosed proxy card. All shares of Company common stock represented
at the meeting by properly executed and dated proxies will be voted according to
the instructions indicated on the proxy card. If you sign, date and return a
proxy card without giving voting instructions, your shares will be voted as
recommended by the Company's Board of Directors. The Board of Directors
recommends a vote "FOR" each of the nominees and "FOR" ratification of
Shatswell, MacLeod & Company, P.C. as independent auditors.
If any matters not described in this proxy statement are properly presented
at the annual meeting, the persons named in the proxy card will use their own
judgment to determine how to vote your shares. This includes a motion to adjourn
or postpone the meeting in order to solicit additional proxies. If the annual
meeting is postponed or adjourned, your Company common stock may be voted by the
persons named in the proxy card on the new meeting date as well, unless you have
revoked your proxy. The Company does not know of any other matters to be
presented at the meeting.
You may revoke your proxy at any time before the vote is taken at the
meeting. To revoke your proxy you must either advise the Corporate Secretary of
the Company in writing before your common stock has been voted at the annual
meeting, deliver a later dated proxy, or attend the meeting and vote your shares
in person. Attendance at the annual meeting will not in itself constitute
revocation of your proxy.
If your Company common stock is held in street name, you will receive
instructions from your broker, bank or other nominee that you must follow in
order to have your shares voted. Your broker or bank may allow you to deliver
your voting instructions via the telephone or the Internet. Please see the
instruction form that is provided by your broker, bank or other nominee and
accompanies this proxy statement.
The cost of solicitation of proxies on behalf of the Board will be borne by
the Company. In addition to the solicitation of proxies by mail, Regan &
Associates, Inc., a proxy solicitation firm, will assist the Company in
soliciting proxies for the annual meeting. The Company will pay a fee of $4,250,
inclusive of out-of-pocket expenses for these services. Proxies may also be
solicited personally or by telephone by directors, officers and other employees
of the Company and the Bank without any additional compensation. The Company
will also request persons, firms and corporations holding shares in their names,
or in the name of their nominees, which are beneficially owned by others, to
send proxy material to, and obtain proxies from, the beneficial owners, and will
reimburse those record holders for their reasonable expenses in doing so.
2
<PAGE>
Participants in Bay State Federal's ESOP and 401(a) Plan
If you are a participant in the Bay State Federal Savings Bank Employee
Stock Ownership Plan (the "ESOP") or if you hold shares of Company common stock
through the Bank's 401(a) Plan, you will be receiving additional proxy cards.
Through such additional proxy cards, you will be able to direct the trustees for
the plans as to the manner in which shares of Company common stock allocated to
your plan accounts are to be voted.
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STOCK OWNERSHIP
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The following table provides information as of May 30, 2000, with respect
to persons known by the Company to be the beneficial owners of more than 5% of
the Company's outstanding common stock. A person may be considered to own any
shares of common stock over which he or she has, directly or indirectly, sole or
shared voting or investing power.
<TABLE>
<CAPTION>
Number of Shares Percent of Common
Name and Address Owned Stock Outstanding
---------------- ---------------- -----------------
<S> <C> <C>
Bay State Federal Savings Bank 202,818(1) 10.37%
Employee Stock Ownership Plan and Trust
1299 Beacon Street
Brookline, Massachusetts 02446
Bay State Federal Savings Charitable Foundation 187,795(2) 9.60%
(the "Foundation")
1299 Beacon Street
Brookline, Massachusetts 02446
First Financial Fund, Inc. 120,400(3) 6.15%
Gateway Center Three
100 Mulberry Street, 9th Floor
Newark, New Jersey 07102
Tontine Financial Partners, L.P. 100,000(4) 5.11%
Tontine Management, L.L.C.
Tontine Overseas Associates, L.L.C.
Jeffrey L. Gendell
200 Park Avenue
Suite 3900
New York, New York 10166
</TABLE>
----------
(1) Under the terms of the ESOP, the ESOP trustee will vote shares allocated to
participants' accounts in the manner directed by the participants. The ESOP
trustee, subject to its fiduciary responsibilities, will vote unallocated
shares and allocated shares for which no timely voting instructions are
received in the same proportion as shares for which the trustee has
received proper voting instructions from participants. As of May 30, 2000,
61,512 shares have been allocated to participants' accounts and 141,306
shares remain unallocated under the ESOP.
(2) The Foundation was established and funded in connection with the Bank's
conversion to stock form on March 27, 1998. As mandated by the Office of
Thrift Supervision, the terms of the gift instrument require that all
shares of common stock held by the Foundation must be voted in the same
ratio as all other shares of Company common stock on all proposals
considered by stockholders of the Company.
(3) Based on information disclosed in a Schedule 13G filed with the Securities
and Exchange Commission ("SEC") on February 15, 2000.
(4) Based on information disclosed by the group of reporting persons set forth
herein in a Schedule 13D filed with the SEC and most recently amended on
January 3, 2000.
3
<PAGE>
The following table provides information about the shares of Company common
stock that may be considered to be owned by each director or nominee for
director of the Company, by the executive officers named in the Summary
Compensation Table and by all directors and executive officers of the Company as
a group as of May 30, 2000. A person may be considered to own any shares of
common stock over which he or she has, directly or indirectly, sole or shared
voting or investment power. Unless otherwise indicated, each of the named
individuals has sole voting and investment power with respect to the shares
shown.
<TABLE>
<CAPTION>
Number of Options Percent of
Shares Owned Exercisable Common Stock
Name (Excluding Options) Within 60 Days Outstanding (1)
-------------------------------------- ------------------- -------------- ---------------
<S> <C> <C> <C>
Robert B. Cleary ..................... 5,340(2) 2,171 *
Michael O. Gilles .................... 16,707(3) 4,437 1.08%
Leo F. Grace ......................... 15,590(4) 2,171 *
Richard F. Hughes .................... 7,190(5) 2,171 *
Richard F. McBride ................... 24,603(6) 2,171 1.37
Philip R. McNulty .................... 7,833(7) 4,200 *
John F. Murphy ....................... 38,584(8) 22,183 3.07
Denise M. Renaghan ................... 26,245(9) 16,638 2.17
Kent T. Spellman ..................... 56,120(10) 2,171 2.98
Directors and executive officers
as a group (9 persons) ............ 198,212 58,313 12.73
</TABLE>
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* Less than 1% of shares outstanding
(1) Based on 1,956,280 shares of Company common stock outstanding and entitled
to vote as of May 30, 2000, plus the number of shares that may be acquired
within 60 days by each individual (or group of individuals) by exercising
stock options.
(2) Includes 3,472 shares of unvested restricted stock as to which Mr. Cleary
exercises voting power, but not investment power.
(3) Includes 5,678 shares of unvested restricted stock as to which Mr. Gilles
exercises voting power, but not investment power.
(4) Includes 3,472 shares of unvested restricted stock as to which Mr. Grace
exercises voting power, but not investment power.
(5) Includes 200 shares held for the benefit of Mr. Hughes' grandchildren in
which his son serves as trustee and 3,472 shares of unvested restricted
stock as to which Mr. Hughes exercises voting power, but not investment
power.
(6) Includes 9,013 shares held by Mr. McBride's spouse and 3,472 shares of
unvested restricted stock as to which Mr. McBride exercises voting power,
but not investment power.
(7) Includes 3,500 shares of unvested restricted stock as to which Mr. McNulty
exercises voting power, but not investment power.
(8) Includes 195 shares held by Mr. Murphy's spouse's individual retirement
account and 20,281 shares of unvested restricted stock as to which Mr.
Murphy exercises voting power, but not investment power.
(9) Includes 13,309 shares of unvested restricted stock as to which Ms.
Renaghan exercises voting power, but not investment power.
(10) Includes 10,000 shares held by Mr. Spellman's spouse, 1,780 shares held by
a corporation in which Mr. Spellman is a principal owner and 3,472 shares
of unvested restricted stock as to which Mr. Spellman exercises voting
power, but not investment power.
4
<PAGE>
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INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
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The two nominees proposed by the Board of Directors for election as
director were unanimously chosen by the Nominating Committee of the Board of
Directors. None of the nominees are being proposed according to an agreement or
understanding between any of them and the Company.
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PROPOSAL 1 -- ELECTION OF DIRECTORS
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The Company's Board of Directors consists of seven members. Five directors
are independent and two directors are members of management. The Board is
divided into three classes with three-year staggered terms, with approximately
one-third of the directors elected each year. The nominees for election this
year are Richard F. McBride and Denise M. Renaghan, each of whom is a director
of the Company and the Bank.
It is intended that the proxies solicited by the Board of Directors will be
voted for the election of the nominees named above. If any nominee is unable to
serve, the persons named in the proxy card would vote your shares to approve the
election of any substitute proposed by the Board of Directors. Alternatively,
the Board of Directors may adopt a resolution to reduce the size of the Board.
At this time, the Board of Directors knows of no reason why any nominee might be
unable to serve.
The Board of Directors recommends a vote "FOR" the election of both of the
nominees.
The following table sets forth certain information regarding the nominees
for election at the meeting, as well as information regarding those directors
continuing in office after the meeting.
Year First
Elected Term to
Age (1) Director (2) Expire
--------- -------------- ----------
DIRECTOR NOMINEES
Richard F. McBride ............ 72 1994 2003
Denise M. Renaghan ............ 43 1997 2003
DIRECTORS CONTINUING IN OFFICE
Robert B. Cleary .............. 64 1987 2001
Leo F. Grace .................. 68 1997 2002
Richard F. Hughes ............. 68 1997 2002
John F. Murphy ................ 60 1975 2002
Kent T. Spellman .............. 51 1988 2001
----------
(1) As of April 14, 2000.
(2) Includes prior service on the Board of Directors of the Bank. Each member
of the Board of Directors also serves as a director of the Bank.
5
<PAGE>
The present principal occupation and other business experience during the
last five years of each nominee for election and each director continuing in
office is set forth below.
Director Nominees
Richard F. McBride is the owner of H.R. McBride Realtor, located in
Watertown, Massachusetts.
Denise M. Renaghan joined the Bank in 1974 and has served in various
positions before being named Executive Vice President and Chief Operating
Officer in January 1997. Ms. Renaghan is a member of the Education Committee of
America's Community Bankers, the Loan Committee of the Connecticut On-Line
Computer Center, and the Massachusetts Mortgage Bankers Association. She is a
past president and currently a member of the Financial Managers Society and is a
past president of the Brookline Consortium for Community Housing.
Directors Continuing in Office
Robert B. Cleary has been principal of the Robert Cleary Insurance Group, a
provider of life, property and casualty insurance and financial planning,
located in Boston, for more than forty years.
Leo F. Grace was President, Chief Executive Officer and Chairman of the
Board of Directors of Union Federal Savings Bank of Boston from 1968 until the
merger of Union Federal with the Bank in February 1997. He served as a
consultant to the Bank until February 21, 2000.
Richard F. Hughes is the founder and President of Hughes & Associates,
Inc., an organizational and management consulting firm located in Quincy,
Massachusetts.
John F. Murphy joined the Bank in 1961 and served in various positions
until 1976, when he was named President and Chief Executive Officer of the Bank.
In 1994, he was also named Treasurer of the Bank. In 1996, Mr. Murphy was
elected Chairman of the Board of Directors. Mr. Murphy is a director of
Connecticut On-Line Computer Center Trust and is a member of the Legislative,
Secondary Market and Federal Home Loan Bank System Committees and the Government
Affairs Council of the America's Community Bankers. He is a past president of
the New England League of Savings Institutions and a former director of the
Federal Home Loan Bank of Boston.
Kent T. Spellman is founder and President of Telluride Clothing Co., Inc.,
a branded clothing wholesaler, located in Natick, Massachusetts. He is also a
general partner of several partnerships holding commercial real estate.
Meetings and Committees of the Board of Directors
The Board of Directors of the Company and the Board of Directors of the
Bank conduct business through meetings of the Board of Directors and through
activities of their committees. The Board of Directors of the Company meets at
least quarterly and may have additional meetings as needed. The Board of
Directors of the Bank generally meets monthly and may have additional meetings
as needed. During fiscal 2000, the Board of Directors of the Company held four
meetings and the Board of Directors of the Bank held 12 meetings. All of the
current directors of the Company and the Bank attended at least 75% of the total
number of the Company's and the Bank's board meetings held and committee
meetings on which
6
<PAGE>
such directors served during fiscal 2000. The Board of Directors of the Company
maintains the following committees:
Audit and Compliance Committee. The Audit Committee of the Company consists
of Messrs. Cleary, Spellman and Murphy. The purpose of the Audit and Compliance
Committee is to review the Company's audit reports and management's actions
regarding the implementation of audit findings and to review compliance with all
relevant laws and regulations. The Committee is also responsible for supervising
the Company's internal auditor and engaging the Company's independent auditor.
The Audit and Compliance Committee met once in fiscal 2000.
Compensation Committee. The Compensation Committee of the Company consists
of Messrs. Cleary, McBride and Murphy. This Committee is responsible for all
matters regarding compensation and fringe benefits. The Compensation Committee
met two times in fiscal 2000.
Nominating Committee. The Company's Nominating Committee for the 2000
Annual Meeting consisted of Messrs. Murphy, Cleary and Spellman. The Nominating
Committee considers and recommends the nominees for director to stand for
election at the Company's Annual Meeting of Stockholders. The Company's Bylaws
provide for stockholder nominations of directors. These provisions require such
nominations to be made pursuant to timely written notice to the Secretary of the
Company. The stockholders' notice of nominations must contain all information
relating to the nominee which is required to be disclosed by the Company's
Bylaws and by the Securities Exchange Act of 1934 (the "Exchange Act"). See
"Additional Information - Notice of Business to be Conducted at an Annual
Meeting." The Nominating Committee met on April 20, 2000.
Directors' Compensation
Directors' Fees. All Directors of the Bank are currently paid an annual
retainer of $6,000 and receive a fee of $500 for each regularly scheduled
monthly and special Board meeting attended. Members of the Executive Committee
of the Bank additionally receive an annual retainer of $4,000 and a fee of $500
for each meeting attended. All directors of the Company are paid an annual
retainer of $6,000.
Consulting Agreement. Pursuant to the Bank's merger with Union Federal
Savings Bank, Boston, Massachusetts, in February 1997, the Bank entered into a
consulting agreement with Mr. Grace, who at the time of the merger was Union
Federal's President and Chief Executive Officer. The agreement terminated on
February 21, 2000. Under the agreement, Mr. Grace was paid $127,000 each year
for consulting services he provided to the Bank. Mr. Grace is subject to a
covenant not to compete, either directly or indirectly, with the Bank until
February 21, 2001.
7
<PAGE>
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EXECUTIVE COMPENSATION
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Summary Compensation Table
The following information is furnished for the Chief Executive Officer and
the other highest paid executive officers of Bay State Federal Savings Bank who
received salary and bonus of $100,000 or more during the year ended March 31,
2000 ("Named Executive Officers").
<TABLE>
<CAPTION>
Long-Term Compensation
---------------------------
Annual Compensation Awards
----------------------- ---------------------------
Restricted Securities
Stock Underlying All Other
Name and Fiscal Salary Bonus Awards Options/SARs Compensation
Principal Positions Year ($)(1) ($) ($) (#) ($)(2)
------------------- ------ ------ -------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
John F. Murphy ......................... 2000 $299,500 $ 70,000 $ -- -- $ 27,616
President and Chief 1999 273,848 -- 500,702 63,381 32,790
Executive Officer 1998 241,223 60,000 -- -- 45,755
Denise M. Renaghan ..................... 2000 $199,000 $ 50,000 $ -- -- $ 23,690
Executive Vice 1999 167,848 -- 375,527 47,536 27,867
President and Chief 1998 136,000 39,846 -- -- 38,722
Operating Officer
Michael O. Gilles(3).................... 2000 $140,000 $ 30,000 $ -- -- $ 22,305
Senior Vice President and 1999 144,137 -- 168,232 12,676 22,863
Chief Financial Officer
Philip R. McNulty(3) ................... 2000 $125,000 $ 25,000 $ -- -- $ 20,443
Senior Vice President and 1999 94,231 10,000 98,750 12,000 --
Chief Lending Officer
</TABLE>
----------
(1) Includes directors' fees for Mr. Murphy and Ms. Renaghan.
(2) Includes matching contributions under the Bank's 401(a) Plan of $4,989,
$4,686, $3,504 and $2,817 and ESOP allocations with a market value as of
March 31, 2000 of $18,801, $18,801, $18,801 and $17,626 for Mr. Murphy, Ms.
Renaghan, Mr. Gilles and Mr. McNulty, respectively. Also includes the value
of split dollar life insurance policies, based upon an actuarial analysis,
of $3,826 for Mr. Murphy and $203 for Ms. Renaghan for fiscal year 2000.
Such life insurance policies provide that Mr. Murphy and Ms. Renaghan may
receive a benefit, if any, equal to the difference between the cash
surrender value of the policy and the premiums paid by the Bank.
(3) Messrs. Gilles and McNulty were hired on March 13, 1998 and June 17, 1998,
respectively.
8
<PAGE>
The following table provides certain information with respect to the number
of shares of common stock represented by outstanding options held by the Named
Executive Officers as of March 31, 2000. Also reported are the values for
"in-the-money" options which represent the positive spread between the exercise
price of any such existing stock options and the year end price of the common
stock.
Option Value at Fiscal Year-End
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs in-the-money Options/SARs
at Fiscal Year-End(#)(1) at Fiscal Year-End($)(2)(3)
--------------------------------- ------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John F. Murphy ............ 15,845 47,536 $ -- $ --
Denise M. Renaghan ........ 11,884 35,652 -- --
Michael O. Gilles ......... 3,169 9,507 -- --
Philip R. McNulty ......... 3,000 9,000 -- --
</TABLE>
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(1) The options in this table have an exercise price of $19.75.
(2) The price of the common stock on March 31, 2000 was $16.18.
(3) Based on the market value of the underlying common stock at fiscal year
end, minus the exercise price.
Employment Agreements. The Company and the Bank entered into employment
agreements with Mr. Murphy and Ms. Renaghan (individually, the "Executive"). The
Employment Agreements are intended to ensure that the Bank and the Company will
be able to maintain a stable and competent management base. The continued
success of the Bank and the Company depends to a significant degree on the
skills and competence of Mr. Murphy and Ms. Renaghan.
Each of the Company employment agreements provide for a five-year term of
employment that extends on a daily basis until either the Executive or the
Company provides written notice of non-renewal, at which time the term of the
agreement becomes a fixed five-year term. Each of the Bank employment agreements
provide for a three-year term of employment that the Bank may extend on an
annual basis following a performance evaluation of the Executive. Under the
employment agreements, the base salary of the Executive is reviewed annually by
the Board of Directors or a committee of the Board of Directors. In addition to
the base salary, the agreements provide for, among other things, participation
in stock benefit plans and other certain employee fringe benefit programs
applicable to executive personnel.
Each of the agreements provide that the Company or Bank, as applicable, may
terminate the Executive's employment for cause, as described in the respective
agreements, at any time. In the event that either the Company or Bank terminates
the Executive's employment for reasons other than for cause, or in the event the
Executive resigns after specified circumstances that would constitute
constructive termination, then the Executive or, in the event of death,
Executive's beneficiary will receive an amount equal to the remaining
compensation payments and benefits that would have been provided to the
Executive during the remaining term of the agreement. Upon any such termination
of the Executive, the Executive is subject to a one-year non-competition
agreement.
Under the agreements, upon involuntary termination or, under certain
circumstances, voluntarily termination following a change in control of the Bank
or the Company, the Executive or, in the event of the
9
<PAGE>
Executive's death, Executive's beneficiary would receive a severance payment
equal to the greater of (i) the payments and benefits due for the remaining term
of the agreement or (ii) five (5) times (in the case of the Company agreement)
or three (3) times (in the case of the Bank agreement) the Executive's annual
compensation for the last taxable year. The Company or Bank would also continue
the Executive's health and welfare benefits for sixty or thirty-six months,
respectively. If a change in control occurs, the Executive will not receive
duplicative payments or benefit coverage under the employment agreements.
Change in Control Agreements. The Company and the Bank have entered into
three-year change in control agreements with Mr. Gilles. The Bank has also
entered into a two-year change in control agreement with Mr. McNulty. The Bank
agreements are renewable annually and the Company agreement renews daily. The
agreements provide that in the event of involuntary termination or, under
certain circumstances, voluntary termination following a change in control of
the Bank or the Company, the officer is entitled to receive a severance payment
equal to two times or three times (as the case may be) the officer's average
annual compensation for the five years preceding termination. The Bank or the
Company would also continue and pay for the officer's life, health and
disability coverage for 24 or 36 months (as the case may be) following
termination. The Company will guarantee the payments to the officer under the
Bank agreements if are not paid by the Bank.
Retirement Plan. The Bank participates in the Financial Institutions
Retirement Fund (the "Retirement Plan") to provide retirement benefits for
eligible employees. Employees are generally eligible to participate in the
Retirement Plan after 12 consecutive months of employment with the Bank and the
attainment of age 21. Hourly-paid employees are excluded from participation in
the Retirement Plan. The formula for normal retirement benefits payable annually
under the Retirement Plan is 2% multiplied by years of benefit service
multiplied by the average of the participant's highest three years of salary
paid by the Bank. A participant may elect early retirement as early as age 45.
However, such participant's normal retirement benefits will be reduced by an
early retirement factor based on age at early retirement.
Participants generally have no vested interest in Retirement Plan benefits
prior to the completion of five years of service with the Bank. Following the
completion of five years of vesting service, or in the event of a participant's
attainment of age 65, death or termination of employment due to disability, a
participant will become 100% vested in the accrued benefit under the Retirement
Plan. The amounts of benefits paid under the Retirement Plan are not reduced for
any social security benefit payable to participants. As of January 1, 2000, Mr.
Murphy, Ms. Renaghan, Mr. Gilles and Mr. McNulty had 34, 26, 2 and 2 credited
years of service, respectively.
The following table indicates the annual retirement benefits that would be
payable under the pension plan and the related benefit equalization plan (see
below) upon retirement at age 65 to a participant electing to receive his
pension benefit in the standard form of benefit, assuming various specified
levels of plan compensation and various specified years of credited service.
Under the Internal Revenue Code, maximum annual benefits under the pension plan
are limited to $135,000 per year and annual compensation for calculation
purposes is limited to $170,000 per year for the 2000 calendar year.
10
<PAGE>
<TABLE>
<CAPTION>
Years of Service
Average Annual ------------------------------------------------------------------------------
Compensation 5 10 15 20 25 30+
------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 75,000 $ 7,500 $ 15,000 $ 22,500 $ 30,000 $ 37,500 $ 45,000
100,000 10,000 20,000 30,000 40,000 50,000 60,000
125,000 12,500 25,000 37,500 50,000 62,500 75,000
150,000 15,000 30,000 45,000 60,000 75,000 90,000
175,000 17,500 35,000 52,500 70,000 87,500 105,000
200,000 20,000 40,000 60,000 80,000 100,000 120,000
250,000 25,000 50,000 75,000 100,000 125,000 150,000
300,000 30,000 60,000 90,000 120,000 150,000 180,000
350,000 35,000 70,000 105,000 140,000 175,000 210,000
400,000 40,000 80,000 120,000 160,000 200,000 240,000
450,000 45,000 90,000 135,000 180,000 225,000 270,000
</TABLE>
Supplemental Executive Retirement Plan. Bay State Federal maintains a
program which provides for supplemental benefits to designated individuals who
retire, who terminate employment in connection with a change in control, or
whose participation in the employee stock ownership plan ends due to termination
of the employee stock ownership plan (regardless of whether the individual
terminates employment) prior to the complete scheduled repayment of the employee
stock ownership plan loan. Generally, the supplemental executive retirement plan
will provide the individual with a benefit equal to what the individual would
have received under the employee stock ownership plan had he remained employed
throughout the scheduled term of the employee stock ownership plan loan less the
benefits actually provided under the employee stock ownership plan on behalf of
such individual. Benefits vest equally over a five-year period beginning on the
date of participation. The vested portion of the benefits are payable upon the
termination of the participant's service (other than for cause). A separate
trust may be established to hold assets of the Bank for the purpose of paying
the benefits accrued under the supplemental executive retirement plan or the
Bank may hold assets for such payments through a common trust established for
the benefit equalization plan discussed below. At March 31, 2000, Mr. Murphy and
Ms. Renaghan participated in the program.
Benefit Equalization Plan. The Bank maintains a retirement benefit
equalization plan to provide selected employees with retirement benefits which
would have been payable but for limitations imposed by the Internal Revenue Code
on the amount of benefits accrued or allocated under tax-qualified plans.
A participant's benefit under this plan generally equals the benefits that
would have accrued or been allocated under the tax-qualified plans, but for the
limitations imposed by the Internal Revenue Code. The benefits available under
the benefit equalization plan are reduced by the benefits actually accrued or
allocated under such plans. The Bank has established a grantor trust (also known
as a rabbi trust) to hold assets of the Bank for the purpose of paying benefits
under the benefit equalization plan, provided that, in the event of the
insolvency of the Bank, the assets of the trust are subject to the claims of the
Bank's creditors. The assets of this trust may be used to acquire shares of
common stock to be used to satisfy the obligations of the Bank for the payment
of benefits under the benefit equalization plan.
11
<PAGE>
Executive Compensation
The report of the Compensation Committee and the stock performance graph
shall not be deemed incorporated by reference by any general statement
incorporating by reference this proxy statement into any filing under the
Securities Act of 1933 or the Exchange Act, except as to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
Committee Report on Executive Compensation. Under rules established by the
Securities and Exchange Commission, the Company is required to provide certain
data and information in regard to the compensation and benefits provided to the
Company's Chief Executive Officer and the other executive officers of the
Company. The disclosure requirements for these executive officers include the
use of a report explaining the rationale and considerations that led to
fundamental compensation decisions affecting those individuals. In fulfillment
of this requirement, the Compensation Committee has prepared the following
report for inclusion in this proxy statement. Since the Company has no employees
other than Bank employees who perform services to the Company without additional
compensation, the Bank's Compensation Committee evaluates the performance of
each Named Executive Officer and other senior officers of the Company and the
Bank and determines the compensation of all executives. While the President and
Chief Executive Officer is a member of the Compensation Committee, he recuses
himself from any discussion or voting regarding his level of compensation.
Compensation Policies. The Company's executive compensation policies are
intended to attract and retain qualified executives, to recognize and reward
individual contributions and achievement and to offer a compensation package
that is competitive in the financial industry and motivational to each
individual executive. In furtherance of these objectives, the Company and the
Bank maintain a compensation program for executive officers which consists of
two main elements, base salary and a bonus, which comprise annual compensation.
In addition, executive officers participate in other benefit plans available to
all employees, including the retirement plan, thrift plan and Bay State ESOP,
the stock-based benefit plans and, if designated by the board of directors,
certain other executive compensation arrangements.
The salary and bonus levels are intended to be consistent and competitive
with the practices of other comparable financial institutions and each
executive's level of responsibility. In making its determinations, the
Compensation Committee utilizes surveys of compensation paid to executive
officers performing similar duties for depository institutions and their holding
companies with particular focus on the level of compensation paid by
institutions of comparable size and characteristics primarily in the New England
region of the United States. Although the Compensation Committee does not use
any specific formula, salary increases and annual bonus determinations are aimed
at reflecting the overall performance of the Company and the performance of the
individual executive officer. The Compensation Committee also seeks the input of
the President and Chief Executive Officer with regard to the performance
evaluation of other executive officers.
Stock-Based Compensation. In addition to salary and bonuses, executive
officers participate in the Bay State Bancorp, Inc. 1998 Stock-Based Incentive
Plan. Each of the executive officers was granted stock options and restricted
stock awards under the plan in 1998, which vest over a five-year period. The
Compensation Committee believes that stock ownership is a significant incentive
in building stockholder value and aligning the interests of employees with
stockholders as the value of this component of compensation increases as the
common stock of the Company appreciates in value.
12
<PAGE>
Compensation of the Chief Executive Officer. During the fiscal year ended
March 31, 2000, Mr. Murphy's base salary totalled $275,000, which represented a
$25,000 increase from the previous fiscal year. In addition, he received a bonus
of $70,000 for Fiscal 2000. The Compensation Committee utilizes the similar
survey data for the Chief Executive Officer that it utilizes for its other
executive officers in reaching a determination for any salary increases or bonus
for the CEO. The Compensation Committee believes that Mr. Murphy's compensation
is appropriate based upon the Bank's compensation policy, Mr. Murphy's
performance in managing the Company, the Company's performance during the fiscal
year and after a comparison of peer institutions.
Compensation Committee
Robert T. Cleary
Richard F. McBride
John F. Murphy
Compensation Committee Interlocks and Insider Participation. No executive
officer of the Company or the Bank serves as a member of the compensation
committee of another entity, one of whose executive officers serves on the
Compensation Committee of the Company or the Bank. No executive officer of the
Company or the Bank served as a director of another entity, one of whose
executive officers serves on the Compensation Committee of the Company or the
Bank. No executive officer of the Company or the Bank served as a member of the
compensation committee of another entity, one of whose executive officers serves
as a director of the Company or the Bank. With the exception of Mr. Murphy, who
serves as President and Chief Executive Officer of the Company and the Bank,
none of the members of the Company's Compensation Committee is an officer or
employee of the Company.
13
<PAGE>
--------------------------------------------------------------------------------
STOCK PERFORMANCE GRAPH
--------------------------------------------------------------------------------
The following graph compares the cumulative total stockholder return on the
Company common stock with the cumulative total return on the American Stock
Exchange Composite Index and with the SNL American Stock Exchange Thrift Index.
The graph assumes that $100 was invested at the close of business on March 30,
1998, the initial day of trading of the Company's common stock. Total return
assumes the reinvestment of all dividends.
[GRAPH]
[THE FOLLOWING TABLE IS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Total Return Performance
<TABLE>
<CAPTION>
Period Ending
----------------------------------------------------------------
Index 3/30/98 9/30/98 3/31/99 9/30/99 3/31/00
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Bay State Bancorp, Inc.......... $100.00 75.74 69.95 66.92 58.20
The AMEX Composite Index........ 100.00 84.32 96.45 107.03 136.47
SNL AMEX Thrift Index........... 100.00 73.18 72.23 72.42 63.99
</TABLE>
14
<PAGE>
--------------------------------------------------------------------------------
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
--------------------------------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than 10% of any
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the SEC. Executive officers, directors
and greater than 10% stockholders are required by regulation to furnish the
Company with copies of all Section 16(a) reports they file.
Based solely on its review of the copies of the reports it has received and
written representations provided to the Company from the individuals required to
file the reports, the Company believes that each of its executive officers and
directors has complied with applicable reporting requirements for transactions
in Company common stock during the fiscal year ended March 31, 2000.
--------------------------------------------------------------------------------
TRANSACTIONS WITH MANAGEMENT
--------------------------------------------------------------------------------
Federal regulations require that all loans or extensions of credit to
executive officers and directors must be made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with the general public and must not involve more than
the normal risk of repayment or present other unfavorable features. In addition,
loans made to a director or executive officer in excess of the greater of
$25,000 or 5% of the Bank's capital and surplus (up to a maximum of $500,000)
must be approved in advance by a majority of the disinterested members of the
Board of Directors.
The Bank's current policy allows the Bank to make loans to its executive
officers and directors on the same terms and conditions offered to the general
public. The Bank's policy provides that all loans made by the Bank to its
executive officers and directors be made in the ordinary course of business, on
substantially the same terms, including collateral, as those prevailing at the
time for comparable transactions with other persons and may not involve more
than the normal risk of collectibility or present other unfavorable features. At
March 31, 2000, the Bank had 14 loans outstanding to executive officers and
directors totalling $6.0 million. With the exception of loans to Messrs. Cleary
and Murphy, which are secured by mortgage liens on their primary residences and,
at March 31, 2000, had balances of $478,000 and $349,000, respectively, all
other of the Bank's loans to executive officers and Directors had balances of
less than $60,000 as of March 31, 2000 or were made by the Bank in the ordinary
course of business, on substantially the same terms, including interest rates
and collateral prevailing at the time for comparable transactions with other
persons and do not involve more than the normal risk of collectibility or
present unfavorable features. Although the mortgage loans to Messrs. Cleary and
Murphy were made prior to the enactment of the Financial Institutions Reform,
Recovery and Enforcement Act and do not involve more than the normal risk of
collectibility or present unfavorable features, such loans were made with
interest rates which were below the interest rates otherwise available to the
Bank's customers at the time such loans were made.
The Company intends that all transactions in the future between the Company
and its executive officers, directors, holders of 10% or more of the shares of
any class of its common stock and affiliates thereof, will contain terms no less
favorable to the Company than could have been obtained by it in arms length
negotiations with unaffiliated persons and will be approved by a majority of
independent outside directors of the Company not having any interest in the
transaction.
15
<PAGE>
--------------------------------------------------------------------------------
PROPOSAL 2 -- RATIFICATION OF INDEPENDENT AUDITORS
--------------------------------------------------------------------------------
The Board of Directors has appointed Shatswell, MacLeod & Company, P.C. to
be its auditors for the 2001 fiscal year, subject to the ratification by
stockholders. A representative of Shatswell, MacLeod & Company, P.C. is expected
to be present at the annual meeting to respond to appropriate questions from
stockholders and will have the opportunity to make a statement should he or she
desire to do so.
If the ratification of the appointment of the auditors is not approved by a
majority of the votes cast by stockholders at the annual meeting, other
independent public accountants may be considered by the Board of Directors. The
Board of Directors recommends that stockholders vote "FOR" the ratification of
the appointment of auditors.
--------------------------------------------------------------------------------
MISCELLANEOUS
--------------------------------------------------------------------------------
The Company's Annual Report to Stockholders has been mailed to stockholders
of record as of the close of business on May 30, 2000. Any stockholder who has
not received a copy of the Annual Report may obtain a copy by writing to the
Secretary of the Company. The Annual Report is not to be treated as part of the
proxy solicitation material or as having been incorporated in this proxy
statement by reference.
A copy of the Company's Form 10-K for the fiscal year ended March 31, 2000,
as filed with the SEC will be furnished without charge to stockholders as of the
close of business on May 30, 2000 upon written request to Jill W. Lacy,
Corporate Secretary, Bay State Bancorp, Inc., 1299 Beacon Street, Brookline,
Massachusetts 02446.
--------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
--------------------------------------------------------------------------------
To be considered for inclusion in the Company's proxy statement and form of
proxy relating to the 2001 Annual Meeting of Stockholders, a stockholder
proposal must be received by the Secretary of the Company at the address set
forth on the Notice of Annual Meeting of Stockholders not later than February
16, 2001. If such Annual Meeting is held on a date more than 30 calendar days
from July 27, 2001, a stockholder proposal must be received by a reasonable time
before the proxy solicitation for such Annual Meeting is made. Any such proposal
will be subject to 17 C.F.R. ss. 240.14a-8 of the Rules and Regulations under
the Securities Exchange Act of 1934.
The Bylaws of the Company, a copy of which may be obtained from the
Company, set forth the procedures by which a stockholder may properly bring
business before a meeting of stockholders. Pursuant to the Bylaws, only business
brought by or at the direction of the Board of Directors may be conducted at a
special meeting. The Bylaws of the Company provide an advance notice procedure
for a stockholder to properly bring business before an annual meeting. The
stockholder must give written advance notice to the Secretary of the Company not
less than ninety (90) days before the date originally fixed for such meeting;
16
<PAGE>
provided, however, that in the event that less than one hundred (100) days
notice or prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be received not later
than the close of business on the tenth day following the date on which the
Company's notice to stockholders of the annual meeting date was mailed or such
public disclosure was made. In order for a stockholder to bring business before
the Company's 2001 Annual Meeting of Stockholders, the Company would have to
receive notice of such business no later than April 28, 2001 assuming the 2001
Annual Meeting is held on July 27, 2001 and that the Company provides at least
100 days notice of the date of the meeting. The advance notice by stockholders
must include the stockholder's name and address, as they appear on the Company's
record of stockholders, a brief description of the proposed business, the reason
for conducting such business at the annual meeting, the class and number of
shares of the Company's capital stock that are beneficially owned by such
stockholder and any material interest of such stockholder in the proposed
business. In the case of nominations to the Board of Directors, certain
information regarding the nominee must be provided. Nothing in this paragraph
shall be deemed to require the Company to include in its proxy statement or the
proxy relating to any Annual Meeting any stockholder proposal which does not
meet all of the requirements for inclusion established by the Securities and
Exchange Commission in effect at the time such proposal is received.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ JILL W. LACY
Jill W. Lacy
Corporate Secretary
Brookline, Massachusetts
June 16, 2000
17
<PAGE>
REVOCABLE PROXY
BAY STATE BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
July 27, 2000
2:00 p.m. Eastern Time
------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints the official proxy committee of Bay State
Bancorp, Inc. (the "Company"), consisting of the full board of directors, with
full power of substitution, to act as proxy for the undersigned, and to vote all
shares of common stock of the Company which the undersigned is entitled to vote
only at the Annual Meeting of Stockholders, to be held on July 27, 2000, at 2:00
p.m. local time, at the Double Tree Guest Suites, 550 Winter Street, Waltham,
Massachusetts and at any and all adjournments thereof, with all of the powers
the undersigned would possess if personally present at such meeting as follows:
1. The election as directors of all nominees listed (unless the "For All
Except" box is marked and the instructions below are complied with).
Richard F. McBride, Denise M. Renaghan
FOR ALL
FOR VOTE WITHHELD EXCEPT
--- ------------- ------
|_| |_| |_|
INSTRUCTION: To withhold your vote for any individual nominee, mark "FOR ALL
EXCEPT" and write that nominee's name on the line provided below.
--------------------------------------------------------------------------------
2. The ratification of the appointment of Shatswell, MacLeod & Company, P.C.
as independent auditors of Bay State Bancorp, Inc. for the fiscal year
ending March 31, 2001.
FOR VOTE WITHHELD ABSTAIN
--- ------------- -------
|_| |_| |_|
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
This proxy is revocable and will be voted as directed, but if no
instructions are specified, this proxy, properly signed and dated, will be voted
"FOR" each of the proposals listed. If any other business is presented at the
Annual Meeting, including whether or not to adjourn the meeting, this proxy will
be voted by the proxies in their best judgment. At the present time, the Board
of Directors knows of no other business to be presented at the Annual Meeting.
This proxy also confers discretionary authority on the Board of Directors to
vote with respect to the election of any person as director where the nominees
are unable to serve or for good cause will not serve and matters incident to the
conduct of the meeting.
Dated:___________________________
--------------------------------
SIGNATURE OF SHAREHOLDER
--------------------------------
SIGNATURE OF CO-HOLDER (IF ANY)
The above signed acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Annual Meeting of Stockholders, a Proxy
Statement dated June 16, 2000 and an Annual Report to Stockholders.
Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder may sign but only one signature
is required.
----------------------
PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THIS PROXY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
