NEWMIL BANCORP, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of NewMil Bancorp, Inc.:
NOTICE IS HEREBY GIVEN that the 1996 Annual Meeting of
Shareholders of NEWMIL BANCORP, INC. will be held at the
Candlewood Valley Country Club, New Milford, Connecticut on
Friday, October 25, 1996 at 9:30 a.m., for the purpose of
considering and voting on the following matters:
1. To elect two Directors to serve until the Annual
Meeting of Shareholders in 1999 who, with the six
Directors whose terms of office do not expire at this
meeting, will constitute the full Board.
2. To ratify the appointment of Coopers & Lybrand as
independent auditors for the fiscal year ending June
30, 1997.
3. To transact such other business as may properly be
brought before the meeting or any adjournment thereof.
Only shareholders of record at the close of business on
September 5, 1996, are entitled to notice of and to vote at this
meeting or any adjournment thereof.
By order of the Board of Directors,
Betty F. Pacocha
Secretary
New Milford, Connecticut
September 23, 1996
YOUR VOTE IS IMPORTANT. WE URGE YOU TO SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED POSTAGE PREPAID ENVELOPE AS
PROMPTLY AS POSSIBLE WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING IN PERSON. IF YOU DO ATTEND THE MEETING, YOU MAY THEN
REVOKE YOUR PROXY AND VOTE IN PERSON.
NEWMIL BANCORP, INC.
19 Main Street
New Milford, Connecticut 06776
ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 25, 1996
PROXY STATEMENT
INFORMATION CONCERNING THE SOLICITATION
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of NewMil
Bancorp, Inc. (the "Corporation"), a Delaware corporation, for
the Annual Meeting of Shareholders of the Corporation to be held
at the Candlewood Valley Country Club, New Milford, Connecticut
on Friday, October 25, 1996 at 9:30 a.m. (the "Meeting"), and any
adjournments thereof. This Proxy Statement and the enclosed
proxy card are first being given or sent to shareholders on or
about September 23, 1996.
The Corporation will bear the costs of soliciting proxies
from its shareholders. In addition to this solicitation by mail,
proxies may be solicited by Directors, officers and employees of
the Corporation and the Bank by personal interview, telephone or
telegram. Arrangements will also be made with brokerage houses
and other custodians, nominees and fiduciaries for the forwarding
of solicitation material to the beneficial owners of the
Corporation's Common Stock (as hereinafter defined) held of
record by such persons, and the Corporation may reimburse such
custodians, nominees and fiduciaries for reasonable out-of-pocket
expenses incurred in connection therewith.
Only holders of Common Stock of record at the close of
business on September 5, 1996 (the "Record Date") are entitled to
vote at the Meeting. On that date, there were 4,051,890 shares
of the Corporation's $.50 par value common stock outstanding (the
"Common Stock"). All shares of Common Stock outstanding carry
voting rights and all shareholders are entitled to one vote per
share of Common Stock held by such shareholder on each matter
submitted to vote. Pursuant to the Corporation's Bylaws, a
majority of the outstanding shares entitled to vote, present
either in person or by proxy, will constitute a quorum for
transacting business at the Meeting.
Shares represented by properly executed proxies in the
enclosed form will be voted in accordance with any specifications
made therein. Proxies that contain no directions to the contrary
will be voted FOR the election of all nominees for Director and
FOR the ratification of the appointment of Coopers & Lybrand as
the Corporation's independent auditors for the fiscal year ending
June 30, 1997. If any other business is properly presented at
this Meeting, the Proxy shall be voted in accordance with the
recommendations of management.
A shareholder who executes and returns a proxy on the
enclosed form has the power to revoke it at any time before it is
voted at the Meeting by filing with the Secretary of the
Corporation an instrument revoking it, or a duly executed proxy
bearing a later date, or by attending the Meeting and voting in
person. Attendance at the Meeting will not in and of itself
constitute the revocation of a proxy. Voting by those present
during the conduct of the Meeting will be by ballot.
PRINCIPAL SHAREHOLDERS
The following table shows those persons known to the
Corporation (including any "group" as that term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934) to be
the beneficial owners of more than five percent of the Common
Stock as of the Record Date. In preparing the following table,
the Corporation has relied on information supplied in public
filings filed by such persons with the Securities and Exchange
Commission and other information available to it. According to
this information, each person listed below is believed to have
sole voting and investment powers with respect to shares
beneficially owned except as noted.
<TABLE>
<CAPTION>
Shares
Name and Address Beneficially Percent
of Beneficial Owner Owned of Class
<S> <C> <C>
Dimensional Fund Advisor Inc. 297,000(1) 7.33%
1299 Ocean Avenue, 11th Floor,
Santa Monica, CA 90401
James R. Williams 245,978(2) 6.07%
RFD #2, Box 281
Millerton, NY 12546
</TABLE>
(1) Dimensional Fund Advisors, Inc.'s beneficially owned shares
are based on a Securities and Exchange Commission 13F filing
for the quarter ended June 30, 1996. Dimensional Fund
Advisors, Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 297,000
shares of NewMil Bancorp, Inc. common stock as of June 30,
1996, all of which shares are held in portfolios of DFA
Investment Dimensions Group, Inc., a registered open-end
investment company, or in series of the DFA Investment Trust
Company, a Delaware business trust, or the DFA Group Trust
and DFA Participation Group Trust, investment vehicles for
qualified employee benefit plans, for each of which
Dimensional serves as investment manager. Dimensional
disclaims beneficial ownership of all such shares.
(2) Mr. Williams' beneficially owned shares are based on
information available to the Bank.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
In accordance with the Corporation's Bylaws and the
applicable laws of Delaware, responsibility for the management of
the Corporation is vested in the Board of Directors. During the
year ended June 30, 1996, the Board of Directors of the
Corporation held fourteen (14) regular and special meetings. The
Board of Directors of the Corporation is comprised of the same
individuals who serve on the Board of Directors of the
Corporation's wholly-owned subsidiary, New Milford Savings Bank
(the "Bank"). Each Director attended at least 75 percent of the
meetings of the Board of Directors of the Corporation and any
committee(s) of which he or she was a member.
During fiscal 1996 many matters ordinarily dealt with by
subcommittees of each Board of Directors were dealt with by the
appropriate Board of Directors as a committee of the whole. The
committees of the Corporation's Board of Directors are the Audit
Committee, the Investment Committee, the Nominating Committee,
and the Salary and Benefits Committee. The committees of the
Bank's Board of Directors are the Audit Committee, the Community
Reinvestment Act Committee, the Investment Committee, the Loan
Committee, the Nominating Committee, the Salary and Benefits
Committee, and the Trust Committee.
The Corporation's Audit Committee met four (4) times during
fiscal 1996. The Corporation's Audit Committee is responsible,
amongst other things, for oversight of: internal accounting
controls; the internal audit function; the selection of
independent accountants; and the results of the annual audit
examination. The members of the Corporation's Audit Committee
are Willis H. Barton, Jr., Herbert E. Bullock, Laurie G. Gonthier
and Mary C. Williams.
The Corporation's Nominating Committee met two (2) times
during fiscal 1996. The Corporation's Nominating Committee
recommends to the Corporation's Board of Directors candidates for
director either to be elected at annual meetings of shareholders
or to be appointed by the Board of Directors from time to time
for the purpose of filling any vacancy on the Board of Directors.
Vacancies in directorships may be filled, until the expiration of
the term of the vacated directorship, by a vote of a majority of
the directors then in office. The members of the Corporation's
Nominating Committee are Herbert E. Bullock, John V. Haxo,
Suzanne L. Powers and Mary C. Williams.
The Corporation's Salary and Benefits Committee met four (4)
times during fiscal 1996. The Corporation's and the Bank's
Salary and Benefits Committees make recommendations to their
respective Boards of Directors on compensation for officers and
employees, and on benefit plans for employees of the Corporation
and the Bank. The Bank's Salary and Benefits Committee
administers the 1986 Stock Option Plan for officers and key
employees of the Bank, which includes recommendations for the
granting of stock options. The members of the Salary and
Benefits Committee are Willis H. Barton, Jr., John V. Haxo,
Suzanne L. Powers and Mary C. Williams.
The Corporation's Investment Committee met eleven (11) times
during fiscal year 1996. The Corporation's and the Bank's
Investment Committees approve investment policies and monitor the
performance of the Corporation's and the Bank's investment
portfolios. The members of the Corporation's and the Bank's
Investment Committees are Herbert E. Bullock, Laurie G. Gonthier
and John V. Haxo.
Matters ordinarily dealt with by the Bank's Loan Committee
were dealt with during fiscal year 1996 by the Bank's Board of
Directors as a committee of the whole. The Bank's Loan Committee
approves the loan policies of the Bank, approves certain loans
and reviews all reports on the loan portfolio. The members of
the Bank's Loan Committee are Willis H. Barton, Jr., Laurie G.
Gonthier and Suzanne L. Powers.
Matters ordinarily dealt with by the Bank's Trust Committee
were dealt with during fiscal year 1996 by the Bank's Board of
Directors as a committee of the whole. The Trust Committee
approves the trust policies of the Bank and reviews all trust
accounts. The Bank's Trust Committee no longer administers trust
accounts for unrelated third parties. The Bank remains as
Trustee for only one account, New Milford Savings Bank Pension
Plan, and serves as custodian for New Milford Savings Bank
Foundation. The Bank's Trust Committee, therefore, continues to
administer these accounts. The members of the Bank's Trust
Committee are Herbert E. Bullock, John V. Haxo, Anthony J. Nania
and Mary C. Williams.
The Bank's Community Reinvestment Act Committee ("CRA") met
one (1) time during fiscal year 1996. The committee was formed
as a means of assuring compliance with the requirements of the
Community Reinvestment Act. The members of the Bank's CRA
Committee are Herbert E. Bullock, Willis H. Barton, Jr., Anthony
J. Nania and Francis J. Wiatr.
Directors Compensation
Officers of the Corporation who are also directors receive
no compensation as directors. Each non-employee director
received an annual stipend of $7,500 for the fiscal year ended
June 30, 1996. Directors also receive $250 for each Board
meeting attended and $150 for each additional committee meeting
attended.
On October 23, 1992, at the 1992 Annual Meeting, the
Shareholders approved The 1992 Stock Option Plan for Outside
Directors (the "1992 Plan"). Each non-employee director was
granted options to purchase 10,000 shares of Common Stock of the
Corporation pursuant to such 1992 Plan, at an exercise price of
$3.00, the fair market value of the Corporation's Common Stock on
the date of grant. On October 20, 1995, at the 1995 Annual
Meeting, the Shareholders approved certain amendments to the 1992
Plan. The 1992 Plan, as amended, provides that on June 30 of
each year each non-employee director shall receive a grant of
additional options of 2,000 shares. In addition, any newly
elected non-employee directors shall receive an initial option
grant of 2,000 shares. Directors who are also employees of the
Corporation or the Bank are not eligible to participate in this
1992 Plan.
PROPOSAL 1
ELECTION OF DIRECTORS
The Certificate of Incorporation and the Bylaws of the
Corporation provide for the election of directors by the
shareholders. For this purpose, the Board of Directors is
divided into three classes, as nearly equal in size as possible,
with one class elected each year for a three-year term, to hold
office until the end of such term and until successors have been
elected and qualified. The terms of office of the members of one
class expire and a successor class is elected at each annual
meeting of the shareholders. The Corporation's Bylaws contain a
special provision applicable only to a director who is also an
officer of the Corporation; in such case, the officer/director
shall be deemed to have resigned as a director should he, for any
reason, no longer be an officer of the Corporation.
At the Meeting, the terms of two directors, Anthony J. Nania
and Mary C. Williams expire. They have been nominated to be
elected each for a three-year term, expiring at the annual
meeting in 1999. In the event that any nominee for director is
unable or declines to serve, which the Board of Directors has no
reason to expect, the attorneys named in the proxy will vote for
a substitute designated by the present Board of Directors.
Nominations of persons for election to the Board of
Directors may be made at a meeting of shareholders by or at the
direction of the Board of Directors or by any shareholder of the
Corporation entitled to vote for the election of directors at the
meeting who complies with certain notice procedures set forth in
the Bylaws. Such nominations, other than those made by or at the
direction of the Board of Directors, must be made pursuant to
timely notice in writing to the Secretary of the Corporation. To
be timely, a shareholder's notice must be delivered to or mailed
and received at the Corporation's principal executive offices not
fewer than 60 days nor more than 90 days prior to the annual
meeting; provided, however, that if fewer than 50 days' notice or
prior public disclosure of the date of the annual meeting is
given or made to shareholders, notice by the shareholder to be
timely must be received not later than the close of business on
the 10th day following the day on which such notice of the date
of the Meeting was mailed or such public disclosure was made. A
shareholder's notice must set forth (a) as to each person whom
the shareholder proposes to nominate for election or re-election
as a Director, (i) the name, age, business address and residence
address of such person, (ii) the principal occupation or
employment of such person, (iii) the class and number of shares
of capital stock of the Corporation which are beneficially owned
by such person, (iv) the total number of shares of capital stock
of the Corporation that will be voted for each proposed nominee;
and (v) any other information relating to such person that is
required to be disclosed in solicitation of proxies for election
of Directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as
amended (including without limitation such person's written
consent to being named in the proxy statement as a nominee and to
serving as a Director if elected) and (b) as to the shareholder
giving the notice (i) the name and address of such shareholder,
as they appear on the Corporation's books, and (ii) the class and
number of shares of capital stock of the Corporation which are
beneficially owned by such shareholder.
The following tables set forth information as of the Record
Date based upon the Corporation's and the Bank's books and
records and upon Questionnaires executed by the Corporation's and
the Bank's directors and executive officers, regarding the
nominees for election as directors at the Meeting and each
director continuing in office. The tables include the total
number and percentage of shares of Common Stock beneficially
owned by each nominee and by all directors and executive officers
as a group. Each person has sole voting and investment powers
with respect to shares listed as being beneficially owned by
them, except as indicated in the notes following the tables.
<TABLE>
<CAPTION>
NOMINEES FOR ELECTION FOR A THREE YEAR TERM
Positions Held Common
With the Term Stock Percent
Corporation and Will Bene- of
the Bank; Prin- Has Expire ficially Common
cipal Occupation Served the Owned Stock
During the Past as a Annual as of Bene-
Five Years and Director Meeting September 5, ficialy
Name Directorships Age Since in 1996 Owned
<S> <C> <C> <C> <C> <C> <C>
Anthony J.
Nania Director; 51 1990 1999 123,415(1) 2.96%
Chairman and
CEO of the
Corporation and
Chairman of the
Bank; Attorney;
Chairman and
President of
Geer Corp., a
nursing home
and rehabili-
tation center;
Director of Colt
Firearms, Inc.;
Former Probate
Judge and Repre-
sentative to
General Assembly
Mary C. Williams Director; Former Vice 57 1990 1999 74,000(2) 1.82%
President J & J
Log and Lumber Corp.
</TABLE>
(1) Includes 2,287 shares owned directly by Mr. Nania, options
to purchase 115,000 shares of Common Stock exercisable
within 60 days of the Record Date, 1,068 shares held by Mr.
Nania's spouse in her Individual Retirement Account, and
5,059 shares held by Mr. Nania as custodian for his minor
children.
(2) Includes 60,000 shares held directly by Mrs. Williams and
options to purchase 14,000 shares of Common Stock
exercisable within 60 days of the Record Date.
<TABLE>
<CAPTION>
DIRECTORS CONTINUING IN OFFICE
Positions
Held With the Shares
Corporation Term of
and the Bank; Will Common Percent
Principal Expire Stock of
Occupation Has At Bene- Common
During the Served the ficially Stock
Past Five as a Annual Owned as of Bene-
Years and Director Meeting September 5, ficially
Name Directorships Age Since in 1996 Owned
<S> <C> <C> <C> <C> <C> <C>
Willis H. Barton, Director; 74 1987(1) 1997 22,250(2) .55%
Jr. Retired
Partner
in W.G.
Barton & Son;
Director of
New Milford
Center Cemetery
Association
and New Milford
Hospital, New
Milford, CT
Herbert E. Bullock Director; 61 1987(3) 1997 16,400(4) .40%
Employee, Echo
Bay Marina,
New Milford,
CT
Laurie G. Gonthier Director; 46 1990 1998 19,000(5) 0.47%
Vice
President
of Marketing
for Paine
Webber,
Middlebury,
CT
Dr. John V. Haxo Director; 72 1987(6) 1998 15,000(7) 0.37%
Retired
Surgeon
Suzanne L. Powers Director; 58 1988 1998 24,000(8) 0.59%
Attorney;
Judge of
Probate
Francis J. Wiatr Director; 46 1994(9) 1997 105,475(10) 2.54%
President
of the
Corporation;
CEO and
President
of the Bank;
Former
President
and CEO,
Bank of
Waterbury,
Waterbury, CT;
Former Senior
Executive Vice
President,
Citytrust,
Bridgeport, CT
All Directors and 504,634(11) 11.34%(12)
Executive Officers as
a Group (14 Persons)
</TABLE>
(1) Mr. Barton has been a director of the Corporation since its
formation in 1987. Mr. Barton has been a director of the
Bank since 1970.
(2) Includes 5,000 shares owned jointly with spouse, 1,250
shares owned by spouse and daughter, 2,000 shares held
directly and options to purchase 14,000 shares of Common
Stock exercisable within 60 days of the Record Date.
(3) Mr. Bullock has been a director of the Corporation since its
formation in 1987. Mr. Bullock has been a director of the
Bank since 1972.
(4) Includes 400 shares held jointly with spouse, 2,000 shares
owned by spouse and mother-in-law and options to purchase
14,000 shares of Common Stock exercisable within 60 days of
the Record Date.
(5) Includes 2,500 shares held jointly by Mr. Gonthier with his
spouse, 2,500 shares in Mr. Gonthier's Individual Retirement
Account and options to purchase 14,000 shares of Common
Stock exercisable within 60 days of the Record Date.
(6) Dr. Haxo has been a director of the Corporation since its
formation in 1987. Dr. Haxo has been a director of the Bank
since 1973.
(7) Includes 1,000 shares owned directly by Dr. Haxo and options
to purchase 14,000 shares of Common Stock exercisable within
60 days of the Record Date.
(8) Includes 1,000 shares owned directly by Mrs. Powers, 4,000
shares owned jointly by Mrs. Powers with her spouse, 5,000
shares owned by Mrs. Powers' spouse and options to purchase
14,000 shares of Common Stock exercisable within 60 days of
the Record Date.
(9) Mr. Wiatr was appointed as President of the Corporation and
President and Chief Executive Officer ("CEO") of the Bank on
March 21, 1994.
(10) Includes 5,475 held directly by Mr. Wiatr and options
granted to Mr. Wiatr to purchase 100,000 shares which are
exercisable within 60 days of the Record Date. Excludes
options granted to Mr. Wiatr to purchase 25,000 shares which
are not exercisable within 60 days of the Record Date.
(11) Includes 398,500 shares issuable upon the exercise of
options exercisable by such persons within 60 days of the
Record Date.
(12) For the purpose of calculating the percentage of Common
Stock beneficially owned by the persons listed in the table,
including the directors and executive officers as a group,
the total number of shares outstanding includes the 398,500
shares issuable upon the exercise of options which may be
exercised by such persons within 60 days of the Record Date
(the "Option Shares").
THE NOMINEES FOR DIRECTOR MUST BE ELECTED BY A MAJORITY OF
THE SHARES PRESENT IN PERSON OR BY PROXY AT THE ANNUAL MEETING.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" THE PROPOSED NOMINEES.
Section 16 Compliance
Section 16(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), requires the Corporation's
directors and executive officers, and persons who own more than
ten percent of a registered class of the Corporation's equity
securities (collectively referred to as the "Insiders"), to file
with the Securities and Exchange Commission and NASD initial
reports of ownership and reports of changes in ownership of any
securities of the Corporation. Insiders are required by the
Exchange Act to furnish the Corporation with copies of all
Section 16(a) reports they file. Based solely on a review of the
copies of such reports furnished to the Corporation and written
representations that no other reports were required, the
Corporation believes that during the fiscal year ended June 30,
1996, all Section 16(a) required filings applicable to the
Corporation's Insiders were made.
EXECUTIVE COMPENSATION
The following Cash Compensation Table sets forth cash
compensation and certain other compensation paid or accrued by
the Corporation or the Bank for services in all capacities
rendered during fiscal years ended June 30, 1996, 1995 and 1994
to the Corporation's CEO and the three most highly compensated
executive officers of the Corporation and the Bank, other than
the CEO, whose cash compensation for the fiscal year ended June
30, 1996 exceeded $100,000 (together, the "Named Executives").
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Compensation
Annual Compensation Awards
(a) (b) (c) (d) (e) (g) (i)
Other All
Annual Other
Name and Compen- Compen-
Principal sation Options/ sation
Position Year Salary($) Bonus($) ($) SARs(#) ($)(10)
<S> <C> <C> <C> <C> <C> <C>
Anthony J. Nania 1996 $110,770 $20,000(1) $ - 60,000(11) $4,573
Chairman/CEO of the 1995 150,000 37,570(2) - 20,000 6,300
Corporation and 1994 150,000 8,438(3) - 10,000 2,116
Chairman of the
Bank
Francis J. Wiatr 1996 $168,462(4) $65,000(5) $ - 50,000(12) $4,676
President of the 1995 160,000 57,570(6) - - 959
Corporation; Presi- 1994 40,000 - - 75,000(13) -
dent/CEO of the Bank
Thomas W. Grant 1996 $93,847 $ 7,500(7) $ - 15,000(14) $2,942
Senior Vice 1995 80,000 42,759(8) - - 518
President of the 1994 - - - - -
Bank
B. Ian McMahon 1996 $89,419 $ 15,000(9) $ - 8,000(15) $2,882
Senior Vice 1995 81,681 - - - 2,857
President & CFO 1994 73,894 - - 5,000 797
of the Bank
</TABLE>
(1) Mr. Nania received a total performance bonus of $20,000 for
the fiscal year ended June 30, 1996.
(2) Mr. Nania received a total performance bonus valued at
$37,570. The amount shown reflects the total amount of cash
bonus and the dollar value of stock option bonus (measured
as the market value of the underlying stock on the date of
grant minus the exercise price) paid or earned during the
fiscal year ended June 30, 1995.
(3) The amount shown reflects the dollar value of stock option
bonus (measured as the market value of the underlying stock
on the date of grant minus the exercise price) paid or
earned during the fiscal year ended June 30, 1994.
(4) Mr. Wiatr was elected President of the Corporation and
President and CEO of the Bank on March 22, 1994.
Thereafter, during fiscal 1995 and 1994 Mr. Wiatr received a
salary of $160,000 on an annualized basis. During 1996 Mr.
Wiatr's salary was increased to $170,000 on an annualized
basis.
(5) Mr. Wiatr will receive a performance bonus of $65,000 for
the fiscal year ended June 30, 1996, the payment of which is
deferred until October 31, 2000 and which is conditioned
upon the stock performance of the Corporation.
(6) Mr. Wiatr received a performance bonus of $57,570 for the
fiscal year ended June 30, 1995.
(7) Mr. Grant received a bonus totaling $7,500 based on his
performance for the 1996 fiscal year.
(8) Mr. Grant received bonuses totaling $42,759 for the 1995
fiscal year. Mr. Grant received $15,000 as a stipulation to
his being hired by the Bank on June 20, 1994 and an
additional bonus of $27,759 based on his performance for the
1995 fiscal year.
(9) Mr. McMahon received a bonus totaling $15,000 based on his
performance for the 1996 fiscal year.
(10) The amounts reported for All Other Compensation include the
following: (i) Term life insurance premiums paid by the
Corporation or the Bank in fiscal 1996, 1995 and 1994 on
behalf of each of the named executives: Mr. Nania, $1,573,
$1,573 and $1,246, respectively; Mr. Wiatr, $1,100 and $959
for 1996 and 1995, respectively; Mr. Grant, $547 and $518
for 1996 and 1995, respectively; and Mr. McMahon, $407, $407
and $350, respectively; and (ii) Contribution match paid by
the Bank under the Bank's 401K Plan in fiscal year 1996,
1995 and 1994 on behalf of Mr. Nania of $3,000, $4,727 and
$870 respectively, Mr. Wiatr, $3,576 for 1996, Mr. Grant
$2,395 for 1996, Mr. McMahon, $2,475, $2,450 and $447,
respectively.
(11) Mr. Nania received bonuses in the 1996 fiscal year of 15,000
options and 45,000 options based on his performance for the
1996 and 1995 fiscal years, respectively.
(12) Mr. Wiatr received bonuses in the 1996 fiscal year of 25,000
options and 25,000 options based on his performance for the
1996 and 1995 fiscal years, respectively.
(13) On March 22, 1994, an aggregate of 75,000 options, in three
tranches, were granted to Mr. Wiatr pursuant to the 1986
Stock Option and Incentive Plan (the "1986 Plan").
Currently 50,000 options are exercisable and 25,000 will
become exercisable on March 22, 1997 (unless accelerated
upon a change in control).
(14) Mr. Grant received a bonus in the 1996 fiscal year of 15,000
options based on his performance for the 1995 fiscal year.
(15) Mr. McMahon received a bonus in the 1996 fiscal year of
8,000 options based on his performance for the 1996 fiscal
year.
Options/SAR Grants
The following table provides detailed information concerning
stock options granted to the Named Executives pursuant to the
1986 Plan during the fiscal year ended June 30, 1996. In
addition, in accordance with SEC rules, this table shows
potential realizable gains that would exist for these options for
the Named Executives. These potential gains are based on assumed
annualized rates of stock price appreciation of 5% and 10% from
the date the options were granted over the full 10 year option
term.
<TABLE>
<CAPTION>
Options/SAR Grants in Fiscal Year Ended June 30, 1996
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants Over Option Term
(a) (b) (c) (d) (e) (f) (g)
%
of Total
Options/
SARs
Granted
to
Emp-
loyees Exercise
in or Base Expi-
Options Fiscal Price ration
Name Granted(#)(1) Year ($/Sh) Date 5% ($)(2) 10% ($)(2)
<S> <C> <C> <C> <C> <C> <C>
Anthony J. Nania 15,000(3) 9.7 $7.125 06/25/06 $67,213 $170,331
45,000(4) 29.1% 6.000 07/24/05 169,802 430,310
Francis J. Wiatr 25,000(3) 16.2 7.125 06/25/06 112,022 283,885
25,000(4) 16.2 6.000 07/24/05 94,334 239,061
Thomas W. Grant 15,000(4) 9.7 6.000 07/24/05 56,601 143,437
B. Ian McMahon 8,000(3) 5.2 7.125 06/25/06 35,847 90,843
</TABLE>
(1) Options granted pursuant to the 1986 Plan will terminate on
the earlier of ten years from the date of grant or three
months following the employee's ceasing to be employed by
the Corporation or the Bank. Under the terms of the 1986
Plan, the Salary and Benefits Committee retains limited
discretion to modify the terms of outstanding options,
including the repricing of options, under certain
conditions.
(2) The resulting stock price for the grant expiring on July 24,
2005 would be $9.773 at 5% and $15.562 at 10% compounded
annually for 10 years. The resulting stock price for the
grant expiring on June 25, 2006 would be $11.606 at 5% and
$18.480 at 10% compounded annually for 10 years.
(3) Represents stock option bonus granted on June 25, 1996 based
on performance for the 1996 fiscal year.
(4) Represents stock option bonus granted on July 24, 1995 based
on performance for the 1995 fiscal year.
The following table provides detailed information concerning
stock options exercised by the Named Executives during the fiscal
year ended June 30, 1996. This table also provides information
concerning the number and value of specified exercisable
("vested") and unexercisable ("unvested") stock options at June
30, 1996. Finally, this table reports the value of unexercised
"in-the-money" stock options at June 30, 1996, which represents
the positive spread between the exercise price of any such
existing stock options and the fair market value of the
Corporation's Common Stock on June 30, 1996 ($7.125).
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Fiscal Year Ended June 30, 1996
and June 30, 1996 Option/SAR Value Table
(a) (b) (c) (d) (e)
Value of
Number of Unexercised
Shares Unexercised In-the-Money
Acquired Options/SARs Options/SARs
on Value(a) at June 30, 1996 at June 30, 1996
Name Exercise(#) Realized($) Exercisable/ Exercisable/
Unexercisable Unexercisable
<S> <C> <C> <C> <C>
Anthony J. Nania - $ - 115,000/ 0 $230,808/ $ -
Francis J. Wiatr - - 100,000/25,000 $184,375/ $78,125
Thomas W. Grant - - 15,000/ 0 $ 16,875/ $ -
B. Ian McMahon - - 20,000/ 0 $ 43,250/ $ -
</TABLE>
Employment Agreements
The Bank currently has an Employment Agreement with Mr.
Wiatr. Mr. Wiatr's agreement provides for an annual base
compensation of $170,000. Mr. Wiatr also agrees to serve as
director of the Corporation and the Bank (for so long as he
continues as an officer of the Corporation and Bank) for which he
will receive no additional compensation. In addition, the
agreement provides for the options described in footnote 5 to the
Summary Compensation Table above. The Agreement also provides
for certain customary benefits, including an automobile allowance
and country club membership.
Mr. Wiatr's agreement provides that if the Corporation or
the Bank experiences a change in control, Mr. Wiatr will be
entitled to receive a lump sum cash payment equal to three times
the greater of his compensation for the last full fiscal year
preceding the change in control or the average of such
compensation for the last three full fiscal years. In no event
shall such payments be made in an amount which would cause them
to be deemed "excess parachute payments" under Section 280G of
the Internal Revenue Code of 1986, as amended. If Mr. Wiatr is
terminated before a change in control occurs, no severance would
be due other than a continuation of benefits for three months and
payment for unused vacation time.
The agreement provides that for a period of two (2) years
following Mr. Wiatr's employment with the Bank, he shall not
engage in, render advice or assistance to or be employed on a
compensation basis by any person, firm or entity which is in
competition (as defined in the agreement) with the Bank. In
addition, Mr. Wiatr agrees in the agreement not to use or reveal,
at any time during or after the term of the agreement, any
confidential information that he has received during the course
of his employment at the Bank.
The Bank has entered into one-year change of control
agreements with Messrs. Grant and McMahon and two other executive
officers of the Bank. The agreements provide that, in the event
of a change in control of the Corporation or Bank, the executive
will be entitled to a lump sum cash payment equal to the greater
of his or her compensation for the last full fiscal year
preceding the change in control or the average of such
compensation for the last three full fiscal years. In no event
shall such payments be made in an amount which would cause them
to be deemed "excess parachute payments" under Section 280G of
the Internal Revenue Code, as amended.
EMPLOYEE BENEFIT PLANS
Pension Plan
The Bank maintains a non-contributory defined benefit
pension plan (the "Pension Plan") that is qualified under the
Internal Revenue Code and complies with the requirements of the
Employee Retirement Income Security Act of 1984 ("ERISA").
Effective September 1, 1993 the Pension Plan was curtailed
and the crediting of additional benefits to participants under
the Pension Plan discontinued. Distributions of vested benefits
will be made after the retirement of vested participants. If a
participant terminates employment before attaining the normal
retirement date as set forth in the Pension Plan, the Pension
Plan's vesting provisions will govern whether such participant is
entitled to any benefits pursuant to such Pension Plan.
The Pension Plan covers full-time employees, as of September
1, 1993, who had attained the age of 21 years and had completed
at least six months service with the Bank at September 1, 1993.
The Pension Plan provides in general for monthly payments to or
on behalf of each covered employee upon such employee's
retirement at age 62 or 65, depending upon whether their
employment began before April 1, 1976, or after that date.
Annual payments are based upon the employee's basic annual
compensation for the highest paid three years of employment
through September 1, 1993 and such employee's covered months of
service to a maximum of 60 percent.
The Pension Plan provides for optional early retirement
benefits provided a participant has attained age 58 and completed
at least 25 years of service with the Bank or attained the age of
62 depending on whether their employment began before April 1,
1976 or after that date. The Pension Plan also provides death
benefits comparable to the benefits offered in the case of early
retirement. To fund the benefits provided by the Pension Plan,
the Bank makes an annual contribution, if required, for the
benefit of eligible employees computed on an actuarial basis. No
contribution was required or made during the last fiscal year.
Contributions to the Pension Plan fund are paid entirely by the
Bank and expenses of administering the Pension Plan are paid from
the fund.
The following table illustrates annual pension benefits for
retirement in fiscal 1996 at age 65 under the most advantageous
Pension Plan provisions available for various levels of
compensation and years of service. The Bank's Pension Plan does
not provide for Social Security integration.
<TABLE>
<CAPTION>
Pension Plan Table
Average Final Years of Service(b)
Earnings(a) 15 Years 20 Years 25 Years 30 Years 35 Years
<S> <C> <C> <C> <C> <C>
$ 25,000 $ 7,500 $10,000 $12,500 $15,000 $15,000
50,000 15,000 20,000 25,000 30,000 30,000
75,000 22,500 30,000 37,500 45,000 45,000
100,000 30,000 40,000 50,000 60,000 60,000
125,000 37,500 50,000 62,500 75,000 75,000
150,000 45,000 60,000 75,000 90,000 90,000
</TABLE>
(a) Average of highest three years of annual compensation.
(b) Benefits are computed based on the participant's average of
highest three years of annual compensation and the number of
months of service, up to a maximum of 60%. The Pension Plan
does not provide for Social Security integration.
As of June 30, 1996, Mr. Nania's salary for pension benefit
purposes was $146,957, he had one year of service accrued, and
his estimated accrued annual pension benefit payable upon
retirement assuming full vesting (which amount was frozen
effective September 1, 1993) was $2,939. No amounts would be
payable to Messrs. Wiatr, Grant or McMahon pursuant to the
Pension Plan.
Savings and Protection Plan
The Bank maintains a Profit Sharing Plan (the "Profit-
Sharing Plan") which benefits all full-time employees.
Effective April 1, 1994 the Bank amended the Profit-Sharing
Plan to add a 401K provision. This part of the Plan allows for a
defined contribution by employees with a match by the Bank of 50%
on the first 6% of an employee's salary. If an employee elects
to contribute greater than 6% of their salary, the Bank's match
is capped at 50% of 6% of the employee's salary. The Bank's
matching contribution for the 1996 fiscal year, covering the
period from July 1, 1995 to June 30, 1996, was $56,196. All
contributions under the 401K are vested when made, except to the
extent adjustment may be necessary to comply with applicable
allocation restrictions which apply to 401K plans generally.
The Bank maintains a non-contributory profit-sharing feature
to the Profit-Sharing Plan which benefits all full-time employees
and follows the same eligibility requirements contained in the
Bank's Pension Plan. The amounts contributed to the Profit-
Sharing Plan are determined annually by the Board of Directors of
the Bank on a discretionary basis. No contributions were made to
the profit-sharing feature of the Profit-Sharing Plan in the
fiscal year ended June 30, 1996.
The Board of Directors of the Bank reviews the structure of
the Profit-Sharing Plan annually, and makes whatever adjustments
it deems appropriate. The Bank has no long-term agreement or
commitment to maintain the Profit-Sharing Plan.
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Board of Directors as a whole makes decisions on
compensation for executive officers (with Messrs. Nania and Wiatr
not participating in decisions concerning their compensation).
The Board is currently comprised of eight members. Because the
business of the Corporation currently consists of the business of
the Bank, no separate cash compensation is paid to the executive
officers of the Corporation. Except for Mr. Nania, who has
participated in discussions concerning Mr. Wiatr's compensation,
no other members of the Board who participate in these decisions
are employed by the Corporation or the Bank, neither do any of
these members have an interlocking relationship with a
compensation committee of another entity, nor do they participate
in any of the Corporation's or Bank's executive compensation
plans.
In addition, the Salary and Benefits Committee, none of
whose members are employees of the Corporation or the Bank, makes
recommendations to the Board of Directors concerning the grant of
stock options pursuant to the 1986 Plan to employees, including
director and non-director executive employees. Based on these
recommendations, the Board of Directors makes decisions regarding
the grant of any such options (with Messrs. Nania and Wiatr not
participating in decisions concerning themselves). This
Committee also makes recommendations to the Board of Directors on
compensation for other officers and employees and on other
benefit plans for employees of the Corporation and the Bank.
The Board of Directors does not have formal compensation
policies. The Board does, however, consider the Corporation's
and the Bank's performance, the accomplishment of business
objectives, and the individual's contribution to earnings and
shareholder value in setting senior officer compensation levels.
The Board also considers the compensation paid by peer group
institutions with the goal of being competitive in the attraction
and retention of qualified executives. The two principal
components of executive officers' compensation are salary and
stock options granted under the Corporation's 1986 Plan. The
Board considers granting bonuses only when it determines that
performance is meritorious and exceptional, and only after
consideration of such factors as the Bank's performance for such
year compared to prior years, and the time and effort exerted by
management. These decisions are made on a judgmental basis, and
not according to a specific formula. Based on the reduced time
that the Chairman spends on Bank related business, the Board
reviewed Mr. Nania's annual base salary and lowered it to $65,000
in January 1996 from its 1995 amount of $150,000. The Board
chose to recognize meritorious performance by Messrs. Nania,
Wiatr, Grant and McMahon in the fiscal year ended June 30, 1996
by the payment of a cash bonus and a stock option bonus as
reflected in the Summary Compensation Table.
Board of Directors of the Corporation and the Bank
Willis H. Barton, Jr. Anthony J. Nania (not as to himself)
Herbert E. Bullock Suzanne L. Powers
Laurie G. Gonthier Francis J. Wiatr (not as to himself)
John V. Haxo Mary C. Williams
PERFORMANCE GRAPH
The following graph compares over the last five years the
cumulative total shareholder return on the Corporation's Common
Stock, based on the market price of the Corporation's Common
Stock, with the cumulative total return of companies on the S&P
500 Index and the reported total return of companies on the KBW
New England Savings Bank Index. Total return values were
calculated based on cumulative total return values assuming
reinvestment of dividends. The graph assumes a $100 investment
on June 30, 1991.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
During the fiscal year ended June 30, 1996, certain
directors and officers of the Corporation and the Bank and
associates of such directors and officers have been and currently
are customers of the Bank and the Corporation and have had
banking and other transactions with the Bank and the Corporation.
All transactions, including loans, if any, made to such persons
and their associates (a) were made on substantially the same
terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other
customers of the Bank, (b) were made in the ordinary course of
business, and (c) did not involve more than the normal risk of
collectability or present other unfavorable features.
During the fiscal year ended June 30, 1996 the Bank and the
Bank's Pension Plan and Profit-Sharing Plan paid PaineWebber fees
or commissions totaling $62,918, of which approximately $16,500
was earned by Director Laurie G. Gonthier, a Vice President of
Marketing for PaineWebber in Middlebury, Connecticut. During the
fiscal year ended June 30, 1996 the Bank paid legal fees totaling
$13,710 to the law firm of Powers & Powers of which director
Suzanne L. Powers was a partner. During the fiscal year ended
June 30, 1996 the Bank paid legal fees totaling $1,160 to the law
firm of Nania & Drury of which Anthony J. Nania, Chairman and CEO
of the Corporation and Chairman of the Bank, was a partner.
PROPOSAL 2
RATIFICATION OF THE APPOINTMENT OF COOPERS & LYBRAND AS
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING JUNE 30, 1997
The Board of Directors of the Corporation has made
arrangements with Coopers & Lybrand, independent certified public
accountants, to be its independent auditors for the fiscal year
ending June 30, 1997 subject to ratification by the Corporation's
shareholders. Neither the firm nor any of its partners has any
direct or indirect financial interest in, or any connection
(other than as independent auditors) with the Corporation or the
Bank. A representative of Coopers & Lybrand is expected to be
present at the Meeting and will be provided with an opportunity
to make a statement if he or she desires to do so and to respond
to shareholders' questions.
THE INDEPENDENT AUDITORS MUST BE RATIFIED BY A MAJORITY OF
THE VOTES PRESENT IN PERSON OR BY PROXY AT THE ANNUAL MEETING.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" RATIFICATION.
SHAREHOLDER PROPOSALS
Proposals of the Corporation's shareholders intended to be
presented at the 1997 annual meeting of the Corporation must be
received by the Corporation not later than May 26, 1997, to be
included in the Corporation's proxy statement and form of proxy
relating to that meeting. Any such proposal must comply with
Rule 14a-8 promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended.
OTHER MATTERS
At the time of preparation of this Proxy Statement, the
Board of Directors of the Corporation knew of no other matters to
be presented for action at the Meeting other than as set forth in
the Notice of Annual Meeting of Shareholders and described in
this Proxy Statement. If any other matters properly come before
the Meeting or any adjournment(s) thereof, the proxies will be
voted in accordance with the determination of a majority of the
Board of Directors.
By order of the Board of Directors,
BETTY F. PACOCHA
Secretary
September 23, 1996
PROXY PROXY
NEWMIL BANCORP, INC.
19 Main Street
New Milford, Connecticut 06776
1996 ANNUAL MEETING OF SHAREHOLDERS - OCTOBER 25, 1996
This proxy is solicited on behalf of the Board of Directors of NewMil Bancorp,
Inc.
The undersigned shareholder of NewMil Bancorp, Inc. hereby appoints
Suzanne L. Powers, John V. Haxo and Laurie G. Gonthier and each of them the
proxies of the undersigned with full power of substitution to vote all the
shares of NewMil Bancorp, Inc. held of record by the undersigned on September
5, 1996, at the Annual Meeting of Shareholders of the Corporation to be held
at the Candlewood Valley Country Club, in New Milford, Connecticut, at 9:30
a.m. on Friday, October 25, 1996 and at any adjournment(s) thereof, with all
the power which the undersigned would have if personally present, hereby
revoking any proxy heretofore given. A majority of said proxies or their
substitutes who attend the meeting (or if only one shall be present, then that
one) may exercise all of the powers hereby granted.
This proxy when properly signed will be voted in the manner directed herein
by the undersigned shareholder. If no specification is made, this proxy will
be voted "FOR" all nominees for Director and "FOR" proposal 2. If any other
business is properly presented at this Annual Meeting, or any adjournment(s)
thereof, this proxy will be voted in accordance with the determination of a
majority of the Board of Directors.
The undersigned hereby acknowledges receipt of the proxy statement for the
Meeting and instructs the proxies to vote as follows:
1. ELECTION OF DIRECTORS:
Anthony J. Nania and Mary C. Williams
FOR all nominees listed above WITHHOLD AUTHORITY to vote for
(except as marked to the contrary below) all nominees listed above
(Instruction: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below.)
For all nominees except:_______________________________________________
THIS PROXY IS CONTINUED ON THE REVERSE SIDE
2. PROPOSAL TO RATIFY THE APPOINTMENT OF COOPERS & LYBRAND as independent
auditors of NewMil Bancorp, Inc. for the fiscal year ending June 30, 1997.
FOR AGAINST ABSTAIN
3. With discretionary authority to vote upon such other matters as may
properly come before the Meeting.
Please sign exactly as your name appears on this proxy
card. When signing as a fiduciary or representative -
attorney, executor, administrator, trustee or guardian -
please give your full title as such. Proxies signed by
a corporation must be signed in the full corporate name
by the President or otherwise duly authorized officer.
Proxies signed by a partnership must be signed in the
partnership name by a duly authorized person.
Date:__________________________________________________
_______________________________________________________
Signature
_______________________________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
I PLAN TO ATTEND MEETING
_________________________ _______________________
ACCOUNT NUMBER COMMON
