<PAGE> 1
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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
MASSBANK CORP.
(Name of Registrant as Specified In Its Charter)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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<PAGE> 2
MASSBANK CORP.
123 HAVEN STREET
READING, MASSACHUSETTS 01867
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 18, 2000
To the Stockholders of
MASSBANK CORP.:
The Annual Meeting of Stockholders of MASSBANK Corp. will be held at the
Sheraton Ferncroft Resort, 50 Ferncroft Road, Danvers, Massachusetts on Tuesday,
April 18, 2000 at 10:00 a.m. (together with all adjournments and postponements
thereof, the "Annual Meeting"), for the following purposes:
1. To consider and act upon a proposal to elect one Director to serve
until the 2001 Annual Meeting of Stockholders and four Directors to serve
until the 2003 Annual Meeting of Stockholders and until their respective
successors are duly elected and qualified; and
2. To consider and act upon any other matters which may properly come
before the Annual Meeting.
Only stockholders of record at the close of business on February 29, 2000
are entitled to notice of and to vote at the Annual Meeting.
By Order of the Board of Directors,
ROBERT S. CUMMINGS, Secretary
Reading, Massachusetts
March 23, 2000
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE
COMPLETE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE
PROVIDED. IF YOU WISH TO VOTE YOUR STOCK IN PERSON AT THE ANNUAL MEETING, YOUR
PROXY MAY BE REVOKED.
<PAGE> 3
MASSBANK CORP.
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 18, 2000
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of MASSBANK Corp. (the "Corporation") for the
Annual Meeting of Stockholders of the Corporation, and any adjournments or
postponements thereof (the "Annual Meeting"). At the Annual Meeting,
stockholders will consider and act upon the matters set forth in the
accompanying Notice of Annual Meeting of Stockholders.
Stock transfer books will not be closed, but the Board of Directors has
fixed the close of business on February 29, 2000 as the record date for
determining the stockholders entitled to notice of and to vote at the Annual
Meeting. On that date, there were outstanding 3,269,193 shares of common stock,
par value $1.00 per share ("Common Stock"), and the holders thereof on that date
are entitled to one vote for each share held by them.
The presence, in person or by proxy, of holders of at least a majority of
the total number of outstanding shares of Common Stock entitled to vote is
necessary to constitute a quorum for the transaction of business at the Annual
Meeting. The Corporation intends to count abstentions and broker non-votes as
present for purposes of determining the presence or absence of a quorum for the
transaction of business at the Annual Meeting. A broker non-vote occurs when a
broker or other nominee holding shares for a beneficial owner votes on one
proposal, but does not vote on another proposal because such broker or other
nominee does not have discretionary voting power as to the proposal and has not
received voting instructions from the beneficial owner.
A quorum being present, Directors will be elected by a plurality of the
votes cast. Votes may only be cast in favor or withheld from the nominees; there
is no ability to abstain. Accordingly, votes that are withheld and broker
non-votes will have no effect on the results of the vote for the election of
Directors.
The cost of soliciting proxies will be borne by the Corporation. The
solicitation of proxies by mail may be followed by the solicitation of certain
stockholders by officers or regular employees of the Corporation by telephone or
oral communication. The enclosed proxy, if executed and returned, may be revoked
at any time before it has been exercised (i) by delivery of a revocation in
writing to the Secretary of the Corporation at the principal executive offices
of the Corporation (123 Haven Street, Reading, Massachusetts 01867), (ii) by
delivering a later-dated proxy, or (iii) by voting in person at the Annual
Meeting. Attendance at the Annual Meeting will not by itself constitute
revocation of a proxy.
<PAGE> 4
Stockholders are requested to complete, date, sign and return the
accompanying proxy in the enclosed envelope. Shares represented by a properly
executed proxy received prior to the vote at the Annual Meeting and not revoked
will be voted at the Annual Meeting as directed on the proxy. If a properly
executed proxy is submitted and no instructions are given, the proxy will be
voted FOR the election of the five nominees for Director set forth herein. It is
not anticipated that any other matters than those set forth in this Proxy
Statement will be presented at the Annual Meeting. If other matters are
presented, proxies will be voted in accordance with the discretion of the proxy
holders.
The approximate date on which this Proxy Statement and the enclosed proxy
are first being sent to stockholders is March 23, 2000. The Corporation's 1999
Annual Report, including financial statements for the fiscal year ended December
31, 1999, is being mailed to stockholders concurrently with this Proxy
Statement. The Annual Report, however, is not part of the proxy soliciting
materials.
2
<PAGE> 5
PROPOSAL ONE
ELECTION OF DIRECTORS
In accordance with the Corporation's Restated Certificate of Incorporation
and By-Laws, the Board of Directors is divided into three approximately equal
classes, with each Director serving for a term of three years. As a consequence,
the term of only one class of Directors expires each year, and their successors
are elected for terms of three years. The Board of Directors is presently
comprised as follows:
Class I: Ms. Pettinelli, Messrs. Costello and Marshall and Dr.
Stackhouse, who were elected to serve until the 2002 Annual
Meeting of Stockholders and until their successors are elected
and qualified.
Class II: Messrs. Bedell, Cummings, Lapidus and Schurian, who were elected
to serve until the 2000 Annual Meeting of Stockholders and until
their successors are elected and qualified.
Class III: Messrs. Altschuler, Brandi, Bufferd and Carr, who were elected
to serve until the 2001 Annual Meeting of Stockholders and until
their successors are elected and qualified.
The Board of Directors has nominated three of the four Class II Directors
and one current Class III Director to stand for re-election at the Annual
Meeting to serve until the 2003 Annual Meeting of Stockholders and until their
successors are elected and qualified. Each of Messrs. Bedell, Bufferd, Lapidus
and Schurian will stand for re-election at the Annual Meeting. In addition, Mr.
Cummings, currently a Class II Director, will stand for election at the Annual
Meeting as a Class III Director to serve until the 2001 Annual Meeting of
Stockholders and until his successor is elected and qualified. Unless otherwise
noted thereon, proxies solicited hereby which are executed and returned on a
timely basis will be voted for the election of the Board of Directors' nominees.
The Corporation believes that each nominee for Director will be able to serve.
If one or more of such nominees should be unable to serve, the individuals named
in the enclosed proxy will vote for such other person or persons, if any, as the
Board of Directors at the time may recommend to serve in place of the person or
persons unable to serve.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION
OF ITS NOMINEES.
Set forth below is information regarding (i) the nominees for election as
Class II and Class III Directors at the Annual Meeting and (ii) the continuing
Directors whose terms are not scheduled to expire until the 2001 or 2002 Annual
Meeting of Stockholders.
SAMUEL ALTSCHULER RETIRED AS EXECUTIVE VICE PRESIDENT AND DIRECTOR, SANMINA
CORPORATION
[PHOTO OF
ALTSCHULER] Mr. Altschuler, 72, has served as a Director since 1986 and
as a Trustee of a predecessor bank since 1979. He is also a
member of the Compensation and Option Committee of the
Corporation. Mr. Altschuler was Chairman, President and a
Director of Altron, Inc., a manufacturer of electronic
interconnect products, since founding the company in 1970.
In December 1998, Mr. Altschuler became Executive Vice
President and a Director of Sanmina Corporation, a provider
of electronic manufacturing services and the successor of
Altron, Inc. Mr. Altschuler retired from such positions in
May 1999. Mr. Altschuler is a past President of IPC, an
industry trade association.
3
<PAGE> 6
MATHIAS B. BEDELL RETIRED AS PRESIDENT OF BEDELL BROTHERS INSURANCE AGENCY
[PHOTO]
Mr. Bedell, 67, has served as a Director since 1986 and as a
Trustee of a predecessor bank since 1965. Mr. Bedell is also
a member of the Executive Committee of the Corporation and a
Director and Executive Committee member of MASSBANK (the
"Bank"), the Corporation's principal subsidiary. He also
serves on the Insurance Committee of the Corporation and as
Chairman of the Compensation and Option Committee of the
Corporation.
GERARD H. BRANDI CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER,
MASSBANK CORP. AND MASSBANK
[PHOTO]
Mr. Brandi, 51, has served as a Director since 1986. He first
joined a predecessor bank in 1975 and became a Trustee in
1978. He has served the Bank and the Corporation in various
capacities over the past twenty-four years. Mr. Brandi was
named President of the Corporation and the Bank in 1986,
Chief Executive Officer in 1992 and Chairman in 1993. Mr.
Brandi is also Chairman of the Executive Committees of the
Corporation and the Bank, a member of the Asset/Liability
Committee of the Corporation and a member of the Trust
Committee of the Bank. He is a Director of the Depositors
Insurance Fund, The Lowell Plan, the New England Automated
Clearing House, Connecticut On Line Computer Center and the
Massachusetts Bankers Association. He also serves as Vice
President and Director of the Lowell Development and Finance
Corp., and Treasurer and Director of the Massachusetts
Society for the Prevention of Cruelty to Animals.
ALLAN S. BUFFERD TREASURER, MASSACHUSETTS INSTITUTE OF TECHNOLOGY
[PHOTO]
Mr. Bufferd, 62, has served as a Director since 1995. He is
also a member of the Asset/Liability Committee of the
Corporation. Mr. Bufferd serves as Vice Chairman and Life
Trustee and as a member of the Executive Committee of the
Beth Israel Deaconess Medical Center, a Trustee of the
Whiting Foundation and Chairman of the Board of Trustees of
Wheelock College. He is also a member of the Investment
Subcommittee of the Commonwealth of Massachusetts Pension
Retirement Investments Trust. In addition, he is the
Treasurer and a Director of the Harvard Cooperative Society
and a Director of MASCO.
4
<PAGE> 7
PETER W. CARR RETIRED AS VICE PRESIDENT/FINANCE OF GUILFORD TRANSPORTATION
INDUSTRIES
[PHOTO]
Mr. Carr, 69, has served as a Director since 1986 and as a
Trustee of a predecessor bank since 1980. Mr. Carr is also
the Chairman of the Audit Committee of the Corporation.
ALEXANDER S. COSTELLO EDITORIAL PAGE EDITOR, THE LOWELL SUN
[PHOTO]
Mr. Costello, 46, has served as a Director since 1993. He is
a member of the Audit Committee of the Corporation. Mr.
Costello is the Chairman of the Board of Directors of The
Lowell Plan, a non-profit organization dedicated to the
revitalization of the City of Lowell, and a member of the
Board of Governors of Saints' Memorial Hospital of Lowell.
ROBERT S. CUMMINGS ATTORNEY, SENIOR COUNSEL OF NIXON PEABODY LLP
[PHOTO]
Mr. Cummings, 69, has served as a Director since 1986 and as
a Trustee of a predecessor bank since 1979. Mr. Cummings is
Secretary of the Corporation, a member of the Executive
Committee of the Corporation and a Director and Executive
Committee member of the Bank. He also serves on the
Compensation and Option Committee of the Corporation and as
Chairman of the Trust Committee of the Bank. Mr. Cummings is
a Trustee of Hallmark Healthcare, Chairman of the
Commissioners of Trust Funds of the Town of Reading,
Chairman and Director of the Massachusetts Society for the
Prevention of Cruelty to Animals and Treasurer, Director and
Executive Committee member of the World Society for the
Prevention of Cruelty to Animals.
5
<PAGE> 8
LEONARD LAPIDUS BANKING AND BANK REGULATION CONSULTANT
[PHOTO]
Mr. Lapidus, 70, has served as a Director since 1994. He is
a member of the Asset/Liability Committee of the Corporation.
Mr. Lapidus served as a Director of the Bank from 1994 to
1995. Mr. Lapidus served from 1981 to 1994 as President of
the Depositors Insurance Fund, a fund established under
Massachusetts law to provide deposit insurance to
Massachusetts savings banks. From 1995 to 1999, he was a
United States Government official who advised, and arranged to
place advisors with, the governments of former Soviet bloc
countries and emerging nations to help them reform their
banking and bank regulatory systems. Since June 1999, Mr.
Lapidus has been a self-employed consultant on banking and
bank regulatory systems.
STEPHEN E. MARSHALL PRESIDENT AND TREASURER, C. H. CLEAVES INSURANCE AGENCY,
INC.
[PHOTO]
Mr. Marshall, 61, has served as a Director since 1986 and as
a Trustee of a predecessor bank since 1972. He is a member of
the Executive Committee of the Corporation and a Director and
Executive Committee member of the Bank. Mr. Marshall is also
Chairman of the Insurance Committee of the Corporation. Mr.
Marshall's affiliations include the Professional Insurance
Agents of Massachusetts. Mr. Marshall is associated with
various local charitable, civic and church organizations.
NANCY L. PETTINELLI EXECUTIVE DIRECTOR, VISITING NURSE ASSOCIATION OF GREATER
LOWELL, INC.
[PHOTO]
Ms. Pettinelli, 53, has served as a Director since October
1998. She is a member of the Compensation and Option
Committee and the Insurance Committee of the Corporation. Ms.
Pettinelli was the Director of Clinical Services for the
Visiting Nurse Association of Greater Lowell, Inc. from 1986
through April 1995 and has served as its Executive Director
thereafter.
6
<PAGE> 9
HERBERT G. SCHURIAN CERTIFIED PUBLIC ACCOUNTANT
[PHOTO]
Mr. Schurian, 63, has served as a Director since 1986 and as
a Trustee of a predecessor bank since 1973. He is a member of
the Executive Committee of the Corporation and a Director and
an Executive Committee member of the Bank. He is Chairman of
the Asset/Liability Committee and a member of the Audit
Committee of the Corporation. Mr. Schurian is associated with
various professional, civic and local charitable
organizations.
DONALD B. STACKHOUSE, D.M.D. RETIRED AS PRESIDENT OF DENTAL HEALTH CONCEPTS
[PHOTO]
Dr. Stackhouse, 68, has served as a Director since 1986 and
as a Trustee of a predecessor bank since 1972. He is also a
member of the Executive Committee of the Corporation and a
Director and an Executive Committee member of the Bank. Dr.
Stackhouse is a former Clinical Professor in Graduate
Prothodontics at Tufts University and a Director of the L.D.
Pankey Dental Institute.
7
<PAGE> 10
The following chart shows the number of shares of the Corporation's Common
Stock beneficially owned by each Director and named executive officer of the
Corporation as of January 18, 2000.
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY PERCENT
NAME OWNED(1) OF CLASS(2)
---- ------------ -----------
<S> <C> <C>
Samuel Altschuler........................................... 22,518 *
Mathias B. Bedell........................................... 30,110(3) *
Gerard H. Brandi............................................ 161,287(4)(5) 4.8%
Allan S. Bufferd............................................ 4,650(6) *
Peter W. Carr............................................... 21,250(6) *
David F. Carroll............................................ 36,933(5)(6) 1.1%
Reginald E. Cormier......................................... 40,139(5) 1.2%
Alexander S. Costello....................................... 7,750 *
Robert S. Cummings.......................................... 29,400 *
Leonard Lapidus............................................. 5,850 *
Stephen E. Marshall......................................... 9,908 *
Nancy L. Pettinelli......................................... 1,500 *
Herbert G. Schurian......................................... 25,700(7) *
Dr. Donald B. Stackhouse.................................... 23,307 *
Donald R. Washburn.......................................... 42,122(5)(8) 1.3%
Donna H. West............................................... 41,632(5)(9) 1.3%
All Directors and executive officers as a group (17
persons).................................................. 515,634(5)(10) 14.4%
</TABLE>
- ---------------
* Less than 1%.
(1) Unless otherwise indicated, each person named has sole voting and sole
investment power with respect to all shares indicated. Includes the
following number of shares that the above listed Directors and executive
officers have the right to acquire within 60 days through the exercise of
options granted pursuant to the Corporation's 1986 Stock Option Plan or
Amended and Restated 1994 Stock Incentive Plan: Mr. Altschuler, 17,250
shares; Mr. Bedell, 15,000 shares; Mr. Brandi, 31,500 shares; Mr. Bufferd,
4,250 shares; Mr. Carr, 17,250 shares; Mr. Carroll, 22,417 shares; Mr.
Cormier, 17,133 shares; Mr. Costello, 7,750 shares; Mr. Cummings, 22,000
shares; Mr. Lapidus, 5,583 shares; Mr. Marshall, 9,750 shares; Ms.
Pettinelli, 1,500 shares; Mr. Schurian, 19,500 shares; Dr. Stackhouse,
18,667 shares; Mr. Washburn, 22,317 shares; and Ms. West, 23,367 shares,
respectively. Does not include the following number of units of cash-only
securities (contracts issued to the holder under the Corporation's Deferred
Compensation Plan) whose value per unit is derived from changes in the
market price per share of the Corporation's Common Stock: Mr. Bedell, 5,757
units; Mr. Bufferd, 295 units; Mr. Cummings, 5,757 units; Mr. Lapidus, 303
units; and Mr. Marshall, 89 units.
(2) Calculated on the basis of 3,306,243 outstanding shares as of January 18,
2000.
(3) Includes 3,684 shares owned by Mr. Bedell's spouse, as to which shares Mr.
Bedell disclaims beneficial ownership.
(4) Includes 779 shares held by Mr. Brandi as custodian for various nieces and
nephews and 9,601 shares owned by Mr. Brandi's spouse, as to all of which
shares Mr. Brandi disclaims beneficial ownership. Also
8
<PAGE> 11
includes 89,343 shares owned jointly with Mr. Brandi's spouse, with respect
to which shares Mr. and Mrs. Brandi share voting and investment power.
(5) Includes shares allocated to the accounts of executive officers under the
Bank's Employee Stock Ownership Plan (the "ESOP"). The number of such
allocated shares included in the above table is as follows: Mr. Brandi --
14,379; Mr. Carroll -- 6,096; Mr. Cormier -- 5,123; Mr. Washburn -- 6,613;
Ms. West -- 6,167; and all executive officers as a group (six persons) --
40,872. Does not include any portion of the unallocated shares under the
ESOP which may be deemed to be beneficially owned by participating
executive officers as a result of their ability to direct the voting of
such shares through the voting of shares allocated to their accounts under
the ESOP. The number of such unallocated shares over which the executive
officers may exercise voting power is as follows: Mr. Brandi -- 2,925; Mr.
Carroll -- 1,240; Mr. Cormier -- 1,042; Mr. Washburn -- 1,345; Ms. West --
1,255; and all executive officers as a group -- 8,315.
(6) Voting and investment power for these shares (other than shares which may
be acquired through the exercise of options as described above) is shared
with spouse as to all shares indicated.
(7) Includes 3,800 shares owned by Mr. Schurian's spouse and 400 shares owned
by his son, as to all of which shares Mr. Schurian disclaims beneficial
ownership.
(8) Includes 2,400 shares owned jointly with Mr. Washburn's spouse, with
respect to which shares Mr. and Mrs. Washburn share voting and investment
power.
(9) Includes 181 shares held by Ms. West as custodian for her grandson, as to
which shares Ms. West disclaims beneficial ownership.
(10) Includes 264,317 shares that such persons have the right to acquire through
the exercise of options granted pursuant to the Corporation's 1986 Stock
Option Plan or Amended and Restated 1994 Stock Incentive Plan.
BOARD AND COMMITTEE MEETINGS
During 1999, the Board of Directors of the Corporation held four meetings,
the Executive Committee of the Corporation held ten meetings, the Audit
Committee of the Corporation held four meetings and the Compensation and Option
Committee of the Corporation held one meeting. During 1999, each incumbent
Director attended at least 75% of the aggregate number of meetings of the
Corporation's Board of Directors and of the committees of which he or she was a
member.
The Executive Committee of the Corporation consists of Messrs. Bedell,
Brandi, Cummings, Marshall and Schurian and Dr. Stackhouse and is vested with
the authority of the Board of Directors in most matters between Board meetings.
The Audit Committee of the Corporation consists of Messrs. Carr, Costello and
Schurian and is responsible for reviewing the Corporation's financial statements
and the scope of the audit, reviewing the Corporation's internal financial and
accounting controls and recommending to the Board the appointment of independent
auditors. The Compensation and Option Committee of the Corporation consists of
Messrs. Altschuler, Bedell and Cummings and Ms. Pettinelli. The Compensation and
Option Committee is responsible for making recommendations to the Board of
Directors of the Bank with respect to the policies which govern both annual
compensation and incentive stock ownership programs for the employees of the
Bank.
The Board of Directors of the Corporation acts as a nominating committee,
selecting nominees for election as Directors and executive officers. The Board
considers the recommendation of any stockholder with respect to nominees for
election to the Board if such recommendation is timely in accordance with, and
is accompanied by the information required by, the Corporation's By-Laws. To
make a recommendation, a stockholder should send the nominee's name and
supporting information to the Secretary of the Corporation at the Corporation's
principal offices. See "Stockholder Proposals."
9
<PAGE> 12
PRINCIPAL STOCKHOLDERS
The following table sets forth information with respect to each holder who,
to the knowledge of the Corporation, beneficially owned more than 5% of the
Corporation's Common Stock as of December 31, 1999.
<TABLE>
<CAPTION>
AMOUNT OF PERCENT OF
BENEFICIAL OWNERSHIP OF COMMON STOCK
NAME AND ADDRESS CORPORATION'S COMMON STOCK BENEFICIALLY OWNED(1)
---------------- -------------------------- ---------------------
<S> <C> <C>
Private Capital Management, Inc.(2) ......... 341,493 10.3%
3003 North Tamiami Trail
Naples, FL 33940
Baker, Fentress & Company(3)................. 219,165 6.6%
200 West Madison Street
Chicago, IL 60606
Dimensional Fund Advisors Inc.(4)............ 203,299 6.1%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
First Manhattan Co.(5)....................... 202,566 6.1%
437 Madison Avenue
New York, NY 10022
</TABLE>
- ---------------
(1) Calculated on the basis of 3,306,243 outstanding shares as of January 18,
2000.
(2) Private Capital Management, Inc. ("PCM") is an investment adviser registered
under the Investment Advisers Act of 1940 (the "Advisers Act"). According to
a filing made by PCM with the Securities and Exchange Commission (the "SEC")
on Schedule 13F dated February 14, 2000, PCM, in its role as investment
adviser, possesses no voting power and sole dispositive power over the
341,493 above shares which had been purchased for the accounts of investment
advisory clients of PCM.
(3) Baker, Fentress & Company ("Baker") is an investment company registered
under the Investment Company Act of 1940 (the "Investment Company Act").
According to a joint filing made by Baker and John A. Levin & Co., Inc.
("Levin") with the SEC on Schedule 13G dated February 14, 2000, Baker
possesses sole voting power over 18,265 of the above shares, shared voting
power over 106,413 of the above shares, sole dispositive power over 18,265
of the above shares and shared dispositive power over 200,900 of the above
shares. Levin, an investment adviser under the Advisers Act, holds for the
accounts of its investment advisory clients the above 219,165 shares. Baker
is the sole shareholder of Levin Management Co., Inc., which is the sole
shareholder of Levin. Baker, therefore, may be deemed the beneficial owner
of the above 219,165 shares held by Levin.
(4) Dimensional Fund Advisors Inc. ("Dimensional") is an investment adviser
registered under the Advisers Act, which furnishes investment advice to four
investment companies registered under the Investment Company Act and serves
as investment manager to certain other investment vehicles (such investment
companies and investment vehicles, collectively, the "Portfolios").
According to a filing made by it with the SEC on Schedule 13G dated February
4, 2000, Dimensional, in its role as investment adviser and investment
manager, possesses sole voting power and sole dispositive power over the
203,299 above shares which are owned by the Portfolios.
(5) First Manhattan Co. ("First Manhattan") is a broker or dealer registered
under the Securities Exchange Act of 1934 and an investment adviser
registered under the Advisers Act. According to a filing made by it with the
SEC on Schedule 13G dated February 9, 2000, First Manhattan possesses sole
voting power over 164,587 of the above shares, shared voting power over
18,379 of the above shares, sole dispositive power over 164,587 of the above
shares and shared dispositive power over 37,979 of the above shares.
10
<PAGE> 13
EXECUTIVE COMPENSATION
Until the Corporation becomes actively involved in other business, no
separate compensation is being paid to the executive officers of the
Corporation, all of whom are executive officers of the Bank and receive
compensation as such.
SUMMARY OF COMPENSATION
The following table sets forth for the fiscal years ended December 31,
1999, 1998 and 1997, a summary of the compensation paid by the Bank to the Chief
Executive Officer and the four additional executive officers whose remuneration
from the Corporation and its subsidiaries exceeded $100,000 during 1999.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
---------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION ----------------------- -------
--------------------------------------- RESTRICTED
OTHER ANNUAL STOCK SECURITIES LTIP ALL OTHER
SALARY BONUS COMPENSATION AWARD(S) UNDERLYING PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) OPTIONS(#) ($) ($)(1)
- --------------------------- ---- ------ ----- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gerard H. Brandi......... 1999 366,000 110,000 (2) -0- 2,500 -0- 73,420(3)
Chairman, President 1998 351,000 90,000 (2) -0- 2,500 -0- 74,837(3)
and Chief Executive 1997 337,500 94,500 (2) -0- 3,333 -0- 76,580(3)
Officer
Donald R. Washburn....... 1999 119,100 20,000 (2) -0- 2,000 -0- 9,984(4)
Senior Vice President, 1998 114,600 21,000 (2) -0- 1,750 -0- 12,280(4)
Lending 1997 110,700 17,700 (2) -0- 2,333 -0- 13,244(4)
Donna H. West............ 1999 118,200 20,000 (2) -0- 2,000 -0- 9,734(5)
Senior Vice President, 1998 113,400 18,500 (2) -0- 1,750 -0- 12,417(5)
Community Banking 1997 108,600 20,600 (2) -0- 2,333 -0- 13,458(5)
Reginald E. Cormier...... 1999 102,480 17,000 (2) -0- 2,000 -0- 8,391(6)
Senior Vice President, 1998 97,800 15,500 (2) -0- 1,750 -0- 10,762(6)
Treasurer and Chief 1997 93,000 18,500 (2) -0- 2,333 -0- 11,502(6)
Financial Officer
David F. Carroll......... 1999 96,600 6,000 (2) -0- 2,000 -0- 7,496(7)
Vice President, 1998 93,600 8,500 (2) -0- 1,750 -0- 9,977(7)
Operations 1997 90,000 14,000 (2) -0- 2,333 -0- 10,754(7)
</TABLE>
- ---------------
(1) Includes (i) the cash value of shares of MASSBANK Corp. Common Stock
acquired by the ESOP and allocated to the named party (but excluding any
allocation of dividends and interest thereunder), and (ii) such other items
as are disclosed in individual footnotes below. Such cash value was
determined by multiplying the number of shares of Common Stock so allocated
by the closing price of the Common Stock on December 31 of the applicable
year.
(2) Perquisites did not exceed 10% of total salary and bonus.
(3) Consists of the Bank's payment of permanent life insurance premiums in the
amount of $3,226 in each of 1999, 1998 and 1997 under Mr. Brandi's executive
supplemental retirement agreement, ESOP allocations valued at $11,494,
$14,961 and $15,534 representing 390, 382 and 326 shares of Common Stock on
December 31, 1999, 1998 and 1997, respectively, determined in accordance
with footnote 1 above, and contributions of $58,700, $56,650 and $57,820 to
a rabbi trust for a deferred compensation program for Mr. Brandi in 1999,
1998 and 1997, respectively.
11
<PAGE> 14
(4) Consists of ESOP allocations of $9,984, $12,280 and $13,244 representing
338, 314 and 278 shares of Common Stock at December 31, 1999, 1998 and 1997,
respectively, determined in accordance with footnote 1 above.
(5) Consists of ESOP allocations of $9,734, $12,417 and $13,458 representing
330, 317 and 283 shares of Common Stock at December 31, 1999, 1998 and 1997,
respectively, determined in accordance with footnote 1 above.
(6) Consists of ESOP allocations of $8,391, $10,762 and $11,502 representing
284, 275 and 242 shares of Common Stock at December 31, 1999, 1998 and 1997,
respectively, determined in accordance with footnote 1 above.
(7) Consists of ESOP allocations of $7,496, $9,977 and $10,754 representing 254,
255 and 226 shares of Common Stock at December 31, 1999, 1998 and 1997,
respectively, determined in accordance with footnote 1 above.
12
<PAGE> 15
OPTION GRANTS
The following table sets forth certain information regarding options
granted during 1999 to the Chief Executive Officer and the other executive
officers named above.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------------ VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SHARES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM
OPTIONS EMPLOYEES BASE PRICE ----------------------
NAME GRANTED IN FISCAL YEAR PER SHARE EXPIRATION DATE 5% 10%
---- ---------- -------------- ----------- --------------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Gerard H. Brandi..... 2,500 8.6% $37.50 January 18, 2009 $58,959 $149,413
Chairman, President
and Chief Executive
Officer
Donald R. Washburn... 2,000 6.9% $37.50 January 18, 2009 $47,167 $119,531
Senior Vice
President, Lending
Donna H. West........ 2,000 6.9% $37.50 January 18, 2009 $47,167 $119,531
Senior Vice
President,
Community Banking
Reginald E.
Cormier............ 2,000 6.9% $37.50 January 18, 2009 $47,167 $119,531
Senior Vice
President,
Treasurer and Chief
Financial Officer
David F. Carroll..... 2,000 6.9% $37.50 January 18, 2009 $47,167 $119,531
Vice President,
Operations
</TABLE>
13
<PAGE> 16
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUE
The following table sets forth certain information regarding options
exercised during the fiscal year ended December 31, 1999 and options held as of
December 31, 1999 by the Chief Executive Officer and the other executive
officers named above.
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES ACQUIRED VALUE FISCAL YEAR END FISCAL YEAR END
NAME ON EXERCISE REALIZED EXERCISABLE / UNEXERCISABLE EXERCISABLE / UNEXERCISABLE
---- --------------- -------- --------------------------- ---------------------------
<S> <C> <C> <C> <C>
Gerard H. Brandi......... 1,000 $23,250 20,669/0 $244,104/0
Chairman, President and
Chief Executive Officer
Donald R. Washburn....... 2,100 $56,438 14,233/0 $174,833/0
Senior Vice President,
Lending
Donna H. West............ 50 $ 1,338 15,283/0 $198,458/0
Senior Vice President,
Community Banking
Reginald E. Cormier...... 2,250 $46,063 9,050/0 $ 98,821/0
Senior Vice President,
Treasurer and Chief
Financial Officer
David F. Carroll......... -- -- 15,333/0 $199,396/0
Vice President,
Operations
</TABLE>
14
<PAGE> 17
COMPARATIVE STOCK PERFORMANCE BY THE CORPORATION
COMPARISON OF TEN YEAR CUMULATIVE TOTAL RETURN
The following chart compares the performance of the Common Stock of the
Corporation (assuming reinvestment of dividends) with the S&P 500 Index and a
group comprised of 14 industry peers, including the Corporation (the "Ten Year
Peer Group"), over a ten-year period. The chart assumes a $100 investment was
made on December 31, 1989 in the Common Stock of MASSBANK Corp., the stocks
included in the S&P 500 and the stocks of the Ten Year Peer Group. Data for the
chart was provided to the Corporation by The Bloomberg. Information about the
indices and the Ten Year Peer Group which was provided by The Bloomberg is
believed to be reliable, but neither the accuracy nor the completeness of such
information is guaranteed by the Corporation.
COMPARISON OF TEN YEAR CUMULATIVE TOTAL RETURN
AMONG MASSBANK CORP., THE S&P 500 INDEX AND THE TEN YEAR PEER GROUP
<TABLE>
<CAPTION>
MASSBANK CORP. S&P 500 INDEX TEN YEAR PEER GROUP
-------------- ------------- -------------------
<S> <C> <C> <C>
12/31/89 100.00 100.00 100.00
12/31/90 76.35 96.90 52.91
12/31/91 99.29 126.36 68.83
12/31/92 194.67 135.97 128.11
12/31/93 211.38 149.62 165.56
12/31/94 210.92 151.59 179.37
12/31/95 300.94 208.49 261.48
12/31/96 371.54 256.33 341.33
12/31/97 634.21 341.83 584.79
12/31/98 533.25 439.50 498.46
12/31/99 414.57 531.98 441.95
</TABLE>
(1) The banks in the Ten Year Peer Group are: Abington Bancorp, Inc., Andover
Bancorp, Inc., Arrow Financial Corp., CCBT Financial Companies, Inc.,
Century Bank, First Essex Bancorp, First Federal Savings and Loan of East
Hartford, Granite State Bankshares, Inc., Lawrence Savings Bank, MASSBANK
Corp., Medford Bancorp, Inc., Merchants Bancshares, Metrowest Bank and
Warren Bancorp, Inc.
15
<PAGE> 18
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
The following chart compares the performance of the Common Stock of the
Corporation (assuming reinvestment of dividends) with the S&P 500 Index and a
group comprised of 14 industry peers, including the Corporation (the "Five Year
Peer Group"), over a five-year period. The chart assumes a $100 investment was
made on December 31, 1994 in the Common Stock of MASSBANK Corp., the stocks
included in the S&P 500 and the stocks of the Five Year Peer Group. Data for the
chart was provided to the Corporation by The Bloomberg. Information about the
indices and the Five Year Peer Group which was provided by The Bloomberg is
believed to be reliable, but neither the accuracy nor the completeness of such
information is guaranteed by the Corporation.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG MASSBANK CORP., THE S&P 500 INDEX AND THE FIVE YEAR PEER GROUP
<TABLE>
<CAPTION>
MASSBANK CORP. S&P 500 INDEX FIVE YEAR PEER GROUP
-------------- ------------- --------------------
<S> <C> <C> <C>
12/31/94 100.00 100.00 100.00
12/31/95 142.68 137.54 145.74
12/31/96 176.15 169.09 193.19
12/31/97 300.69 225.49 335.98
12/31/98 252.83 289.93 283.20
12/31/99 196.56 350.93 246.12
</TABLE>
(1) The banks in the Five Year Peer Group are: Abington Bancorp, Inc., Andover
Bancorp, Inc., Arrow Financial Corp., CCBT Financial Companies, Inc.,
Century Bank, First Essex Bancorp, First Federal Savings and Loan of East
Hartford, Granite State Bankshares, Inc., Lawrence Savings Bank, MASSBANK
Corp., Medford Bancorp, Inc., Merchants Bancshares, Metrowest Bank and
Warren Bancorp, Inc.
16
<PAGE> 19
EMPLOYMENT AGREEMENTS
The Corporation and the Bank have entered into a three-year employment
agreement with Mr. Brandi, and the Bank has entered into two-year employment
agreements with Messrs. Carroll, Cormier and Washburn and Ms. West (each an
"Employment Agreement" and collectively, the "Employment Agreements"). Mr.
Brandi's Employment Agreement is scheduled to expire in 2003, unless extended as
explained below. The Employment Agreements of Messrs. Carroll, Cormier and
Washburn and Ms. West are scheduled to expire in 2002, unless extended as
explained below. Pursuant to the Employment Agreements, Mr. Brandi, Mr. Carroll,
Mr. Cormier, Mr. Washburn and Ms. West are paid current annual salaries of
$400,000, $99,000, $110,400, $123,600, and $123,600, respectively.
Under the respective Employment Agreements, the Corporation or the Bank, as
the case may be, may terminate the officer's employment, without incurring any
continuing obligations to him or her, at any time for "cause," as defined in the
Employment Agreement. On each anniversary of the respective Employment
Agreement, unless the Corporation or the Bank, as the case may be, or the
officer has previously given the specified notice to the other of his, her or
its election not to extend the respective Employment Agreement, an additional
one-year period is automatically added to the term of the Employment Agreement.
In addition, the Employment Agreements provide generally that if the
Corporation or the Bank, as the case may be, were to terminate the officer's
employment for any reason other than for "cause," or, solely with respect to Mr.
Brandi, he were to terminate his own employment upon the occurrence of a
significant change in the responsibilities, powers or authorities exercised by
him from those exercised immediately prior to a "Change in Control," or
following a reduction in his annual compensation, or for other reasons as set
forth in his Employment Agreement, the officer would be entitled to continue to
receive the compensation and benefits specified in the Employment Agreement for
the duration of what otherwise would have been its term. The compensation and
benefits payable to Mr. Brandi in the foregoing situations provide for an
adjustment factor tied to increases in the Consumer Price Index. A "Change in
Control" is generally defined in Mr. Brandi's Employment Agreement to mean (i)
the occurrence of a tender or exchange offer, business combination, sale of
assets, contested election or combination of transactions, the result of which
is that the persons who were Directors of the Corporation or the Bank before
such transactions cease to constitute a majority of the Board of Directors of
the Corporation or the Bank, respectively, or (ii) the acquisition by a person
or group of persons of beneficial ownership of 25% or more of the Common Stock
of the Corporation or the Bank, as the case may be, which is not approved by the
respective Board of Directors in the manner established by Mr. Brandi's
Employment Agreement. In addition, Mr. Brandi's Employment Agreement provides
that in the event Mr. Brandi is not elected to, or is subsequently removed from,
the office of Chief Executive Officer of the Corporation or the Bank, then such
event would be treated as a termination without cause by the Corporation and the
Bank, and Mr. Brandi would be entitled to exercise his rights described in this
paragraph under the Employment Agreement.
EXECUTIVE SEVERANCE AGREEMENTS
The Corporation and the Bank have entered into an Executive Severance
Agreement with Mr. Brandi, and the Bank has entered into Executive Severance
Agreements with Messrs. Carroll, Cormier and Washburn and Ms. West (each an
"Executive Severance Agreement" and collectively, the "Executive Severance
Agreements"). The Executive Severance Agreements generally provide that if there
were a "Change in Control" of the Corporation, as defined therein, and if at any
time during the two-year period following the Change in Control, either the
Corporation or the Bank, as the case may be, were to terminate the employment of
any of the above named officers for any reason other than for deliberate
dishonesty with respect to the Corporation or the Bank, conviction of certain
crimes, gross and willful failure to perform his or her duties, or for other
reasons as set forth in the Executive Severance Agreements, or any of the above
named officers were
17
<PAGE> 20
to terminate his or her employment following a substantial adverse change in his
or her title or responsibilities or a reduction in his or her annual base
salary, or for other reasons as set forth in the Executive Severance Agreements,
the named officer would be entitled to receive a lump sum payment equal to
approximately three times his or her average annual compensation over the five
previous years of his or her employment with the Corporation or the Bank, as the
case may be. For purposes of the Executive Severance Agreements, a "Change in
Control" is generally deemed to have occurred when (i) a person or group of
persons acquires beneficial ownership of 50% or more of the Common Stock of the
Corporation, (ii) as a result of a tender offer, proxy contest, merger or
similar transaction, persons who were Directors before such transaction cease to
constitute at least a majority of the Board of Directors of the Corporation, or
(iii) the stockholders of the Corporation approve a merger, a plan of
liquidation or an agreement for the sale of all or substantially all of the
Corporation's assets.
Any payments under the Executive Severance Agreements or the Employment
Agreements are subject to reduction if such payments are non-deductible to the
Corporation or the Bank as a result of Section 280G of the Internal Revenue Code
of 1986, as amended (the "Code"). In addition, if the officer becomes entitled
to receive cash compensation pursuant to both the Employment Agreement and the
Executive Severance Agreement, he or she is required to elect to receive cash
compensation pursuant to only one of such agreements. The officer would be
entitled to continue to receive any benefits for which he or she is eligible
under his or her Employment Agreement regardless of the agreement under which he
or she elects to receive cash compensation.
PENSION PLAN
The Bank provides a retirement plan for all of its eligible employees
through the Savings Banks Employees Retirement Association ("SBERA"), an
unincorporated association of savings banks operating within Massachusetts and
other organizations which provide services to or for savings banks.
The following table illustrates annual minimum pension benefits for
retirement at age 65 under the most advantageous plan provisions (in effect for
the plan year November 1, 1999 - October 31, 2000) available for various levels
of compensation and years of service. The figures in this table are calculated
on the basis of a straight-life annuity and are based on the assumption that the
plan continues in its present form. The benefits are not subject to any
deduction for Social Security or other offset amounts.
<TABLE>
<CAPTION>
ANNUAL PENSION BENEFIT BASED ON YEARS OF SERVICE
--------------------------------------------------
AVERAGE 25 YEARS
COMPENSATION(1)(2) 10 YEARS 15 YEARS 20 YEARS OR MORE
------------------ -------- -------- -------- --------
<S> <C> <C> <C> <C>
$100,000.................................... $19,016 $28,524 $38,032 $47,540
120,000.................................... 23,216 34,824 46,432 58,040
140,000.................................... 27,416 41,124 54,832 68,540
160,000.................................... 31,616 47,424 63,232 79,040
</TABLE>
- ---------------
(1) Average compensation for purposes of this table is based on the three years
immediately preceding retirement.
(2) Under applicable federal laws, the maximum compensation that may be used for
plan years beginning in 1999 to calculate benefits under the Bank's
retirement plan is $160,000.
Mr. Brandi, Mr. Carroll, Mr. Cormier, Mr. Washburn and Ms. West will have
an estimated 38, 29, 25, 35 and 35 credited years of service, respectively,
under the plan at age 65.
EXECUTIVE SUPPLEMENTAL RETIREMENT AGREEMENT
The Corporation and the Bank have entered into an Executive Supplemental
Retirement Agreement with Mr. Brandi. The Executive Supplemental Retirement
Agreement provides in general for monthly payments upon retirement and for
monthly payments to a beneficiary in lieu of retirement payments if Mr. Brandi
dies
18
<PAGE> 21
prior to his retirement. Mr. Brandi's agreement provides for 180 monthly
payments of $2,500 upon his retirement and 120 monthly payments of $3,000 in the
case of his death prior to retirement. The agreement is substantially funded by
an insurance policy owned by the Bank on the life of Mr. Brandi.
REPORT OF THE COMPENSATION AND OPTION COMMITTEE
The Compensation and Option Committee (the "Committee") of the Board of
Directors of the Corporation is comprised of the following non-employee
Directors: Samuel Altschuler, Mathias B. Bedell (Chairman), Robert S. Cummings
and Nancy L. Pettinelli. The Committee is responsible for making recommendations
to the Board of Directors of the Bank with respect to the policies that govern
both annual compensation and incentive stock ownership programs for the
employees of the Bank.
COMPENSATION PHILOSOPHY
The goals of the compensation program are to align compensation with
business objectives and performance, and to enable the Bank to attract, retain
and reward executive officers who contribute to the success of the Bank.
STRUCTURE OF COMPENSATION
Compensation paid to the Bank's Chief Executive Officer ("CEO") and other
executive officers consists primarily of the following elements: base salary,
annual performance incentives in the form of cash bonuses, and long-term
performance incentives in the form of stock option awards, as discussed below.
BASE SALARY
Several factors determine base salary, including the Corporation's
performance, individual performance, compensation paid in prior years and
compensation of officers employed by similar institutions. The Committee reviews
competitive salary information from independent surveys. The Committee also
consults with the CEO with respect to the salaries for the other executives. The
Committee reviews recommendations of management for the annual salary, benefits
and incentives budget as part of the overall planning and budgeting process of
the Corporation, and submits its recommendations to the Board of Directors of
the Bank.
CHIEF EXECUTIVE OFFICER COMPENSATION
The compensation paid to Gerard H. Brandi, the CEO of the Bank and the
Corporation, consisted of his annual base salary, a cash bonus, awards of stock
options and deferred compensation contributions. For 1999, the Committee
considered the following factors (without any specific weighting of these
measures) in determining the compensation to be paid to Mr. Brandi: the
Corporation's size and performance, including its profitability, efficiency and
share price performance, Mr. Brandi's performance and the compensation of chief
executive officers at similar institutions. Based on these factors, Mr. Brandi's
annual compensation, consisting of base salary and an annual performance
incentive in the form of a cash bonus, was increased approximately 7.9% during
1999, and he was awarded options to acquire 2,500 shares of Common Stock.
INCENTIVE PROGRAMS
Profit Sharing and Incentive Compensation Bonus Plan. All non-officer
employees of the Bank are eligible to receive annual profit-sharing
distributions based on the Corporation's net income. All officers and senior
executives (including the CEO) are eligible to receive incentive bonuses based
upon the following factors (without any specific weighting of these measures):
the Corporation's net income, return on assets,
19
<PAGE> 22
earnings per share and other specific goals and objectives. Because
substantially all of the target goals for these factors were met for 1999,
bonuses were awarded during 1999 to the CEO and the other executive officers.
Stock Option Awards. The Corporation's 1986 Stock Option Plan and Amended
and Restated 1994 Stock Incentive Plan are intended as performance incentives
for participants who contribute to the attainment of long-term strategic
objectives of the Corporation. The Plans enable persons to whom options are
granted to acquire or increase a proprietary interest in the success of the
Corporation. The long-term strategic objectives of the Corporation are set forth
in a five-year strategic plan which is revised annually. Because substantially
all of the Corporation's strategic objectives were attained, stock options were
awarded to the CEO, Directors and Bank officers.
Employee Stock Ownership Plan. All full-time employees of the Bank and the
Corporation who have at least one year of service are eligible to participate in
the ESOP. The ESOP provides these persons with a long-term ownership interest in
the Corporation that is designed to serve as an incentive for individual
performance.
The Committee's policy with respect to Section 162(m) of the Code is to
make every reasonable effort to ensure that compensation is deductible to the
extent permitted and appropriate, while simultaneously providing the
Corporation's executives with appropriate rewards for their performance.
This report has been furnished by Samuel Altschuler, Mathias B. Bedell,
Robert S. Cummings and Nancy L. Pettinelli, the members of the Committee.
* * * * *
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In 1999, the Compensation and Option Committee of the Board of Directors
was comprised of Messrs. Altschuler, Bedell (Chairman) and Cummings and Ms.
Pettinelli, all of whom are non-employee Directors of the Corporation. In
addition, Louise A. Hickey, a former non-employee Director of the Corporation,
served as a member of the Compensation and Option Committee for a portion of
1999. (Ms. Hickey's term of office expired at the 1999 Annual Meeting of
Stockholders.) The Corporation retained during 1999 and proposes to retain
during 2000 the law firm of Nixon Peabody LLP. Mr. Cummings is senior counsel of
Nixon Peabody LLP.
DIRECTOR COMPENSATION
Members of the Board of Directors of the Corporation (excluding Executive
Committee members and employees of the Corporation or the Bank) received $500
for each Board of Directors or committee meeting attended during 1999, and will
receive $600 for each meeting during 2000, and members of the Executive
Committee received $500 for each Board of Directors meeting attended during
1999, and will receive $500 for each meeting during 2000. In addition, members
of the Executive Committee (excluding employees of the Bank) received during
1999, and will receive during 2000, an annual payment of $6,000, and such
members of the Executive Committee received an additional $250 for each meeting
attended of the Board of Directors of the Bank and of any committee thereof
during 1999, and will receive an additional $250 for each meeting during 2000.
Directors of the Corporation and the Bank also are reimbursed for expenses
incurred in connection with attendance at the meetings. During 1999, the
chairmen of the various committees (other than the Executive Committee)
received, and will receive in 2000, an additional $50 for each committee meeting
over which they presided and the Secretary of the Corporation, who is also the
Clerk of the Bank, received, and will receive in 2000, an annual payment of
$1,000. In addition, during 1999, each non-employee director received options to
purchase 750 shares of the Corporation's Common Stock. Members of the Executive
Committee received options to purchase an additional 250 shares of the
Corporation's Common Stock.
20
<PAGE> 23
INDEBTEDNESS OF MANAGEMENT
The Bank has made loans (i) to one Director, who is also an executive
officer, (ii) to one other executive officer and (iii) to members of the
immediate families of certain Directors and executive officers, under which the
indebtedness of such persons exceeded $60,000 during 1999. In addition, during
1999, the Bank made a participation loan to Massachusetts Institute of
Technology ("MIT"), which loan is currently serviced by the Bank. The Bank's
portion of the participation loan was $15,000,000. Allan S. Bufferd, a Director
of the Corporation, is the Treasurer of MIT. All of the loans described above
were made in the ordinary course of business, were made 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.
CERTAIN BUSINESS RELATIONSHIPS
The Corporation retained during 1999 and proposes to retain during 2000 the
law firm of Nixon Peabody LLP. Robert S. Cummings, a Director and Secretary of
the Corporation, is senior counsel of Nixon Peabody LLP.
INDEPENDENT PUBLIC ACCOUNTANTS
A representative of KPMG LLP, the independent public accountants for the
Corporation, expects to be present at the Annual Meeting and will have an
opportunity to make a statement, if he or she desires to do so. The
representative will be available to respond to appropriate questions.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Corporation's Directors, executive officers and beneficial owners of
more than 10% of its Common Stock are required under Section 16(a) of the
Securities Exchange Act of 1934, as amended, to file reports of ownership and
changes in ownership with the SEC. Copies of those reports must also be
furnished to the Corporation. Based solely on a review of reports furnished to
the Corporation and written representations that no other reports were required,
the Corporation believes that during 1999 no person who was a Director,
executive officer or greater than 10% beneficial owner of the Corporation's
Common Stock failed to file on a timely basis all reports required by Section
16(a), except that, with respect to Private Capital Management, Inc., which the
Corporation believes beneficially owned greater than 10% of the Corporation's
Common Stock during 1999, the Corporation has not received any filings under
Section 16(a) and is therefore unable to make this determination.
STOCKHOLDER PROPOSALS
For a proposal of a stockholder to be included in the Board of Directors'
Proxy Statement for the Corporation's 2001 Annual Meeting of Stockholders, it
must be received at the principal executive offices of the Corporation (123
Haven Street, Reading, Massachusetts 01867) on or before November 23, 2000. Such
a proposal must also comply with the requirements as to form and substance
established by the SEC for such a proposal to be included in the Proxy
Statement.
In addition, the Corporation's By-Laws also provide that any stockholder
wishing to have any director nominations or a stockholder proposal considered at
an annual meeting must provide written notice of such
21
<PAGE> 24
nominations or stockholder proposal and certain other information as set forth
in the By-Laws of the Corporation to the Secretary of the Corporation at its
principal executive offices (a) not less than 75 days nor more than 120 days
prior to the anniversary of the immediately preceding annual meeting of
stockholders (the "Anniversary Date") or (b) in the event that the annual
meeting of stockholders is scheduled to be held on a date more than seven days
prior to the Anniversary Date, not later than the close of business on (i) the
20th day (or if that day is not a business day for the Corporation, on the next
succeeding business day) following the first date on which the date of such
meeting was publicly disclosed or (ii) if the first date of such public
disclosure occurs more than 75 days prior to such scheduled date of such
meeting, then the later of (1) the 20th day (or if that day is not a business
day for the Corporation, on the next succeeding business day) following the
first date of such public disclosure or (2) the 75th day prior to such scheduled
date of such meeting (or if that day is not a business day for the Corporation,
on the next succeeding business day). Any stockholder desiring to submit a
nomination or proposal must comply with the By-Laws of the Corporation.
Proxies solicited by the Board of Directors will confer discretionary
voting authority with respect to stockholder proposals, subject to SEC rules
governing the exercise of this authority.
OTHER MATTERS
The Board of Directors is not aware of any other matters which may come
before the Annual Meeting. It is the intention of the persons named in the
enclosed proxy to vote the proxy in accordance with their best judgment if any
other matters shall properly come before the Annual Meeting.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE
COMPLETE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE
PROVIDED. IF YOU WISH TO VOTE YOUR STOCK IN PERSON AT THE ANNUAL MEETING, YOUR
PROXY MAY BE REVOKED.
March 23, 2000
22
<PAGE> 25
0728-PS-99
<PAGE> 26
MASSBANK CORP.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
By signing and returning the proxy card below, you will be appointing
GERARD H. BRANDI and REGINALD E. CORMIER, and each of them, Proxies with power
of substitution to vote on your behalf at the Annual Meeting of Stockholders of
MASSBANK Corp. (the "Annual Meeting") to be held at the Sheraton Ferncroft
Resort, 50 Ferncroft Road, Danvers, Massachusetts, on Tuesday April 18, 2000 at
10:00 a.m., and at any adjournments or postponements thereof, thereby granting
full power and authority to act on your behalf at the Annual Meeting, and at any
adjournments or postponements thereof. In their discretion, the Proxies shall be
authorized to vote upon such other business as may properly come before the
Annual Meeting or any adjournment or postponement thereof.
Your vote for the election of directors may be indicated on the proxy
card below. To vote your shares for all director nominees, mark the "FOR ALL
NOMINEES" box. To withhold voting for all nominees, mark the "WITHHELD FROM ALL
NOMINEES" box. To withhold voting for a particular nominee, mark the "FOR ALL
EXCEPT" box and write such nominee's name in the space provided. IF NO DIRECTION
IS GIVEN, THE PROXY WILL BE VOTED FOR THE NOMINEES LISTED IN THE PROXY, SO THAT
A STOCKHOLDER WISHING TO VOTE IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE
BOARD OF DIRECTORS NEED ONLY SIGN AND DATE THE PROXY AND RETURN IT IN THE
ENCLOSED ENVELOPE.
The nominees for Class II are (01) Mathias B. Bedell, (02) Allan S.
Bufferd, (03) Leonard Lapidus and (04) Herbert G. Schurian and the nominee for
Class III is (05) Robert S. Cummings.
PLEASE DETACH PROXY CARD HERE
================================================================================
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
The undersigned hereby appoints GERARD H. BRANDI and REGINALD E.
CORMIER, and each of them, Proxies for the Annual Meeting with the powers set
forth in this proxy card and the introduction to this proxy card. When properly
executed, this proxy will be voted in the manner directed herein by the
undersigned. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE NOMINEES
LISTED IN THIS PROXY. THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS OF
MASSBANK CORP.
1. Election of Directors:
CLASS II: (01) Mathias B. Bedell, (02) Allan S. Bufferd
(03) Leonard Lapidus, (04) Herbert G. Schurian
CLASS III: (05) Robert S. Cummings
[ ] FOR ALL NOMINEES [ ] WITHHELD FROM ALL NOMINEES
[ ] FOR ALL EXCEPT
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MARK HERE FOR ADDRESS CHANGE AND NOTE AT
LEFT [ ]
MARK HERE IF YOU PLAN TO ATTEND THE
MEETING [ ]
The undersigned hereby revokes any proxy
previously given and acknowledges
receipt of the Notice of Annual Meeting
of Stockholders and Proxy Statement and
a copy of the Annual Report for the
fiscal year ended December 31, 1999.
Please date this proxy and sign exactly
as your name appears hereon. Joint
owners should each sign. If signing as
an attorney or for an estate, trust or
corporation, title or capacity should be
stated.
Signature: Date: Signature: Date:
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