SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement |_| Confidential, for Use of the
Commission only (as permitted by
Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
FIRST ESSEX BANCORP, INC.
(Name of Registrant as Specified In Its Charter)
Not Applicable
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement no.:
3) Filing Party:
4) Date Filed:
* * * * *
<PAGE>
[Logo]
- --------------------------------------------------------------------------------
FIRST ESSEX BANCORP, INC.
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS
to be held on May 7, 1998
and
PROXY STATEMENT
- --------------------------------------------------------------------------------
IMPORTANT
Please mark, sign and date your proxy
and promptly return it in the enclosed envelope.
<PAGE>
[Logo]
April 6, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of First Essex Bancorp, Inc. (the "Corporation") to be held on Thursday, May 7,
1998, at 10:00 a.m., local time, at the Andover Country Club, 60 Canterbury
Street, Andover, Massachusetts.
The Annual Meeting has been called for the purpose of electing three Class
II Directors, each for a three-year term and considering and voting upon such
other business as may properly come before the meeting or any adjournments or
postponements thereof.
The Board of Directors has fixed the close of business on March 13, 1998 as
the record date for determining stockholders entitled to notice of and to vote
at the Annual Meeting.
The Board of Directors of the Corporation recommends that you vote "FOR"
the election of the three nominees of the Board of Directors as Directors of the
Corporation.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE REQUESTED TO
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED ENVELOPE
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE
ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY
RETURNED YOUR PROXY CARD.
Very truly yours,
/s/ Leonard A. Wilson
LEONARD A. WILSON
President and Chief Executive Officer
CORPORATE HEADQUARTERS: 71 Main Street, Andover, MA 01810
Telephone (978) 681-7500
<PAGE>
FIRST ESSEX BANCORP, INC.
71 Main Street
Andover, Massachusetts 01810
Telephone: (978) 681-7500
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on Thursday, May 7, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of First
Essex Bancorp, Inc. (the "Corporation") will be held on Thursday, May 7, 1998,
at 10:00 a.m., local time, at the Andover Country Club, 60 Canterbury Street,
Andover, Massachusetts, for the purpose of considering and acting upon:
1. The election of three Class II Directors each for a three-year
term; and
2. Such other business as may properly come before the meeting
and any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on March 13, 1998 as
the record date for determination of stockholders entitled to notice of and to
vote at the Annual Meeting and any adjournments or postponements thereof. Only
holders of common stock of record at the close of business on that date will be
entitled to notice of and to vote at the Annual Meeting and any adjournments or
postponements thereof.
In the event there are not sufficient votes with respect to the foregoing
proposals at the time of the Annual Meeting, the Annual Meeting may be adjourned
in order to permit further solicitation of proxies.
By Order of the Board of Directors
/s/ William F. Burke
WILLIAM F. BURKE
Secretary
Andover, Massachusetts
April 6, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE
REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF
YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU
HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
<PAGE>
FIRST ESSEX BANCORP, INC.
71 Main Street
Andover, Massachusetts 01810
Telephone: (978) 681-7500
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on Thursday, May 7, 1998
This Proxy Statement is being furnished to stockholders on or about April
6, 1998 in connection with the solicitation of proxies by the Board of Directors
of First Essex Bancorp, Inc. (the "Corporation") for use at the Annual Meeting
of Stockholders of the Corporation to be held on Thursday, May 7, 1998, at 10:00
a.m., local time, at the Andover Country Club, 60 Canterbury Street, Andover,
Massachusetts, and any adjournments or postponements thereof (the "Annual
Meeting").
At the Annual Meeting, the stockholders of the Corporation will be asked to
consider and vote upon the following matters:
1. To elect three Class II Directors each for a three-year term, each
such term to continue until the 2001 annual meeting and until each such
Director's successor is duly elected and qualified; and,
2. To transact such other business as may properly come before the
meeting and any adjournments or postponements thereof.
The Notice of Annual Meeting, Proxy Statement and proxy card are first
being mailed to stockholders of the Corporation on or about April 6, 1998, in
connection with the solicitation of proxies for the Annual Meeting. The Board of
Directors has fixed the close of business on March 13, 1998, as the record date
for the determination of stockholders entitled to notice of and to vote at the
Annual Meeting (the "Record Date"). Only holders of common stock of record at
the close of business on the Record Date will be entitled to notice of and to
vote at the Annual Meeting. As of the Record Date, there were 7,533,888 shares
of the Corporation's common stock, par value $0.10 per share ("Common Stock"),
outstanding and entitled to vote at the Annual Meeting and 1333 stockholders of
record. Each holder of a share of Common Stock outstanding as of the close of
business on the Record Date will be entitled to one vote for each share held of
record for each matter properly submitted at the Annual Meeting.
The presence, in person or by proxy, of a majority of the total number of
outstanding shares of Common Stock is necessary to constitute a quorum for the
transaction of business at the Annual Meeting. A quorum being present, the
affirmative vote of a plurality of the shares present and voting is necessary to
elect a nominee as a Director of the Corporation. Assuming the presence of a
quorum, abstentions and broker non-votes will have no effect on the outcome of
the election of Directors. Votes will be tabulated by the Corporation's transfer
agent, BankBoston, N.A., c/o Boston EquiServe Limited Partnership.
Stockholders of the Corporation are requested to complete, date, sign and
return the accompanying proxy card in the enclosed envelope. Common stock
represented by properly executed proxies received by the Corporation and not
revoked will be voted at the Annual Meeting in accordance with the instructions
contained therein. If instructions are not given therein, properly executed
proxies will be voted "FOR" the election of the three nominees for Director
listed in this
<PAGE>
proxy statement. It is not anticipated that any matters other than the election
of Directors will be presented at the Annual Meeting. If other matters are
presented, proxies will be voted in accordance with the discretion of the proxy
holders.
Any properly completed proxy may be revoked at any time before it is voted
by giving written notice of such revocation to the Secretary of the Corporation,
or by signing and duly delivering a proxy bearing a later date, or by attending
the Annual Meeting and voting in person.
ANNUAL REPORT TO STOCKHOLDERS; OTHER INFORMATION
The Annual Report of the Corporation, including financial statements for
the fiscal year ended December 31, 1997 ("fiscal 1997"), is being mailed to
stockholders of the Corporation concurrently with this Proxy Statement. The
Annual Report, however, is not a part of the proxy solicitation material.
Stockholders of record on March 13, 1998 will receive a Proxy Statement and
the Corporation's 1997 Annual Report to Stockholders, which contains detailed
financial information concerning the Corporation. The Corporation will mail,
without charge, a copy of its Annual Report on Form 10-K (excluding exhibits) to
any stockholder solicited hereby who requests it in writing. Please submit any
such written request to David W. Dailey, Chief Financial Officer, First Essex
Bancorp, Inc., 71 Main Street, Andover, Massachusetts 01810.
GENERAL
First Essex Bancorp, Inc., a Delaware corporation, is the holding company
for First Essex Bank, FSB (the "Bank").
PROPOSAL ONE - ELECTION OF DIRECTORS
The Board of Directors of the Corporation currently consists of eight
members and is divided into three classes, two of which have three members and
one of which has two members. Directors serve for three year terms with one
class of Directors being elected by the Corporation's stockholders at each
annual meeting.
At the Annual Meeting, three Class II Directors will be elected to serve
until the 2001 annual meeting and until their successors are duly elected and
qualified. The Board of Directors has nominated Augustine J. Fabiani, Walter W.
Topham and Leonard A. Wilson to serve as Class II Directors. Unless otherwise
specified in the proxy, it is the intention of the persons named in the proxy to
vote the shares represented by each properly executed proxy for the election as
Directors of each of the nominees. Each of the nominees has agreed to stand for
election and to serve if elected as a Director. However, if any of the persons
nominated by the Board of Directors fails to stand for election or is unable to
accept election, the proxies will be voted for the election of such other
persons as the Board of Directors may recommend.
The Board of Directors of the Corporation recommends that the Corporation's
stockholders vote FOR the election of the three nominees of the Board of
Directors as Directors of the Corporation.
-2-
<PAGE>
Information Regarding Directors and Nominees
The following table sets forth certain information as of March 13, 1998
concerning each Director of the Corporation, including the three Class II
Directors who have been nominated for re-election at the Annual Meeting, based
on information furnished by them to the Corporation.
Director
Name Age Since(1)
- --------------------------------------------- --------- ------------------
CLASS I - TERM TO EXPIRE 2000
Frank J. Leone, Jr. . . . . . . . . . . . . 58 1973
Robert H. Pangione . . . . . . . . . . . . 62 1982
CLASS II - TERM TO EXPIRE 1998
Augustine J. Fabiani * . . . . . . . . . . . 67 1981
Walter W. Topham * . . . . . . . . . . . . . 59 1981
Leonard A. Wilson * . . . . . . . . . . . . 58 1989
CLASS III - TERM TO EXPIRE 1999
Thomas S. Barenboim . . . . . . . . . . . . 42 1996
William L. Lane 56 1977
Robert H. Watkinson . . . . . . . . . . . 57 1983
- --------------------------
* Nominee for election.
(1) The Bank converted from mutual to stock form in December, 1986, and the
Corporation was simultaneously formed to be the holding company for the
Bank. All Directors of the Corporation were first elected on, and have
served as Directors since, December 17, 1986, except Messrs. Wilson and
Barenboim, who were elected to the Board effective as of February 16, 1989
and March 21, 1996, respectively. The year listed in the table is the year
in which the named individual became a Trustee of the Bank (prior to its
conversion from mutual to stock form) or a Director of the Corporation. All
Directors are also Directors of the Bank.
The principal occupation and business experience during at least the last
five years for each Director of the Corporation is set forth below. Information
regarding Mr. Wilson is set forth under the heading "Executive Officers."
Thomas S. Barenboim is President and owner of Clark Chrysler-Plymouth Jeep
Eagle, Robert's Chrysler Plymouth, Thames Ford-Mercury, and I.T. Robert's
Autobody.
Augustine J. Fabiani is retired; he was formerly Division Personnel Manager
of Massachusetts Electric Co. in North Andover, Massachusetts.
-3-
<PAGE>
William L. Lane is President and Chief Executive Officer of Valley Regional
Health System, Inc. and its subsidiary corporations, Holy Family Hospital, Inc.,
Valley Regional Support Services, Inc., Valley Regional Ventures, Inc., Andover
Center for Physical Therapy and Holy Family Hospital Foundation, Inc. The
principal business of these corporations is to provide acute hospital service.
Mr. Lane has been the Chief Executive Officer of this entity since 1971.
Frank J. Leone, Jr. is a partner in Leone Realty Trust, commercial real
estate. He was formerly President of F.J. Leone Furniture Co., Inc., a furniture
store located in Methuen, Massachusetts.
Robert H. Pangione is President of MacDonald and Pangione Insurance Agency,
Inc. in North Andover, Massachusetts, and R.C. Briggs Insurance Agency, Inc. in
Amesbury, Massachusetts.
Walter W. Topham is a partner of Topham, Fardy & Co., Certified Public
Accountants, located in Andover, Massachusetts.
Robert H. Watkinson is Executive Director of Massachusetts Statewide
Emergency Telecommunications Board, in Reading, Massachusetts. He was formerly a
telecommunications consultant and a Managing Director of NYNEX, at its facility
in Boston.
Information Regarding the Board of Directors and its Committees
The Board of Directors of the Corporation held 15 meetings during fiscal
1997. During fiscal 1997, each of the incumbent Directors attended at least 75%
of the total number of meetings of the Board and of the committees of which he
was a member, except that Robert H. Pangione, as a member of the
Compensation/Nominating Committee, attended 67% of the meetings of that
committee due to a prolonged illness.
The Corporation has four standing committees: an Executive Committee, an
Auditing Committee, a Compensation/Nominating Committee, and a Community
Reinvestment Act (CRA) Committee.
Executive Committee. The members of the Executive Committee are Messrs.
Leone, Pangione, Topham and Wilson. During fiscal 1997, the Executive Committee
of the Corporation met 19 times. The Executive Committee is vested with
authority of the Board in most matters between meetings of the Board.
Auditing Committee. The members of the Auditing Committee are Messrs.
Fabiani, Lane, Topham and Watkinson. The members of the Auditing Committee of
the Corporation also serve as members of the Auditing Committee of the Bank.
During fiscal 1997, the Auditing Committee of the Corporation met 5 times. The
Auditing Committee reviews the financial statements of the Corporation and the
scope of the annual audit, monitors the Corporation's internal financial and
accounting controls and recommends to the Board of Directors the appointment of
independent certified public accountants.
Compensation/Nominating Committee. The members of the
Compensation/Nominating Committee are Messrs. Barenboim, Fabiani, Pangione,
Topham and Wilson (ex officio). The members of the Compensation/Nominating
Committee of the Corporation also constitute the Compensation/Nominating
Committee of the Bank. During fiscal 1997, the Compensation /Nominating
Committee of the Corporation met 6 times. The Compensation/Nominating Committee
recommends the compensation levels, positions and titles of officers and
employees of the Corporation to the Board of Directors. The members of the
-4-
<PAGE>
Compensation/Nominating Committee also serve as the Option Committee under the
1987 and 1997 Stock Option Plans. The Compensation/Nominating Committee
recommends nominees for election as Directors of the Corporation. The
Compensation/Nominating Committee will consider nominees for Director
recommended by stockholders for the 1999 Annual Meeting. If any stockholder
desires to make such a recommendation, the name or names of the persons
recommended should be submitted in writing together with supporting information
with respect to the qualifications and experience of such persons in the manner
set forth in the By-Laws of the Corporation. See "Submission of Stockholder
Proposals for 1999 Annual Meeting."
Community Reinvestment Act (CRA) Committee. The members of the CRA
Committee are Messrs. Leone and Watkinson. During fiscal 1997, the CRA Committee
of the Corporation met 3 times.
During fiscal 1997, Directors of the Corporation who are not employees of
the Corporation received $400 for each Board of Directors meeting they attended.
Members of the Executive Committee, the Auditing Committee, the
Compensation/Nominating Committee and the CRA Committee also received $400 for
each committee meeting they attended. The Directors also received an annual
retainer of $10,000 payable in cash on a quarterly basis. No such fees are paid
to Directors who are also employees of the Corporation. The Directors of the
Corporation are also the Directors of the Bank. No additional fees or retainers
are paid to any Director for serving on the Bank's Board of Directors or any
committee thereof. For fiscal 1998, the Directors will receive a $600 fee for
each Board of Directors or committee meeting they attend, in addition to the
annual retainer.
Executive Officers
The names and ages of all executive officers of the Corporation and the
principal occupation and business experience during at least the last five years
for each are set forth below as of February 28, 1998.
Leonard A. Wilson became President and Chief Executive Officer of the
Corporation in May 1989 and President and Chief Executive Officer of the Bank in
February 1989. Mr. Wilson was Executive Vice President of the Corporation from
February 1989 to May 1989. Mr. Wilson was previously employed, since 1966, by
various commercial banking subsidiaries of Shawmut Corporation in various
management and executive positions. Mr. Wilson was Chairman of the Board and/or
President and Chief Executive Officer for various subsidiaries of Shawmut
Corporation from 1981 to 1989. Mr. Wilson is 58 years old.
David W. Dailey became Executive Vice President and Chief Financial Officer
of the Corporation and Executive Vice President and Chief Financial Officer of
the Bank in October 1991. Mr. Dailey was previously employed by Shawmut National
Corporation as its Senior Vice President and Division Head of Financial
Operations from 1989 to 1991, Senior Vice President and Division Head of Finance
from 1985 through 1988 and Senior Vice President and Division Head of Control
and Services from 1981 through 1984. In these positions, Mr. Dailey was
responsible for accounting control, financial systems and financial operations,
including tax planning, audit and treasury functions and risk management. He was
employed by Shawmut National Corporation in other executive and managerial
capacities from 1973 through 1981. Mr. Dailey is 58 years old.
John M. DiGaetano became Executive Vice President of the Corporation and
Executive Vice President for Consumer Banking of the Bank in October 1992. Mr.
DiGaetano was previously employed by Shawmut National Corporation as its
President of Shawmut Arlington Trust Company from 1989 to
-5-
<PAGE>
1991. Previously Mr. DiGaetano was Executive Vice President of Consumer Banking
for Arlington Trust Company from 1984 to 1989. In these positions, Mr. DiGaetano
was responsible for branch administration, consumer sales, marketing and
consumer lending. He was employed by Arlington Trust Company in other executive
and managerial capacities from 1961 through 1984. Mr. DiGaetano is 54 years old.
Wayne C. Golon became Executive Vice President of the Corporation and
Executive Vice President for Operations and Systems of the Bank in July 1995.
Mr. Golon was previously employed by Shawmut National Corporation as its Senior
Vice President and Division Head of Cash Management and Deposit Operations from
1992 to 1995, responsible for a staff of 850 people providing cash management
and deposit account servicing to corporate, commercial, and retail customers.
Prior to 1992, Mr. Golon held a variety of management positions in Operations
within Shawmut National Corporation. Mr. Golon is 49 years old.
David L. Savoie became Senior Credit Officer of the Bank in July 1997. Mr.
Savoie became Executive Vice President of the Corporation and Executive Vice
President and Senior Lending Officer of the Bank in December 1991. Prior to
joining the Corporation, Mr. Savoie was employed as Executive Vice President of
First NH Bank during 1991 and Executive Vice President of Amoskeag Bank from
1990 through 1991. In these positions, he was responsible for the administration
of non-performing assets. Mr. Savoie was employed by Old Stone Bank as Executive
Vice President with responsibility for real estate loan origination and
management from 1983 through 1990, and in various other executive and managerial
capacities from 1972 through 1983. Mr. Savoie is 54 years old.
Brian W. Thompson became Executive Vice President of the Corporation and
Executive Vice President for Commercial Banking of the Bank in December 1996.
Prior to joining the Corporation, Mr. Thompson was President and Chief Executive
Officer of Finest Financial Corp. and its subsidiary, Pelham Bank and Trust
Company, from October 1995 until its acquisition by the Corporation in December
1996. Prior to joining Finest Financial Corp., Mr. Thompson was Executive Vice
President of Peoples Bancorp and Peoples Bank of Worcester from 1991 to 1995
with responsibility for Commercial Banking activities. He was also employed by
Shawmut National Corporation in various executive, management and lending
activities for 23 years. Mr. Thompson is 51 years old.
William F. Burke became Senior Vice President of the Corporation and the
Bank in April 1993. In addition, Mr. Burke currently holds the positions of
Secretary of the Corporation and Secretary of the Bank to which he was named in
May 1996 and August 1994, respectively. Mr. Burke was Vice President of the
Corporation and the Bank from June 1992 until April 1993. Mr. Burke was
previously employed by Shawmut National Corporation as Vice President
responsible for corporate accounting policy and control and Senior Compliance
Officer from 1991 to 1992, manager of financial planning and financial
information systems from 1988 to 1991, and manager of budgeting and financial
reporting from 1985 to 1988. He was employed by Shawmut National Corporation in
other capacities from 1975 through 1985. Mr. Burke is 49 years old.
Thomas P. Coursey became Senior Vice President and Controller of the
Corporation and of the Bank in December 1996. Mr. Coursey had previously been
named Vice President and Controller of the Corporation and of the Bank in August
1996. Prior to joining the Corporation, Mr. Coursey was employed by Shawmut
National Corporation from 1985 to 1995 as Vice President in a variety of
-6-
<PAGE>
managerial capacities including Chief Financial Officer of various subsidiary
banks, Deputy Controller, Corporate Tax Director, and Manager of Financial
Operating Systems. Mr. Coursey is 50 years old.
Each officer of the Corporation holds his office for one year and until his
successor is elected and qualified or until his earlier resignation or removal.
Executive Compensation
Summary Compensation Table
The following summary compensation table sets forth information concerning
compensation for services rendered in all capacities awarded to, earned by or
paid to the Corporation's Chief Executive Officer and the four other most highly
compensated executive officers serving on December 31, 1997 whose compensation
exceeded $100,000 during fiscal 1997 (the "Named Executive Officers").
<TABLE>
<CAPTION>
Long-Term
Compensation
--------------
Awards
Annual Compensation --------------
--------------------------- Securities All Other
Name and Salary Bonus Underlying Compensation
Principal Position Year ($)(1) ($)(1) Options (#)(2) (#)(3)
------------------ ---- ------- ------ --------------- ------------
<S> <C> <C> <C> <C> <C>
Leonard A. Wilson ...... 1997 323,000 50,025 15,000 127,202
President and Chief 1996 275,507 114,660 45,000 163,557
Executive Officer 1995 260,483 42,900 0 79,750
Brian Thompson.......... 1997 153,365 25,875 17,000 4,500
Executive Vice 1996 0 0 0 0
President 1995 0 0 88,050(4) 0
David W. Dailey......... 1997 148,808 25,185 6,000 5,652
Executive Vice 1996 141,799 58,380 18,000 4,236
President 1995 134,173 21,863 0 3,669
Wayne C. Golon.......... 1997 144,700 16,641 17,000 4,800
Executive Vice 1996 136,625 38,220 18,000 7,110
President 1995 65,000 (5) 6,856 10,000 49,955
David L. Savoie......... 1997 138,200 15,893 6,000 5,175
Executive Vice 1996 131,174 36,680 18,000 4,177
President 1995 122,635 13,475 0 3,684
</TABLE>
- -----------------------
(1) Perquisites and other personal benefits paid to each Named Executive
Officer in each instance aggregated less than 10% of the total annual
salary and bonus set forth in the columns entitled "Salary" and "Bonus"
for each Named Executive Officer, and accordingly, are omitted from the
table as permitted by the rules of the Securities and Exchange
Commission.
-7-
<PAGE>
(2) Represents options granted in each of fiscal 1995, fiscal 1996 and fiscal
1997. During fiscal 1995, fiscal 1996 and fiscal 1997, the Corporation did
not grant any restricted stock awards or stock appreciation rights or make
any long-term incentive plan payouts to any of the executive officers.
(3) All Other Compensation represents a payment by the Corporation of premiums
for term life insurance on behalf of Mr. Wilson in fiscal 1995, fiscal
1996, and fiscal 1997 in the amounts of $2,257, $2,257, and $2,829,
respectively, accruals to Mr. Wilson's Executive Salary Continuation
Agreement of $73,200, $156,800 and $120,000, respectively, payments by the
Corporation of relocation expenses on behalf of Mr. Golon in fiscal 1996
and fiscal 1995 in the amount of $1,961 and $49,955 respectively, and a
payment of $4,046 during fiscal 1996 to compensate Mr. Golon for the loss
of tax benefit that would have accrued to him if he had been eligible to
participate in the First Essex Bank 401(k) Plan (the "401(k) Plan") during
the first year of his employment. The amounts reported also include
Corporation matching contributions pursuant to the First Essex Bank 401(k)
Plan (the "401(k) Plan") for fiscal 1995, fiscal 1996 and fiscal 1997
respectively, for the benefit of the named individuals. Such contributions
were made in shares of Common Stock, valued as follows: Mr. Wilson, $4,293,
$4,500 and $4,373; Mr. Thompson , $0, $0 and $4,500; Mr. Dailey, $3,669,
$4,236 and $5,652; Mr. Golon, $0, $1,103 and $4,800; and Mr. Savoie,
$3,684, $4,177 and $5,175.
(4) These stock options were assumed by the Corporation in conjunction with the
acquisition of Finest Financial Corp. in December, 1996.
(5) This salary amount represents the salary paid to Mr. Golon from the
commencement of his employment by the Corporation on July 10, 1995 through
December 31, 1995.
Stock Options Granted in Fiscal 1997
The following table sets forth certain information regarding stock options
granted during fiscal 1997 to the Named Executive Officers:
<TABLE>
<CAPTION>
Potential Realizable
Individual Grants Value at Assumed
---------------------------------------------------------- Annual Rates of
Number of % of Total Stock Price
Securities Options/SARs Exercise Appreciation for
Underlying Granted to or Option Term
Options/SARs Employees in Base Price Expiration ----------------------
Name Granted(#) Fiscal Period ($/Share) Date 5%($) 10%($)
- ----------- ------------- ------------- - ---------- ----------- ---------- -- ------
<S> <C> <C> <C> <C> <C> <C>
Leonard A.Wilson 15,000 7.82% 19.750 10/09/2007 $482,560 $768,396
Brian Thompson 11,000 5.73% 16.375 04/10/2007 293,405 467,198
6,000 3.13% 19.750 10/09/2007 193,024 307,358
David W. Dailey 6,000 3.13% 19.750 10/09/2007 193,024 307,358
Wayne C. Golon 11,000 5.73% 16.375 04/10/2007 293,405 467,198
6,000 3.13% 19.750 10/09/2007 193.024 307,358
David L. Savoie 6,000 3.13% 19.750 10/09/2007 193,024 307,358
</TABLE>
- ------------------------------
The grants reflected in the table were made pursuant to the Corporation's
1997 Stock Incentive Plan (the "1997 Stock Plan") with the exception of a grant
of 11,000 shares to each of Mr. Golon and Mr. Thompson that were made pursuant
to the Corporation's 1987 Stock Option Plan (the "1987 Stock Plan").
-8-
<PAGE>
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-end Option/SAR Values
The table below sets forth certain information regarding stock options
exercised during fiscal 1997 and stock options held at December 31, 1997 by the
Named Executive Officers. No stock appreciation rights ("SARS") are outstanding
under the 1987 Stock Plan or the 1997 Stock Plan.
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at Fiscal at Fiscal
Shares Year-End (#) Year-End($)
Acquired on Value Exercisable/ Exercisable/
Name Exercise(#) (1) Realized($) Unexercisable Unexercisable(2)
---- --------------- ----------- ------------- ----------------
<S> <C> <C> <C> <C>
Leonard A. Wilson ....... 13,000 90,750 78,321/78,679 1,242,349/890,151
Brian Thompson .......... -- -- 88,050/17,000 1,371,819/96,625
David W. Dailey ......... 7,000 69,750 26,289/25,011 405,957/271,256
Wayne C. Golon........... 2,150 14,519 10,517/32,333 137,876/288,287
David L. Savoie.......... 2,300 24,663 39,289/25,011 639,957/271,256
</TABLE>
- ----------------------
(1) All exercises relate to grants made pursuant to the 1987 Stock Plan.
(2) Calculations based upon the difference between the closing price of the
Corporation's Common Stock on December 31, 1997 of $23.25 and the exercise
price of the options under both the 1987 Stock Plan and the 1997 Stock
Plan.
Pension Plan
The Bank provides a retirement plan (the "SBERA Plan") for its eligible
employees through SBERA, an unincorporated association of savings banks
operating within Massachusetts and of other organizations which provide services
to or for savings banks. SBERA's sole purpose is to enable the participating
employers to provide pensions and other benefits for their employees.
-9-
<PAGE>
The following table illustrates annual pension benefits for retirement
at age 65 under the most advantageous plan provisions in effect on December 31,
1997.
<TABLE>
<CAPTION>
Annual Pension Benefits
Based on Years of Service (1)
-------------------------------------------------------------
Average 25 Years
Compensation 10 Years 15 Years 20 Years and after
------------ -------- -------- -------- ---------
<S> <C> <C> <C> <C>
$ 20,000. . . . . . . . . . . . . $ 2,500 $ 3,750 $ 5,000 $ 6,250
40,000 . . . . . . . . . . . . 5,642 8,463 11,284 14,104
60,000 . . . . . . . . . . . . 9,342 14,013 18,684 23,354
80,000 . . . . . . . . . . . . 13,042 19,563 26,084 32,604
100,000 . . . . . . . . . . . . 16,742 25,113 33,484 41,854
120,000 . . . . . . . . . . . . 20,442 30,663 40,884 51,104
125,000 . . . . . . . . . . . . 21,367 32,050 42,734 53,417
140,000 . . . . . . . . . . . . 24,142 36,213 48,284 60,354
150,000 . . . . . . . . . . . . 25,992 38,988 51,984 64,979
160,000(2) . . . . . . . . . . . 27,842 41,763 55,684 69,604
- --------------------------
</TABLE>
(1) The annual pension benefit is computed on the basis of a single life
annuity.
(2) The maximum compensation that may be used to calculate benefits under the
retirement plan is $160,000.
The number of estimated credited years of service at age 65 for purposes of
the retirement plan for the Named Executive Officers are: Mr. Wilson, 17; Mr.
Thompson, 15; Mr. Dailey, 13; Mr. Golon, 19; and Mr. Savoie, 17.
The pension benefit described above is funded entirely by contributions of
the Bank. Mr. Wilson may also receive benefits under the Executive Salary
Continuation Agreement described below.
Executive Salary Continuation Agreement
The Corporation and the Bank (which are hereinafter sometimes referred
to collectively as the "Employers") have entered into an Executive Salary
Continuation Agreement with Mr. Wilson. Under this agreement, Mr. Wilson would
be entitled to certain payments following retirement at or after age 62.
Payments under the agreement will equal 65% of the highest annual compensation
(including bonuses) received during any of the five years preceding retirement,
reduced by a portion of social security benefits payable as well as amounts
payable pursuant to other qualified defined benefit pension plans (i.e., the
SBERA Plan). The agreement also provides for certain reduced payments if Mr.
Wilson's employment terminates before age 62, and for certain benefits in the
event of disability. Additionally, if Mr. Wilson were to die prior to retirement
or disability, death benefits provided by this agreement may, in certain
circumstances, be payable to his beneficiaries. In connection with this
agreement, the Employers may elect to maintain an insurance policy on Mr.
Wilson's life.
-10-
<PAGE>
Employment Contracts, Termination of Employment and Change in Control
Arrangements
The Employers have entered into amended and restated employment agreements
(the "Employment Agreements") with Messrs. Wilson, Thompson and Dailey. The
Employment Agreements provide that such officers will receive annual
compensation equal to $290,000, $150,000 and $146,000, respectively, subject to
increases in accordance with the Employers' usual practice.
Mr. Wilson's Employment Agreement is for a three-year term, which commenced
on January 1, 1997, and is extended daily until notice of non-renewal is given
by either Mr. Wilson or the Employers. Mr. Dailey's and Mr. Thompson's
Employment Agreements are each for a two-year term, which commenced on January
1, 1997 and are extended daily until notice of non-renewal is given by either of
Mr. Dailey or Mr. Thompson, as the case may be, or the Employers. Under each of
the Employment Agreements, the Employers may terminate the officer's employment
at any time for "cause", as defined therein, without incurring any continuing
obligations to the officer. If the Employers terminate an officer's employment
for any reason other than for "cause", as defined in the Employment Agreement,
or if the officer terminates his employment for "good reason", as defined
therein, the Employers will remain obligated to provide (a) an amount equal to
the sum of such officer's base salary or other compensation earned through the
date of termination, plus such officer's pro rata share of his highest annual
bonus paid during the three fiscal years preceding such termination, plus all
accrued vacation and deferred compensation; (b) a lump sum severance benefit
equal to three times the sum of such officer's annual base salary and the
highest annual bonus paid to such officer in the three fiscal years preceding
such termination; (c) benefits as specified in the officer's Employment
Agreement for the duration of what otherwise would have been the term of the
Employment Agreement and (d) a pension adjustment as specified in the Employment
Agreement.
In addition, the Employers have entered into special termination agreements
(the "Special Termination Agreements") with Messrs. Wilson, Dailey, Thompson,
DiGaetano, Golon, Savoie and Burke. These agreements provide generally that if
there is a "Change in Control", as defined therein, of either of the Employers
and if at any time during the three-year period (in the case of Mr. Wilson and
Mr. Thompson) or two-year period (in the case of Messrs. Dailey, DiGaetano,
Golon, Savoie and Burke) following such "Change in Control", either of the
Employers were to terminate the officer's employment for any reason other than
due to the officer's death, or for "cause", as defined therein, or the officer
were to terminate his employment with either of the Employers following a
significant change in the nature or scope of the officer's responsibilities,
authorities, powers, functions or duties; a determination by such officer that,
as a result of a Change in Control, he is unable to exercise the
responsibilities, authorities, powers, functions or duties exercised by such
officer immediately prior to such Change in Control; a reduction in such
officer's annual base salary; a significant relocation of the Employers'
offices; a failure of the Employers to pay any portion of compensation due to
the officer; the termination of or a material reduction in benefits; or for
failure of the Employers to obtain a satisfactory agreement from any successor
to assume and agree to perform the Special Termination Agreement, the officer
would be entitled to receive certain severance benefits provided in such
officer's Special Termination Agreement. Such severance benefits include an
amount equal to the sum of such officer's base salary or other compensation
earned through the date of termination, plus such officer's pro rata share of
his highest annual bonus paid during the three fiscal years preceding such
termination, plus all accrued vacation and deferred compensation; and an amount
equal to three times the highest average total compensation for three of the
then preceding five years in the case of Messrs. Wilson and Thompson, and two
times the highest average total compensation for three of the then preceding
five years in the case of Messrs. Dailey, DiGaetano,
-11-
<PAGE>
Golon, Savoie and Burke. In the case of such a termination, each of Mr.
Wilson, Mr. Thompson and Mr. Dailey could elect to receive (in lieu of any
benefits due under such officer's Special Termination Agreement) such
termination benefits as he may receive under his Employment Agreement.
Compensation/Nominating Committee Interlocks and Insider Participation
Mr. Wilson participated in the deliberations of the Compensation/Nominating
Committee concerning compensation of all executive officers other than himself.
No Compensation/Nominating Committee interlocks exist.
Compensation/Nominating Committee Report on Executive Compensation
Overview
The Corporation's executive compensation philosophy is to provide
competitive levels of compensation, integrate management's pay with the
achievement of the Corporation's performance goals, reward above average
corporate performance, recognize individual initiative and achievement, align
management's and stockholders' interests in the enhancement of stockholder value
through stock and stock option awards, and assist the Corporation in attracting
and retaining qualified management.
Compensation of the Corporation's executive officers for fiscal 1997 was
composed of three elements: (1) annual base salary, (2) annual performance
incentives in the form of cash bonuses under the Corporation's Senior Management
Incentive Compensation Plan (the "Incentive Plan") and (3) long-term performance
incentives in the form of stock option awards under the 1987 Stock Plan and 1997
Stock Plan.
In 1996, the Corporation retained Thomas Warren & Associates, Inc.
("Warren") as a compensation consultant to evaluate the Corporation's executive
compensation. In its analysis, Warren compared the Corporation's compensation to
that of a peer group of eleven Massachusetts banks with assets between $1
billion and $2.5 billion (the "Peer Group"). Warren also compared the
Corporation's compensation levels to levels for banks located in New England of
comparable size and type published by banking associations and other
organizations ("Published Data"). Warren's analysis is reflected in the base
salary ranges set for fiscal 1997.
While the Peer Group and the banks discussed in the Published Data are not
identical to the Keefe, Bruyette & Woods, Inc. New England Savings Bank Index to
which the Corporation's stock performance is compared in this Proxy Statement,
the Compensation/Nominating Committee believes that the compensation information
for these groups is comparable since both groups contain banks located in New
England of comparable size and type.
Each element of the Corporation's executive compensation, as well as the
compensation of the Chief Executive Officer, is discussed separately below.
Base Salary
The fiscal 1997 salaries of the executive officers were established in
December 1996, based upon salary ranges determined by the
Compensation/Nominating Committee. The Committee established the
-12-
<PAGE>
salary ranges after reviewing Warren's recommendations based upon salaries
paid by banks of comparable size and type located in New England.
The Chief Executive Officer recommends to the Compensation/Nominating
Committee the salary level to be paid to each executive officer within the
ranges so established based upon corporate and individual performance. The
numeric data used to evaluate the performance of the Corporation includes, but
is not limited to, return on assets, return on equity, asset growth and quality,
operating efficiency ratio, and capital position. Salaries are also based upon a
subjective evaluation of the individual performance of the officer and his or
her duties and responsibilities. The Compensation/Nominating Committee
determines the salary level of the Chief Executive Officer based upon the same
criteria.
Base salaries in fiscal 1997 were established within the salary ranges set
by the Compensation/Nominating Committee. Salaries were generally set within the
middle third of the established salary range, reflecting the
Compensation/Nominating Committee's belief that the Corporation's Named
Executive Officers perform comparable duties and have comparable
responsibilities to similarly situated officers at the banks analyzed in
determining the salary ranges. These salaries also reflect the continuing
improvement in the Corporation's performance and are designed to provide the
executive officers with base salaries comparable to officers in the
Corporation's Peer Group and the banks analyzed in the Published Data.
Cash Bonuses
Annual incentives are provided through the grant of cash bonuses pursuant
to the Incentive Plan. Incentive compensation paid pursuant to the Incentive
Plan is based on both organizational and individual performance.
The Incentive Plan provides that bonuses, calculated as a percent of base
salary, may be awarded if the Corporation meets specified performance
objectives, measured on the basis of return on assets. Bonuses awarded to
executives other than Messrs. Wilson and Dailey may be adjusted based upon a
subjective evaluation of such officer's attainment of individual performance
goals set for that officer at the beginning of the year in which the bonus is
awarded.
In fiscal 1997, the Compensation/Nominating Committee granted cash bonuses
to Messrs. Wilson, Dailey, Golon, Savoie and Thompson totaling $50,025, $25,185,
$16,640, $15,893 and $25,875, respectively. These awards reflect the
Corporation's achievement of specified performance objectives as provided in the
Incentive Plan. Bonuses awarded to Messrs. Golon and Savoie also reflect such
officers' attainment of individual performance goals established for 1997.
Stock Options
Long-term incentives are provided through the grant of stock options. The
1987 Stock Plan and 1997 Stock Plan (hereafter, the "Stock Plans") are
administered by the Compensation/Nominating Committee, which has the power to
determine those individuals to whom options and rights will be granted, the
number of shares, the types of options and other terms and conditions of the
options and rights. The Stock Plans provide for the granting of both "incentive
stock options" and "nonqualified stock options". In addition, the 1997 Stock
Plan provides for the granting of unrestricted stock awards, conditioned stock
awards, performance share awards and stock appreciation rights. All options
granted
-13-
<PAGE>
under the Stock Plans are required to have an exercise price per share
equal to at least the fair market value of a share of Common Stock on the date
the option is granted and will expire no later than ten years from the date of
grant. The 1987 Stock Plan expired on August 4, 1997. No further options can be
granted under the 1987 Stock Plan after such expiration.
In fiscal 1997, the Compensation/Nominating Committee granted stock options
to Mr. Wilson totaling 15,000 shares, and 6,000 shares each to Messrs. Dailey,
Golon, Savoie and Thompson, under the 1997 Stock Plan. In addition, Messrs.
Golon and Thompson were granted options totaling 11,000 shares each under the
1987 Stock Plan. The stock options, which vest over a three year period, were
also designed to align the officers' and stockholders' long-term objectives.
Determination of the Chief Executive Officer's Compensation
Mr. Wilson's salary, cash bonus, and stock options are determined by the
Compensation/Nominating Committee substantially in accordance with the policies
described above relating to all executives of the Corporation. In particular,
the Compensation/Nominating Committee considered, among other things, the
following performance criteria in determining Mr. Wilson's 1997 base salary: (1)
financial performance of the Corporation; (2) selection and management of staff;
(3) development of regional business relationships; (4) effective management of
bank budgets and asset growth; and (5) development of new opportunities for
business expansion. The grant of a cash bonus to Mr. Wilson in fiscal 1997
reflects the Corporation's achievement of certain performance objectives as
specified in the Incentive Plan.
In December 1996, the Compensation/Nominating Committee increased Mr.
Wilson's base salary for fiscal 1997. This salary increase reflects the
continuing improvement in the performance of the Corporation, recognizes Mr.
Wilson's achievement of certain strategic goals including building an
experienced management team, improving asset quality and developing a strategic
plan for the Corporation, and ensures that Mr. Wilson's salary will remain
comparable to that of other chief executive officers of similarly situated
banks.
THOMAS S. BARENBOIM
AUGUSTINE J. FABIANI
ROBERT H. PANGIONE
WALTER W. TOPHAM
LEONARD A. WILSON (ex officio)
-14-
<PAGE>
Comparative Performance by the Corporation
The chart that follows compares the Common Stock with (i) the S&P 500 and
(ii) the Keefe, Bruyette & Woods, Inc. ("KBW") New England Savings Bank Index,
and assumes an investment of $100 on December 31, 1992, in each of the
following: (1) the Common Stock of the Corporation; (2) the Stocks comprising
the S&P 500 Index; and (3) the Stocks of the KBW New England Savings Bank Index.
INDEX OF TOTAL RETURN (12/31/92=100)
S&P 500 KBW New England FESX Price Plus
DATE INDEX Bank Index Indexed Cumulative Dividends
- --------------------------------------------------------------------------------
12/31/92 100.00 100.00 100.00 $ 3.750
3/31/93 104.35 110.93 136.67 $ 5.125
6/30/93 104.85 104.57 116.67 $ 4.375
9/30/93 107.52 135.41 198.00 $ 7.425
12/31/93 110.02 133.51 182.83 $ 6.856
- --------------------------------------------------------------------------------
3/31/94 105.87 140.44 214.93 $ 8.060
6/30/94 106.33 165.45 264.33 $ 9.912
9/30/94 111.53 157.97 252.79 $ 9.480
12/31/94 111.51 134.40 208.26 $ 7.810
- --------------------------------------------------------------------------------
3/31/95 122.33 150.90 229.75 $ 8.616
6/30/95 133.97 171.43 235.55 $ 8.833
9/30/95 144.58 196.16 306.78 $11.504
12/31/95 153.26 209.77 331.90 $12.446
- --------------------------------------------------------------------------------
3/31/96 161.48 210.20 317.17 $11.894
6/30/96 168.71 222.95 324.40 $12.165
9/30/96 173.88 250.54 361.53 $13.558
12/31/96 188.36 289.74 399.04 $14.964
- --------------------------------------------------------------------------------
3/31/97 193.44 300.88 452.10 $16.954
6/30/97 227.14 361.53 540.07 $20.252
9/30/97 244.13 426.65 632.49 $23.719
12/31/97 251.12 498.12 726.09 $27.228
- --------------------------------------------------------------------------------
Source: KEEFE, BRUYETTE & WOODS, INC.
-15-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 13, 1998 the beneficial
ownership of Common Stock for (i) each person known by the Corporation to own
beneficially more than 5% of the Common Stock as of such date, (ii) each current
Director and nominee for re-election as a Director of the Corporation, (iii)
each executive officer, and (iv) all current directors and executive officers of
the Corporation as a group:
<TABLE>
<CAPTION>
Number of Shares
of Common Stock
Beneficially Percent
Name Owned(1) of Class(2)
---- ---------------- -----------
<S> <C> <C>
Thomas S. Barenboim............................................. 15,600 0.21%
William F. Burke (3)(4)......................................... 35,145 0.46%
Thomas P. Coursey (4)........................................... 3,369 0.04%
David W. Dailey (3)(4).......................................... 55,717 0.74%
John M. DiGaetano (4)........................................... 60,531 0.80%
Augustine J. Fabiani (3)........................................ 17,665 0.23%
Wayne C. Golon (3)(4)........................................... 19,478 0.26%
William L. Lane (3)............................................. 18,872 0.21%
Frank J. Leone, Jr (3).......................................... 31,565 0.42%
Robert H. Pangione (3)(5)....................................... 91,973 1.22%
David L. Savoie (4)............................................. 53,951 0.71%
Brian W. Thompson (4)........................................... 109,135 1.43%
Walter W. Topham (3)(6)......................................... 21,692 0.29%
Robert H. Watkinson (3)......................................... 20,048 0.27%
Leonard A. Wilson (3)(4)........................................ 121,243 1.60%
All Directors and Officers as a group (15 persons) (1)(4)(5)(6). 675,977 8.59%
</TABLE>
- --------------------------------------
(1) Beneficial share ownership is determined pursuant to Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
Accordingly, a beneficial owner of a security includes any person who,
directly or indirectly, through any contract, arrangement, understanding,
relationship or otherwise has or shares the power to vote such security
or the power to dispose of such security. The amounts set forth above as
beneficially owned include shares owned by spouses and relatives living
in the same home, as to which beneficial ownership may be disclaimed. The
amounts set forth above as beneficially owned also include shares of
Common Stock which such beneficial owner had the right to acquire within
60 days of March 13, 1998 under options previously granted pursuant to
the 1987 Stock Plan and/or the 1997 Stock Plan in the following amounts:
Mr. Barenboim, 10,500 shares; Mr. Burke, 32,000 shares; Mr. Coursey,
3,333 shares; Mr. Dailey, 35,234 shares; Mr. DiGaetano, 52,934 shares;
Mr. Fabiani, 8,000 shares; Mr. Golon, 16,725 shares; Mr. Lane, 8,000
shares; Mr. Leone, 5,000 shares; Mr. Savoie, 14,434 shares; Mr. Thompson,
91,716 shares; Mr. Topham, 3,000 shares; Mr. Watkinson, 8,000 shares; Mr.
Wilson, 42,642 shares; and all of the Directors and Officers as a group,
331,518 shares. For information regarding the stock options held by the
Named Executive Officers, see "Stock Options Granted in 1997" and
"Aggregated Option/SAR Exercises in Last Fiscal Year and FY-end
Option/SAR Values." On March 13, 1998, the closing sale price of the
Corporation's Common Stock as reported by the Nasdaq National Market was
$24.625.
-16-
<PAGE>
(2) For purposes of computing the Percent of Class held by each person, any
shares of Common Stock which such person has the right to acquire within
60 days of March 13, 1998 pursuant to the exercise of a stock option is
deemed to be outstanding, but is not deemed to be outstanding for
purposes of computing the Percent of Class held by any other person.
(3) Indicates that such person shares voting or investment power as to all or
a portion of such shares. The number of shares as to which each person
shares voting or investment power is as follows: Mr. Burke, 1,500 shares;
Mr. Dailey, 19,000 shares; Mr. Fabiani, 1,595 shares; Mr. Golon, 2,150
shares; Mr. Lane, 4,552 shares; Mr. Leone, 26,440 shares; Mr. Pangione,
12,825 shares; Mr. Topham, 2,457 shares; Mr. Watkinson, 3,000 shares;
Mr. Wilson, 28,500 shares.
(4) Includes shares allocated to the account of such persons under the 401(k)
Plan in the following amounts: Mr. Burke, 1,645 shares; Mr. Coursey, 36
shares; Mr. Dailey, 1,483 shares; Mr. DiGaetano, 3,412 shares; Mr. Golon,
603 shares; Mr. Savoie, 1,417 shares; Mr. Thompson, 1,814 shares; Mr.
Wilson, 9,901 shares; and all of the Directors and Officers as a group,
20,311 shares.
(5) Includes 35,000 shares owned by Mr. Pangione's wife. Mr. Pangione
disclaims beneficial ownership of the shares owned by his wife.
(6) Includes 43 shares owned jointly by Mr. Topham's wife and daughter.
Certain Transactions With Management and Others
As a matter of policy, the Bank makes loans to Directors, officers and
employees of the Corporation or the Bank within the limitations set by law,
provided that such loans are on the same terms and conditions as offered to any
other borrower. All loans that have been obtained by the Directors, officers and
employees of the Corporation or the Bank were made in the ordinary course of
business and on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
unaffiliated persons and did not involve more than the normal risk of
collectibility or present other unfavorable features to the Bank. All loans to
Directors or officers must be approved by the Board of Directors.
From time to time the Bank has purchased various services and products in
the ordinary course of its business from various companies owned or operated by,
or employing, certain of its Directors. Such transactions have been entered into
on terms no less favorable to the Bank than would have been available from
unrelated third parties.
EXPENSES OF SOLICITATION
The Corporation will pay the entire expense of soliciting proxies for the
Annual Meeting. D.F. King & Co., Inc. has been retained to assist in the
solicitation of proxies and will be compensated in the amount of $1,500 plus
out-of-pocket expenses. In addition to such solicitation and solicitation by use
of the mails, certain Directors, officers and regular employees of the
Corporation and the Bank (who will receive no compensation for their services
other than their regular compensation) may solicit proxies by telephone,
telegram or personal interview. Banks, brokerage houses, custodians, nominees
and other fiduciaries have been requested to forward proxy materials to the
beneficial owners of shares held of record by them and such custodians will be
reimbursed for their expenses.
-17-
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Corporation's directors
and executive officers and any persons who own more than 10% of the
Corporation's common stock to file with the Securities and Exchange Commission
(the "SEC") initial reports of ownership and reports of changes of ownership of
common stock. Such persons are required by SEC regulations to furnish the
Corporation with copies of all Section 16(a) forms they file. To the
Corporation's knowledge, based solely on the information furnished to the
Corporation during fiscal 1997, all such Section 16(a) filing requirements were
complied with.
NOTICE OF 1999 ANNUAL MEETING
Notice is hereby given that the 1999 Annual Meeting of Stockholders of
First Essex Bancorp, Inc. will be held on Thursday, May 6, 1999, unless
stockholders are notified otherwise.
SUBMISSION OF STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Pursuant to federal securities law, stockholder proposals intended to be
presented at the 1999 annual meeting must be received in writing by the
Corporation not less than 120 calendar days in advance of the anniversary date
of this Proxy Statement (i.e., by December 7, 1998) in order to be considered
for inclusion in the Corporation's Proxy Statement and form of proxy for that
meeting. The By-laws of the Corporation provide that any proposals or Director
nominations submitted by stockholders that will not be included in the Proxy
Statement for an annual meeting may still be presented for action at such annual
meeting if such proposal is filed with the Secretary of the Corporation at least
75 days, but not more than 120 days, before the anniversary of the preceding
year's annual meeting (the "Anniversary Date"). However, if the annual meeting
is scheduled for a date more than seven days before the Anniversary Date,
stockholder proposals or nominations must be received by the Corporation before
the later of (i) 20 days after public disclosure of the date for the annual
meeting or (ii) the 75th day before the annual meeting. Any proposals should be
mailed to: Secretary, First Essex Bancorp, Inc., 71 Main Street, Andover,
Massachusetts 01810.
INDEPENDENT ACCOUNTANTS
Arthur Andersen LLP served as the independent public accountants for the
Corporation for fiscal 1997 and is expected to serve as the Corporation's
independent public accountants for 1998. Representatives of Arthur Andersen LLP
will be present at the meeting and will have the opportunity to make a
statement, if they so desire, and will be available to respond to appropriate
questions.
OTHER MATTERS
The Board of Directors does not know of any matters other than those
described in this Proxy Statement which will be presented for action at the
Annual Meeting. If other matters are duly presented, proxies will be voted in
accordance with the best judgment of the proxy holders.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE
REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
-18-
<PAGE>
FES15 3 DETACH HERE
PROXY
FIRST ESSEX BANCORP, INC.
71 MAIN STREET, ANDOVER, MASSACHUSETTS 01810
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
MAY 7, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking any proxy heretofore given, hereby constitutes
and appoints Leonard A. Wilson, David W. Dailey and William F. Burke and each of
them the attorney and proxy of the undersigned, with full power of substitution
to vote all shares of common stock of First Essex Bancorp, Inc. (the
"Corporation") held of record by the undersigned at the close of business on
March 13, 1998, on behalf of the undersigned at the Annual Meeting of
Stockholders of the Corporation to be held on Thursday, May 7, 1998 at 10:00
a.m. local time at the Andover Country Club, 60 Canterbury Street, Andover,
Massachusetts and at any adjournments thereof, hereby granting full power and
authority to act on behalf of the undersigned at said meeting and any
adjournments thereof. In their discretion, the proxies are each authorized to
vote upon such other business as may properly come before said meeting and any
adjournments thereof.
When properly executed, this proxy will be voted in the manner directed
herein by the undersigned stockholder. If no direction is given, this proxy will
be voted FOR election of the three nominees proposed by the Board of Directors
as Class II Directors of the Corporation, so that a stockholder wishing to vote
in accordance with the Board of Directors' recommendations need only sign and
date this proxy on the reverse side and return it in the enclosed envelope.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON AND DATE ON THE REVERSE SIDE
AND RETURN YOUR PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE.
---------------
| SEE REVERSE |
| SIDE |
---------------
<PAGE>
FES15 3 DETACH HERE
[X] Please mark
votes as in
this example.
The undersigned hereby acknowledges receipt of a copy of the accompanying
Notice of the Annual Meeting of Stockholders and Proxy Statement for the Annual
Meeting of Stockholders and hereby revokes any proxy or proxies heretofore
given. This proxy may be revoked at any time before it is voted on any matter
(without, however, affecting any vote taken prior to such revocation) pursuant
to the revocation methods specified in the Proxy Statement.
1. To elect the following three nominees proposed by the Board
of Directors as Class II Directors of the Corporation.
Nominees: Augustine J. Fabiani, Walter W. Topham and
Leonard A. Wilson
[ ] FOR [ ] WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
FOR
ALL
EXCEPT
[ ] ________________________________________________________________________
If you wish to withhold your shares from one or two of the nominees, mark the
"For All Except" box and write the nominee's(s') name(s) on the line above.
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Please date and sign exactly as your name appears
hereon and return in the enclosed envelope. Where
there is more than one holder only one must sign.
When signing as an attorney, administrator,
executor, guardian or trustee, please add your
full title as such. If executed by a corporation,
the proxy should be signed by a duly authorized
person, stating his or her title or authority.
Signature: _______________ Date: _______ Signature: ______________ Date: _______
