UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ X ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED
BY RULE 14A-6 (E) (2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
NEWMIL BANCORP, INC.
(Name of Registrant as Specified in its Charter)
TYLER COOPER & ALCORN, LLP
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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 of other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposal 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. Identity 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:
Notes:
NEWMIL BANCORP, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of NewMil Bancorp, Inc.:
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Shareholders
of NEWMIL BANCORP, INC. will be held at the Candlewood Valley Country
Club, New Milford, Connecticut on Friday, October 29, 1999 at 9:30 a.m.,
for the purpose of considering and voting on the following matters:
1. To elect three Directors to serve until the Annual Meeting of
Shareholders in 2002 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 PricewaterhouseCoopers LLP as
independent auditors for the fiscal year ending June 30, 2000.
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 August 27,
1999, 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 27, 1999
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 29, 1999
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 29, 1999 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 27, 1999.
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
August 27, 1999 (the "Record Date") are entitled to vote at the Meeting.
On that date, there were 3,630,114 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 PricewaterhouseCoopers as the Corporation's
independent auditors for the fiscal year ending June 30, 2000. 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>
<S>
<C> <C> <C>
Shares
Name and Address Beneficially Percent
of Beneficial Owner Owned of Class
------------------- ------------ --------
Dimensional Fund Advisor Inc. 282,800(1) 7.79%
1299 Ocean Avenue, 11th Floor,
Santa Monica, CA 90401
First Manhattan Asset Company 266,108(2) 7.33%
437 Madison Ave
New York, NY 10022
The Estate of James R. Williams 245,978(3) 6.78%
RFD #2, Box 281
Millerton, NY 12522
(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, 1999. Dimensional Fund Advisors, Inc.
("Dimensional"), a registered investment advisor, is deemed to
have beneficial ownership of 282,800 shares of NewMil Bancorp,
Inc. common stock as of June 30, 1999, 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) First Manhattan Asset Company's beneficially owned shares are
based on a Securities and Exchange Commission 13F filing for the
quarter ended June 30, 1999. First Manhattan Asset Company
("First Manhattan"), a registered investment advisor, is deemed
to have beneficial ownership of 266,108 shares of NewMil Bancorp,
Inc. common stock as of June 30, 1999, all of which shares are
held in investment portfolios of First Manhattan clients.
(3) Shares owned beneficially by the estate of Mr. Williams are based
on information available to the Corporation.
</TABLE>
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, 1999,
the Board of Directors of the Corporation held fifteen (15) 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 1999 many matters ordinarily dealt with by
subcommittees of each Board of Directors were dealt with by the 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 five (5) times during fiscal
1999. 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; the results of
the annual audit examination; and, relationships with state and federal
regulatory agencies. The members of the Corporation's Audit Committee
are Willis H. Barton, Jr., Joseph Carlson II, Herbert E. Bullock, Laurie
G. Gonthier and Mary C. Williams.
The Corporation's Nominating Committee met two (2) times during
fiscal 1999. 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 Suzanne L. Powers, Herbert E.
Bullock, Joseph Carlson II and Laurie G. Gonthier.
The Corporation's Salary and Benefits Committee met one (1) time
during fiscal 1999. 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., Laurie G. Gonthier,
Suzanne L. Powers and Mary C. Williams.
The Corporation's Investment Committee met twelve (12) times during
fiscal year 1999. The Corporation's and the Bank's Investment Committees
approve investment and interest rate risk policies and monitor the
performance of the Corporation's and the Bank's investment portfolios and
interest rate risk positions. The members of the Corporation's and the
Bank's Investment Committees are Willis H. Barton, Jr., Joseph Carlson
II, Laurie G. Gonthier, and Francis J. Wiatr.
Matters ordinarily dealt with by the Bank's Loan Committee were
dealt with during the fiscal year 1999 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.
Matters ordinarily dealt with by the Bank's Trust Committee were
dealt with during fiscal year 1999 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 the 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, and Suzanne L. Powers.
The Bank's Community Reinvestment Act Committee ("CRA") met three
(3) times during fiscal year 1999. 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., Betty F. Pacocha and Francis J. Wiatr.
Directors Compensation
Each non-employee director received an annual stipend of $8,500
for the fiscal year ended June 30, 1999. Directors also received $250
for each Board meeting attended, until January 1999 when this was
increased to $350, and $150 for each additional committee meeting
attended. Officers of the Corporation who are also directors receive
no compensation as directors.
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 3,000 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 or she, for any reason, no longer
be an officer of the Corporation.
At the Meeting, the terms of three directors, Joseph Carlson II,
Betty F. Pacocha and Mary C. Williams expire. They have been nominated
to be elected each for a three-year term, expiring at the annual meeting
in 2002. 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.
On August 19, 1999, the Board of Directors elected Robert J.
McCarthy to fill the remaining term of Dr. John V. Haxo, who will retire
from the Board of Directors at the 1999 Annual Meeting of Shareholders on
October 29, 1999. Mr. McCarthy, former chairman of Norco, Inc., has vast
experience in management and strategic planning which, coupled with his
active involvement in the New Milford community, will complement the
Board. Mr. McCarthy serves on the boards of several local community
organizations.
The following tables set forth information as of the Record Date
based upon the Corporation's and the Bank's books and records and
information provided by the 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>
<S>
NOMINEES FOR ELECTION FOR A THREE YEAR TERM
<C> <C> <C> <C>
Positions Held With the
Corporation and the Bank; Has Served
Principal Occupation as a
During the Past Five Years Director
Name and Directorships Age Since
---- -------------------------- --- ---------
Joseph Carlson II Director; Former Vice 60 1997 (1)
Chairman and CFO of
Centerbank and Center
Financial
Betty F. Pacocha Director; Secretary of 65 1997 (3)
the Corporation and
Executive Vice President
and Secretary of the Bank
Mary C. Williams Director; Former Vice 60 1990
President of J & J Log and
Lumber Corp.
<C> <C> <C> <C>
Shares of
Term Will Common Stock Percent of
Expire At Beneficially Common Stock
the Annual Owned as of Beneficially
Name Meeting in August 27,1999 Owned
---- ---------- -------------- ------------
Joseph Carlson II 2002 15,000(2) 0.41%
Betty F. Pacocha 2002 34,126(4) 0.93%
Mary C. Williams 2002 78,000(5) 2.14%
(1) Mr. Carlson was elected a Director of the Corporation and the
Bank by the Board of Directors on August 21, 1997 to fill a
vacancy.
(2) Includes 10,000 shares held directly by Mr. Carlson and options
to purchase 5,000 shares of Common Stock exercisable within
60 days of the Record Date. It does not include options to
purchase 2,000 shares of Common Stock, granted on June 30, 1999,
which were not exercisable within 60 days of the Record Date.
(3) Ms. Pacocha was elected a Director of the Corporation and the
Bank by the Board of Directors on August 21, 1997. Ms. Pacocha
has been an employee of the Bank since 1961 and she has served
as Secretary of the Corporation since 1992.
(4) Includes 3,626 shares held directly by Ms. Pacocha and options
to purchase 30,500 shares of Common Stock exercisable within 60
days of the Record Date.
(5) Includes 60,000 shares held directly by Ms. Williams and options
to purchase 18,000 shares of Common Stock exercisable within 60
days of the Record Date. It does not include options to purchase
2,000 shares of Common Stock, granted on June 30, 1999, that are
not exercisable within 60 days of the Record Date.
</TABLE>
<TABLE>
<S>
DIRECTORS CONTINUING IN OFFICE
<C> <C> <C> <C>
Positions Held With the
Corporation and the Bank; Has Served
Principal Occupation as a
During the Past Five Years Director
Name and Directorships Age Since
- ---- -------------------------- ----- --------
Willis H. Barton, Jr. Director; Retired Partner 77 1987 (1)
in W.G. Barton & Son;
Director of New Milford
Center Cemetery Association
and New Milford Hospital,
New Milford, CT
Herbert E. Bullock Director; Employee, Echo 64 1987 (3)
Bay Marina,
New Milford, CT
Laurie G. Gonthier Director; Vice President- 49 1990
Investments for Paine
Webber, Middlebury, CT
Robert J. McCarthy Director; Former Chairman, 55 1999 (6)
President and Chief Operating
Officer of Norco Inc.,
Georgetown, CT
Suzanne L. Powers Director; Attorney; 61 1988
Former Judge of Probate
Francis J. Wiatr Director; Chairman, President, 49 1994 (9)
and CEO of the Corporation and
Bank
<C> <C> <C> <C>
Shares of
Term Will Common Stock Percent of
Expire At Beneficially Common Stock
the Annual Owned as of Beneficially
Name Meeting in August 27, 1999 Owned
- ---- ---------- --------------- -----
Willis H. Barton, Jr. 2000 26,250(2) 0.72%
Herbert E. Bullock 2000 18,400(4) 0.50%
Laurie G. Gonthier 2001 25,500(5) 0.70%
Robert J. McCarthy 2001 5,000(7) 0.14%
Suzanne L. Powers 2001 28,000(8) 0.77%
Francis J. Wiatr 2000 151,442(10) 4.01%
All Directors and 510,190(11) 12.69% (12)
Executive Officers as
a Group (16 Persons)
(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 held jointly by Mr. Barton with his spouse,
1,250 shares held by Mr. Barton's spouse and daughter, 2,000
shares held directly by Mr. Barton and options to purchase 18,000
shares of Common Stock exercisable within 60 days of the Record
Date. It does not include options to purchase 2,000 shares of
Common Stock, granted on June 30, 1999, which were not 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 by Mr. Bullock with his spouse
and options to purchase 18,000 shares of Common Stock exercisable
within 60 days of the Record Date. It does not include options
to purchase 2,000 shares of Common Stock, granted on June 30,
1999, which were not exercisable within 60 days of the Record
Date.
(5) Includes 5,000 shares held jointly by Mr. Gonthier with his
spouse, 2,500 shares in Mr. Gonthier's Individual Retirement
Account and options to purchase 18,000 shares of Common Stock
exercisable within 60 days of the Record Date. It does not
include options to purchase 2,000 shares of Common Stock, granted
on June 30, 1999, which were not exercisable within 60 days of
the Record Date.
(6) Mr. McCarthy was elected to the Board on August 19, 1999, to fill
the vacancy created by the retirement of Dr. Haxo from the Board
on October 29, 1999.
(7) Includes 5,000 shares held jointly by Mr. McCarthy with his
spouse. It does not include options to purchase 3,000 shares of
Common Stock, granted on August 19, 1999, which were not
exercisable within 60 days of the Record Date.
(8) Includes 1,000 shares held directly by Ms. Powers, 4,000 shares
held jointly by Ms. Powers with her spouse, 5,000 shares held by
Ms. Powers' spouse and options to purchase 18,000 shares of Common
Stock exercisable within 60 days of the Record Date. It does not
include options to purchase 2,000 shares of Common Stock, granted
on June 30, 1999, which were not exercisable within 60 days of
the Record Date.
(9) Mr. Wiatr was appointed President of the Corporation and President
and Chief Executive Officer ("CEO") of the Bank on March 21, 1994.
He was appointed Chairman and CEO of the Corporation and Chairman
of the Bank on August 5, 1997.
(10) Includes 6,442 shares held directly by Mr. Wiatr and options to
purchase 145,000 shares of common stock exercisable within 60 days
of the Record Date.
(11) Includes 391,500 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 directors and executive officers as a
group, the total number of shares outstanding includes the 391,500
shares issuable upon the exercise of options which may be
exercised by such persons within 60 days of the Record Date (the
"Option Shares").
</TABLE>
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(a) Beneficial Ownership Reporting 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
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, 1999, all Section 16(a) required filings applicable
to the Corporation's Insiders were made, except the following: A Form 3,
initial statement of beneficial ownership, for Mary Akins, executive
officer of the Corporation, was filed late by approximately 60 days.
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, 1999, 1998 and 1997 to the Corporation's CEO and the four 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, 1999 determined in accordance with Item 402 of SEC Regulation
S-K exceeded $100,000 (together, the "Named Executives").
<TABLE>
<S>
Summary Compensation Table
Annual Compensation
-------------------
Awards
------
<C> <C> <C> <C>
(a) (b) (c) (d)
Name and
Principal
Position Year Salary ($) Bonus ($)
--------- ---- ---------- ---------
Francis J. Wiatr 1999 $170,000 $100,000 (1)
Chairman, President and 1998 170,000 85,000 (2)
CEO of the Corporation 1997 170,000 75,000 (3)
and the Bank
Betty F. Pacocha 1999 $ 98,462 $50,000 (4)
Executive Vice President 1998 89,539 10,000 (5)
& Secretary of the Bank 1997 85,481 6,000 (6)
B. Ian McMahon 1999 $110,077 $10,000 (7)
Senior Vice President 1998 103,846 10,000 (8)
& CFO of the Bank 1997 94,423 7,500 (9)
Thomas W. Grant 1999 $104,231 $20,000 (10)
Senior Vice President 1998 99,423 -
of the Bank 1997 95,000 25,000 (11)
Terrence J. Shannon 1999 $84,175 $40,000 (12)
Senior Vice President 1998 79,285 25,000 (13)
of the Bank 1997 75,998 5,000 (14)
Long Term
---------
Compensation
------------
<C> <C> <C> <C>
(a) (e) (g) (i)
Name and Other Annual All Other
Principal Compensation Options/ Compensation
Position ($) SARs(#) ($)(18)
- -------- ------------ -------- ------------
Francis J. Wiatr $ - 10,000 (15) $6,312
- 10,000 (17) 6,518
- - 6,103
Betty F. Pacocha $ - 6,000 (16) $3,559
- - 3,403
- - 3,199
B. Ian McMahon $ - 3,000 (16) $3,817
- 5,000 (17) 3,669
- - 3,693
Thomas W. Grant $ - 5,000 (16) $3,762
- - 3,640
- - 3,622
Terrence J. Shannon $ - 5,000 (16) $6,810
- 5,000 (17) 5,497
- - 4,770
(1) Mr. Wiatr will receive a performance bonus of $100,000 for the
1999 fiscal year, the payment of which is deferred until October
31, 2003 and which is conditioned upon the stock performance of
the Corporation.
(2) Mr. Wiatr will receive a performance bonus of $85,000 for the
1998 fiscal year, the payment of which is deferred until October
31,2002 and which is conditioned upon the stock performance of
the Corporation.
(3) Mr. Wiatr will receive a performance bonus of $75,000 for the
1997 fiscal year, the payment of which is deferred until October
31, 2001 and which is conditioned upon the stock performance of
the Corporation.
(4) Ms. Pacocha received a performance bonus totaling $50,000 for the
1999 fiscal year.
(5) Ms. Pacocha received a performance bonus totaling $10,000 for the
1998 fiscal year.
(6) Ms. Pacocha received a performance bonus totaling $6,000 for the
1997 fiscal year.
(7) Mr. McMahon received a performance bonus totaling $10,000 for the
1999 fiscal year, the payment of which is deferred until October
31, 2003 and which is conditioned upon the stock performance of
the Corporation.
(8) Mr. McMahon will receive a performance bonus of $10,000 for the
1998 fiscal year, the payment of which is deferred until October
31, 2002 and which is conditioned upon the stock performance of
the Corporation.
(9) Mr. McMahon received a performance bonus totaling $7,500 for the
1997 fiscal year.
(10) Mr. Grant received a performance bonus totaling $20,000 for the
1999 fiscal year.
(11) Mr. Grant received a performance bonus totaling $25,000 for the
1997 fiscal year.
(12) Mr. Shannon received a performance bonus totaling $40,000 for
the 1999 fiscal year.
(13) Mr. Shannon received a performance bonus totaling $25,000 for
the 1998 fiscal year.
(14) Mr. Shannon received a performance bonus totaling $5,000 for
the 1997 fiscal year.
(15) Represents stock options granted on September 16, 1999 based on
performance for the 1999 fiscal year.
(16) Represents stock options granted on August 19, 1999 based on
performance for the 1999 fiscal year.
(17) Represents stock options granted on July 28, 1998 based on
performance for the 1998 fiscal year.
(18) The amounts reported for All Other Compensation include the
following: (i) Term life insurance premiums paid by the
Corporation or the Bank in fiscal year 1999, 1998 and 1997 on
behalf of each of the named executives: Mr. Wiatr, $1,569, $1,775
and $1,475, respectively; Ms. Pacocha, $605, $518 and $495,
respectively; and Mr. McMahon, $515, $495 and $410, respectively;
Mr. Grant, $635, $576 and $547, respectively; and Mr. Shannon,
$3,471, $2,851 and $2,352, respectively; and (ii) Contribution
match paid by the Bank under the Bank's 401K Plan in fiscal year
1999, 1998 and 1997 on behalf of Mr. Wiatr, $4,743, $4,743 and
$4,628 respectively; Ms. Pacocha, $2,954, $2,885 and $2,704
respectively; Mr. McMahon, $3,302, $3,174 and $3,283 respectively;
Mr. Grant, $3,127, $3,064 and $3,075; and Mr. Shannon, $3,339,
$2,646 and $2,418 respectively.
</TABLE>
The following table provides detailed information concerning stock
options exercised by the Named Executives during the fiscal year ended
June 30, 1999. This table also provides information concerning the
number and value of specified exercisable ("vested") and unexercisable
("unvested") stock options at June 30, 1999. Finally, this table
reports the value of unexercised "in-the-money" stock options at June 30,
1999, 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, 1999 ($11.03125).
<TABLE>
<S>
Aggregated Option/SAR Exercises in Fiscal Year Ended June 30, 1999
and June 30, 1999 Option/SAR Value Table
<C> <C> <C>
(a) (b) (c)
Shares Acquired Value(1)
Name on Exercise(#) Realized($)
- ---- -------------- -----------
Francis J. Wiatr - -
Betty F. Pacocha - -
B. Ian McMahon 1,500 $12,047
Thomas W. Grant - -
Terrence J. Shannon 1,000 $8,031
<C> <C> <C>
(a) (d) (e)
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at June 30, 1999 at June 30, 1999
Name Exercisable/Unexercisable Exercisable/Unexercisable (1)
- ---- ------------------------- -----------------------------
Francis J. Wiatr 125,000 / 0 $750,781 / $ -
Betty F. Pacocha 24,500 / 0 $165,516 / $ -
B. Ian McMahon 18,500 / 0 $109,328 / $ -
Thomas W. Grant 15,000 / 0 $75,469 / $ -
Terrence J. Shannon 16,000 / 0 $90,000 / $ -
(1) Based on the average of the bid and asked price of the
Corporation's common stock as reported on The Nasdaq Stock
Market on June 30, 1999
</TABLE>
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, 1999. 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>
<S>
Options/SAR Grants in Fiscal Year Ended June 30, 1999
Individual Grant
- --------------------------------------------------------------------
<C> <C> <C> <C>
(a) (b) (c) (d)
% of Total
Options/SARs Exercise
Granted to or Base
Options Employees in Price
Name Granted(#)(1) Fiscal Year ($/Sh)
- ---- ------------- ------------ --------
Francis J. Wiatr 10,000 (3) 40.0 12.4375
B. Ian McMahon 5,000 (3) 20.0 12.4375
Terrence J. Shannon 5,000 (3) 20.0 12.4375
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Over Option Term
---------------------
<C> <C> <C> <C>
(a) (e) (f) (g)
Expiration
Name Date 5% ($)(2) 10% ($)(2)
- ---- ---------- --------- ----------
Francis J. Wiatr 07/28/08 55,312 161,747
B. Ian McMahon 5 07/28/08 27,656 80,874
Terrence J. Shannon 07/28/08 27,656 80,874
(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 28, 2008
would be $17.969 at 5% and $28.612 at 10% compounded annually for
10 years.
(3) Represents stock options granted on July 28, 1998 based on
performance for the 1998 fiscal year.
</TABLE>
Employment Agreements
The Bank currently has an Employment Agreement with Mr. Wiatr. Mr.
Wiatr's agreement currently provides for an annual base compensation
of $210,000. 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. 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. Such payments are not limited to amounts which would be
fully deductible for federal income tax purposes pursuant to Section
280G of the Internal Revenue Code of 1986, as amended, and the
Corporation (or its successors) will be additionally obligated to
reimburse Mr. Wiatr for any excise tax he incurs on such payments
pursuant to Section 280G and related I.R.C. provisions. 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 also entered into one-year change of control
agreements with Ms. Pacocha, Mr. McMahon, Mr. Grant, Mr. Shannon and
one other executive officer of the Bank. In addition, the Bank has
also entered into six-month change of control agreements with three
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 non-deductible
"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 1999 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>
<S>
Pension Plan Table
Years of Service (b)
--------------------
<C> <C> <C> <C> <C> <C>
Average Final
Earnings(a) 15 Years 20 Years 25 Years 30 Years 35 Years
- ----------- -------- -------- -------- -------- --------
$ 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
(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 or Social Security integration.
</TABLE>
As of June 30, 1999, Ms. Pacocha's salary for pension benefit
purposes was $57,188 and she had thirty-two years of service accrued.
No amounts would be payable to Messrs. Wiatr, McMahon, Grant, or Mr.
Shannon pursuant to the Pension Plan.
Savings and Protection Plan
Effective April 1, 1994 the Bank amended its 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 his or her salary, the Bank's match is capped at 50% of 6% of
the employee's salary. The Bank's total matching contribution for the
fiscal year ended June 30, 1999, was $79,196. 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, 1999.
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.
Supplemental Retirement Plan
The Bank has provided Mr. Wiatr with a Supplemental Retirement
Agreement pursuant to which Mr. Wiatr may receive retirement benefits
beginning at age 65 for 15 years. The amount of retirement benefits are
dependant on his years of service to the Bank up to the maximum age of
65. If Mr. Wiatr's employment with the Bank were to end during the
fiscal year 2000, he would be entitled to an annual retirement benefit of
$16,091 beginning at age 65. The Agreement represents an unsecured
general obligation of the Bank, although the Bank has purchased a life
insurance policy on Mr. Wiatr as a funding vehicle for the benefits
obligation.
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Board of Directors as a whole makes decisions on compensation
for executive officers (with Mr. Wiatr and Ms. Pacocha not participating
in decisions concerning their compensation). The Board is currently
comprised of nine 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. Wiatr, who participated in discussions concerning Ms.
Pacocha's compensation, no other members of the Board who participated
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 Mr. Wiatr and Ms. Pacocha 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 three principal components of executive officers' compensation are
salary, performance cash bonuses, 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. The Corporation's CEO, Mr. Wiatr,
received a salary of $170,000 in fiscal year 1999, the same as in fiscal
year 1998. This salary is required under Mr. Wiatr's employment
contract. The Board chose to recognize meritorious performance by
Messrs. Wiatr, McMahon, Grant, Shannon and Ms. Pacocha in the fiscal
year ended June 30, 1999 by awarding performance bonuses as reflected in
the Summary Compensation Table. Mr. Wiatr's bonus of $100,000
represented a $15,000 increase over his bonus of $85,000 in the prior
year, based primarily on achievement of pre-established performance
targets (individual and company) and comparison to local and national
total compensation figures for comparable institutions.
Board of Directors of the Corporation and the Bank
Willis H. Barton, Jr. Betty F. Pacocha (not as to herself)
Herbert E. Bullock Suzanne L. Powers
Joseph Carlson II Francis J. Wiatr (not as to himself)
Laurie G. Gonthier Mary C. Williams
John V. Haxo
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 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, 1994.
<TABLE>
<S>
<C> <C> <C> <C>
June 94 June 95 June 96
------- ------- -------
S&P 500 100.0 126.0 159.6
NewMil Bancorp, Inc. 100.0 140.5 155.6
KBW New England Bank Index 100.0 103.6 134.8
<C> <C> <C>
June 97 June 98 June 99
------- ------- -------
S&P 500 214.9 279.6 343.1
NewMil Bancorp, Inc. 271.8 308.2 273.6
KBW New England Bank Index 218.5 311.5 260.0
</TABLE>
TRANSACTIONS WITH MANAGEMENT AND OTHERS
During the fiscal year ended June 30, 1999, 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, 1999 the Bank and the Bank's
Pension Plan and Profit-Sharing Plan paid PaineWebber fees or commissions
totaling $94,873, of which approximately $20,892 was earned by Director
Laurie G. Gonthier a Vice President of Marketing for PaineWebber, in
Middlebury, Connecticut. During the fiscal year ended June 30, 1999 the
Bank paid legal fees totaling $1,025 to the law firm of Powers & Powers
of which director Suzanne L. Powers is a partner.
PROPOSAL 2
RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING JUNE 30, 2000
The Board of Directors of the Corporation has made arrangements
with PricewaterhouseCoopers LLP, independent certified public
accountants, to be its independent auditors for the fiscal year ending
June 30, 2000 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
PricewaterhouseCoopers LLP 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 2000 annual meeting of the Corporation must be received
by the Corporation not later than May 31, 2000, 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 27, 1999
