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)
- --------------------------------------------------------------------------------
(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>
- --------------------------------------------------------------------------------
FIRST ESSEX BANCORP, INC.
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS
to be held on May 6, 1999
and
PROXY STATEMENT
- --------------------------------------------------------------------------------
IMPORTANT
Please mark, sign and date your proxy and promptly
return it in the enclosed envelope.
<PAGE>
April 5, 1999
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 6,
1999, 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 III 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 12, 1999
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,
LEONARD A. WILSON
President and Chief Executive
Officer
CORPORATE HEADQUARTERS: 71 Main Street, Andover, MA 01810 Telephone (978)
475-4313
<PAGE>
FIRST ESSEX BANCORP, INC.
71 Main Street
Andover, Massachusetts 01810
Telephone: (978) 475-4313
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on Thursday, May 6, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of First
Essex Bancorp, Inc. (the "Corporation") will be held on Thursday, May 6, 1999,
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 III 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 12,1999
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
WILLIAM F. BURKE
Secretary
Andover, Massachusetts
April 5, 1999
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) 475-4313
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on Thursday, May 6, 1999
This Proxy Statement is being furnished to stockholders on or about April
5, 1999 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 6, 1999, 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 III Directors each for a three-year term, each
such term to continue until the 2002 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 5, 1999, in
connection with the solicitation of proxies for the Annual Meeting. The Board of
Directors has fixed the close of business on March 12, 1999, 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 7,614,634 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 1,248 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. 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, The First National Bank
of Boston, 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 proxy statement. It is not anticipated that any matters other
than the election of Directors will be presented at the Annual Meeting.
<PAGE>
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, 1998 ("fiscal 1998"), 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 12, 1999 will receive a Proxy Statement
and the Corporation's 1998 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 William F. Burke, 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 nine
members and is divided into three classes, all of which have three 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 III Directors will be elected to serve
until the 2002 annual meeting and until their successors are duly elected and
qualified. The Board of Directors has nominated Thomas S. Barenboim, William L.
Lane and Robert H. Watkinson to serve as Class III 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.
Information Regarding Directors and Nominees
The following table sets forth certain information as of March 12, 1999
concerning each Director of the Corporation, including the three Class III
Directors who have been nominated for re-election at the Annual Meeting, based
on information furnished by them to the Corporation.
2
<PAGE>
<TABLE>
<CAPTION>
Director
Name Age Since(1)
- ---- ------- -----------
<S> <C> <C>
CLASS I - TERM TO EXPIRE 2000
Frank J. Leone, Jr. ................................. 59 1973
Robert H. Pangione................................... 63 1982
Brian W. Thompson.................................... 52 1998
CLASS II - TERM TO EXPIRE 2001
Augustine J. Fabiani................................. 68 1981
Walter W. Topham..................................... 60 1981
Leonard A. Wilson, Chairman.......................... 59 1989
CLASS III - TERM TO EXPIRE 1999
Thomas S. Barenboim*................................. 43 1996
William L. Lane*..................................... 57 1977
Robert H. Watkinson*................................. 58 1983
</TABLE>
- --------------------------
* 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,
Barenboim, and Thompson who were elected to the Board effective as of
February 16, 1989, March 21, 1996, and September, 1998 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 and Mr. Thompson 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.
William L. Lane is President of Valley Regional Health System, Inc. and its
subsidiary corporations, Holy Family Hospital, Inc., Valley Regional Support
Services, Inc., Valley Regional Ventures, Inc. 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.
3
<PAGE>
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 16 meetings during fiscal
1998. During fiscal 1998, 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.
The Corporation has five standing committees: an Executive Committee, an
Auditing Committee, a Compensation/Nominating Committee, a Community
Reinvestment Act (CRA) Committee and a Year 2000 (Y2K) Compliance Committee.
Executive Committee. The members of the Executive Committee are Messrs.
Leone, Pangione, Thompson, Topham and Wilson. During fiscal 1998, the Executive
Committee of the Corporation met seven times. The Executive Committee is vested
with the 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 1998, the Auditing Committee of the Corporation met seven 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 1998, the Compensation /Nominating
Committee of the Corporation met five 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
Compensation/Nominating Committee also serve as the Option Committee under the
Corporation's 1987 Stock Option Plan (the "1987 Stock Plan") and 1997 Stock
Incentive Plan (the "1997 Stock Plan" and, together with the 1987 Stock Plan,
the "Stock 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 2000 Annual Meeting. If any stockholder desires to make such a
recommendation, the name or names of the persons recommended should be timely
submitted in writing together with supporting information with respect to the
qualifications and experience of such persons and the other information required
by the Corporation's By-laws. See "Submission of Stockholder Proposals for 2000
Annual Meeting."
Community Reinvestment Act (CRA) Committee. The members of the CRA
Committee are Messrs. Leone and Watkinson. During fiscal 1998, the CRA committee
of the corporation met four times.
Year 2000 (Y2K) Compliance Committee. In 1998, the Board established a Y2K
Compliance Committee to oversee the activities of management and others in
dealing with the issues raised by the change of century. The members of the Y2K
Compliance Committee are Messrs. Barenboim, Fabiani and Leone. During fiscal
1998, the Y2K Compliance Committee met seven times.
4
<PAGE>
During fiscal 1998, Directors of the Corporation who are not employees of
the Corporation received $600 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 $600 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.
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, 1999.
Leonard A. Wilson became Chairman and Chief Executive Officer of the
Corporation and the Bank on September 12, 1989. Mr. Wilson was President and
Chief Executive Officer of the Corporation from May 1989 to September 1989, and
President and Chief Executive Officer of the Bank from February 1989 to
September 1989. Mr. Wilson also served as 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 1977 to 1989. Mr. Wilson is 59 years old.
Brian W. Thompson became President and Chief Operating Officer of both the
Corporation and the Bank in September 1998. At the same time, he was also
elected to the Board of Directors of both the Corporation and the Bank. From
December 1996 until September 1998 Mr. Thompson served as Executive Vice
President of the Corporation and Executive Vice President for Commercial Banking
of the Bank. 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 serving as
President of a number of banking subsidiaries and in other various executive,
management and lending activities for 23 years. Mr. Thompson is 52 years old.
William F. Burke became Chief Financial Officer of the Corporation and the
Bank in October 1998. He 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 to April 1993. Mr. Burke was previously
employed by Shawmut National Corporation in various management capacities from
1975 to 1992. Mr. Burke is 50 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 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 various other capacities from 1961
through 1984. Mr. DiGaetano is 55 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
5
<PAGE>
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 50 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
managerial capacities including Chief Financial Officer of various subsidiary
banks, Deputy Controller, Corporate Tax Director, and Manager of Financial
Operating Systems. Mr. Coursey is 51 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, 1998
whose compensation exceeded $100,000 during fiscal 1998 (the "Named Executive
Officers").
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
Annual Compensation Securities
------------------- Underlying All Other
Salary Bonus Options Compensation
Name and Principal Position Year ($)(1) ($)(1) (#)(2) ($)(3)
- ------------------------------- -------- ------------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Leonard A. Wilson 1998 $315,000 $95,382 25,000 $198,362
Chairman and Chief 1997 290,000 50,025 15,000 127,202
Executive Officer 1996 275,507 114,660 45,000 163,557
Brian Thompson 1998 174,231 59,046 17,500 3,200
President and Chief 1997 153,365 25,875 17,000 4,500
Operating Officer 1996 0 0 0 0
David W. Dailey (4) 1998 150,000 33,165 0 248,777
Executive Vice 1997 148,808 25,185 6,000 5,652
President 1996 141,799 58,380 18,000 4,236
Wayne C. Golon 1998 152,000 36,343 10,000 3,200
Executive Vice 1997 144,700 16,641 17,000 4,800
President 1996 136,625 38,220 18,000 7,110
John M. DiGaetano 1998 138,200 33,044 10,000 3,073
Executive Vice 1997 136,681 15,433 6,000 3,456
President 1996 129,106 36,140 18,000 4,282
</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.
6
<PAGE>
(2) Represents options granted in each of fiscal 1996, fiscal 1997 and fiscal
1998. During fiscal 1996, fiscal 1997 and fiscal 1998, 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 1996,
fiscal 1997 and fiscal 1998 in the amounts of $2,257, $2,829 and $3,162,
respectively, accruals in fiscal 1996, fiscal 1997 and fiscal 1998 to Mr.
Wilson's Executive Salary Continuation Agreement of $156,800, $120,000
and $192,000, respectively; a special $237,500 payment by the Corporation
to Mr. Dailey in fiscal 1998 relating to his retirement (see "Employment
Contracts, Termination of Employment and Change in Control Agreements")
together with a $8,077 payment in lieu of accrued but unused vacation; a
payment by the Corporation of relocation expenses on behalf of Mr. Golon
in fiscal 1996 in the amount of $1,961; 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 401(k) Plan for fiscal 1996, fiscal 1997
and fiscal 1998, respectively, for the benefit of the named individuals.
Such contributions were made in shares of Common Stock, valued as
follows: Mr. Wilson, $4,500, $4,373 and $3,200; Mr. Thompson, $0, $4,500
and $3,200; Mr. Dailey, $4,236, $5,652 and $3,200; Mr. DiGaetano, $4,282,
$3,456 and $3,073; and Mr. Golon, $1,103, $4,800 and $3,200.
(4) Mr. Dailey retired from his employment with the Corporation on December
31, 1998.
Stock Options Granted in Fiscal 1998
The following table sets forth certain information regarding stock
options granted during fiscal 1998 to the Named Executive Officers. The grants
reflected in the table were made pursuant to the 1997 Stock Plan.
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------------- Potential Realizable
Value at Assumed Annual
Number of % of Total Rates of Stock Price
Securities Options/SARs Exercise Appreciation For
Underlying Granted to or Base Option Term
Options/SARS Employees in Price Expiration -----------------------------
Name Granted (#) Fiscal Period ($/Share) Date 5%($) 10%($)
------ ------------- ------------- --------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Leonard A. Wilson ...... 25,000 17.71% 23.9837 07/08/2008 $377,081 $955,596
Brian Thompson ......... 17,000 12.39 23.9837 07/08/2008 263,956 668,917
David W. Dailey (1) .... 0 -- -- -- -- --
John M. DiGaetano ...... 10,000 7.08 23.9837 07/08/2008 150,832 382,238
Wayne C. Golon ......... 10,000 7.08 23.9837 07/08/2008 150,832 382,238
</TABLE>
- -----------------
(1) Mr. Dailey retired from his employment with the Corporation on December 31,
1998.
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-end Option/SAR Values
The table below sets forth certain information regarding stock options
exercised during fiscal 1998 and stock options held at December 31, 1998, by the
Named Executive Officers. No stock appreciation rights ("SARS") are outstanding
under the Stock Plans.
7
<PAGE>
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
Shares at Fiscal Year-End at Fiscal Year-End
Acquired on Value (#) Exercisable/ ($) Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable(1)(2)
- ---------------------- ------------ ------------ ------------------ --------------------
<S> <C> <C> <C> <C>
Leonard A. Wilson ........ 18,200 $277,300 58,142/84,158 $579,878/$341,947
Brian Thompson -- -- 93,716/28,834 915,514/11,918
David W. Dailey (3) ...... 2,000 26,131 2,000/12,066 0/53,437
John M. DiGaetano ........ -- -- 54,934/22,066 565,125/53,437
Wayne C. Golon ........... 850 12,006 21,208/30,792 146,338/57,287
</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, 1998 of $18.00 and the
exercise price of the options under the Stock Plans.
(3) Mr. Dailey retired from his employment with the Corporation on December 31,
1998.
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.
The following table illustrates annual pension benefits for retirement at
age 65 under the most advantageous plan provisions in effect on December 31,
1998.
<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 5,532 8,298 11.065 13,831
60,000 9,232 13,848 18,465 23,081
80,000 12,932 19,398 25,865 32,331
100,000 16,632 24,948 33,265 41,581
120,000 20,332 30,498 40,665 50,831
125,000 21,257 31,886 42,515 53,143
140,000 24,032 36,048 48,065 60,081
150,000 25,882 38,823 51,765 64,706
160,000(2) 27,732 41,598 55,465 69,331
</TABLE>
- --------------------
8
<PAGE>
(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, 16; Mr.
Thompson, 15; Mr. Dailey, 13; Mr. DiGaetano, 16; and Mr. Golon, 19.
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. As of the date of this Proxy Statement, the Employers have not
elected to do so.
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 and Thompson. The
Employment Agreements provide that such officers will receive annual
compensation equal to $315,000 and $195,000, respectively, subject to increases
in accordance with the Employers' usual practice. Mr. Thompson's annual
compensation reflects an increase (effective September 1998) which corresponds
with his midyear promotion.
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. Thompson's Employment
Agreement is for a two-year term, which commenced on January 1, 1997 and is
extended daily until notice of non-renewal is given by either Mr. Thompson or
the Employers. Under both 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, Thompson,
Burke, DiGaetano and Golon. These agreements provide
9
<PAGE>
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. Burke,
DiGaetano and Golon) 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.
Burke, DiGaetano and Golon. In the case of such a termination, Mr. Wilson and
Mr. Thompson 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.
The Corporation's former Chief Financial Officer, Mr. Dailey, retired
from the Corporation on December 31, 1998. In connection with his retirement,
the Corporation entered into an agreement with Mr. Dailey which provides for
certain retirement benefits, including a lump sum special payment of $237,500;
accelerated vesting and extension of the exercise date of certain stock options
held by him; and continuation of health insurance benefits for a period of six
months following the date of his retirement. Prior to his retirement, the
Employers had entered into an Employment Agreement and a Special Termination
Agreement with Mr. Dailey. These agreements terminated upon his retirement.
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 1998 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 Corporation's 1997 Stock
Plan.
10
<PAGE>
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 1998.
While the Peer Group and the banks discussed in the Published Data are
not identical to the banks included in the Keefe, Bruyette & Woods, Inc. New
England Savings Bank Index to which the Corporation's stock performance is
compared in this Proxy Statement (see "Comparative Performance of the
Corporation"), the Compensation/Nominating Committee believes that the
compensation information for these groups is comparable since both groups
contain many of the same banks, as well as other 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 1998 salaries of the executive officers were established in
December 1997 based upon salary ranges determined by the Compensation/Nominating
Committee. The Committee established the 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 1998 were established within the salary ranges
set by the Compen-sation/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, with the
exception of incentive compensation for Messrs. Wilson and Thompson which is
based solely on organizational 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 equity, budgeted earnings and
individual performance.
11
<PAGE>
In fiscal 1998, the Compensation/Nominating Committee granted cash
bonuses to Messrs. Wilson, Thompson, Dailey, DiGaetano and Golon totaling
$95,382, $59,046, $33,165, $33,044 and $36,343, respectively. These awards
reflect the Corporation's achievement of specified performance objectives as
provided in the Incentive Plan. Bonuses awarded to Messrs. Dailey, DiGaetano and
Golon also reflect such officers' attainment of individual performance goals
established for 1998.
Stock Options
Long-term incentives are provided through the grant of stock options. 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 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.
Although options remain outstanding under the 1987 Stock Plan, no further
options can be granted thereunder.
In fiscal 1998, the Compensation/Nominating Committee granted stock
options to Mr. Wilson and Mr. Thompson totaling 25,000 shares and 17,500,
respectively, and 10,000 shares each to Messrs, DiGaetano and Golon. 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 1998 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 1998
reflects the Corporation's achievement of certain performance objectives as
specified in the Incentive Plan.
In December 1997, the Compensation/Nominating Committee increased Mr.
Wilson's base salary for fiscal 1998. 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. Mr. Wilson's December 1997 increase also included a "range adjustment" to
bring his base salary closer to the midpoint of the range for his position.
THOMAS S. BARENBOIM
AUGUSTINE J. FABIANI
ROBERT H. PANGIONE
WALTER W. TOPHAM
LEONARD A. WILSON (ex officio)
12
<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, 1993, 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.
[PERFORMANCE GRAPH]
First Essex Bancorp (FESX) Vs. The Five Year Total Return for the
KBW New England Bank Index and S&P 500 Index
Index of Total Return
500.00
400.00
300.00
200.00
100.00
0.00
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
Source: KEEFE, BRUYETTE WOODS, INC.
13
<PAGE>
INDEX OF TOTAL RETURN (12/31/93 = 100)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
S&P 500 KBW New England FESEX Price Plus
DATE INDEX Bank Index Indexed Cumulative Dividends
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
12/31/93 100.00 100.00 100.00 $6.750
3/31/94 96.24 105.19 117.56 $7.935
6/30/94 96.65 123.93 144.57 $9.759
9/30/94 101.38 118.33 138.27 $9.333
12/31/94 101.36 100.67 113.91 $7.689
- --------------------------------------------------------------------------------
3/31/95 111.19 113.03 125.66 $8.482
6/30/95 121.77 128.41 128.83 $8.696
9/30/95 131.42 146.93 167.80 $11.326
12/31/95 139.31 157.13 181.54 $12.254
- --------------------------------------------------------------------------------
3/31/96 146.78 157.45 173.48 $11.710
6/30/96 153.35 167.00 177.43 $11.977
9/30/96 158.05 187.66 197.74 $13.348
12/31/96 171.21 217.03 218.26 $14.732
- --------------------------------------------------------------------------------
3/31/97 175.83 225.37 247.28 $16.691
6/30/97 206.46 270.80 295.39 $19.939
9/30/97 221.91 319.57 345.94 $23.351
12/31/97 228.26 373.11 397.14 $26.807
- --------------------------------------------------------------------------------
3/31/98 260.03 395.82 414.47 $27.977
6/30/98 268.59 386.00 386.81 $26.110
9/30/98 241.92 302.58 289.83 $19.563
12/31/98 293.36 344.79 316.59 $21.370
- --------------------------------------------------------------------------------
</TABLE>
Source: KEEFE, BRUYETTE & WOODS, INC.
14
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
At the close of business on March 12, 1999, there were issued and
outstanding 7,614,634 shares of Common Stock entitled to cast 7,614,634 votes.
On March 12, 1999, the closing price of the Corporation's Common Stock as
reported by The Nasdaq Stock Market was $17.00 per share.
Principal Stockholders
The following table sets forth, as of March 12, 1999, the beneficial
ownership of Common Stock for (i) each current Director and nominee for
re-election as a Director of the Corporation, (ii) each executive officer named
in the Executive Compensation table, and (iii) all current directors and
executive officers of the Corporation as a group. The Corporation is not aware
of any person who owns beneficially more than 5% of the Common Stock.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. Shares of common stock issuable by the
Corporation pursuant to options which may be exercised within 60 days after
March 12, 1999 are deemed to be beneficially owned and outstanding for purposes
of calculating the number of shares and the percentage beneficially owned by the
applicable person. However, these shares are not deemed to be beneficially owned
and outstanding for purposes of computing the percentage beneficially owned by
any other person or entity.
<TABLE>
<CAPTION>
Number of Shares
of Common Stock
Beneficially Percent
Name Owned(1) of Class
- ------------------- ----------------- ----------
<S> <C> <C>
Thomas S. Barenboim 23,720 0.31%
David W. Dailey (2)(3) 35,015 0.46%
John M. DiGaetano (3) 71,260 0.93%
Augustine J. Fabiani (4) 21,665 0.28%
Wayne C. Golon (2)(3) 33,110 0.43%
William L. Lane (2) 19,872 0.26%
Frank J. Leone, Jr (2)(5). 35,565 0.47%
Robert H. Pangione (2)(6) 95,973 1.26%
Brian W. Thompson (3) 115,750 1.50%
Walter W. Topham (2)(7) 24,092 0.32%
Robert H. Watkinson (2) 24,048 0.32%
Leonard A. Wilson (2)(3) 145,026 1.89%
All Directors and Officers as a group
(14 persons) (1)(3)(4)(5)(6)(7) 694,085 8.68%
</TABLE>
- ------------------------
(1) The amounts set forth above as beneficially owned include shares of Common
Stock which such beneficial owner had the right to acquire within 60 days of
March 12, 1999 under options previously granted pursuant to the 1987 Stock
Plan and/or the 1997 Stock Plan in the following amounts: Mr. Barenboim,
14,500 shares; Mr. Dailey, 14,066 shares; Mr. DiGaetano, 63,000 shares; Mr.
Fabiani, 12,000 shares; Mr. Golon, 29,146 shares; Mr. Lane, 12,000 shares;
Mr. Leone, 9,000 shares; Mr. Pangione, 4,000 shares; Mr. Thompson, 97,383
shares; Mr. Topham, 7,000 shares; Mr. Watkinson,
15
<PAGE>
12,000 shares; Mr. Wilson, 64,163 shares; and all of the Directors and
Officers as a group, 383,590 shares. The persons named in this table have
sole voting and investment power with respect to the shares listed, except
as otherwise indicated. The inclusion herein of shares listed as
beneficially owned does not constitute an admission of beneficial ownership.
(2) 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. Dailey, 19,000 shares; Mr.
Golon, 3,000 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.
(3) Includes shares allocated to the account of such persons under the 401(k)
Plan in the following amounts: Mr. Dailey, 1,949 shares; Mr. DiGaetano,
4,075 shares; Mr. Golon, 964 shares; Mr. Thompson 2,762 shares and Mr.
Wilson, 11,163 shares; and all of the Directors and Officers as a group,
23,070 shares.
(4) Includes 1,595 shares owned by a trust of which Mr. Fabiani is the trustee
and the beneficiary.
(5) Includes 26,440 shares owned by a trust of which Mr. Leone is a trustee and
a beneficiary.
(6) Includes 35,000 shares owned by Mr. Pangione's wife. Mr. Pangione disclaims
beneficial ownership of the shares owned by his wife.
(7) 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. Approximately $65,000, less the trade-in
value of two automobiles of approximately $24,000, was expended for two
automobiles that were purchased from a company owned by Mr. Barenboim in the
year ended December 31, 1998. 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
reasonable 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.
16
<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 1998, all such Section 16(a) filing requirements were
complied with.
NOTICE OF 2000 ANNUAL MEETING
Notice is hereby given that the 2000 Annual Meeting of Stockholders of
First Essex Bancorp, Inc. will be held on Thursday, May 4, 2000, unless
stockholders are notified otherwise.
SUBMISSION OF STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
In order to be eligible for inclusion in the Corporation's proxy
statement and form of proxy for the annual meeting scheduled to be held in May
2000, stockholder proposals must comply with SEC rule 14a-8 and any other
applicable rules and must be delivered to the Corporation's principal executive
offices at least 120 days prior to the anniversary date of mailing of this Proxy
Statement. This Proxy Statement was mailed on or about April 5, 1999, so the
date by which proposals are required to be received under Rule 14a-8 will be
December 7, 1999.
In addition, 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
previous 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. If next year's
annual meeting is held as scheduled, proposals or nominations must be received
not earlier than January 7, 2000, but not later than February 21, 2000, and any
proposal or nomination submitted after February 21, 2000 will be untimely. The
By-laws contain a number of other substantive and procedural requirements which
should be reviewed by any interested stockholder. 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 1998 and is expected to serve as the Corporation's
independent public accountants for 1999. 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.
17
<PAGE>
0981-1999-PS
<PAGE>
FEB65B DETACH HERE
- --------------------------------------------------------------------------------
PROXY
FIRST ESSEX BANCORP, INC.
71 MAIN STREET, ANDOVER, MASSACHUSETTS 01810
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 6, 1999
THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking any proxy heretofore given, hereby constitutes
and appoints Leonard A. Wilson, Brian W. Thompson 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 12, 1999, on behalf of the undersigned at the Annual Meeting of
Stockholders of the Corporation to be held on Thursday, May 6, 1999 at 10:00
a.m., local time at the Andover Country Club, 60 Canterbury Street, Andover,
Massachusetts and 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 III 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 SEE REVERSE
SIDE SIDE
- ----------- -----------
<PAGE>
FEB65A DETACH HERE
- --------------------------------------------------------------------------------
Please mark
[X] 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 III Directors of the Corporation.
Nominees: Thomas S. Barenboim, William L. Lane and Robert H. Watkinson
FOR WITHHELD
ALL [ ] [ ] FROM ALL
FOR NOMINEES NOMINEES
ALL
EXCEPT
[ ]
-----------------------------------------
If you wish to withhold your shares from one or two of the nominees, mark
the "For All Except" box and write 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:
----------------- -------- ---------------- --------
