SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
- --------------------------------------------------------------------------------
Check the appropriate box:
|_| Preliminary Proxy Statement |_| Confidential for use of the
|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
Medford Bancorp, 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)(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 of 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 of 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>
MEDFORD BANCORP, INC.
29 HIGH STREET
MEDFORD, MASSACHUSETTS 02155
TELEPHONE: (781) 395-7700
March 24, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of
Stockholders of Medford Bancorp, Inc. (the "Company") to be held on Monday,
April 26, 1999 at 10:00 a.m., local time, at Medford Savings Bank, Five High
Street, Suite 202, Medford, Massachusetts.
The Annual Meeting has been called for the following purposes:
1. To elect four Directors of the Company for a three-year term.
2. To transact such other business as may properly come before the
meeting and any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on March 1, 1999,
as the record date for determining stockholders entitled to notice of and to
vote at the Annual Meeting and any adjournments or postponements thereof.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT AT THE ANNUAL
MEETING YOU VOTE "FOR" PROPOSAL ONE.
Very truly yours,
/s/ Arthur H. Meehan
ARTHUR H. MEEHAN
Chairman, President and
Chief Executive Officer
IMPORTANT
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE REQUESTED TO
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU
ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON EVEN IF YOU HAVE PREVIOUSLY
RETURNED YOUR PROXY CARD.
<PAGE>
MEDFORD BANCORP, INC.
29 HIGH STREET
MEDFORD, MASSACHUSETTS 02155
TELEPHONE: (781) 395-7700
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 26, 1999
------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Medford
Bancorp, Inc. (the "Company") will be held at Medford Savings Bank, Five High
Street, Suite 202, Medford, Massachusetts, on Monday, April 26, 1999, at 10:00
a.m., local time, for the following purposes:
1. To elect four Directors of the Company for a three-year term.
2. To transact such other business as may properly come before the
meeting and any adjournments or postponements thereof.
The Board of Directors of the Company has fixed the close of business on
March 1, 1999, 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 record of the Company's common stock 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.
In the event that there are not sufficient votes to approve the foregoing
proposal at the time of the Annual Meeting, the Annual Meeting may be adjourned
or postponed in order to permit further solicitation of proxies by the Company.
The above matters are described in detail in the accompanying Proxy
Statement.
By Order of the Board of Directors
/s/ Eugene R. Murray
EUGENE R. MURRAY
Clerk
March 24, 1999
Medford, Massachusetts
IMPORTANT
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE REQUESTED TO
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU
ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON EVEN IF YOU HAVE PREVIOUSLY
RETURNED YOUR PROXY CARD.
<PAGE>
MEDFORD BANCORP, INC.
29 HIGH STREET
MEDFORD, MASSACHUSETTS 02155
TELEPHONE: (781) 395-7700
------------------------
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 26, 1999
------------------------
VOTING, REVOCATION AND SOLICITATION OF PROXIES
Annual Meeting
This Proxy Statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of Medford Bancorp, Inc. (the
"Company") for use at its 1999 Annual Meeting of Stockholders to be held at
Medford Savings Bank, Five High Street, Suite 202, Medford, Massachusetts, on
Monday, April 26, 1999, at 10:00 a.m., local time, and any adjournments or
postponements thereof.
At the Annual Meeting, stockholders of the Company will be asked to
consider and vote upon the following matters:
1. To elect four Directors of the Company for a three-year term.
2. To transact such other business as may properly come before the
meeting and any adjournments or postponements thereof.
The accompanying Notice of Meeting and this Proxy Statement are initially
being mailed on or about March 24, 1999 to record holders of the Company's
common stock as of March 1, 1999 (the "Record Date").
Annual Report
The Company's 1998 Annual Report, including the Company's Annual Report on
Form 10-K, for the year ended December 31, 1998 (the "Annual Report"), which
contains the Company's consolidated financial statements audited by its
independent certified public accountants and their report thereon, is being
delivered simultaneously with this Proxy Statement to stockholders of record of
the Company as of the Record Date. The Annual Report, however, is not part of
the Company's proxy soliciting material. Additional copies of the Annual Report,
and copies of the Company's Annual Report on Form 10-K, for the year ended
December 31, 1998 as filed with the Securities and Exchange Commission (the
"SEC") (without exhibits), are available upon written request, without charge,
from the Company. Such requests should be directed to: Medford Bancorp, Inc., 29
High Street, Medford, Massachusetts 02155, Attention: Shareholder Relations.
Record Date; Voting
The Board of Directors of the Company has fixed the close of business on
March 1, 1999 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 record of Common Stock of the Company at the close of
business on the Record Date will be entitled to notice of and to vote at the
Annual Meeting and any adjournments or postponements thereof. At the close of
business on the Record Date, there were 8,364,330 shares of Common Stock of the
Company issued and outstanding and entitled to vote at the Annual Meeting and
any adjournments or postponements thereof. As of such date, there were
approximately 1,161 holders of record of the Company's Common Stock. The holders
of the Company's Common Stock outstanding as of the close of business on the
Record Date will be entitled to one vote for each share held upon each matter
properly submitted to the Annual Meeting and any adjournments or postponements
thereof.
Proxies
Holders of the Company's Common Stock are requested to complete, date,
sign and promptly return the accompanying proxy card in the enclosed envelope.
The proxy card must be signed and dated for it to be properly
<PAGE>
executed. If the enclosed proxy card is properly executed and returned to the
Company in time to be voted at the Annual Meeting, the shares represented
thereby will, unless such proxy has previously been revoked, be voted in
accordance with the instructions marked thereon. Executed proxies with no
instruction indicated thereon will be voted "FOR" Proposal One (the election of
the four nominees of the Board of Directors of the Company). In their
discretion, the persons named in the proxy card are each authorized to vote upon
such other business as may properly come before the Annual Meeting and any
adjournments or postponements thereof.
The presence of a stockholder at the Annual Meeting will not automatically
revoke the stockholder's proxy. A stockholder of record may, however, revoke a
proxy at any time prior to the voting thereof on any matter by filing with the
Clerk of the Company a written notice of revocation, by delivering to the
Company a duly executed proxy bearing a later date, or by attending the Annual
Meeting and voting in person. All written notices of revocation and other
communications with respect to revocation of proxies in connection with the
Annual Meeting should be addressed as follows: Medford Bancorp, Inc., 29 High
Street, Medford, Massachusetts 02155, Attention: Shareholder Relations.
In addition to the use of the mails, proxies may be solicited personally
or by telephone or telegraph by officers, Directors and employees of the Company
who will not be specially compensated for such solicitation activities.
Arrangements will also be made with brokerage firms and other custodians,
nominees and fiduciaries for forwarding solicitation materials to the beneficial
owners of shares held of record by such persons, and the Company will reimburse
such persons for their reasonable out-of-pocket expenses incurred in that
connection. The Company has also retained Corporate Investor Communications,
Inc., a proxy soliciting firm, to assist in the solicitation of proxies at a fee
of approximately $4,000, plus reimbursement of certain out-of-pocket costs. The
cost of soliciting proxies, including the fee of Corporate Investor
Communications, Inc., will be borne by the Company.
Quorum and Stockholder Vote Required
The presence, in person or by proxy, of at least a majority of the total
number of issued and outstanding shares of Common Stock is necessary to
constitute a quorum for the transaction of business at the Annual Meeting. A
quorum being present, a plurality of the votes cast at the Annual Meeting is
necessary to elect each of the nominees for Director.
In accordance with the By-laws of the Company and applicable state law,
abstentions, votes withheld for director nominees and broker non-votes (that is,
shares represented at the meeting which are held by a broker or other nominee
and as to which (i) instructions have not been received from the beneficial
owner or the person entitled to vote and (ii) the broker or nominee does not
have discretionary voting power) shall be treated as shares that are present and
entitled to vote for the purpose of determining whether quorum is present.
Abstentions and broker non-votes will not be counted as voting at the Annual
Meeting and, therefore, will have no effect on the outcome of Proposal One.
PROPOSAL ONE
ELECTION OF CLASS OF DIRECTORS
The Board of Directors of the Company currently consists of ten members
and is divided into three classes. One of the three classes of Directors
consists of four members and two classes consist of three members. The term of
office of the Directors in one of the classes expires in each year, and their
successors are elected at each annual meeting of stockholders for a term of
three years and until their successors are elected and qualified. The terms of
David L. Burke, Mary Lou Doherty, Arthur H. Meehan, and Eugene R. Murray as
Directors of the Company expire in 1999.
At the Annual Meeting, four persons will be elected Directors of the
Company to serve for a three-year term until the 2002 Annual Meeting of
Stockholders and until their successors are elected and qualified. The Board of
Directors of the Company has nominated David L. Burke, Mary Lou Doherty, Arthur
H. Meehan, and Eugene R. Murray for reelection as Directors of the Company for
three-year terms.
Unless authority to do so has been withheld or limited in the proxy, it is
the intention of the persons named in the proxy to vote the shares represented
by each properly executed proxy "FOR" the election of each of the nominees named
above as Directors of the Company. The Board of Directors believes that each of
the nominees
2
<PAGE>
will stand for election and, if elected, will serve as a Director. However, if
any nominee fails to stand for election or is unable to accept election, the
proxies will be voted for the election of such other person or persons as the
Board of Directors may recommend.
The Board of Directors recommends that stockholders vote "FOR" the
election of each of the nominees proposed by management for Directors named
herein.
DIRECTORS
The following table sets forth as of January 1, 1999, information supplied
by each person who is currently a Director and/or a nominee for election as a
Director of the Company with respect to such person's age, principal occupation
for the past five years and the year in which the person began serving as a
Director or Trustee of Medford Savings Bank (the "Bank") (prior to the formation
of the Company).
NOMINEES FOR ELECTION AT THE ANNUAL MEETING FOR A THREE-YEAR TERM
<TABLE>
<CAPTION>
Director
Name Age Since Principal Occupation
- ---- --- ----- --------------------
<S> <C> <C> <C>
David L. Burke 55 1995 President and Treasurer of Boston Steel &
Manufacturing Company in Malden, Massachusetts
Mary Lou Doherty 73 1983 Assistant Principal, Medford school system (retired)
Arthur H. Meehan 63 1992 Chairman of the Board of Directors of the Company
and the Bank; President and Chief Executive Officer
of the Company; President, Chief Executive Officer
and a Director of the Bank since 1993
Eugene R. Murray 66 1979 Clerk of the Company and of the Bank;
Underwriting Manager of Boston Office of Cigna
Special Risk Facilities (retired)
</TABLE>
DIRECTORS WHOSE TERMS WILL EXPIRE AT THE 2000 ANNUAL MEETING
<TABLE>
<CAPTION>
Director
Name Age Since Principal Occupation
- ---- --- ----- --------------------
<S> <C> <C> <C>
Edward D. Brickley 63 1973 Manager of Corporate International Accounting at
Polaroid Corporation in Cambridge, Massachusetts
(retired)
Robert A. Havern, III 49 1981 Attorney in private practice in Arlington,
Massachusetts; Member of State Legislature of the
Commonwealth of Massachusetts since 1987
Francis D. Pizzella 71 1976 Attorney at law; President of Savings Bank Life
Insurance Company of Massachusetts and
President of the Savings Bank Employees
Retirement Association (retired)
</TABLE>
DIRECTORS WHOSE TERMS WILL EXPIRE AT THE 2001 ANNUAL MEETING
<TABLE>
<S> <C> <C> <C>
Paul J. Crowley 68 1993 Founder and Chairman Emeritus of Computer
Partners and former President of C.S.C. Consulting
Group (retired)
</TABLE>
3
<PAGE>
<TABLE>
<S> <C> <C> <C>
Edward J. Gaffey 61 1984 President of Country Way Trust; former President
and Treasurer of Edward J. Gaffey & Sons, Inc.,
operating funeral homes in Medford, Arlington and
Scituate, Massachusetts
Andrew D. Guthrie,
Jr., M.D. 69 1983 Physician, President of Mistick Pediatric Associates
</TABLE>
The Board of Directors, Its Committees and Compensation
The following is a description of the Executive, Audit, Compensation and
Options Committees of the Board of Directors of the Company. The Board of
Directors acts as a nominating committee, selecting nominees for election or
reelection as Directors and officers. The Board of Directors will consider a
nominee for election to the Board of Directors recommended by a stockholder of
record if the stockholder submits the nomination in compliance with the
requirements of the Company's By-Laws. See "STOCKHOLDER PROPOSALS" for a summary
of these requirements.
Executive Committee. The Bank's Executive Committee met 14 times and the
Company's Executive Committee did not meet during fiscal year 1998. The members
of the Executive Committees of the Company and of the Bank during 1998 were
Messrs. Meehan (Chairman), Crowley, Gaffey, Murray and Pizzella. The Executive
Committee is vested with the authority of the Board of Directors in most matters
between meetings of the Board of Directors. Except for Mr. Meehan, who received
no compensation for his service, members of the Bank's Executive Committee
received $400 for each meeting they attended during fiscal year 1998, as well as
annual fee of $8,600.
Audit Committee. The Company's Audit Committee met 5 times. The members of
the Company's Audit Committee during 1998 were Messrs. Gaffey (Chairman and
Clerk), Brickley and Pizzella. The Audit Committee reviews the financial
statements and the scope of the annual audit, monitors internal financial and
accounting controls, and recommends to the Board of Directors of the Company the
appointment of independent certified public accountants. Members of the
Company's Audit Committee received $450 (the Clerk received an additional fee of
$125 per meeting) for each meeting they attended during fiscal year 1998 and an
annual fee of $2,400.
Compensation and Options Committee. The Company's Compensation and Options
Committee met 2 times during 1998. The Compensation and Options Committee of the
Company consists of Messrs. Murray (Chairman), Burke, Crowley, Gaffey, and
Pizzella. The Compensation and Options Committee establishes salary increases
and other compensation-related issues for the Chairman, President and Chief
Executive Officer, and reviews the proposed salary increases of all other senior
executives and all officers as a group. The Compensation and Options Committee
also determines, pursuant to the Medford Bancorp, Inc. Stock Option Plan, the
persons to whom options will be granted, the number of shares underlying the
options, the types of options and other terms and conditions of the options.
Members of the Company's Compensation and Options Committee received $450 for
each meeting they attended during fiscal year 1998.
The Board of Directors of the Company held 9 meetings during fiscal 1998.
Each of the Directors attended at least 75% of the total number of meetings of
the Board of Directors of the Company. Except for Mr. Meehan, who received no
compensation for his service, directors of the Company received $325 for each
meeting of the Board of Directors that they attended.
Pursuant to the Company's Directors Deferred Compensation Plan for Outside
Directors, non-employee Directors may defer payment of all or any part of annual
fees, meeting fees, committee fees, and other payments for services rendered by
the Directors ("Fees") and may invest such Fees in the Company's Common Stock.
Under this plan, Fees earn interest and dividends and are payable at the
Director's election in installments over a three-year period following the
Director's retirement from the Board of Directors, death, or disability.
OWNERSHIP BY MANAGEMENT AND OTHER STOCKHOLDERS
The following table sets forth certain information with respect to the
number of shares of the Company's Common Stock beneficially owned as of January
1, 1999 by the Chairman, President and Chief Executive Officer, the other four
most highly compensated executive officers (including executive officers of the
Bank), each Director and all Directors and executive officers as a group.
4
<PAGE>
Amount and Nature of Percentage of
Beneficial Outstanding
Executives Ownership (1)(2)(3) Common Stock
- ---------- ------------------- ------------
Arthur H. Meehan..... 267,595(4) 3.20%
Chairman, President, Chief
Executive Officer and Director
of the Company
Phillip W. Wong...... 66,208 *
Executive Vice President,
Chief Financial Officer and
Treasurer of the Company
George A. Bargamian.. 77,147 *
Senior Vice President of
the Bank
Eric B. Loth......... 62,906 *
Senior Vice President of
the Bank
William F. Rivers.... 84,950(5) 1.02%
Senior Vice President of
the Bank
Directors
- ---------
Edward D. Brickley... 30,930(6) *
David L. Burke ...... 6,790(7) *
Paul J. Crowley...... 106,958(8) 1.28%
Mary Lou Doherty..... 20,072 *
Edward J. Gaffey..... 108,352(9) 1.30%
Andrew D. Guthrie.... 49,908 *
Robert A. Havern..... 34,396 *
Eugene R. Murray..... 73,465 *
Francis D. Pizzella.. 156,453(10) 1.87%
All Directors and Executive
Officers as a Group (14
persons)........... 1,146,130 13.70%
- ------------
* Less than 1%
(1) Unless otherwise noted in the footnotes to this table, each of the
Directors, nominees and executive officers has sole or shared voting and
investment power for the shares of Common Stock beneficially owned by
him/her. The amounts set forth for Messrs. Meehan, Wong, Bargamian, Loth
and Rivers include 9,597, 2,608, 12,043, 104 and 22,646 shares,
respectively, allocated to their accounts under the Bank's Employees'
Stock Ownership Plan (the "ESOP").
(2) The shares of Common Stock in this column include those shares which may
be acquired by the persons or group indicated pursuant to the exercise of
stock options within 60 days of January 1, 1999.
(3) This share ownership includes shares of Common Stock allocated to the
account of Directors under the Deferred Investment Plan for Outside
Directors. Under this plan 7,281, 1,970, 10,166, 31,162, 17,116, 30,035
and 29,124 shares of Common Stock have been allocated to the accounts of
Messrs. Brickley, Burke, Crowley, Gaffey, Guthrie, Murray and Pizzella,
respectively.
(4) Mr. Meehan also has an interest in a 401(k) Plan Share Fund which may
invest in the Company's stock. He does not have voting power over the
shares, but does have the right to dispose of them.
(5) Mr. Rivers also has an interest in a 401(k) Plan Share Fund which may
invest in the Company's stock. He does not have voting power over the
shares, but does have the right to dispose of them.
5
<PAGE>
(6) Of the shares of Common Stock listed as owned by Mr. Brickley, 7,107
shares are owned by Mr. Brickley's wife. Mr. Brickley disclaims beneficial
ownership of these shares.
(7) Of the shares of Common Stock listed as owned by Mr. Burke, 720 shares are
owned by Mr. Burke's wife. Mr. Burke disclaims beneficial ownership of
these shares.
(8) Of the shares of Common Stock listed as owned by Mr. Crowley, 10,000
shares are owned by Mr. Crowley's wife. Mr. Crowley disclaims beneficial
ownership of these shares.
(9) Of the shares of Common Stock listed as owned by Mr. Gaffey, 21,150 shares
are owned by Mr. Gaffey's wife. Mr. Gaffey disclaims beneficial ownership
of these shares.
(10) Of the shares of Common Stock listed as owned by Mr. Pizzella, 33,063
shares are owned by Mr. Pizzella's wife. Mr. Pizzella disclaims beneficial
ownership of these shares.
The following table presents information as to the entities known to the
Company to be beneficial owners of more than five percent of the Common Stock of
the Company as of December 31, 1998.
<TABLE>
<CAPTION>
Amount and Nature Percentage of
of Beneficial Outstanding
Name And Address of Beneficial Owner Ownership Common Stock
------------------------------------ --------- ------------
<S> <C> <C>
Dimensional Fund Advisors Inc. ............... 671,000(1) 8.02%
1299 Ocean Avenue, 11th Floor, Santa Monica, California 90401
Investors Bank and Trust Bank, in its capacity as Trustee of the
Medford Savings Bank Employees' Stock Ownership Plan 426,776(2) 5.10%
24 Federal Street, Boston, Massachusetts 02110
</TABLE>
- ------------
(1) The Company has relied upon the information set forth in the Schedule 13G
filed with the SEC by Dimensional Fund Advisors Inc. ("Dimensional") for
beneficial ownership of shares of Common Stock as of December 31, 1998.
Dimensional, an investment advisor registered under Section 203 of the
Investment Advisors Act of 1940, furnishes investment advice to four
investment companies registered under the Investment Company Act of 1940,
and serves as investment manager to certain other investment vehicles,
including commingled group trusts (these investment companies and
investment vehicles are the "portfolios"). In its role as investment
advisor and investment manager, Dimensional possesses both voting and
investment power over such shares of Common Stock owned by the Portfolios.
Dimensional disclaims beneficial ownership of all such shares of Common
Stock.
(2) The Company has relied on information furnished by the Trustee of the ESOP
to the Company.
EXECUTIVE COMPENSATION
Executive officers of the Company currently receive no compensation in
their capacities as executive officers of the Company but are compensated as
employees of the Bank.
The following table sets forth information concerning the compensation for
services rendered in all capacities during the three fiscal years through 1998
earned by the Chairman, President and Chief Executive Officer, and the four
other most highly compensated executive officers of the Bank (who, in the case
of Messrs. Meehan and Wong, are also officers of the Company).
6
<PAGE>
I. Summary Compensation Table
<TABLE>
<CAPTION>
Long-term
Compensation
Annual Compensation (1) Awards(3) All
------------------------------------- Securities Other
Name and Principal Position Underlying Annual
with the Bank Year Salary ($) Bonus(2)$ Options (#) Compensation
- ------------- ---- ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Arthur H. Meehan, 1998 $420,000 $95,000 7,500 $241,504(4)
Chairman, President and 1997 380,000 75,000 5,000 100,961(4)
Chief Executive Officer 1996 345,000 60,000 None 38,375(4)
Phillip W. Wong, 1998 $137,500 $25,000 3,000 $2,428(5)
Executive Vice President, 1997 125,000 25,000 2,000 2,250(5)
Chief Financial Officer, 1996 114,000 25,000 None 2,085(5)
and Treasurer
George A. Bargamian, 1998 $124,000 $20,000 3,000 $2,153(6)
Senior Vice President 1997 118,000 15,000 2,000 2,040(6)
1996 110,000 18,000 None 1,950(6)
Eric B. Loth, 1998 $123,000 $0 3,000 $2,141(7)
Senior Vice President 1997 116,000 15,000 2,000 1,890(7)
1996 110,000 10,000 None 1,725(7)
William F. Rivers, 1998 $116,600 $18,000 3,000 $2,041(8)
Senior Vice President 1997 110,000 15,000 2,000 1,905(8)
1996 103,000 17,000 None 1,845(8)
</TABLE>
- --------------------
(1) Excludes the value of certain perquisites and benefits furnished by the
Company or Bank to its executive officers to facilitate the conduct of its
business. The aggregate amount of such benefits for each executive officer
did not exceed the lesser of $50,000 or 10% of the compensation reported
in the table for such individual.
(2) Amounts paid under the Bank's Incentive Compensation Program for services
rendered in the year reported.
(3) None of the executives listed received any restricted stock awards or LTIP
payouts during the three years reported.
(4) A contribution of $2,500, $2,375 and $2,375 was made to Mr. Meehan's
401(k) account in 1998, 1997 and 1996, respectively. A contribution of
$24,000, $42,739 and $36,000 was made to Mr. Meehan's Supplemental
Executive Retirement Plan in 1998, 1997 and 1996, respectively. A
contribution of $215,004 and $55,847 was made to Mr. Meehan's Executive
Supplemental Benefit Agreement in 1998 and 1997, respectively.
(5) A contribution of $2,428, $2,250 and $2,085 was made to Mr. Wong's 410(k)
account in 1998, 1997 and 1996, respectively.
(6) A contribution of $2,153, $2,040 and $1,950 was made to Mr. Bargamian's
401(k) account in 1998, 1997 and 1996, respectively.
(7) A contribution of $2,141, $1,890 and $1,725 was made to Mr. Loth's 401(k)
account in 1998, 1997 and 1996, respectively.
(8) A contribution of $2,041, $1,905 and $1,845 was made to Mr. Rivers' 401(k)
account in 1998, 1997 and 1996, respectively.
7
<PAGE>
II. Stock Options Granted in Fiscal 1998
The following table sets forth information concerning individual grants of
stock options made during fiscal 1998 to each executive officer of the Company
and/or the Bank listed below. Neither the Company nor the Bank granted any stock
appreciation rights during fiscal 1998.
<TABLE>
<CAPTION>
Potential Realizable
Value
At Assumed Annual
Rates of Stock Price
Appreciation for Option
Individual Grants Term
- -------------------------------------------------------------------------------------- -----------------------
Number of Percentage of
Securities Total Options
Underlying Granted to Exercise or
Options Employees Base Price Expiration
Name Granted In Fiscal Year ($/sh) Date 5%($) 10%($)
- ------------------ ---------- -------------- ------------ ----------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Arthur H. Meehan 7,500 20.0% $16.8125 12/23/08 $79,300 $200,961
Phillip W. Wong, 3,000 8.0% $16.8125 12/23/08 $31,720 $80,384
George A. Bargamian 3,000 8.0% $16.8125 12/23/08 $31,720 $80,384
Eric B. Loth 3,000 8.0% $16.8125 12/23/08 $31,720 $80,384
William F. Rivers 3,000 8.0% $16.8125 12/23/08 $31,720 $80,384
</TABLE>
III. Option Exercises and Year-End Value Table
The following table sets forth the aggregate number of stock options
exercised by each executive officer of the Company and/or the Bank listed below
and, for each such executive officer, the number of exercisable and
unexercisable stock options and the value of exercisable and unexercisable
"in-the-money" stock options at the end of fiscal 1998.
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year, and FY-End Option Value
------------------------------------------------------------------------
Number of Value of
Securities Unexercised
Underlying In-The-Money
Unexercised Securities Under-
Options lying Options
Shares Acquired at FY-End (#) at FY-End ($)
on Exercise Value Exercisable/ Exercisable/
Name (#) Realized($)(1) Unexercisable Unexercisable(1)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Arthur H. Meehan 14,000(2) $195,125(2) 163,784/13,500 $1,711,635/$4,688
Phillip W. Wong -0- -0- 61,600/5,400 $673,950/$1,875
George A. Bargamian 24,000(2) $438,750(2) 23,600/5,400 $306,638/$1,875
Eric B. Loth -0- -0- 61,600/5,400 $433,950/$1,875
William F. Rivers 11,000(2) $179,781(2) 41,600/5,400 $561,450/$1,875
</TABLE>
(1) Market value of underlying securities at exercise or year-end minus the
exercise or base price. Market value is calculated on the basis of the
closing price for the Common Stock as reported on the Nasdaq National
Market of $16.75 on December 31, 1998.
(2) Because the shares have not been sold by the executive, they are reflected
in the beneficial ownership table.
8
<PAGE>
Pension Plan
The Bank provides a non-contributory qualified retirement plan for its
eligible employees through the Savings Banks Employees Retirement Association.
The retirement plan provides that the retirement benefit provided to any
participant will be based on the average of the highest three consecutive years
of cash compensation during the participant's employment at the Bank.
The following table illustrates annual pension benefits for retirement at
age 65 under the most advantageous plan provisions in effect on December 31,
1998. The benefits listed in the table are not subject to any deduction for
Social Security or other offset amount.
ANNUAL PENSION BENEFIT
BASED ON YEARS OF SERVICE(1)(2)
-------------------------------
25 OR
AVERAGE COMPENSATION 10 YRS 15 YRS 20 YRS MORE YRS
- ---------------------------------------------------------------------
$ 60,000.................. 9,232 13,848 18,465 23,081
80,000.................. 12,932 19,398 25,865 32,331
100,000.................. 16,632 24,948 32,265 41,581
120,000.................. 20,332 30,498 40,665 50,831
140,000.................. 24,032 36,048 48,065 60,081
150,000.................. 25,882 38,823 51,765 64,706
160,000.................. 27,732 41,598 55,465 69,331
- ------------
(1) The annual pension benefit is computed on the basis of a straight-life
annuity.
(2) Federal law does not permit qualified pension plans to recognize
compensation in excess of $160,000 for plan years beginning in 1998 or to
pay an annual benefit in excess of $130,000 for plan years beginning in
1998.
The number of credited years of service at December 31, 1998 and the
estimated credited years at age 65 (the maximum number of credited service years
is 25 years), respectively, for purposes of the retirement plan for the
following executive officers were: Mr. Meehan 7 and 9; Mr. Wong 6 and 22; Mr.
Bargamian 11 and 25; Mr. Loth 4 and 13 and Mr. Rivers 25 and 25.
Employment Contract, Special Termination Agreements, Other Agreements
The Bank and the Company entered into an amended and restated employment
agreement with Mr. Meehan, effective November 26, 1997, to include the Company
as a party (the "Amended and Restated Agreement"). Although the Amended and
Restated Agreement has an initial term of three years, on April 27, 1998, and on
each successive anniversary of that date, unless the Company and the Bank, or
Mr. Meehan, have previously given the specified notice to the other of its or
his election not to extend the Agreement, an additional one-year period will be
added to the Amended and Restated Agreement. The Amended and Restated Agreement
provides that Mr. Meehan will receive minimum annual compensation equal to a
current base salary ($441,000 as of January 1, 1999), subject to no less than an
annual cost of living increase, in addition to all regular benefits provided by
the Bank and any sums that may be awarded under the Bank's discretionary bonus
plan. Under the terms of the Amended and Restated Agreement, the Company and the
Bank may terminate Mr. Meehan's employment, without incurring any continuing
obligations to him, at any time for "cause," which is defined by the Amended and
Restated Agreement to mean his deliberate dishonesty to the Company or the Bank,
conviction of a crime involving moral turpitude, or gross and willful failure to
perform his duty. If the Company and the Bank terminate Mr. Meehan's employment
for any reason other than "cause," or if Mr. Meehan terminates his employment
under certain conditions, the Company and the Bank will remain obligated to
continue providing the compensation and benefits specified in the Amended and
Restated Agreement for the duration of what otherwise would have been the term
of the Amended and Restated Agreement.
The Bank entered into amended and restated special termination agreements
with each of Messrs. Meehan, Wong, Bargamian, Loth and Rivers, effective
November 26, 1997, to include certain references to change in control (as
defined in the Amended and Restated Special Termination Agreements) of the
Company (the "Special Termination Agreements"). In addition, the Special
Termination Agreements of Messrs. Meehan and Wong include the Company
9
<PAGE>
as a party. The Special Termination Agreements provide that (A) if there is a
Change in Control and (B) if, at any time during the three-year period following
such Change in Control, the Bank (and the Company, in the case of Messrs. Meehan
and Wong) terminates the contracting officer's employment for any reason other
than for "cause" (as defined in the Special Termination Agreement), or the
contracting officer terminates his own employment following (i) his demotion;
(ii) his loss of title, office or significant authority; (iii) a reduction in
his annual base salary; (iv) the failure to pay the officer his current or
deferred compensation for seven days; (v) the failure to continue in effect any
material compensation, incentive, bonus or benefit plan, unless an alternative
equitable arrangement is agreed upon; (vi) the failure to continue to provide
the officer with certain benefits; or (vii) the failure to obtain a satisfactory
agreement from any successor to assume and agree to perform the Special
Termination Agreements, the officer will be entitled to receive the severance
benefits provided to him in his respective agreement as described below. In the
case of such a termination, Mr. Meehan would be entitled to receive a lump sum
payment in an amount equal to approximately three times his average annual
compensation over the five previous years of his employment with the Bank, and
each of Mr. Wong, Bargamian, Loth and Rivers would be entitled to receive an
amount equal to approximately two times his average annual compensation over the
same period.
The Bank entered into a Supplemental Executive Retirement Plan with Mr.
Meehan, effective November 1, 1994. The agreement is designed to provide the
benefits which he would have been entitled to under defined benefit plans but
for the reduction in the IRC 401 (a) (17) compensation ceiling to $150,000
effective November 1, 1994.
The Bank also entered into an Executive Supplemental Benefit Agreement
with Mr. Meehan, effective October 28, 1997. The Executive Supplemental Benefit
Agreement generally provides for fifteen annual payments of $70,000 to Mr.
Meehan upon his retirement or to a beneficiary if Mr. Meehan dies before
receiving all fifteen annual payments. The annual payments are conditioned upon
Mr. Meehan's fulfilling certain specified duties to render services to the Bank
in an advisory or consulting capacity at the request of the Bank.
Compensation Committee Report on Executive Compensation
The following report reflects the work of the Company's Compensation and
Options Committee.
The Company's executive compensation philosophy is to provide competitive
levels of compensation, integrate management's pay with the achievement of the
Company's performance goals, reward above average corporate performance,
recognize individual initiative and achievement, and assist the Company in
attracting and retaining qualified management.
At the end of each fiscal year, the Compensation and Options Committee
reviews the performance of the Chairman, President and Chief Executive Officer
(the "CEO"), evaluates the performance of the Company, and establishes an
appropriate salary increase for recommendation to and approval by the Board of
Directors. In addition, the Compensation and Options Committee reviews the
proposed salary increases for all other senior executives, and all officers as a
group. In establishing the salary for the CEO, the Compensation and Options
Committee (i) considers financial performance data, including, without
limitation, return on assets, return on equity, asset growth and quality, and
capital position, (ii) utilizes a comparison of the compensation package for
comparable positions in financial institutions within the Company's peer group
provided by outside consulting services and (iii) makes a subjective evaluation
of the individual performance of the CEO in carrying out his or her duties and
responsibilities. The committee's salary practice is to compensate the CEO to
attract and retain a qualified incumbent.
Additional short-term incentives can be earned through a discretionary
bonus plan, administered by the Compensation and Options Committee. Senior
executive officers as well as other officers are eligible to receive a bonus
payable prior to the end of the first quarter of the following year if the
Company or the Bank meets or exceeds certain base standards and individual
performance warrants consideration. The base standards for 1998 were the
budgeted financial goals and results of the Company and the Bank, which included
earnings per share as well as other financial achievements, and the
discretionary evaluation of individual performance and contributions towards
those results.
Long-term incentives are provided through the grant of stock options.
These plans are administered by the Compensation and Options Committee, which
has the authority to determine the individuals to whom and the terms at which
option grants are made. Options are granted to individuals to reward significant
contributions to company performance or to attract and retain qualified
individuals. Both "incentive stock options" and "nonqualified stock options" may
be granted pursuant to these plans. All options granted under these plans are
required to have an exercise price per share equal to at least the fair market
value of a share of Common Stock on the date the option is granted and generally
vest over a period of at least three years.
10
<PAGE>
Based upon a review of the performance of the Company and Mr. Meehan's
performance, which review was conducted at the Committee meeting in December
1998, Mr. Meehan's salary was increased effective January 1, 1999, from $420,000
to $441,000. Additionally, Mr. Meehan was granted 7,500 stock options and
awarded a cash bonus of $95,000 in December 1998. Mr. Meehan's compensation was
based on the Company's overall profitability, the performance of the Company's
core banking business, the Company's asset growth and quality, the Company's
deposit growth and the Company's equity growth. More specifically, the Committee
acknowledged that the Company achieved record net income of $12,252,000 for
1998, an increase of $862,000 over 1997 levels. Earnings per share for 1998 also
increased -- 12 cents or 10% compared to the previous year. At year end, total
assets increased 1.4% from the prior year and total deposits increased 6.1% to
$871.7 million. Furthermore, return on equity increased from 11.81% to 11.99%.
In addition, the Committee reviewed comprehensive surveys obtained from outside
consulting services, as well as compensation information of a select peer group,
comparing Mr. Meehan's overall compensation to that of chief executive officers
of comparable banking institutions in the Northeast, Massachusetts and the local
peer group.
Messrs. Wong, Bargamian, Loth and Rivers were also granted salary
increases effective January 1, 1999 based upon their individual performance and
that of the Company, as described above. In addition, Messrs. Wong, Bargamian,
Loth and Rivers were granted stock options, and Messrs. Wong, Bargamian, and
Rivers were also awarded a cash bonus December 1998, based upon assessments of
individual performance as well as comparison to peer group compensation
packages.
This report is provided by Messrs. Burke, Crowley, Gaffey, Murray and
Pizzella, the members of the Compensation and Options Committees of the Company
during fiscal year 1998.
RELATIONSHIPS AND TRANSACTIONS WITH THE COMPANY
Certain Directors and officers of the Company and the Bank and members of
their immediate family are at present, as in the past, customers of the Bank and
have transactions with the Bank in the ordinary course of business. In addition,
certain of the Directors are at present, as in the past, also directors,
officers or stockholders of corporations or members of partnerships that are
customers of the Bank and have transactions with the Bank in the ordinary course
of business. Such transactions with Directors and officers of the Company and
the Bank and their families and with such corporations and partnerships were
made in the ordinary course of business, were made on substantially the same
terms, including interest rates and collateral on loans, as those prevailing at
the time for comparable transactions with other persons, and did not involve
more than the normal risk of collectibility or present other features
unfavorable to the Bank.
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return on the Company's Common Stock (or the
Bank's common stock, prior to the formation of the Company), based on the market
price of the Company's (or Bank's) common stock and assuming reinvestment of
dividends, with the total return of companies within the Standard & Poor's 500
Stock Index and the Keefe, Bruyette & Woods ("KBW") New England Bank Index. The
calculation of total cumulative return assumes a $100 investment in the
Company's (or Bank's) common stock, the S&P 500 and the KBW New England Bank
Index on December 31, 1993.
11
<PAGE>
- --------------------------------------------------------------------------------
Medford Bancorp, Inc. (MDBK) Vs. The Five Year Total Return for the
KBW New England Bank Index and S&P 500 Index
- --------------------------------------------------------------------------------
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Medford Savings Bank/Medford Bancorp, Inc. $100.00 $105.63 $162.38 $201.33 $315.47 $276.75
% change 5.63 53.73 23.99 56.69 (12.27)
S & P 500 $100.00 $101.36 $139.31 $171.21 $228.26 $293.36
% change 1.36 37.44 22.90 33.32 28.52
KBW New England Bank Index $100.00 $100.67 $157.13 $217.03 $373.11 $344.79
% change 0.67 56.08 38.12 71.92 (7.59)
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act of 1934 and SEC
regulations, the Company's executive officers and directors must file reports of
ownership and changes in ownership with the SEC and the Nasdaq Stock Market,
Inc. and furnish the Company with copies of all Section 16(a) reports they file.
To the Company's knowledge, based solely on review of the copies of such reports
furnished to the Company, no executive officer or director of either the Bank or
the Company failed to file any such reports.
ACCOUNTANTS
The firm of Wolf & Company, P.C. served as the Company's independent
public accountants for the year ended December 31, 1998 and is expected to serve
as the Company's independent public accountants for 1999. Representatives of
Wolf & Company, P.C. are expected to be present at the Annual Meeting to be
available to respond to appropriate questions, and to have the opportunity to
make a statement if they so desire.
OTHER MATTERS
It is not anticipated that any matters other than those set forth in this
Proxy Statement will be brought before the Annual Meeting. If any other matters
properly come before the Annual Meeting, the persons named as proxies will vote
upon such matters in their discretion in accordance with their best judgment.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 2000 Annual Meeting
of Stockholders of the Company must be received in writing by the Company at its
principal executive offices on or before November 24, 1999 in order to be
considered for inclusion in its proxy statement and form of proxy relating to
the 2000 Annual Meeting. These proposals must also comply with the rules of the
SEC governing the form and content of proposals in order to be included in the
Company's proxy statement and form of proxy. The Company's By-Laws also provide
that any
12
<PAGE>
stockholder wishing to have a proposal or director nomination considered at the
2000 Annual Meeting must provide written notice of such proposal or director
nomination, along with appropriate supporting materials as set forth in the
Company's By-laws, to the Clerk of the Company at the Company's principal
executive office not less than 75 days nor more than 120 days prior to April 26,
2000; provided, however, that in the event the Annual Meeting is scheduled to be
held on a date more than 30 days before April 26, 2000 or more than 60 days
after April 26, 2000, 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 (a) the 75th day prior to the
scheduled date of such Annual Meeting, or (b) the 15th day following the day on
which public disclosure of the date of such Annual Meeting is first made by the
Company. Any proposals or nominations that are not received during this period
will not be considered at the 2000 Annual Meeting. Any stockholder wishing to
submit a proposal or director nomination should review the By-law requirements
regarding proposals and director nominations and should submit any such proposal
or director nomination and appropriate supporting documentation to: Medford
Bancorp, Inc., 29 High Street, Medford, Massachusetts 02155, Attention:
Shareholder Relations. Proxies solicited by the Board of Directors will confer
discretionary voting authority with respect to these proposals or nominations,
subject to SEC rules governing the exercise of this authority.
March 24, 1999
13
<PAGE>
|X| PLEASE MARK VOTES
AS IN THIS EXAMPLE
---------------------------------
MEDFORD BANCORP, INC.
---------------------------------
RECORD DATE SHARES:
1. Election of four directors for a three year term.
For All With- For All
Nominees hold Except
David L. Burke |_| |_| |_|
Mary Lou Doherty
Arthur H. Meehan
Eugene R. Murray
If you do not wish your shares voted "For" a particular nominee, mark the "For
All Except" box and strike a line through the name(s) of the nominee(s). Your
shares will be voted for the remaining nominee(s).
The undersigned hereby acknowledge(s) receipt of a copy of the accompanying
Notice of Annual Meeting of Stockholders, the Proxy Statement with report
thereto and the Company's 1998 Annual Report to Stockholders, and hereby
revoke(s) any proxy or proxies heretofore given. This proxy may be revoked at
any time before it is exercised.
Mark box at right if an address change or comment has been noted on
the reverse side of this card. |_|
-------------------------
Please be sure to sign and date this Proxy. Date:
- --------------------------------------------------------------------------------
- --------Stockholder sign here---------------------------Co-owner sign here------
DETACH CARD DETACH CARD
MEDFORD BANCORP, INC.
Dear Stockholder,
Please take note of the important information enclosed with this Proxy Ballot.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on this proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders, April
26, 1999.
Thank you in advance for your prompt consideration.
RGNCM1
<PAGE>
MEDFORD BANCORP, INC.
Proxy for the Annual Meeting of Stockholders to be held on April 26, 1999
This Proxy is Solicited by the Board of Directors
The undersigned hereby constitutes and appoints Arthur H. Meehan, William F.
Rivers and George A. Bargamian, and each of them, as Proxies of the undersigned,
with full power to appoint his substitute, and authorizes each of them (each
having full power to act without the other) to represent and to vote all shares
of Common Stock of Medford Bancorp, Inc. (the "Company") held of record by the
undersigned at the close of business on March 1, 1999 at the Annual Meeting of
Stockholders to be held at Medford Savings Bank, Five High Street, Suite 202,
Medford, Massachusetts, on Monday, April 26, 1999 at 10:00 a.m., local time, and
at any adjournments or postponements thereof.
When properly executed, this proxy will be voted in the manner directed herein
by the undersigned stockholder(s). If no direction is given, this proxy will be
voted FOR the election to the Company's Board of Directors of the four nominees
listed in Proposal 1 on the reverse side. In their discretion, the Proxies are
each authorized to vote upon such other business as may properly come before the
meeting and at any adjournments or postponements thereof. A stockholder wishing
to vote in accordance with the Board of Directors' recommendation need only sign
and date this proxy and return it in the enclosed envelope prior to the Annual
Meeting of Stockholders, April 26, 1999.
Proxy for the Annual Meeting of Stockholders to be held on April 26, 1999
(please date and sign on reverse side, and mail your proxy card promptly in the
enclosed envelope).
- --------------------------------------------------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please sign this proxy exactly as your name(s) appear(s) on the books of the
Company. Joint owners should each sign personally. Trustees, custodians and
other fiduciaries should indicate the capacity in which they sign, and where
more than one name appears, each person must sign. If the stockholder is a
corporation, the signature should be that of an authorized officer who should
state his or her title.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED?
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DO YOU HAVE ANY COMMENTS?
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RGNCM2
