<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
Westport 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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies: N/A
2) Aggregate number of securities to which transaction applies: N/A
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): N/A
4) Proposed maximum aggregate value of transaction: N/A
5) Total fee paid: N/A
[x] 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: N/A
2) Form, Schedule or Registration Statement No.: N/A
3) Filing Party: N/A
4) Date Filed: N/A
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 16, 1996
To the Stockholders of Westport Bancorp, Inc.:
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders (the
"Annual Meeting") of Westport Bancorp, Inc. ("Bancorp") will be held at The
Fairfield County Hunt Club, 174 Long Lots Road, Westport, Connecticut, on
Thursday, May 16, 1996, at 9:30 a.m., for the following purposes:
(1) To elect eight directors, each for a one-year term (Proposal
1);
(2) To consider and vote upon a proposed amendment to the Restated
Certificate of Incorporation of Bancorp, as amended, to
provide for elimination of certain liabilities of directors in
accordance with Delaware law (Proposal 2);
(3) To ratify the appointment by the Board of Directors of Arthur
Andersen LLP as the independent auditors of Bancorp for the
fiscal year ending December 31, 1996 (Proposal 3);
(4) To consider and vote upon a proposal to adjourn the Annual
Meeting to permit the solicitation of additional proxies in
the event that sufficient votes are not present in person or
represented by proxy to vote in favor of the matter summarized
in paragraph 2 above (Proposal 4); and
(5) To transact such other business as may properly come before
the Annual Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on April 19,
1996 as the record date for the determination of stockholders entitled to notice
of and to vote at the Annual Meeting. Only stockholders of record at the close
of business on April 19, 1996 will be entitled to notice of, and to vote at, the
Annual Meeting or any adjournment thereof.
By Order of the Board of Directors
John J. Henchy
Secretary
Westport, Connecticut
April 24, 1996
We invite you to enjoy "Coffee Time" from 9:00 to 9:30 a.m.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT YOU
PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE DATE, SIGN AND
COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
87 Post Road East
Westport, Connecticut 06880
(203) 222-6911
____________________________________
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 16, 1996
____________________________________
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors (the "Board of Directors") of Westport
Bancorp, Inc. ("Bancorp"), 87 Post Road East, Westport, Connecticut 06880. The
proxies being solicited are to be used at the 1996 Annual Meeting of
Stockholders of Bancorp (the "Annual Meeting") and at any adjournments thereof.
The Annual Meeting will be held at 9:30 a.m. on Thursday, May 16, 1996, at The
Fairfield County Hunt Club, 174 Long Lots Road, Westport, Connecticut, for the
purposes set forth in the accompanying Notice of Annual Meeting of Stockholders.
Unless the stockholder specifically directs otherwise, any proxy that has been
properly executed and that has been received by Bancorp in time for the Annual
Meeting will be voted (i) FOR the election of the nominees for director listed
in this Proxy Statement, (ii) FOR approval and adoption of the proposed
amendment to the Restated Certificate of Incorporation of Bancorp, as amended,
to provide for elimination of certain liabilities of directors in accordance
with Delaware law, (iii) FOR the ratification of the appointment of Arthur
Andersen LLP as the independent auditors of Bancorp for the fiscal year ending
December 31, l996, and (iv) FOR the adjournment of the Annual Meeting to permit
the solicitation of additional proxies in the event that sufficient votes are
not present in person or represented by proxy to vote in favor of the proposed
amendment to the Restated Certificate of Incorporation of Bancorp, as amended.
If the stockholder directs otherwise, his or her proxy will be voted as he or
she directs. A stockholder may revoke any proxy that he or she has given. To do
so, the stockholder must file a written notice of revocation with, or deliver a
duly executed proxy bearing a later date to, John J. Henchy, Secretary, Westport
Bancorp, Inc., 87 Post Road East, Westport, Connecticut 06880, or attend the
Annual Meeting and vote in person. The Notice of Annual Meeting of Stockholders,
this Proxy Statement, and the form of proxy are first being mailed to
stockholders of Bancorp on or about April 24, 1996.
The Board of Directors has fixed the close of business on April 19,
1996 as the record date for the determination of stockholders entitled to notice
of and to vote at the Annual Meeting. On the record date, Bancorp had
outstanding 5,638,531 shares of Common Stock, par value $.01 per share (the
"Common Stock"). Each share of Common Stock is entitled to one vote (a total of
5,638,531 votes). On the record date, Bancorp also had outstanding 40,010 shares
of Series A Convertible Preferred Stock, par value $.01 per share (the
"Convertible Preferred Stock"). Each share of Convertible Preferred Stock is
entitled to 100 votes (a total of 4,001,000 votes). The holders of Common Stock
and Convertible Preferred Stock (who are referred to in this Proxy Statement
collectively as the "Stockholders") will vote as one class on the matters
scheduled to come before the meeting. At the Annual Meeting, the Stockholders
will be entitled to cast a total of 9,639,531 votes, which are referred to in
this Proxy Statement as "Votes."
<PAGE>
The affirmative vote of a majority of the Votes that are present, in
person or represented by proxy, at the Annual Meeting is required to elect each
director, to ratify the appointment of Arthur Andersen LLP and to adjourn the
Annual Meeting to permit the solicitation of additional proxies. The affirmative
vote of at least two-thirds of the Votes is required to approve and adopt the
amendment to the Restated Certificate of Incorporation of Bancorp, as amended,
to provide for elimination of certain liabilities of directors in accordance
with Delaware law. Abstentions will be counted as shares that are present and
entitled to vote. An abstention on the approval of the amendment to the Restated
Certificate of Incorporation of Bancorp, as amended, will have the same effect
as a vote against the adoption. An abstention on the ratification of the
appointment of Arthur Andersen LLP or the adjournment of the Annual Meeting will
have the same effect as a vote against such ratification or adjournment, as the
case may be.
Bancorp's Annual Report to Stockholders for the fiscal year ended
December 31, 1995 accompanies this Proxy Statement. Bancorp is required to file
an annual report on Form 10-K for the fiscal year ended December 31, 1995 with
the Securities and Exchange Commission. Stockholders as of April 19, 1996 may
obtain, free of charge, a copy of the Form 10-K, including the financial
statements and financial statement schedules thereto, by writing to John J.
Henchy, Secretary, Westport Bancorp, Inc., 87 Post Road East, Westport,
Connecticut 06880. Stockholders as of April 19, 1996 may obtain copies of the
exhibits to the Form 10-K upon the payment of Bancorp's reasonable expenses in
furnishing such exhibits.
In addition to using the mails, the directors, officers, and employees
of Bancorp and The Westport Bank and Trust Company (the "Bank"), a wholly owned
subsidiary of Bancorp, may solicit proxies personally, by telephone, or by
telegraph. These officers, directors, and employees will not be specifically
compensated for these services. The Company has retained Beacon Hill Partners,
Inc., a proxy soliciting firm ("Beacon Hill"), to assist in the solicitation of
proxies at a fee of $2,750, plus reimbursement of certain out-of-pocket expenses
estimated to be approximately $2,000. The cost of soliciting proxies for the
Annual Meeting, including the fees and expenses of Beacon Hill, will be borne by
Bancorp.
ELECTION OF DIRECTORS
(Proposal 1)
At the Annual Meeting, eight directors will be elected. It is intended
that Votes represented by properly executed proxies will be cast, in the absence
of a contrary indication, in favor of the election of George H. Damman, Michael
H. Flynn, William L. Gault, Kurt B. Hersher, William E. Mitchell, David A.
Rosow, William D. Rueckert, and Jay Sherwood, each to hold office until the next
annual meeting and until his successor is elected and qualified. All of the
nominees are currently serving as directors of Bancorp and the Bank. Proxies may
not be voted for more than eight individuals.
For stockholders participating in Bancorp's Employee Stock Ownership
Plan (the "ESOP") administered by the Bank, the Bank in its capacity as trustee
of the ESOP will vote any shares that it holds for the participant's account in
accordance with the proxy returned by the participant covering his or her shares
held under the ESOP on the record date.
If, at the time of the Annual Meeting, any of the nominees has become
unavailable to serve as a director, shares represented by proxies may be voted
for a substitute chosen by the Board of Directors. Each nominee has consented to
being named in this Proxy Statement and to serve as a director of Bancorp if
elected. Bancorp has no reason to believe that any nominee will be unable to
serve as a director.
-2-
<PAGE>
Information About Nominees
The following table sets forth the names of the nominees for election
as directors, together with their ages as of December 31, 1995 and their
principal occupations and other major affiliations during at least the last five
years.
<TABLE>
<CAPTION>
Period Served as Director
Name and Age and Business Experience During at Least the Last Five Years
------------ -----------------------------------------------------------
<S> <C>
George H. Damman, 61 Director of Bancorp since 1983; Director of the Bank since 1972; President of
Damman Associates, Inc. (insurance brokerage) since 1960.
Michael H. Flynn, 57 Director of Bancorp and the Bank since September 1989; President and Chief
Executive Officer of Bancorp and the Bank since September 1989; Senior Vice
President and Director of Commercial Business Development in Fairfield County for
Connecticut National Bank from 1979 until 1989; Chairman (since 1993) and a
member (since before 1991) of the Board of Directors of Bridgeport Hospital.
William L. Gault, 61 Director of Bancorp since 1983; Director of the Bank since 1979; President of
L.H. Gault & Son, Inc. (fuel oil and gravel supply) since before 1991.
Kurt B. Hersher, 67 Director of Bancorp and the Bank since January 1990; President and Chief
Executive Officer of Stelco Industries, Inc. (a property management company and
former owner of Stevenson Lumber Co. and Truss-Tech, Inc.) since before 1991;
President of Stevenson Lumber Co. (wholesaler and retailer of lumber products)
from 1953 until 1993; President of Truss-Tech, Inc. (manufacturer of floor and
roof trusses) from 1986 until 1993.
William E. Mitchell, 52 Director of Bancorp since 1983; Director of the Bank since 1982; President of Ed
Mitchell Inc. (clothing retailer) since before 1991.
David A. Rosow, 53 Director of Bancorp and the Bank since December 1990; Chairman of the Board of
Directors of Bancorp and the Bank since October 1991; Chairman and Chief
Executive Officer of Rosow & Company, Inc. (private investment company) since
1989; Chairman and Chief Executive Officer of International Golf Group, Inc. (a
company active in the ownership, management, and design of golf courses in the
United States) since 1990.
William D. Rueckert, 42 Director of Bancorp and the Bank since February 1992; President of Rosow &
Company, Inc. (private investment company) since 1989; President of International
Golf Group, Inc. (a company active in the ownership, management, and design of
golf courses in the United States) since 1990.
Jay Sherwood, 50 Director of Bancorp since 1983; Director of the Bank since 1982; Owner, Green's
Farms Agency (private investment, custodial, and administrative company) since
before 1991; President of Sherwood Agency Inc. (private investment company) since
before 1991; Vice President and Secretary of Design Strategy Corporation
(computer consulting company) since before 1991.
</TABLE>
-3-
<PAGE>
Certain Board Committees
Bancorp's Board of Directors held 13 meetings during 1995. Each
director of Bancorp attended at least 75% of the aggregate of the total number
of meetings held by Bancorp's Board and the total number of meetings held by all
committees of the Board on which the director served.
The Board of Directors of Bancorp has appointed a Compensation
Committee, which held eight meetings during 1995. The Compensation Committee
reviews the compensation paid to directors and officers of Bancorp and the Bank,
and makes recommendations concerning the grant of stock options and the
declaration of dividends. The members of the Compensation Committee currently
are Messrs. Damman (Chairman), Flynn, Gault, Rosow, and Rueckert.
The Board of Directors of Bancorp has not appointed audit or nominating
committees.
All directors of Bancorp also serve as directors of the Bank. The
Bank's Board of Directors held 14 meetings during 1995. Each director of the
Bank attended at least 75% of the aggregate of the total number of meetings held
by the Bank's Board and the total number of meetings held by all committees of
the Board on which the director served.
The Board of Directors of the Bank has appointed four committees: the
Audit Committee, the Trust Committee, the Directors Loan Committee, and the
Investment Committee.
The Audit Committee makes recommendations regarding the appointment of
independent auditors and reviews matters raised by the Bank's internal and
independent auditors. The members of the Audit Committee currently are Messrs.
Gault (Chairman), Hersher, Rueckert, and Sherwood. The Audit Committee held five
meetings during 1995.
The Trust Committee reviews the operations of the Bank's Trust
Department. The members of the Trust Committee currently are Messrs. Sherwood
(Chairman), Damman, Flynn, and Rueckert. The Trust Committee held 11 meetings
during 1995.
The Directors Loan Committee decides whether to approve large loans and
credits and reviews the Bank's lending policies and procedures. The members of
the Directors Loan Committee currently are Messrs. Rosow (Chairman), Flynn,
Hersher, and Mitchell. The Directors Loan Committee held 10 meetings during
1995.
The Investment Committee oversees the management of the Bank's
investment portfolio and the Bank's assets and liabilities match. The members of
the Investment Committee currently are Messrs. Flynn (Chairman), Damman, Rosow,
Rueckert, and Sherwood. The Investment Committee held 11 meetings during 1995.
Effective June 22, 1995, the Bank dissolved its Compensation Committee,
which reviewed the compensation of directors and officers of the Bank. The
Compensation Committee of Bancorp has assumed the functions of the Bank's
Compensation Committee. Prior to its dissolution, the members of the
Compensation Committee were Messrs. Damman (Chairman), Flynn, Gault, Rosow, and
Rueckert. The Compensation Committee held four meetings during 1995.
BANCORP'S BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ELECTION OF
EACH DIRECTOR NOMINEE.
-4-
<PAGE>
MANAGEMENT
Executive Officers
The following table sets forth certain information with respect to the
current executive officers of Bancorp and the Bank. All executive officers serve
pursuant to employment agreements with Bancorp and the Bank. See "-- Agreements
With Certain Executive Officers."
<TABLE>
<CAPTION>
Age at Position Held With
Name December 31, 1995 Bancorp and the Bank
---- ----------------- --------------------
<S> <C> <C>
Michael H. Flynn 57 President, Chief Executive Officer and Director of Bancorp
and the Bank
Thomas P. Bilbao 57 Executive Vice President and Chief Operating Officer of
Bancorp and the Bank
William B. Laudano, Jr. 42 Senior Vice President and Chief Financial Officer of Bancorp
and the Bank
Richard T. Cummings, Jr. 41 Senior Vice President, Lending, of Bancorp and the
Bank
</TABLE>
Information concerning the principal occupation of the executive
officers of Bancorp and the Bank during at least the last five years is set
forth below.
Michael H. Flynn has served as President, Chief Executive Officer and
Director of Bancorp and the Bank since September 1989. Mr. Flynn was Senior Vice
President and Director of Commercial Business Development in Fairfield County
for Connecticut National Bank from 1979 until 1989. He has served as Chairman
(since 1993) and a member (since before 1991) of the Board of Directors of
Bridgeport Hospital.
Thomas P. Bilbao has served as Chief Operating Officer of Bancorp and
the Bank since April 1992 and as Executive Vice President of Bancorp and the
Bank since December 1991. Mr. Bilbao was Assistant to the President of Bancorp
and the Bank from May 1991 to December 1991. Mr. Bilbao served as President and
Chief Operating Officer of National Savings Bank of Albany from 1987 to 1990.
William B. Laudano, Jr. has served as Senior Vice President and Chief
Financial Officer of Bancorp and the Bank since August 1993. Mr. Laudano was
Vice President/Senior Vice President and Chief Financial Officer of Connecticut
Bank of Commerce from March 1990 to August 1993, and Senior Manager at Ernst &
Young (public accounting firm) from 1982 to March 1990. Mr. Laudano is a
Certified Public Accountant.
Richard T. Cummings, Jr. has served as Senior Vice President, Lending,
of Bancorp and the Bank since January 1990. Mr. Cummings was Vice President of
Connecticut National Bank from 1982 to 1990.
-5-
<PAGE>
Executive Compensation
The following table sets forth the compensation paid by Bancorp and/or
the Bank for services rendered in all capacities to Bancorp and the Bank during
the fiscal years 1995, 1994, and 1993 to the Chief Executive Officer of Bancorp
and to the other most highly compensated executive officers of Bancorp and the
Bank whose combined salary and bonus exceeded $100,000 during the fiscal year
ended December 31, 1995 (the "named executive officers").
<TABLE>
<CAPTION>
Long-Term
Compensation Awards
-------------------
Annual Compensation
------------------- Securities All Other
Name and Principal Position(s) Year Salary Bonus Underlying Options Compensation
- ----------------------------- ---- ------ ----- ------------------ ------------
<S> <C> <C> <C> <C> <C>
Michael H. Flynn 1995 $160,000 $72,000 -- $5,136 (1)
President, Director, and Chief 1994 150,000 40,000 -- 2,645
Executive Officer of Bancorp 1993 150,000 -- -- 2,242
and the Bank
Thomas P. Bilbao 1995 140,000 54,000 -- 5,077 (2)
Executive Vice 1994 135,000 30,000 -- 2,836
President and Chief Operating 1993 135,000 -- -- 2,127
Officer of Bancorp and the Bank
William B. Laudano, Jr. 1995 99,000 39,000 -- 6,241 (3)
Senior Vice President and Chief 1994 95,000 20,000 -- 1,831
Financial Officer of Bancorp 1993 32,885 (4) -- 75,000 406
and the Bank
Richard T. Cummings, Jr. 1995 98,600 45,000 -- 6,222 (5)
Senior Vice President, Lending, 1994 93,600 25,000 -- 1,651
of Bancorp and the Bank 1993 93,600 -- -- 1,480
____________
<FN>
(1) Consists of a life insurance premium of $636 paid by the Bank and a
matching contribution of $4,500 made by the Bank to Mr. Flynn's 401(k)
savings plan deferral account.
(2) Consists of a life insurance premium of $577 paid by the Bank and a
matching contribution of $4,500 made by the Bank to Mr. Bilbao's 401(k)
savings plan deferral account.
(3) Consists of a life insurance premium of $409 paid by the Bank, a split
dollar life insurance premium with a projected benefit of $1,332 paid by
the Bank, and a matching contribution of $4,500 made by the Bank to Mr.
Laudano's 401(k) savings plan deferral account.
(4) Amount reflects actual compensation paid in 1993 to Mr. Laudano, who
joined Bancorp and the Bank on August 16, 1993.
(5) Consists of a life insurance premium of $400 paid by the Bank, a split
dollar life insurance premium with a projected benefit of $1,322 paid by
the Bank, and a matching contribution of $4,500 made by the Bank to Mr.
Cummings' 401(k) savings plan deferral account.
</FN>
</TABLE>
Option Grants
No options were granted during the fiscal year ended December 31, 1995.
-6-
<PAGE>
Option Exercises and Holdings
The following table sets forth information with respect to each of the
named executive officers concerning the exercise of stock options during 1995
and the value of all unexercised options held by such individuals on December
31, 1995.
Aggregated Option Exercises in 1995
and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
December 31, 1995 December 31, 1995
----------------------------- -----------------------
Number of
Shares
Acquired Value
Name on Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
- ----- ----------- -------- ------------------------- --------------------------
<S> <C> <C> <C> <C>
Michael H. Flynn -- -- 283,333 /166,667 $1,204,165 / $708,335 (1)
Thomas P. Bilbao -- -- 166,667 / 83,333 708,335 / 354,165 (1)
William B. Laudano, Jr. -- -- 75,000 / -- 262,500(2) / --
Richard T. Cummings, Jr. -- -- 33,333 / 16,667 141,665 / 70,835 (1)
__________
<FN>
(1) The closing market price of Common Stock at December 31, 1995 was $6.25 per
share. The exercise price of the options is $2.00 per share. Therefore, the
value of the unexercised options at December 31, 1995 was $4.25 per share.
(2) The closing market price of Common Stock at December 31, 1995 was $6.25 per
share. The exercise price of the options is $2.75 per share. Therefore, the
value of the unexercised options at December 31, 1995 was $3.50 per share.
</FN>
</TABLE>
Pension and Retirement Plans
The Bank has a qualified non-contributory defined benefit pension plan
(the "Pension Plan") covering all employees of the Bank over the age of 21 who
have completed at least one year of service with the Bank and have worked at
least 1,000 hours each year.
The Pension Plan provides that a vested participant will receive an
annual retirement benefit that is equal to 70% of the participant's "average
annual compensation" less 50% of the participant's Social Security benefits,
proportionately reduced for less than 35 years of credited service. Employees
who were participants as of December 31, 1978 are entitled to a minimum benefit
equal to .75% of the first $4,800 of "average annual compensation" plus 1.5% of
"average annual compensation" in excess of $4,800, multiplied by years of
credited service, to a maximum of 35 years of service. The Pension Plan defines
"average annual compensation" as one-fifth of a participant's aggregate
compensation (as defined) for those five consecutive years of service that yield
the highest average yearly compensation. Benefits vest upon completion of five
years of credited service (not including service years prior to age 18) or upon
reaching age 65 and are payable upon retirement or, in certain circumstances,
upon death or disability. The normal form of retirement benefit is a 60-month
annuity.
The Bank froze the Pension Plan on January 1, 1992. As a result, no new
benefits have accrued to participants since that date. The benefits that had
already accrued prior to that date remain in place, were not decreased, and
continue to be available to participants upon retirement. Any current employee
with less than five years of service who was eligible to participate in the
Pension Plan on January 1, 1992 will continue to accrue years of credited
service for vesting purposes until he or she reaches five years of credited
service. Once such an employee reaches five years of service, his or her vested
benefits will be determined using data as of January 1, 1992. Subsequent data
will not be used.
-7-
<PAGE>
The following table sets forth information as of December 31, 1995
concerning estimated annual benefits payable upon retirement at age 65 under the
Pension Plan:
Pension Plan Table
<TABLE>
<CAPTION>
Years of Credited Service
(prior to 1/1/92) at Age 65 is:
Average Annual ----------------------------------------------------------
Compensation 15 20 25 30 35
-------------- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C>
$100,000................................. $ 27,493 $ 36,657 $ 45,821 $ 54,986 $ 64,150
125,000................................. 34,993 46,657 58,321 69,986 81,650
150,000................................. 42,493 56,657 70,821 84,986 99,150
175,000................................. 49,993 66,657 83,321 99,986 116,650
200,000................................. 57,493 76,657 95,821 108,963 120,000(1)
____________
<FN>
(1) Although benefits were frozen on January 1, 1992, the maximum benefit under
Section 415 of the Internal Revenue Code of 1986 may increase after that
date.
</FN>
</TABLE>
For purposes of the Pension Plan, annual compensation is defined as
annual earnings, excluding overtime, bonuses, and any other additional
compensation. This amount corresponds to "Salary" in the Summary Compensation
Table (see "-- Executive Compensation").
As of December 31, 1995, Messrs. Flynn and Cummings had six and five
years of credited service, respectively, under the Pension Plan. Messrs. Bilbao
and Laudano were not eligible to participate in the Pension Plan on January 1,
1992. Consequently, they do not accrue years of credited service under the
Pension Plan.
Supplemental Executive Retirement Plan
The Bank has adopted a Supplemental Executive Retirement Plan, as
amended (the "SERP"), that covers key employees chosen by the Bank to
participate. The SERP replaced the Bank's existing Supplemental Executive
Retirement Plan. The SERP is intended to supplement retirement benefits under
the Bank's Pension Plan such that the SERP and the Pension Plan together will
provide a SERP participant with a benefit at the Normal Retirement Date (as
defined) under the Pension Plan equal to 70% of the participant's final average
earnings (defined as the average annual earnings during the five consecutive
years that yield the highest compensation). A participant who terminates
employment after the Early Retirement Date under the Pension Plan (generally,
age 55 with five years of service) is entitled to reduced benefits under the
SERP. The benefit payable to a participant who terminates employment after his
or her Early Retirement Date is equal to the product of (c) times the amount
determined by subtracting (b) from (a), where: (a) is 70% of the participant's
final average earnings as reduced by .55% for each month by which the date of
the participant's distribution precedes his or her Normal Retirement Date, to a
maximum of 60 months, plus .35% for each such month in excess of 60 months, (b)
is the actuarial equivalent of the participant's accrued benefit under the
Pension Plan and (c) is a fraction (not in excess of one), the numerator of
which is the participant's years of service (as defined for purposes of the
Pension Plan) and the denominator of which is the number of years of service
with which the participant would be credited if he or she remained employed
until his or her Normal Retirement Date.
Payments under the SERP are made in equal monthly installments for a
maximum of 15 years, with 10 years of payments guaranteed. If the participant
dies prior to retirement and while still actively employed by the Bank, no
benefit is payable under the SERP. In the event of a change in control (as
defined), the participant will be entitled to the normal or early retirement
benefit described above, whichever is applicable, except that, for purposes of
calculating the early retirement benefit, the participant will be credited with
two additional years of age and service. The definition of a change in control
for purposes of the SERP is the same as the definition used in the stock option
and employment agreements summarized below (see "-- Agreements With Certain
Executive Officers"). The SERP is unfunded and non-contributory. It is not
qualified under the provisions of the Internal Revenue Code of 1986. The Bank
has chosen Messrs. Flynn and Bilbao and another officer of the Bank to
participate in the SERP. Because Mr. Flynn has accrued virtually no benefits
under the Bank's Pension Plan, and Mr. Bilbao has accrued none, the SERP would
provide Messrs. Flynn and Bilbao benefits upon retirement equal to approximately
70% of their respective final average earnings (as defined). If Messrs. Flynn
and Bilbao were to
-8-
<PAGE>
retire on their normal retirement dates, and if their final average earnings
equaled their 1995 salaries, then Messrs. Flynn and Bilbao would receive annual
payments of $105,000 and $94,500, respectively, under the SERP.
Split Dollar Life Insurance
The Bank has entered into split dollar insurance agreements (collateral
assignment method) with Messrs. Laudano and Cummings dated as of December 1,
1995 covering life insurance policies in the face amounts of $268,000 and
$277,000, respectively, on their lives. Premiums on the policies are paid by the
Bank. Upon the surrender of the policy or the death of the insured, except as
described below, the Bank is entitled to be repaid its cumulative premium
payments (or if less, the cash surrender value of the policy in the case of
surrender). However, if the insured's employment is terminated for any reason
other than cause (as defined in the insured's employment agreement) or if his
employment is actually or constructively terminated after a change in control
(as defined for purposes of his employment agreement), the Bank will release its
claim to be repaid and will charge to the insured as additional compensation the
cumulative premiums paid by it under the split dollar agreement.
Compensation of Directors
Effective September 1, 1992, the Board of Directors of Bancorp and the
Board of Directors of the Bank voted to suspend the payment of all directors'
fees indefinitely. The Board of Directors of Bancorp and the Board of Directors
of the Bank voted to reinstate payment of directors' fees effective May 25,
1995.
Effective May 25, 1995, directors who are not employees of Bancorp or
the Bank are entitled to receive an annual retainer fee of $6,000 from the Bank
and attendance fees of $500 per Bank Board meeting, $200 ($250 in the case of a
committee chairman) per Bank committee meeting, $500 per Bancorp Board meeting
that does not coincide with a Bank Board meeting, and $200 ($250 in the case of
a committee chairman) per Bancorp committee meeting that does not coincide with
a Bank committee meeting. Directors who are employees of Bancorp or the Bank
receive no compensation for their services as Bank or Bancorp Board or committee
members.
Under the Bank's and Bancorp's Directors' Deferred Compensation Plans,
directors of the Bank and Bancorp who are not employees may elect each year to
defer payment of all or part of their directors' fees. The interest earned on
these fees is credited to an unfunded directors' deferred compensation account
on the first day of each fiscal quarter. The rate of interest paid on deferred
fees is the equivalent of the rate of interest paid by the Bank on individual
retirement account certificates of deposit.
Under Bancorp's Directors' Retirement Plan, each non-employee Bancorp
director will be entitled to an annual retirement benefit under the plan equal
to the annual retainer fee paid to Bancorp's directors. The benefit will be
payable to the director: (i) if the director retires from the Bancorp Board on
or after his or her 70th birthday; (ii) if the director ceases to serve as a
director as a result of permanent and total disability following at least 20
years of service as a director; (iii) if, under certain circumstances, a change
in control of Bancorp occurs; (iv) if the director retires on or after his or
her 65th birthday following at least 10 years of service as a director; or (v)
if the director retires regardless of age, following at least 15 years of
service as a director. The director will not begin to receive his or her
retirement benefit under the plan until he or she reaches the age of 65 unless
the director's termination is caused by his or her permanent and total
disability. The annual benefit is payable to the retired director for a period
of time equal to the total number of years that he or she served as a director
(excluding any period when he or she was both a salaried employee of Bancorp and
a director). If a former director dies after he or she has begun receiving his
or her retirement benefit payments but before he or she has received his or her
entire benefit, the unpaid balance will continue to be paid to his or her
designated beneficiary for up to 10 years after his or her death. If a director
dies after reaching age 65 or completing at least 15 years of service as a
director, but before retiring from the Bancorp Board, a retirement benefit will
be paid to his or her designated beneficiary in an amount and for a period equal
to the retirement benefit his or her beneficiary would have received under the
plan if the director had retired from the Bancorp Board on the date of the last
annual meeting of stockholders before the date of his or her death, provided
that no benefit will be payable to the beneficiary or estate for more than l0
years. No benefit is payable to a director's beneficiary or estate if the
director dies prior to age 65, unless the director would otherwise have been
entitled to a retirement benefit under the plan at the time of his or her death.
-9-
<PAGE>
Agreements With Certain Executive Officers
Bancorp and the Bank have employment agreements with each of Messrs.
Flynn, Bilbao, Laudano, and Cummings. In addition, Bancorp has entered into
stock option agreements with each of these executive officers.
The employment agreements provide that the above executives shall have
the following positions with Bancorp and the Bank: Mr. Flynn shall serve as
President and Chief Executive Officer; Mr. Bilbao as Executive Vice President
and Chief Operating Officer; Mr. Laudano as Senior Vice President and Chief
Financial Officer; and Mr. Cummings as Senior Vice President, Lending.
Under their respective employment agreements, each executive officer
may receive annual salary increases based on increases in the cost of living and
based upon performance and scope of responsibility, as determined by the Boards
of Directors of Bancorp and the Bank. Each executive officer shall be eligible
to receive discretionary bonuses as may be authorized by the Boards of Directors
of Bancorp and the Bank and shall be eligible to participate in any plan of
Bancorp or the Bank relating to stock options, stock purchases, pension, thrift,
profit sharing, group life insurance, medical coverage, education, sick leave,
or other retirement or employee benefits that Bancorp or the Bank has adopted or
may adopt for the benefit of its executive employees. In addition, each
executive officer is expected and authorized to incur reasonable expenses in the
performance of his duties, including, in the case of Messrs. Flynn and Cummings,
dues for a country club and business luncheon club. The employment agreements
provide for initial terms of three years ending April 30, 1999 with renewals for
one additional year on April 1, 1997 and each subsequent anniversary of April 1,
unless Bancorp and the Bank, or the executive officer, gives written notice to
the contrary. The 1996 base salaries for Messrs. Flynn, Bilbao, Laudano, and
Cummings are $170,000, $148,000, $105,000, and $108,600, respectively, which
salaries may not be reduced under the employment agreements without the consent
of the executive officer.
The Boards of Directors of Bancorp and the Bank may terminate the
executive officer's employment at any time. Unless the termination is for
"cause" (as defined), disability, retirement, or death and where there has been
no "change in control" (as defined), such executive officers would be entitled
to receive continued compensation and benefits for the remaining term of the
agreement, subject to reduction for compensation and benefits received from a
new employer while such compensation and benefits are being provided.
Each agreement also provides that if the executive officer's employment
is terminated or constructively terminated (as defined) other than because of
his willful misconduct (as defined), disability, death, or retirement in
connection with or within two years following a "change in control" (as
defined), the officer will (subject to certain limitations) be entitled to
continue to participate in certain benefit plans and to receive certain
insurance benefits for three years and to be paid a lump sum cash amount equal
to 2.99 times his average salary and bonus for the five calendar years preceding
the change in control. The cash payment will not be reduced by compensation
received from a subsequent employer, but benefit plan and insurance coverages
will be offset by benefits received from another employer. In addition, in the
case of a change in control that occurs before January 1, 1997, if all or a
portion of the cash payment, continued benefits, and continued insurance
coverage, together with any other amount in the nature of compensation to be
received by Messrs. Flynn or Bilbao (including the accelerated vesting of stock
options and enhanced benefits under the SERP), would be subject to the 20
percent excise tax imposed on "excess parachute payments," the executive officer
will be paid the amount necessary to cause the total payments and benefits
received by the executive officer (including the "gross-up" payment), net of
taxes, to be equal to the amount the executive officer would have received, net
of taxes, if the 20 percent excise tax had not applied. Bancorp estimates that
Messrs. Flynn, Bilbao, Laudano, and Cummings would receive cash payments and
benefits (excluding the accelerated vesting of options) having a present value
of approximately $841,800, $718,500, $336,200, and $313,200, respectively, if a
change in control occurred as of December 31, 1996.
A "change in control" occurs if: (i) 25% or more of the ownership,
control, power to vote, or beneficial ownership of any class of voting
securities of Bancorp is acquired by any natural person, corporation, or other
entity, including a partnership, syndicate, or other group either directly or
indirectly or acting through one or more other such persons; (ii) any person
(other than a person named as a proxy in connection with a solicitation on
behalf of the Board of Directors of Bancorp) holds revocable or irrevocable
proxies as to the election or removal of three or more directors of Bancorp for
25% or more of the voting shares of Bancorp; (iii) any person has received all
applicable regulatory approvals to acquire control of Bancorp; (iv) any person
has
-10-
<PAGE>
commenced a cash tender or exchange offer, or entered into an agreement or
received an option, to acquire beneficial ownership of 25% or more of the total
number of voting shares of Bancorp, except that a change in control will not be
deemed to have occurred in such circumstances unless the Board of Directors of
Bancorp determines that such action will constitute a change in control; (v) as
a result of, or in connection with, any cash tender or exchange offer, merger,
or other business combination, sale of assets or contested election, or any
combination thereof, (A) the individuals who were directors of Bancorp before
such transaction shall cease to constitute at least a majority of the Board or
(B) the persons who were stockholders of Bancorp immediately before such
transaction do not own more than 50% of the voting stock of Bancorp (or any
successor) immediately after such transaction or (vi) Bancorp's beneficial
ownership of the total number of voting shares of the Bank is reduced to less
than 50%.
Pursuant to stock option agreements executed in 1989, Bancorp granted
to Messrs. Flynn and Cummings non-qualified options to purchase up to 50,000 and
15,000 shares of Common Stock, respectively. Messrs. Flynn and Cummings
relinquished these options in stock option agreements dated December 17, 1992.
Under such 1992 agreements, Bancorp granted to Messrs. Flynn, Bilbao, and
Cummings non-qualified options to purchase up to 425,000, 250,000, and 50,000
shares of Common Stock, respectively, that were to become exercisable gradually
over five years and that were to expire 10 years following the date of the stock
option agreement. The exercise price of these options was $2.00 per share. The
agreement provides that all of the unexpired options will become immediately
exercisable upon a change in control of Bancorp as defined for purposes of the
employment agreements.
Pursuant to a stock option agreement dated September 2, 1993, Bancorp
granted to Mr. Laudano an option that is intended to qualify as an incentive
stock option to purchase up to 75,000 shares of Common Stock under Bancorp's
1985 Incentive Stock Option Plan. These options become exercisable gradually
over two years and will expire in 2003. The 1985 Incentive Stock Option Plan
provides that the Board of Directors of Bancorp may declare all of these options
to be immediately exercisable if a change in control of Bancorp (as defined
therein) occurs. The options will terminate within one year after the
termination of Mr. Laudano's employment due to death or disability. The options
will terminate within three months after the termination of Mr. Laudano's
employment for any other reason.
Compensation Committee Report on Executive Compensation
The Board of Directors of Bancorp makes all decisions with respect to
the compensation of executive officers of Bancorp and with respect to grants of
options to purchase shares of Bancorp stock. The Board of Directors of the Bank
makes all decisions (other than decisions involving Bancorp stock options) with
respect to the compensation of executive officers of the Bank. The Board of
Directors of Bancorp normally makes these decisions on the basis of
recommendations submitted by its Compensation Committee. Michael H. Flynn, who
is President and Chief Executive Officer of Bancorp and the Bank as well as a
member of the Boards of Bancorp and the Bank and the Compensation Committee of
Bancorp, takes no part in any final recommendations or decisions that relate to
his own compensation. See "-- Compensation Committee Interlocks and Insider
Participation."
Executive Compensation Policies. The primary objectives of the
compensation policies of Bancorp and the Bank are: (i) to attract and retain
individuals of outstanding ability to lead Bancorp and the Bank; (ii) to reward
executive officers whose efforts have contributed to the success of Bancorp and
the Bank; and (iii) to align compensation levels and incentives with the
business objectives of Bancorp and the Bank. Every decision regarding the
compensation of every executive officer of Bancorp and the Bank is made on the
basis of the following criteria: (i) the quality of the officer's performance;
(ii) the scope of the officer's responsibilities and experience; (iii) the
overall performance and financial condition of Bancorp and the Bank; and (iv)
the levels of compensation that Bancorp's and the Bank's competitors of similar
size are paying executives who hold comparable positions.
The three principal components of executive compensation at Bancorp and
the Bank are salary, annual incentive bonus, and stock options. Bancorp does not
pay salaries to its executive officers. Every executive officer of Bancorp is
also an executive officer of the Bank and receives a salary from the Bank. The
executive officer's salary is a fixed amount that is set annually. In
formulating salary and annual incentive bonus recommendations each year, the
Compensation Committee consults with an independent expert and reviews survey
data regarding the salaries of executives holding positions of comparable
authority with comparable institutions located in the Bank's
-11-
<PAGE>
market area. The Compensation Committee also considers the quality of the
executive's performance, the scope of the officer's responsibilities and
experience, and the overall performance and financial condition of the Bank. In
evaluating the Bank's performance and condition, the Compensation Committee does
not rely exclusively on any single measure or formula. Instead, the Compensation
Committee considers the totality of circumstances relating to the Bank's
operations and financial condition. Some of the indicators reviewed by the
Compensation Committee for this purpose include the Bank's income level, the
Bank's capital ratios, the quality of the Bank's loan portfolio, the level of
the Bank's return on assets, the return on the Bank's equity, the results of
examination by regulators, and the short-term and long-term financial outlook
for the Bank.
When it finds it appropriate to do so, the Bancorp Board, upon the
recommendation of its Compensation Committee, grants options to purchase Bancorp
stock to executive officers and employees of Bancorp and/or the Bank. Stock
options play an important role in executive compensation because they provide a
link between the executive officer's level of remuneration and the level of
success achieved by Bancorp and the Bank. Stock options also create incentives
for executive officers to remain in the long-term employ of Bancorp and/or the
Bank.
Since 1993, the Bancorp Board has granted stock options to each of the
executive officers of Bancorp and the Bank. One executive officer received
options under Bancorp's 1985 Incentive Stock Option Plan. These options qualify
as incentive stock options under the Internal Revenue Code of 1986. The
remainder of the executive officers, including Messrs. Flynn, Bilbao, and
Cummings, received options pursuant to a special grant that was approved by
Bancorp's stockholders at the 1993 annual meeting of stockholders. These options
do not qualify as incentive stock options. The special grant options are
scheduled to become exercisable gradually over a number of years and to expire
within 10 years of their grant. The exercise price of each option equals the
market price of Bancorp Common Stock on the date the option was granted.
The Bancorp Board and Compensation Committee believe that the number
and exercise prices of the options currently held by executive officers of
Bancorp and the Bank are at the levels necessary to create appropriate
incentives and rewards. The Compensation Committee monitors market conditions on
an ongoing basis and notifies the Bancorp Board whenever it determines that
changes in circumstances have rendered these incentives and rewards inadequate
or inappropriate.
In addition to all other compensation that they receive, executive
officers of the Bank may participate in the various employee benefit plans that
are available to other employees of the Bank. The Board of Directors of the Bank
periodically reviews and amends these plans.
Compensation of Mr. Flynn. In determining the level of compensation to
be received by Mr. Flynn, the Boards of Bancorp and the Bank and the
Compensation Committee use the same methodology that they employ in setting the
compensation levels of all other executive officers of Bancorp and the Bank. The
Boards and the Compensation Committee consider the quality of Mr. Flynn's
performance, the scope of his responsibilities and experience, the performance
and financial condition of Bancorp and the Bank, and the level of compensation
received by the chief executive officers of entities that are comparable to
Bancorp and the Bank.
In light of the financial circumstances that have confronted Bancorp
and the Bank during recent years, the Bank Board decided in 1994, as well as in
1993 and 1992, that it would be inappropriate to grant an increase in salary to
the chief executive officer. Mr. Flynn concurred in these decisions.
Accordingly, Mr. Flynn's salary for 1991 through 1994 remained the same. For
1995, Mr. Flynn's salary was increased to $160,000. Throughout 1995, the
financial condition of Bancorp and the Bank continued to improve. In deciding
whether to grant a bonus for 1995, the Bank Board considered all aspects of
Bancorp's and the Bank's performance and financial condition, including income,
return on equity, return on capital, capital ratios, quality of the loan
portfolio, results of examinations (Federal Deposit Insurance Corporation,
Federal Reserve Board, and the State of Connecticut Department of Banking),
together with future financial outlook. Based on all these factors, together
with the improving performance during calendar 1995, the Board elected to award
Mr. Flynn a performance bonus of $72,000.
In 1992, the Bancorp Board granted Mr. Flynn options to purchase up to
425,000 shares of Bancorp Common Stock. As of December 31, 1995, options to
purchase 283,333 of these shares were exercisable. The
-12-
<PAGE>
remainder of these options are scheduled to become exercisable during 1996 and
1997. The exercise price of the options is $2.00 per share. None of the options
qualify as incentive stock options under the Internal Revenue Code of 1986. The
Bancorp Board and Compensation Committee believe that these options will provide
Mr. Flynn with appropriate rewards for his continuing efforts on behalf of
Bancorp and the Bank. Accordingly, Bancorp did not grant any stock options to
Mr. Flynn during 1995.
THE COMPENSATION COMMITTEE OF BANCORP
George H. Damman, Chair
Michael H. Flynn
William L. Gault
David A. Rosow
William D. Rueckert
Compensation Committee Interlocks and Insider Participation
During the fiscal year ended December 31, 1995, George H. Damman,
Michael H. Flynn, William L. Gault, and David A. Rosow served as members of the
Compensation Committee of the Board of Directors of Bancorp. Effective May 25,
1995, Mr. Rueckert became a member of the Compensation Committee. Each is a
member of the Board of Directors of the Bank and the Board of Directors of
Bancorp. None of the members of the Compensation Committee have been employed by
the Bank or Bancorp, except Mr. Flynn, who is President and Chief Executive
Officer of the Bank and Bancorp. Mr. Rosow is Chairman of the Board of Directors
of the Bank and Bancorp.
During 1995, the Bank purchased insurance from Damman Associates, Inc.,
an insurance brokerage firm owned by Mr. Damman. Mr. Damman also serves as
President of this firm. Premium payments by the Bank during 1995 totaled
approximately $364,062.
The Bank leases office space at 24 Post Road East, Westport,
Connecticut, from the Julia Sterling Trust. Mr. Gault serves as trustee of this
Trust. The lease was entered into in April 1987, is effective for a 10-year
period, and provides for annual base rental payments of $51,255 plus inflation
adjustments commencing in 1990. In 1995, rental payments pursuant to the lease
totaled approximately $54,584.
During 1995, the Bank paid $10,239 to L.H. Gault & Son, Inc. for fuel
and related services. Mr. Gault is the president of L.H. Gault & Son, Inc.
-13-
<PAGE>
Five-Year Performance Comparison
The following graph compares total stockholder return on Bancorp Common
Stock over the last five fiscal years with the NASDAQ Stock Market Total Market
Return Index and the NASDAQ Bank Stock Total Market Return Index.
Comparison of Five-Year - Cumulative Total Returns
Performance graph for
Westport Bancorp, Inc.
<TABLE>
<CAPTION>
CRSP Total Returns
Index for:
<S> <C> <C> <C> <C> <C> <C>
12/31/90 12/31/91 12/31/92 12/31/93 12/30/94 12/29/95
Westport Bancorp, Inc. 100.0 19.4 51.8 77.7 74.5 164.7
Nasdaq Stock Market US Companies) 100.0 160.5 186.9 214.5 209.7 296.5
Nasdaq Bank Stocks 100.0 164.1 238.9 272.4 271.4 404.3
SIC 6020-6029, 6710-6719 US & Foreign
</TABLE>
-14-
<PAGE>
Certain Other Transactions
Certain of Bancorp's and the Bank's directors and executive officers,
their families, and the companies controlled by them were customers of the Bank
in the ordinary course of business during 1995. These transactions included
loans made by the Bank in the ordinary course of business on substantially the
same terms, including interest rates and collateral, 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 unfavorable features.
The Bank leases its office space at 101 and 107 Post Road East,
Westport, Connecticut, from the Harry R. Sherwood Trust, a trust for the benefit
of John Sherwood, a member of Jay Sherwood's family. The lease expires on June
30, 2001 and provides for annual base rental payments of approximately $165,000,
plus payment of all taxes and utilities with respect to the premises. In 1995,
the Bank made payments of approximately $194,196 to the Harry R. Sherwood Trust
for this office space.
See "-- Compensation Committee Interlocks and Insider Participation."
Section 16(a) Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers and directors of Bancorp and persons who own more than 10% of Bancorp's
Common Stock to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Based on a review of reports submitted to
Bancorp, Bancorp believes that during the fiscal year ended December 31, 1995,
all Section 16(a) filing requirements applicable to Bancorp's officers,
directors, and more than 10% owners were complied with on a timely basis.
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
Security Ownership of Management
The following table sets forth information as of March 15, 1996 with
respect to the amount of Bancorp's Common Stock and Convertible Preferred Stock
beneficially owned by each director, each named executive officer, and all
directors and executive officers of Bancorp and the Bank as a group.
<TABLE>
<CAPTION>
Number of Number of Shares
Shares of of Convertible
Common Stock Preferred Stock Percent of
and Nature Percent of and Nature Convertible
Name and Position(s) of Beneficial Common Stock of Beneficial Preferred Stock
with Bancorp and the Bank Ownership (1) Outstanding Ownership (1)(2) Outstanding
------------------------- --------------- ------------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
Thomas P. Bilbao...................... 254,330 (3) 4.3% 250 *
Executive Vice President and
Chief Operating Officer of
Bancorp and the Bank
Richard T. Cummings, Jr............... 82,703 (4) 1.4 250 *
Senior Vice President,
Lending, of Bancorp and the Bank
George H. Damman...................... 373,650 (5)(6) 6.4 2,000 5.0%
Director
Michael H. Flynn...................... 447,203 (7) 7.4 500 1.2
President, Chief Executive
Officer and Director of
Bancorp and the Bank
William L. Gault...................... 171,596 (5) 3.0 -- --
Director
Kurt B. Hersher....................... 3,540 (5) * -- --
Director
William B. Laudano, Jr................ 75,000 (8) 1.3 -- --
Senior Vice President and
Chief Financial Officer of
Bancorp and the Bank
William E. Mitchell................... 5,040 (9) * -- --
Director
David A. Rosow........................ 1,833,225 (10) 27.6 10,000 (11) 25.0
Director
William D. Rueckert................... 2,000 * -- --
Director
Jay Sherwood.......................... 299,660 (12) 5.2 1,000 2.5
Director
All directors and executive
officers as a group
(11 individuals)................... 3,547,947 (3)-(10), 45.8 14,000 (11) 35.0
(12)
________________________
<FN>
* Less than 1%.
(1) In accordance with Rule 13d-3 under the Securities Act of 1934, as
amended, a person is deemed to be the beneficial owner, for purposes of
this table, of any shares of Common Stock or Convertible Preferred Stock,
as the case may be, if such person has or shares voting power or
investment power with respect to such security, or has the right to
acquire beneficial ownership at any time within 60 days. Unless otherwise
indicated, each person and the members of the group have sole voting and
investment power with respect to the shares shown.
(2) Each share of Convertible Preferred Stock is convertible into 100 shares
of Common Stock.
(3) Includes 25,000 shares of Common Stock that Mr. Bilbao would hold if he
were to convert all of his Convertible Preferred Stock into Common Stock,
163 shares of Common Stock held for Mr. Bilbao by the
<PAGE>
Bancorp ESOP, and 216,667 shares of Common Stock that Mr. Bilbao would
hold if he were to exercise all of his stock options that were exercisable
within 60 days of March 15, 1996.
(4) Includes 12,500 shares of Common Stock that Mr. Cummings holds as joint
tenant with Sally K. Cummings, 370 shares of Common Stock held for Mr.
Cummings by the Bancorp ESOP, 25,000 shares of Common Stock that Mr.
Cummings would hold as joint tenant with Sally K. Cummings if such joint
tenants were to convert all of their Convertible Preferred Stock into
Common Stock, and 43,333 shares of Common Stock that Mr. Cummings would
hold if he were to exercise all of his stock options that were exercisable
within 60 days of March 15, 1996.
(5) Does not include shares owned by the family members of the following
directors: Mr. Damman (4,090 shares), Mr. Gault (3,780 shares), and Mr.
Hersher (151,600 shares). Beneficial ownership of these shares is
disclaimed by such directors.
(6) Includes 200,000 shares of Common Stock that Mr. Damman would hold if he
were to convert all of his Convertible Preferred Stock into Common Stock.
(7) Includes 1,500 shares of Common Stock as to which Mr. Flynn, as trustee of
a trust, possesses sole voting power, 870 shares of Common Stock held for
Mr. Flynn by the Bancorp ESOP, 50,000 shares of Common Stock that Mr.
Flynn would hold if he were to convert all of his Convertible Preferred
Stock into Common Stock, 368,333 shares of Common Stock that Mr. Flynn
would hold if he were to exercise all of his stock options that were
exercisable within 60 days of March 15, 1996, and 25,000 shares of Common
Stock held by Mr.
Flynn's three children.
(8) Consists of 75,000 shares of Common Stock that Mr. Laudano would hold if
he were to exercise all of his stock options that were exercisable within
60 days of March 15, 1996.
(9) Includes 1,260 shares of Common Stock held by the Ed Mitchell Inc.
Profit-Sharing Plan and Trust, of which Mr. Mitchell is a co-trustee.
(10) Consists of 833,225 shares of Common Stock held by Jean D. Rosow, as to
which David A. Rosow has a general proxy to vote, and 1,000,000 shares of
Common Stock as to which David A. Rosow would have a general proxy to vote
if Jean D. Rosow were to convert all of her Convertible Preferred Stock
into Common Stock (David A. Rosow currently has a general proxy to vote
such Convertible Preferred Stock).
(11) Includes 10,000 shares of Convertible Preferred Stock held by Jean D.
Rosow as to which David A. Rosow has a general proxy to vote.
(12) Includes 100,000 shares of Common Stock that Mr. Sherwood would hold if he
were to convert all of his Convertible Preferred Stock into Common Stock,
and 58,010 shares of Common Stock held by a corporation of which Mr.
Sherwood is a principal owner.
</FN>
</TABLE>
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<PAGE>
Security Ownership of Certain Beneficial Holders
The following table sets forth information as of March 15, 1996 with
respect to ownership of Bancorp's Common Stock and Convertible Preferred Stock
by each person believed by management to be the beneficial owner of more than 5%
of the outstanding Common Stock or Convertible Preferred Stock, as the case may
be. The historical information set forth below is based on the most recent
Schedule 13D or 13G filed on behalf of each such person with the Securities and
Exchange Commission as of that date.
<TABLE>
<CAPTION>
Number of Number of Shares
Shares of of Convertible
Common Stock Preferred Stock Percent of
and Nature Percent of and Nature Convertible
Name and Address of Beneficial Common Stock of Beneficial Preferred Stock
of Beneficial Owner Ownership (1) Outstanding Ownership (1)(2) Outstanding
------------------- --------------- ------------- ------------------ ------------
<S> <C> <C> <C> <C> <C> <C>
David A. Rosow........................ 1,833,225 (3) 27.6% 10,000 (4) 25.0%
167 Old Post Road
Southport, CT 06490
Josiah T. and Valer C. Austin......... 1,787,250 (5) 26.7 10,500 26.2
Star Route 395
Pearce, AZ 85624
Riverside Associates.................. 600,000 (6) 9.6 4,000 10.0
Limited Partnership I
253 Riverside Ave.
Westport, CT 06880
John Sherwood......................... 448,092 (7) 7.7 1,500 3.7
P.O. Box 48
Westport, CT 06881
Michael H. Flynn...................... 447,203 (8) 7.4 500 1.2
277 Greenfield Hill Road
Fairfield, CT 06430
George H. Damman...................... 373,650 (9) 6.4 2,000 5.0
P.O. Box 201
Greens Farms, CT 06436
Jay Sherwood.......................... 299,660 (10) 5.2 1,000 2.5
P.O. Box 32
Greens Farms, CT 06436
____________________
<FN>
(1) In accordance with Rule 13d-3 under the Securities Act of 1934, as
amended, a person is deemed to be the beneficial owner, for purposes of
this table, of any shares of Common Stock or Convertible Preferred Stock,
as the case may be, if such person has or shares voting power or
investment power with respect to such security, or has the right to
acquire beneficial ownership at any time within 60 days. Unless otherwise
indicated, each person has sole voting and investment power with respect
to the shares shown.
(2) Each share of Convertible Preferred Stock is convertible into 100 shares
of Common Stock.
(3) Consists of 833,225 shares of Common Stock held by Jean D. Rosow, as to
which David A. Rosow has a general proxy to vote, and 1,000,000 shares of
Common Stock as to which David A. Rosow would have a general proxy to vote
if Jean D. Rosow were to convert all of her Convertible Preferred Stock
into Common Stock (David A. Rosow currently has a general proxy to vote
such Convertible Preferred Stock).
(4) Consists of 10,000 shares of Convertible Preferred Stock held by Jean D.
Rosow as to which David A. Rosow has a general proxy to vote.
(5) Includes 1,050,000 shares of Common Stock that Josiah T. and Valer C.
Austin would hold if they were to convert all of the Convertible Preferred
Stock that they hold into Common Stock.
(6) Consists of 400,000 shares of Common Stock that Riverside Associates
Limited Partnership I would hold if it were to convert all of its shares
of Convertible Preferred Stock into Common Stock and 200,000 shares of
Common Stock that Riverside Associates Limited Partnership I would hold if
it were to exercise all of its warrants to purchase Common Stock.
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<PAGE>
(7) Includes 159,330 shares of Common Stock held by trusts of which Mr.
Sherwood is the beneficiary, and 150,000 shares of Common Stock that John
Sherwood would hold if he were to convert all of his Convertible Preferred
Stock into Common Stock.
(8) Includes 1,500 shares of Common Stock as to which Mr. Flynn, as trustee of
a trust, possesses sole voting power, 870 shares of Common Stock held for
Mr. Flynn by the Bancorp ESOP, 50,000 shares of Common Stock that Mr.
Flynn would hold if he were to convert all of his Convertible Preferred
Stock into Common Stock, 368,333 shares of Common Stock that Mr. Flynn
would own if he were to exercise all of his stock options that were
exercisable within 60 days of March 15, 1996, and 25,000 shares of Common
Stock held by Mr.
Flynn's three children.
(9) Includes 200,000 shares of Common Stock that Mr. Damman would hold if he
were to convert all of his Convertible Preferred Stock into Common Stock.
Does not include 4,090 shares of Common Stock held by Mr. Damman's spouse,
of which Mr. Damman disclaims beneficial ownership.
(10) Includes 100,000 shares of Common Stock that Mr. Sherwood would hold if he
were to convert all of his Convertible Preferred Stock into Common Stock,
and 58,010 shares of Common Stock held by a corporation of which Mr.
Sherwood is a principal owner.
</FN>
</TABLE>
AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION,
AS AMENDED
(Proposal 2)
The Bancorp Board, having declared its advisability, has unanimously
approved and recommends the adoption by stockholders of an amendment to the
Restated Certificate of Incorporation of Bancorp, as amended, in the form set
forth below, which amendment would eliminate certain liabilities of directors
for monetary damages unless precluded by Delaware law. The amendment would be in
the form of a new Article Ninth to the Restated Certificate of Incorporation of
Bancorp, as amended, captioned and reading as follows, and Article Ninth
currently appearing in the Restated Certificate of Incorporation, as amended,
would be renumbered Article Tenth:
Text of Amendment
NINTH: No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, that nothing contained in this Article Ninth shall
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the General Corporation Law
of the State of Delaware, or (iv) for any transaction from which the director
derived an improper personal benefit. No amendment to or repeal of this Article
Ninth shall apply to or have any effect on the liability or alleged liability of
any director of the Corporation for or with respect to any acts or omissions
prior to such amendment or repeal.
Background
Under Delaware law, the board of directors has the ultimate
responsibility for managing the business and affairs of a corporation. In
discharging this function, the directors have fiduciary obligations to the
corporation and its stockholders. The fiduciary duties of a corporate director
fall into two broad categories: the duty of care and the duty of loyalty. The
duty of care requires exercise of an informed business judgment and is the duty
to exercise diligence and care in managing the business and affairs of the
corporation. The duty of loyalty requires that, in making a business decision,
directors act in good faith and in the honest belief that the action taken is in
the best interests of the corporation. Breach of these duties may subject
directors to substantial personal liability for actions they have taken or
omitted to take as well as significant expense in defending their conduct.
Delaware law permits a corporation to purchase and maintain insurance
against certain types of liability incurred by directors. Bancorp will continue
to seek to maintain appropriate directors' and officers' liability insurance to
complement the protection for the directors and Bancorp afforded by the proposed
amendment.
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The General Corporation Law of the State of Delaware permits Delaware
corporations to provide additional protection for their directors by including
in their certificates of incorporation a provision that eliminates a director's
personal liability for monetary damages for certain breaches of his or her
fiduciary duty of care. In order to provide this protection, Bancorp's
stockholders must adopt an amendment to the Restated Certificate of
Incorporation, as amended.
Reasons for and Effects of the Proposed Amendment
The proposed amendment provides that a director of Bancorp shall not be
personally liable to Bancorp or its stockholders for monetary damages arising
out of the director's breach of his or her fiduciary duty of care, except to the
extent that Delaware law does not permit exemption from such liabilities. The
proposed amendment does not eliminate the fiduciary duties of directors;
instead, it eliminates the personal liability of directors for monetary damages
to the extent permitted by Delaware law. It would not affect the availability of
injunctive or other equitable relief as a remedy for breach of a director's
fiduciary duty.
Delaware law contains express limitations on the ability to limit or
eliminate directors' liability, which are reflected in the proposed amendment.
Under these limitations, a director remains potentially liable for monetary
damages (a) for breach of the director's duty of loyalty to Bancorp or its
stockholders, (b) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (c) for an improper
payment of a dividend or an improper repurchase or redemption of Bancorp's
stock, as provided in Section 174 of the General Corporation Law of the State of
Delaware, or (d) for any transaction from which a director derives an improper
personal benefit. The proposed amendment also provides that its repeal or
modification will have no effect on any liability for acts or omissions that
occur prior to its repeal or modification.
The proposed amendment is subject to the additional limitation under
Delaware law that it will eliminate liability only for conduct occurring on or
after the date it becomes effective. The proposed amendment will not become
effective until the stockholders have adopted it and Bancorp has filed a
certificate of amendment with the State of Delaware. Bancorp knows of no
threatened litigation against Bancorp's directors which would be materially
affected by the proposed amendment.
Although Bancorp has not experienced any difficulties in attracting or
retaining directors as a result of insurance or liability issues, the Board
believes the proposed amendment will significantly increase Bancorp's ability to
attract and retain qualified people to serve as outside directors by providing
additional protection for directors in making good faith business decisions. The
Bancorp Board also believes that adoption of the proposed amendment will permit
Bancorp's directors to exercise more freely their business judgment by reducing
their concern over potential litigation. Finally, the Board believes that
insurance carriers will view the proposed amendment favorably and that it may
aid Bancorp in obtaining adequate directors' and officers' liability insurance
coverage at more reasonable cost.
The proposed amendment limits the remedies available to a stockholder
who has a valid claim that the Bancorp Board has acted in violation of its
fiduciary duties if the Bancorp Board's action is among those for which Delaware
law permits elimination or limitation of liability, and therefore the directors
have a personal interest in seeing the proposed amendment adopted. Stockholders
will no longer have a claim for money damages based on a breach of the
director's duty of care, even if the director's conduct involved gross
negligence, unless the conduct falls within the statutory limitations outlined
above. In such a situation, however, a stockholder will continue to be able to
sue to enjoin the completion of the Bancorp Board's action or to rescind a
completed action. In some cases, stockholders may not be aware of a proposed
transaction or other action until it is too late to prevent its completion. In
this situation, Bancorp and the stockholders may have no effective remedy for an
injury occasioned by the directors' action.
The Bancorp Board believes the potential benefits to Bancorp resulting
from the increased ability to attract and retain good outside directors, the
encouragement of the free exercise of business judgment, and a potentially more
advantageous position in seeking and maintaining directors' and officers'
liability insurance far outweigh the potential limitations the proposed
amendment places on stockholder remedies. The proposed amendment does not affect
the duty of Bancorp's directors to act in good faith and in the honest belief
that any action taken is in the best
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interests of Bancorp. The Bancorp Board believes that the level of care and
diligence exercised by the directors will not decrease after adoption of the
proposed amendment.
Required Vote
To be approved, the proposed amendment to the Restated Certificate of
Incorporation of Bancorp, as amended, to eliminate certain liabilities of
directors in accordance with Delaware law will require the affirmative vote of
at least two-thirds of the Votes.
BANCORP'S BOARD RECOMMENDS A VOTE FOR THE APPROVAL OF THE PROPOSED
AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION OF BANCORP, AS AMENDED.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(Proposal 3)
The Board of Directors has appointed Arthur Andersen LLP as the
independent auditors of Bancorp for the fiscal year ending December 31, 1996.
Arthur Andersen LLP has advised Bancorp that neither the firm nor any of its
present members or associates has any financial interest, direct or indirect, in
Bancorp or the Bank. Representatives of the firm are expected to be present at
the Annual Meeting. Such representatives will have an opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate questions. It is intended that shares represented by properly
executed proxies will be voted, in the absence of a contrary indication, in
favor of the ratification of the appointment of Arthur Andersen LLP as the
independent auditors of Bancorp for the fiscal year ending December 31, 1996.
The affirmative vote of a majority of the Votes that are present, in
person or represented by proxy, at the Annual Meeting is required to ratify the
appointment of Arthur Andersen LLP as the independent auditors of Bancorp for
the fiscal year ending December 31, 1996.
BANCORP'S BOARD RECOMMENDS THAT STOCKHOLDERS VOTE TO RATIFY THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE INDEPENDENT AUDITORS OF BANCORP FOR
THE FISCAL YEAR ENDING DECEMBER 31, 1996.
ADJOURNMENT OF ANNUAL MEETING
(Proposal 4)
In the event that sufficient votes are not present in person or
represented by proxy to vote in favor of the proposed amendment to the Restated
Certificate of Incorporation of Bancorp, as amended (Proposal 2), stockholders
will be asked to consider and vote upon a proposal to adjourn the Annual Meeting
to permit the solicitation of additional proxies.
DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Any stockholder proposal intended for inclusion in Bancorp's proxy
statement and form of proxy relating to Bancorp's 1997 Annual Meeting must be
received by Bancorp's Secretary at Westport Bancorp, Inc., 87 Post Road East,
Westport, Connecticut 06880 by December 25, 1996 pursuant to the proxy
soliciting rules of the Securities and Exchange Commission. In addition, the
Bylaws of Bancorp require that notice of stockholder proposals and nominations
for director be delivered to the Secretary of Bancorp not less than 60 days nor
more than 90 days prior to the date of an annual meeting, unless notice or
public disclosure of the date of the meeting occurs less than 70 days prior to
the date of such meeting and such meeting is held more than 30 days before or
after the corresponding date of the annual meeting held in the preceding year,
in which event, Stockholders may deliver such notice not later than the 10th day
following the day on which notice of the date of the meeting was mailed or
public
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<PAGE>
disclosure thereof was made. Notice to the Stockholders shall be deemed
to have been given on the date of Bancorp's quarterly report, letter to
Stockholders, or other communication to Stockholders disclosing the date of the
next annual meeting if the annual meeting is in fact held on that date or within
30 days after that date.
A Stockholder's notice to the Secretary shall set forth as to each
matter that the Stockholder proposes to bring before the annual meeting: (i) a
brief description of the business desired to be brought before the annual
meeting and the reasons for conducting the business at the annual meeting, (ii)
the name and address, as they appear on Bancorp's books, of the Stockholder
proposing the business, (iii) the class and number of shares of stock of Bancorp
of which the Stockholder is the beneficial owner (as that term is defined in the
Restated Certificate of Incorporation of Bancorp, as amended), and (iv) any
material interest of the Stockholder in such business proposed.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of
no other matters to be presented for action by the Stockholders at the Annual
Meeting. If any other matters are properly presented, however, it is the
intention of the persons named in the enclosed proxy to vote in accordance with
their best judgment on such matters.
By Order of the Board of Directors
John J. Henchy
Secretary
Westport, Connecticut
April 24, 1996
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REVOCABLE PROXY
WESTPORT BANCORP, INC.
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned stockholder of Westport Bancorp, Inc. ("Bancorp")
hereby appoints Michael H. Flynn, William L. Gault, and Jay Sherwood, or any of
them, with full power of substitution in each, as proxies to cast all votes that
the undersigned stockholder is entitled to cast at the Annual Meeting of
Stockholders of Bancorp (the "Annual Meeting") to be held at The Fairfield
County Hunt Club, 174 Long Lots Road, Westport, Connecticut on Thursday, May 16,
1996, at 9:30 a.m., and at any adjournments thereof, upon the following matters.
The undersigned stockholder hereby revokes any proxy or proxies heretofore
given.
(To Be Signed on Reverse Side.)
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<PAGE>
<TABLE>
<CAPTION>
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<S> <C> <C> <C> <C> <C> <C>
|X| Please mark your |--
votes as in this |
example. |
|-------
FOR all nominees WITHHOLD AUTHORITY
listed to vote for all FOR AGAINST ABSTAIN
below except as nominees listed below 2. Approval and adoption of the
marked proposed amendment to the
to the contrary Restated Certificate of [ ] [ ] [ ]
Incorporation of Bancorp, as
amended, to provide for the
1. Election of [ ] [ ] elimination of certain
directors. liabilities of directors in
accordance with Delaware law.
3. Ratification of the appointment
of Arthur Andersen LLP as
independent auditors of Bancorp [ ] [ ] [ ]
for the fiscal year ending
Nominees: George H. Damman December 31, 1996.
Michael H. Flynn
William L. Gault
Kurt B. Hersher
William E. Mitchell 4. Approval of proposal to adjourn
David A. Rosow the Annual Meeting to permit the
William D. Rueckert solicitation of additional proxies in
Jay Sherwood the event that sufficient votes are
not present in person or represented
WITHHOLD AUTHORITY by proxy to vote in favor of the [ ] [ ] [ ]
to vote for the following nominee(s) only: proposed amendment to the Restated
(write the name of the nominee(s) in the Certificate of Incorporation of
space below) Bancorp, as amended.
5. Upon such other business as may
_________________________________________________________ properly come before the Annual
Meeting or any adjournments thereof,
as determined by the persons named in
the enclosed proxy in their best
judgment.
This proxy, when properly completed, will be voted as directed by the
undersigned stockholder. UNLESS CONTRARY DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE NOMINEES FOR DIRECTOR NAMED IN
THE PROXY STATEMENT AND ON THIS PROXY, FOR APPROVAL AND ADOPTION OF THE
PROPOSED AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION OF
BANCORP, AS AMENDED, FOR THE RATIFICATION OF THE APPOINTMENT OF ARTHUR
ANDERSEN LLP AS INDEPENDENT AUDITORS OF BANCORP FOR THE FISCAL YEAR
ENDING DECEMBER 31, 1996, FOR THE ADJOURNMENT OF THE ANNUAL MEETING TO
PERMIT THE SOLICITATION OF ADDITIONAL PROXIES IN THE EVENT THAT
SUFFICIENT VOTES ARE NOT PRESENT IN PERSON OR REPRESENTED BY PROXY TO
VOTE IN FAVOR OF THE PROPOSED AMENDMENT TO THE RESTATED CERTIFICATE OF
INCORPORATION OF BANCORP, AS AMENDED, AND IN ACCORDANCE WITH THE BEST
JUDGMENT OF THE PERSONS NAMED ON THIS PROXY AS TO OTHER MATTERS. The
undersigned stockholder may revoke this proxy at any time before it is
voted by delivering to the Secretary of Bancorp either a written
revocation of the proxy or a duly executed proxy bearing a later date,
or by appearing at the Annual Meeting and voting in person. The
undersigned stockholder hereby acknowledges receipt of the Notice of
Annual Meeting of Stockholders and the Proxy Statement.
Signatures: Date:
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NOTE: Please date and sign exactly as name appears hereon. Each executor, administrator, trustee, guardian, attorney-in-fact,
and other fiduciary should sign and indicate his or her full title. When stock has been issued in the name of two or more persons,
all should sign.
If you receive more than one proxy card, please sign and
return all cards in the accompanying envelope.
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</TABLE>
<PAGE>
