<PAGE> 1
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 (Amendment No. )
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
ANDOVER 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> 2
61 MAIN STREET
ANDOVER, MASSACHUSETTS 01810
(508) 749-2000
March 14, 1997
DEAR SHAREHOLDER:
You are cordially invited to attend the Annual Meeting of Shareholders (the
"Annual Meeting") of Andover Bancorp, Inc. ("Andover" or the "Company") to be
held on Thursday, April 24, 1997 at 10:00 a.m., at the Andover Town House, 20
Main Street, Andover, Massachusetts. Parking for the Annual Meeting is available
in Andover's parking lot which is located across the street from the Andover
Town House.
The Annual Meeting has been called for the purpose of electing two Class I
Directors for a three-year term; ratifying the appointment of KPMG Peat Marwick
LLP as Andover's independent auditors for 1997; 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 of Andover (the "Andover Board") has fixed the close
of business on March 3, 1997, as the record date for determining shareholders
entitled to notice of and to vote at the Annual Meeting.
The Andover Board recommends that shareholders vote FOR the election of its
two nominees as Class I Directors and FOR the ratification of the appointment of
KPMG Peat Marwick LLP as Andover's independent auditors.
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/ Gerald T. Mulligan
---------------------------
Gerald T. Mulligan
President and
Chief Executive Officer
<PAGE> 3
ANDOVER BANCORP, INC.
61 MAIN STREET
ANDOVER, MA 01810
TELEPHONE: (508) 749-2000
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 24, 1997
---------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Andover
Bancorp, Inc., a Delaware corporation ("Andover" or the "Company") will be held
at the Andover Town House, 20 Main Street, Andover, Massachusetts at 10:00 a.m.
on Thursday, April 24, 1997 (together with all adjournments and postponements
thereof, the "Annual Meeting"), for the following purposes:
1. To elect two Class I Directors, each for a three-year term to serve
until the 2000 annual meeting of shareholders and until his successor
is duly elected and qualified;
2. To ratify the appointment of KPMG Peat Marwick LLP as Andover's
independent auditors for the fiscal year ending December 31, 1997; and
3. To transact such other business as may properly come before the Annual
Meeting and any adjournments or postponements thereof.
The Board of Directors of Andover (the "Andover Board") has fixed the close
of business on March 3, 1997, as the record date (the "Record Date") for
determining shareholders entitled to notice of and to vote at the Annual Meeting
and any adjournments or postponements thereof. Only holders of shares of common
stock, par value $0.10 per share, of Andover of record at the close of business
on the Record Date will be entitled to notice of and to vote at the Annual
Meeting and any adjournments or postponements thereof.
A list of the shareholders entitled to vote at the Annual Meeting shall be
available at 61 Main Street, Andover, Massachusetts for examination by any
shareholder, for any purpose germane to the Annual Meeting, during ordinary
business hours for a period of 10 days prior to the Annual Meeting.
By order of the Board of Directors
/s/ Cynthia J. Milne
--------------------------
CYNTHIA J. MILNE
Secretary
Andover, Massachusetts
March 14, 1997
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE,
DATE, AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE. YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING EVEN IF YOU
HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
<PAGE> 4
ANDOVER BANCORP, INC.
61 MAIN STREET
ANDOVER, MA 01810
TELEPHONE: (508) 749-2000
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON THURSDAY, APRIL 24, 1997
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Andover Bancorp, Inc. ("Andover" or the
"Company") for the Annual Meeting of Shareholders of Andover to be held at the
Andover Town House, 20 Main Street, Andover, Massachusetts at 10:00 a.m. on
Thursday, April 24, 1997, and any adjournments or postponements thereof (the
"Annual Meeting"). This Proxy Statement and the accompanying proxy card are
being mailed to shareholders on or about March 14, 1997.
At the Annual Meeting, the shareholders of Andover will be asked to
consider and vote upon the following matters:
1. To elect two Class I Directors, each for a three-year term to continue
until the 2000 annual meeting of shareholders and until his successor
is duly elected and qualified;
2. To ratify the appointment of KPMG Peat Marwick LLP as Andover's
independent auditors for the fiscal year ending December 31, 1997; and
3. To transact such other business as may properly come before the Annual
Meeting and any adjournments or postponements thereof.
The Board of Directors of Andover (the "Andover Board") has fixed the close
of business on March 3, 1997, as the record date (the "Record Date") for
determining shareholders entitled to notice of and to vote at the Annual Meeting
and any adjournments or postponements thereof. As of the Record Date, there were
5,142,892 shares of Andover's common stock, par value $0.10 per share (the
"Common Stock"), outstanding and entitled to vote at the Annual Meeting. Each
holder of Common Stock outstanding on the Record Date will be entitled to one
vote for each share held on each matter voted upon at the Annual Meeting. 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.
The presence, in person or by proxy, of at least a majority of the total
number of outstanding shares of Common Stock entitled to vote is necessary to
constitute a quorum for the transaction of business at the Annual Meeting. A
quorum being present, (i) Directors will be elected by a plurality of the shares
present in person or represented by proxy at the Annual Meeting and entitled to
vote on the election of Directors, and (ii) the appointment of KPMG Peat Marwick
LLP as Andover's independent auditors for the fiscal year ending December 31,
1997, will be ratified by a majority of the shares represented in person or by
proxy and entitled to vote at the Annual Meeting.
<PAGE> 5
Andover intends to count (i) shares of Common Stock for which proxies or
ballots have been received but with respect to which holders or shares have
abstained on any matter and (ii) broker non-votes as present at the Annual
Meeting for purposes of determining the presence or absence of a quorum for the
transaction of business at the meeting. A broker non-vote occurs when a broker
or other nominee holding shares for a beneficial owner votes on one proposal,
but does not vote on another proposal because such broker or other nominee does
not have discretionary voting power as to the proposal and has not received
voting instructions from the beneficial owner.
With respect to the election of Directors, votes may only be cast in favor
or withheld from the nominee; there is no ability to abstain. Accordingly,
shares represented by proxy that withholds authority to vote for a particular
nominee or nominees and broker non-votes will have no effect on the results of
the vote for the election of Directors. With respect to the proposal relating to
the ratification of the Company's independent auditors, abstentions will have
the same effect as votes against the proposal while broker non-votes will have
no effect on the results of the vote.
Shareholders of Andover are requested to complete, date, sign and return
the accompanying form of proxy in the enclosed envelope. Shares represented by
proxies in the enclosed form will be voted as shareholders direct. Proxies that
contain no directions to the contrary will be voted FOR the election of the two
nominees of the Board of Directors to serve as Class I Directors of Andover and
FOR the ratification of the appointment of KPMG Peat Marwick LLP as the
Company's independent auditors for the current fiscal year. At the time of
preparation of this Proxy Statement, the Board of Directors of Andover knew of
no other matters to be presented for action at the Annual Meeting. If any other
business should properly come before the Annual Meeting, the persons named as
proxies in the accompanying proxy card shall have authority to vote the shares
in their discretion.
Any properly completed proxy may be revoked at any time before it is voted
on any matter (without, however, affecting any vote taken prior to such
revocation) by notifying the Secretary of Andover (61 Main Street, Andover,
Massachusetts 01810) in writing prior to the Annual Meeting or orally at the
Annual Meeting before the proxy is voted. Attendance at the Annual Meeting will
not by itself constitute revocation of a proxy.
The cost of soliciting proxies in the form enclosed herewith will be borne
by Andover. Solicitation of proxies will be made primarily by mail, although the
Directors, officers and certain employees of Andover or Andover Bank, the
wholly-owned subsidiary of Andover ("Andover Bank") may also solicit proxies
personally or by telephone, telegraph or other means without special
compensation for such activities. Andover will also request persons, banks,
firms and corporations holding shares in their names or in the names of their
nominees, which are beneficially owned by others, to send proxy materials and
obtain proxies from such beneficial owners. Andover will reimburse such holders
for their reasonable expenses. Andover has also retained Kissel Blake Inc., a
proxy soliciting firm, to assist in solicitation of proxies at a fee estimated
to be approximately $2,500, plus reimbursement of certain out-of-pocket
expenses.
ANNUAL REPORT TO SHAREHOLDERS
Andover's Annual Report for the fiscal year ended December 31, 1996 is
enclosed. The Annual Report is not a part of the proxy soliciting materials.
2
<PAGE> 6
PROPOSAL 1
ELECTION OF CLASS I DIRECTORS
The Andover Board is comprised of seven members divided into three classes,
with the Directors in each class serving a term of three years and until their
successors are duly elected and qualified. As the term of one class expires, a
successor class is elected at the annual meeting of shareholders for that year.
At the Annual Meeting, two Class I Directors are to be elected for a
three-year term to serve until the 2000 annual meeting of shareholders and until
their successors are duly elected and qualified. The Andover Board has nominated
Thomas F. Caffrey and Cornelius J. McCarthy to serve as Class I Directors (the
"Nominees"). Each of the Nominees is currently serving as a Director of Andover.
Unless authority to do so has been withheld or limited in a proxy, it is the
intention of the persons named as proxies to vote the shares to which the proxy
relates FOR the election of the Nominees to the Andover Board. Certain
information with respect to the Nominees is shown below under "Information
Regarding Directors".
The Andover Board anticipates that each of the Nominees will stand for
election and will serve, if elected, as a Director. However, if any person
nominated by the Andover Board fails to stand for election or is unable to
accept election, proxies not marked to the contrary will be voted for the
election of such other person or persons as the Andover Board may recommend.
VOTE REQUIRED FOR APPROVAL
A quorum being present, the affirmative vote of a plurality of the votes
cast is necessary to elect a Nominee as a Director of the Company.
THE BOARD RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS VOTE FOR THE ELECTION
OF THE TWO NOMINEES AS DIRECTORS OF THE COMPANY.
3
<PAGE> 7
INFORMATION REGARDING DIRECTORS
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors of the Company held five meetings during 1996. No
incumbent Director attended fewer than 75% of the aggregate of the total number
of meetings held by the Andover Board and the total number of meetings held by
all committees of the Andover Board on which such Director served during the
period of such Director's service. Andover has three standing committees: the
Audit Committee, the Nominating Committee and the Compensation and Option
Committee.
The members of the Audit Committee, a joint committee comprised of members
of the Board of Directors of Andover Bank, Andover Bank NH and of the Andover
Board, are Robert J. Scribner (Chairman) and Fred P. Shaheen, members of the
Andover Board, Frank D. Goldstein, John E. Fenton, Jr. and Irving E. Rogers,
III, members of the Board of Directors of Andover Bank and Robert W. Phinney, a
member of the Board of Directors of Andover Bank NH. The Audit Committee reviews
the financial statements of Andover and the scope of the annual audit, monitors
Andover's internal financial and accounting controls and recommends to the
Andover Board the appointment of independent certified public accountants. The
Audit Committee held four meetings in 1996.
The members of the Compensation and Option Committee, a joint committee
comprised of members of the Board of Directors of Andover Bank and of the
Andover Board, are Messrs. Cornelius J. McCarthy (Chairman) and Scribner,
members of the Andover Board and Frank D. Goldstein and Thomas F. Caffrey,
members of the Board of Directors of Andover Bank. The Compensation and Option
Committee selects the officers and other employees to whom stock options and
rights under Andover's Stock Option Plan are granted and determines compensation
for the officers and other employees of Andover. The Compensation and Option
Committee held three meetings in 1996.
The members of the Nominating Committee, a joint committee comprised of
members of the Board of Directors of Andover Bank and of the Andover Board, are
Clifford E. Elias (Chairman) and Naomi A. Gardner, members of the Andover Board
and Paul J. Donahue and Robert W. Phinney, members of the Board of Directors of
Andover Bank. The Nominating Committee considers and recommends nominees for
election as officers and Directors of Andover. The Nominating Committee held no
meetings in 1996. Andover's By-laws also permit shareholders who are eligible to
vote at the Annual Meeting to make nominations for Directors, if such
nominations are made pursuant to timely notice in writing to the Secretary of
Andover. See "Shareholder Proposals" for a discussion of the procedural
requirements for shareholder nominations.
COMPENSATION OF DIRECTORS
The Directors of Andover are each also Directors of Andover Bank. The
Directors of Andover currently receive a fee of $5,000 annually and $400 for
each Board meeting they attend. The Directors of Andover Bank receive a fee of
$5,000 annually and $400 for each Board meeting they attend. Committee members
of Andover and Andover Bank currently receive an additional fee of $2,000
annually and $400 for each Committee meeting they attend. The Committee Chairman
receive an additional fee of $1,000 annually. Directors who are also salaried
employees of Andover or Andover Bank do not receive any separate compensation
for service as a Director of Andover or Andover Bank.
4
<PAGE> 8
Each member of the Board of Directors of the Company or any of its
subsidiaries who is not an employee of the Company or any of its subsidiaries is
eligible to participate in the Director's Deferred Compensation Plan whereby
members can defer all or a portion of his or her Director's fees until the
Director ceases to be a member of such Board of Directors for any reason
whatsoever. Under the Director's Deferred Compensation Plan, each Director may
choose either to receive interest credits to his account equivalent to the
interest yield on Andover Bank's 36-month deposits or to direct the deemed
investment of his deferred compensation account in stock units equivalent in
value to Common Stock of the Company and receive distribution in shares of
Common Stock of the Company.
Set forth below is certain information regarding the Directors of the
Company, including the two Class I Directors who have been nominated to the
Board, based on information furnished by them to the Company.
<TABLE>
<CAPTION>
NAME AND POSITION DIRECTOR/OFFICER
WITH ANDOVER AGE SINCE (1)
----------------- --- ---------
<S> <C> <C>
(Nominees for Class I Term to Expire in 2000)
Thomas F. Caffrey........................................57 1983
Director
Cornelius J. McCarthy....................................60 1983
Director
(Continuing Directors - Class II Term to Expire
in 1998)
Naomi A. Gardner.........................................55 1983
Director
Robert J. Scribner.......................................68 1975
Director
(Continuing Directors - Class III Term to Expire
in 1999)
Fred P. Shaheen .........................................53 1983
Director
Clifford E. Elias .......................................66 1983
Director
Gerald T. Mulligan.......................................51 1991
Director
</TABLE>
(1) Each of the Nominees and Continuing Directors, with the exception of Mr.
Mulligan, Mr. Shaheen and Mrs. Gardner, who were elected by the Board of
Directors in 1991, 1994 and 1992, respectively, has served as a Director
of Andover since its formation in February 1987. The dates indicated in-
clude service as a Director of Andover Bank, including service prior to
the formation of Andover and as a Trustee of Andover Bank prior to its
conversion from mutual to stock form of ownership in May 1986. All of the
Nominees and Continuing Directors have served as Directors or Trustees of
Andover Bank since the dates indicated above, and continue to serve as
Directors of Andover Bank at the present time.
The principal occupation and business experience during at least the last
five years for each Continuing Director and Nominee follows:
Thomas F. Caffrey is an attorney in private practice in Lawrence,
Massachusetts.
Clifford E. Elias is Professor of Law at Suffolk University, Boston,
Massachusetts and General Counsel of Holy Family Hospital, Methuen,
Massachusetts.
5
<PAGE> 9
Naomi A. Gardner is the Director of Public Relations for Northeast
Rehabilitation Hospital in Salem, New Hampshire.
Cornelius J. McCarthy is President of C.J. McCarthy Insurance Agency, Inc.,
Wilmington, Massachusetts.
Robert J. Scribner was Executive Vice President, Secretary and Director of
Merrimack Mutual Fire Insurance Co., Cambridge Mutual Fire Insurance Co. and Bay
State Insurance Co., Andover, Massachusetts, until his retirement.
Fred P. Shaheen is the Treasurer of Shaheen Brothers, Inc., Amesbury,
Massachusetts.
Gerald T. Mulligan is President and Chief Executive Officer of Andover and
Andover Bank.
INFORMATION REGARDING EXECUTIVE OFFICERS
The names and ages of the four highest paid executive officers of the
Company and the Chief Executive Officer (the "Named Executive Officers") and the
principal occupation and business experience during the last five years for each
are set forth below.
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Gerald T. Mulligan........... 51 President and Chief Executive Officer
John R. Heerwagen............ 46 Senior Vice President
Michael J. Ecker............. 45 Senior Vice President
Joseph F. Casey.............. 36 Chief Financial Officer and Treasurer
Raymond P. Smith............. 48 Senior Vice President
</TABLE>
Gerald T. Mulligan is President and Chief Executive Officer of Andover and
Andover Bank, a position he has held since joining Andover and Andover Bank in
1991.
John R. Heerwagen is Senior Vice President-Retail Banking of Andover Bank,
a position he has held since joining Andover Bank in September, 1991. He was
elected Senior Vice President of Andover in December, 1993.
Michael J. Ecker is Senior Vice President-Special Assets Group and
Construction Lending of Andover and Andover Bank, a position he has held since
October, 1995. Mr. Ecker joined Andover Bank as Vice President-Special Assets
Group in July, 1991, and was elected as a Senior Vice President of Andover Bank
in 1992 and Senior Vice President of Andover in 1993.
Joseph F. Casey is Chief Financial Officer and Treasurer of Andover and
Andover Bank. He joined Andover Bank as Auditor in August, 1985, became its
Controller in 1986, became Treasurer of Andover and Andover Bank in 1988 and
1989, respectively, and became Chief Financial Officer and Treasurer of Andover
and Andover Bank in 1991. Mr. Casey is a certified public accountant.
6
<PAGE> 10
Raymond P. Smith is Senior Vice President-Corporate Banking of Andover
Bank, a position he has held since joining Andover Bank in June, 1995. Mr. Smith
was elected President of Andover Bank NH in September, 1995. Prior to joining
Andover Bank, Mr. Smith was the Senior Vice President/Senior Lending Officer at
the New Dartmouth Bank, Manchester, New Hampshire from 1991 to 1994 which has
since been acquired by Shawmut National Corporation.
OTHER EXECUTIVE OFFICERS
The following sets forth certain information, as of February 1, 1997, with
respect to the principal officers of Andover and Andover Bank, other than the
Named Executive Officers.
Octavio C. Bolivar is Senior Vice President-Systems and Operations of
Andover and Andover Bank, a position he has held since January, 1994. Prior to
joining Andover Bank, Mr. Bolivar was Vice President-Director of Client Services
at Mutual Services, Inc. from October of 1992 to January, 1994. From July, 1991
to May, 1992, Mr. Bolivar was Director of Operations at South Boston Savings
Bank. He is 53 years of age.
Barbara J. Conti is Senior Vice President of Human Resources of Andover
Bank, a position she has held since December, 1995. She joined Andover Bank as
Vice President of Human Resources in April, 1994. From 1991 until she joined
Andover Bank, Ms. Conti was the Vice President/Director of Human Resources of
Sterling Bank of Waltham, Massachusetts, which has since been acquired by Fleet
Bank. Ms. Conti is 42 years of age.
Gerald C. Woodworth, Jr. is Senior Vice President-Loan Operations of
Andover and Andover Bank. He joined Andover Bank as Vice President of Loan
Operations in April, 1986, and was elected a Senior Vice President of Andover
Bank and Andover in 1988 and 1993, respectively. Mr. Woodworth is 56 years of
age.
Pursuant to Andover's By-laws, each Andover officer, including each Named
Executive Officer, holds office until the regular annual meeting of the Board of
Directors following the next annual meeting of shareholders and until his or her
successor is elected and qualified or until his or her earlier resignation or
removal.
7
<PAGE> 11
EXECUTIVE COMPENSATION
No separate compensation is paid to the executive officers of the Company,
all of whom are executive officers of Andover Bank and receive compensation as
such.
I. SUMMARY COMPENSATION TABLE
The following table sets forth for the fiscal years ended December 31,
1996, 1995 and 1994, the cash compensation paid by Andover Bank, as well as the
value of long-term compensation and other compensation, to the Chief Executive
Officer and the four other most highly compensated executive officers of the
Company during 1996.
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
--------------------------------------------------- -----------
Name and Other Annual Securities All Other
Principal Compen- Underlying Compensa-
Position Year Salary($) Bonus($) sation ($) Options ($)(2) tion ($) (3)
- -------- ---- --------- -------- ---------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Gerald T. Mulligan, 1996 $283,077 45,000 (1) 42,000 (4) $24,845 (5)
President and Chief 1995 258,461 45,000 (1) 18,000 9,544 (5)
Executive Officer of 1994 238,076 43,000 (1) 76,800 (6) 9,076 (5)
Andover and Andover Bank
John R. Heerwagen, 1996 121,077 18,500 (1) 8,400 18,633 (7)
Senior Vice President of 1995 115,538 17,200 (1) 7,800 9,153 (7)
Andover and Andover Bank 1994 109,307 16,200 (1) 7,800 6,468 (7)
Michael J. Ecker, 1996 112,692 24,000 (1) 8,400 18,457 (8)
Senior Vice President of 1995 109,615 21,300 (1) 7,800 9,396 (8)
Andover and Andover Bank 1994 103,269 19,800 (1) 7,800 6,237 (8)
Joseph F. Casey, 1996 108,615 15,500 (1) 8,400 19,625 (9)
Chief Financial Officer 1995 105,350 14,500 (1) 7,800 8,245 (9)
and Treasurer of Andover 1994 95,000 15,000 (1) 8,400 5,672 (9)
and Andover Bank
Raymond P. Smith, 1996 103,692 9,000 (1) 8,400 7,925 (10)
Senior Vice President of 1995 (11) 53,846 --- (1) 9,600 ---
Andover Bank
<FN>
(1) The amount of perquisites did not exceed 10% of salary and bonus.
(2) All option data for 1995 and 1994 has been adjusted to reflect a 20% stock
dividend declared on October 17, 1996.
(3) Includes (i) Andover Bank's contributions to the tax exempt benefit plan
that is qualified under Section 401(k) of the Internal Revenue Code of
1986, as amended, and (ii) the cash value of shares of the Common Stock
acquired by the Employee Stock Ownership Plan ("ESOP") and allocated to the
named party. Such cash value was determined by multiplying the number of
shares of Common Stock so allocated by the closing price of Common Stock at
December 31 of the applicable year as reported by The Nasdaq National
Market. Such closing prices were $ 25.625 at December 31, 1996, $17.6042 at
December 31, 1995 and $11.875 at December 31, 1994. The amount does not
include the cash value of dividends declared in 1996 but paid in 1997. All
ESOP data for 1995 and 1994 has been adjusted to reflect a 20% stock
dividend declared on October 17, 1996.
</TABLE>
8
<PAGE> 12
(4) Includes an award of options to purchase 24,000 shares granted on April 25,
1996, to Mr. Mulligan in lieu of his participating in Andover's
supplemental pension plan. Also includes an award of options to purchase
18,000 shares granted on April 25, 1996.
(5) Includes (i) Andover Bank's contribution of $1,911, $1,851 and $1,856 in
1996, 1995 and 1994, respectively, to Mr. Mulligan's 401(k) account, and
(ii) the cash value of 895 shares, 437 shares and 608 shares, allocated to
Mr. Mulligan under the ESOP, at December 31, 1996, 1995 and 1994,
respectively.
(6) Includes an award of options to purchase 60,000 shares granted on June 16,
1994 to Mr. Mulligan in lieu of his participating in Andover's supplemental
pension plan. Also includes an award of options to purchase 16,800 shares
granted on December 30, 1994.
(7) Includes (i) Andover Bank's contribution of $1,209, $1,161 and $1,172 in
1996, 1995 and 1994, respectively, to Mr. Heerwagen's 401(k) account, and
(ii) the cash value of 680 shares, 454 shares and 446 shares, allocated to
Mr. Heerwagen under the ESOP, at December 31, 1996, 1995 and 1994,
respectively.
(8) Includes (i) Andover Bank's contribution to Mr. Ecker's 401(k) account of
$1,367, $1,299 and $1,238 in 1996, 1995 and 1994, respectively, and (ii)
the cash value of 667 shares, 460 shares and 421 shares, allocated to Mr.
Ecker under the ESOP, at December 31, 1996, 1995 and 1994, respectively.
(9) Includes (i) Andover Bank's contribution of $1,073, $1,098 and $1,100 in
1996, 1995 and 1994, respectively, to Mr. Casey's 401(k) account and (ii)
the cash value of 724 shares, 406 shares and 385 shares, allocated to Mr.
Casey under the ESOP, at December 31, 1996, 1995 and 1994, respectively.
(10) Includes (i) Andover Bank's contribution of $520 in 1996 to Mr. Smith's
401(k) account and (ii) the cash value of 289 shares allocated to Mr. Smith
under the ESOP, at December 31, 1996.
(11) Mr. Smith joined Andover in June, 1995.
9
<PAGE> 13
II. OPTION GRANTS TABLE
Set forth below is a chart showing the option grants made to the Chief
Executive Officer and the other four most highly compensated executive officers
of Andover during 1996. No stock appreciation rights ("SARs") have been granted.
<TABLE>
Option Grants in Last Fiscal Year
---------------------------------
<CAPTION>
Potential Realizable Value
At Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term (4)
--------------------------------------------------------------------------- -------------------
Percent
Number of of Total
Securities Options
Underlying Granted to
Options Employees In Exercise or Base
Name Granted (#) Fiscal Year (2) Price ($/Sh) Expiration Date 5% ($) 10% ($)
---- ----------- --------------- ------------ --------------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Gerald T. Mulligan, 18,000 (1) 17.05% $21.4583 04/25/2006 $166,555.00 $494,001.00
President and CEO 24,000 (3) 22.73% $18.8542 04/25/2006 $284,573.00 $721,168.00
John R. Heerwagen, 8,400 (1) 7.95% $21.4583 04/25/2006 $ 77,725.00 $230,533.00
Sr. Vice President
Michael J. Ecker, 8,400 (1) 7.95% $21.4583 04/25/2006 $ 77,725.00 $230,533.00
Sr. Vice President
Joseph F. Casey, 8,400 (1) 7.95% $21.4583 04/25/2006 $ 77,725.00 $230,533.00
CFO & Treasurer
Raymond P. Smith, 8,400 (1) 7.95% $21.4583 04/25/2006 $ 77,725.00 $230,533.00
Sr. Vice President
<FN>
(1) The options granted pursuant to the Andover Bancorp, Inc. Stock Option Plan
and are immediately exercisable.
(2) Percentages are based on a total of 105,600 shares of Common Stock
underlying all options granted to Directors and employees of the Company
during 1996.
(3) The options granted are subject to the following vesting schedule: 12,000
options vest upon grant and 2,400 options vest on each of the following
dates - 4/25/97, 4/25/98, 4/25/99, 4/25/2000 and 4/25/2001. These options
were granted in lieu of Mr. Mulligan participating in Andover's
supplemental pension plan.
(4) The amounts shown as potential realizable values are based on arbitrarily
assumed annualized rates of stock price appreciation of five percent and
ten percent over the full ten year term of the options, as required by
applicable Securities and Exchange Commission regulations. No gain to the
optionee is possible without an increase in stock price which will benefit
all shareholders proportionately. Actual gains, if any, on options
exercised are dependent on the future performance of Common Stock and
overall stock market conditions. There can be no assurance that the
potential realizable values shown in this table will be achieved.
</TABLE>
10
<PAGE> 14
III. OPTION EXERCISES AND YEAR-END TABLE
Set forth below is a chart showing the aggregated exercised and unexercised
options held by the Chief Executive Officer and the other four most highly
compensated executive officers of Andover during 1996.
<TABLE>
Aggregated Option Exercises in Last Fiscal Year and December 31, 1996 Option Value
----------------------------------------------------------------------------------
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Options at
December 31, 1996 (#) December 31, 1996 ($)
--------------------- ------------------------
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) (1) Unexercisable Unexercisable (2)
- ---- --------------- ---------------------- ------------- -----------------
<S> <C> <C> <C> <C>
Gerald T. Mulligan, 3,802 $37,623 129,998/30,000 $1,305,593/$227,499
President and CEO
John R. Heerwagen, 4,972 68,850 34,988/--- $375,294/---
Sr. Vice President
Michael J. Ecker, 1,800 22,124 35,400/--- $374,372/---
Sr. Vice President
Joseph F. Casey, --- --- 33,412/--- $323,637/---
CFO & Treasurer
Raymond P. Smith, --- --- 18,000/--- $111,998/---
Sr. Vice President
<FN>
(1) Value realized upon exercise is the difference between the fair market
value of the underlying stock on the exercise date and the exercise price
of the option.
(2) Value of unexercised, in-the-money options at December 31, 1996, is the
difference between its exercise price and the fair market value of the
underlying stock on December 31, 1996, which was $25.625 per share. These
values have not been, and may never be, realized. The underlying options
have not been, and may not be, exercised; and actual gains, if any, on
exercise will depend on the value of Common Stock on the date of exercise.
There can be no assurance that these values will be realized. Unexercisable
options are those which have not fully vested.
</TABLE>
IV. PENSION PLAN
The following table illustrates estimated annual pension benefits for
retirement at age 65 under the most advantageous plan provisions (in effect on
December 31, 1996) available for various levels of compensation and years of
service.
<TABLE>
<CAPTION>
Pension Plan Table
------------------
25 years
Remuneration (1) (2) 15 years 20 years and after
- -------------------- --------- -------- ---------
<S> <C> <C> <C>
$120,000.........................30,818 41,091 51,364
140,000.........................36,368 48,491 60,614
150,000.........................39,143 52,191 65,239
</TABLE>
(1) To determine the annual amount to be received by an individual under the
pension plan, the three yearly amounts of total taxable compensation for
the three years immediately preceding retirement are averaged.
11
<PAGE> 15
(2) Federal law does not permit defined benefit pension plans to recognize
compensation in excess of $150,000 for plan years beginning in 1994.
The figures in this table are calculated on the basis of a straight-life
annuity and are based on the assumption that Andover Bank's Retirement Plan (the
"Plan") continues in its present form. The benefits are not subject to any
deduction for Social Security or other offset amounts.
Gerald T. Mulligan, President and Chief Executive Officer of Andover
and Andover Bank, will have an estimated 20 years of service under the Plan at
normal retirement date. Senior Vice Presidents of Andover and Andover Bank, John
R. Heerwagen and Michael J. Ecker will both have an estimated 25 years of
service, under the Plan at normal retirement date. Joseph F. Casey, Chief
Financial Officer and Treasurer of Andover and Andover Bank will have an
estimated 40 years of service under the Plan at normal retirement date. Raymond
P. Smith, Senior Vice President of Andover and Andover Bank, will have an
estimated 19 years of service, under the Plan at normal retirement date.
V. TERMINATION AGREEMENTS AND EMPLOYMENT AGREEMENT
Andover and Andover Bank have entered into special termination agreements
with Gerald T. Mulligan and each of the other Named Executive Officers, John R.
Heerwagen, Michael J. Ecker, Joseph F. Casey and Raymond P. Smith. Each of these
special termination agreements provides generally that if there is a change in
control or merger of equals of Andover and if, at any time during the two-year
period following the transaction, the employment of the officer is terminated
for any reason (other than death or for cause, under certain circumstances),
then the officer would be entitled to receive a lump-sum payment in an amount
equal to approximately three times his average annual compensation over the five
previous years of his employment with Andover or Andover Bank (or such shorter
period in which the officer was employed). For the purpose of these special
termination agreements, a change of control or merger of equals will generally
be deemed to have occurred (i) upon the acquisition by a person or group of
persons of beneficial ownership of 25% or more of the Common Stock of Andover,
(ii) upon a majority of the Board of Directors of Andover no longer being
comprised of incumbent directors for any reason, including a tender offer, proxy
contest, merger or similar transaction, or (iii) as a result of certain business
combinations, liquidations, or sale or other transactions as described in the
agreements. In the case of Mr. Mulligan, in the event that he is entitled to
receive benefits under both his employment agreement and special termination
agreement, he would be required to elect benefits under one of the agreements
only.
Andover and Andover Bank have also entered into an employment agreement
with Gerald T. Mulligan. The employment agreement provides that Mr. Mulligan's
employment will continue for successive one-year periods from its May 16
anniversary date unless he is given at least six months' prior notice of its
non-renewal. Under the employment agreement, if Mr. Mulligan's employment is
terminated without cause (as defined in the agreement), Andover and Andover Bank
will remain obligated to continue to provide to Mr. Mulligan the compensation
and benefits specified in the agreement until its expiration date; if Mr.
Mulligan's employment is terminated for cause, Andover and Andover Bank will not
incur any continuing obligation to him under the agreement.
12
<PAGE> 16
VI. SHARE INVESTMENT PERFORMANCE
The Securities and Exchange Commission requires Andover to present a chart
comparing the cumulative total shareholder return on its Common Stock with the
cumulative total return of (i) a broad based equity market index, and (ii) a
published industry index or peer group. The following graph shows changes over
the past five-year period in the value of $100 invested in: (a) Andover's Common
Stock; (b) an industry peer group* of twenty-one regional thrifts as provided by
Advest, Inc.; and (c) the Standard and Poor's 500 Index.
The Standard and Poor's 500 Index reflects the total return of a group of
stocks in a cross-section of industries. All of these stocks have substantially
larger market capitalizations than Andover. The Peer Group Index includes
twenty-one thrift institutions located in New England selected by Advest, Inc.
Some of these institutions have larger market capitalizations than Andover and
some have smaller market capitalizations.
Information about the indices has been obtained from sources believed to be
reliable, but neither the accuracy nor the completeness of such information is
guaranteed by Andover. The year-end values of each investment are based on share
price appreciation plus the reinvestment of dividends paid.
<TABLE>
FIVE YEAR CUMULATIVE TOTAL RETURN
VALUE OF $100 INVESTED ON 12/31/91
[PERFORMANCE CHART]
FISCAL YEARS ENDED DECEMBER 31,
S&P 500 Index Industry Peer Group Index Andover Bancorp, Inc.
<CAPTION>
1991 1992 1993 1994 1995 1996
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
S&P 500 Index $100.00 $107.61 $118.39 $119.99 $ 164.92 $ 202.69
- -----------------------------------------------------------------------------------
Industry Peer Group Index $100.00 $239.91 $316.68 $311.63 $ 515.76 $ 717.47
- -----------------------------------------------------------------------------------
Andover Bancorp, Inc. $100.00 $542.48 $743.89 $684.95 $1,053.98 $1,569.02
- -----------------------------------------------------------------------------------
</TABLE>
--------
*The peer group consists of Abington Bancorp, American Bank of
Connecticut, Andover Bancorp, Inc., Bancorp Connecticut, Inc., Central
Co-operative Bank, CFX Corp., Community Bancshares, Dime Financial Corp., Eagle
Financial Corp., First Federal Savings and Loan of East Hartford, Lawrence
Savings Bank, Massbank Corp., Medford Savings Bank, Metro West Bank, Midconn
Bank, Norwich Financial, Peoples Heritage Financial Group, Inc., Peoples Savings
Financial, Sandwich Cooperative Bank, Tolland Bank, and Webster Financial Corp.
13
<PAGE> 17
REPORT ON EXECUTIVE COMPENSATION
Set forth below is a report that reflects the work of the Compensation and
Option Committee, which is composed of Thomas F. Caffrey, Frank D. Goldstein,
Robert J. Scribner and Cornelius J. McCarthy (Chairman), all of whom are
independent Directors. None of these non-employee Directors has any interlocking
or other relationships with Andover that would call into question his
independence as a committee member.
EXECUTIVE COMPENSATION PHILOSOPHY
The Compensation and Option Committee's philosophy of executive
compensation is (i) to provide competitive levels of compensation that integrate
pay with the individual executive's performance and Andover's annual and
long-term performance goals; (ii) to motivate key executives to achieve
strategic business initiatives and reward them for their achievement; (iii) to
provide compensation opportunities and benefits which are comparable to those
offered by other financial institutions, thus allowing Andover and Andover Bank
to compete for and retain talented executives who are critical to Andover's
long-term success; and (iv) to align the interests of key executives with the
long-term interests of shareholders in the enhancement of shareholder value
through stock and stock option awards that can result in the ownership of Common
Stock.
At present, compensation of Andover's Chief Executive Officer and other
executive officers is composed of the following elements: annual base salary,
annual performance incentives in the form of cash bonuses, and long-term
performance incentives in the form of stock option awards under Andover's Stock
Option Plan. The Company provides executive officers with health, retirement and
other benefits under plans that are generally available to Andover's employees.
Each year the Compensation and Option Committee reviews the performance of
the Chief Executive Officer and each other executive officer in light of the
individual's and Andover's overall performance and any change in the
responsibilities assumed by the executive officer. The specific measures of
corporate performance that were evaluated by the Compensation and Option
Committee in making compensation awards for fiscal 1996 were Andover Bank's
overall profitability, the performance of Andover Bank's core banking business
and Andover's share price performance.
ANNUAL SALARIES
The annual base salaries for executives are intended to be competitive with
other financial institutions in the Northeast. The Compensation and Option
Committee reviews management's recommendations regarding annual salary, annual
bonuses, and other benefits and incentives as part of its overall planning and
submits its recommendations to the Andover Board. With respect to salaries and
awards for executive officers, the Compensation and Option Committee also
consults with the Chief Executive Officer.
INCENTIVE PROGRAMS
Andover's incentive compensation programs combine short-term incentives in
the form of cash bonuses and stock-based long-term incentives in the form of
awards of stock options and stock allocations. Annual bonuses are intended to
recognize and reward individual contributions. Stock options align the interests
of executives and shareholders by providing value to the executive when the
Andover stock price increases. Thus, stock option grants provide an incentive
for the executive to manage Andover from the perspective of an owner with an
equity stake in the business. The stock option awards made in 1996 through the
Stock Option Plan reflect Andover's commitment to this
14
<PAGE> 18
principle. Stock options are intended to reward officers for long-term
appreciation in the value of Andover's stock. Individual stock option awards are
designed to be competitive with other financial institutions in the Northeast,
but are also based upon the recipient's individual performance.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Gerald T. Mulligan's compensation for fiscal year 1996 consisted of his
annual base salary, a cash bonus and an award of stock options. Mr. Mulligan's
compensation was based upon Andover Bank's overall profitability, the
performance of Andover Bank's core banking business and Andover's share price
performance. Andover Bank returned to profitability in 1992 and continued that
trend through 1996. By focusing on strengthening the Andover Bank's core banking
business, Mr. Mulligan was instrumental in this return to consistent
profitability.
Compensation and Option Committee: Thomas F. Caffrey
Frank D. Goldstein
Robert J. Scribner
Cornelius J. McCarthy, Chairman
CERTAIN TRANSACTIONS
Certain of Andover's Directors and officers are at present, as in the past,
customers of Andover Bank and from time to time have entered into transactions
with Andover Bank in the ordinary course of business. In addition, certain of
Andover's Directors are at present, as in the past, also directors, officers or
shareholders of corporations or members of partnerships which are customers of
Andover Bank and which have transactions with Andover Bank in the ordinary
course of business. Such transactions with Directors and officers of Andover and
with such corporations and partnerships are on such terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other persons and do not involve more than normal risk of
collectibility or present other features unfavorable to Andover Bank.
During 1994, Andover Bank entered into an agreement with C. J. McCarthy
Insurance Agency, Inc. for the purpose of providing personal insurance coverage,
at the employee's option, to Andover Bank's employees through a payroll
deduction program. Cornelius J. McCarthy, owner of C. J. McCarthy Insurance
Agency, Inc., is a Director of Andover and Andover Bank. In addition, C. J.
McCarthy Insurance Agency, Inc. provides Andover Bank with some of its
commercial insurance coverage, which management believes is on substantially the
same terms as comparable coverage with unaffiliated persons.
Irving E. Rogers, III, Director of Andover Bank, is the General Manager of
the Eagle-Tribune and the Publisher of the Andover Townsman, both of which are
local newspapers. Andover Bank, in the normal course of business, advertises in
several local newspapers, including the Eagle-Tribune and the Andover Townsman.
15
<PAGE> 19
PROPOSAL 2
RATIFICATION OF INDEPENDENT AUDITORS
The firm of KPMG Peat Marwick LLP has been selected by the Board of
Directors to be the Company's independent auditors for the 1997 fiscal year. The
firm of KPMG Peat Marwick LLP, independent auditors, has audited the accounts of
the Company for several years, and has wide experience in bank accounting and
auditing. Neither the firm nor any of its partners has any direct or indirect
financial interest in, (other than as independent auditors), the Company or any
of the Company's subsidiaries.
Representatives of KPMG Peat Marwick LLP are expected to be present at the
Annual Meeting. These representatives will be afforded the opportunity to make a
statement if they desire to do so, and are expected to be available to respond
to appropriate questions.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of a majority of the shares of Common Stock
represented in person or by proxy at the Annual Meeting is necessary to ratify
the selection of KPMG Peat Marwick LLP as the independent auditors of the
Company for the 1997 fiscal year. Should the selection of KPMG Peat Marwick LLP
as independent auditors of the Company not be ratified by the shareholders, the
Board will reconsider the matter.
THE BOARD RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS VOTE FOR THE
RATIFICATION OF THE SELECTION OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS
OF THE COMPANY FOR THE 1997 FISCAL YEAR.
16
<PAGE> 20
PRINCIPAL AND MANAGEMENT SHAREHOLDERS
The following table sets forth, to the best knowledge and belief of the
Company, certain information regarding the beneficial ownership of the Company's
Common Stock as of February 15, 1997, by (i) each person known to the Company to
be the beneficial owner of more than 5% of the outstanding Common Stock, (ii)
each of the Company's Directors and Nominees, (iii) each of the Chief Executive
Officer and the highest paid executive officers, and (iv) all of the Company's
executive officers and Directors as a group.
Shares
Beneficially Percent of
Directors, Executive Officer and 5% Shareholders Owner (1) Class (2)
- ------------------------------------------------ --------- ---------
Banc Funds.............................................271,000 (3) 5.27%
Thomas F. Caffrey........................................7,967 (4) *
Clifford E. Elias.......................................31,065 (5) *
Naomi A. Gardner.........................................7,245 (6) *
Cornelius J. McCarthy...................................11,960 (7) *
Robert J. Scribner......................................16,200 (8) *
Fred P. Shaheen.........................................21,066 (9) *
Gerald T. Mulligan.....................................192,581 (10) 3.75%
John R. Heerwagen.......................................45,489 (11) *
Michael J. Ecker........................................46,651 (12) *
Joseph F. Casey.........................................37,976 (13) *
Raymond P. Smith........................................18,649 (14) *
All Nominees, Continuing Directors,
Named Executive Officers and executive
officers of Andover and Andover Bank
as a group (19 persons) ...............................548,769 (15) 10.69%
- -------------
*Less than 1%
(1) In accordance with Rule 13d-3 under the Securities Exchange Act of 1934 as
amended (the "Exchange Act"), a person is deemed to be the beneficial
owner, for purposes of this table, of any shares of Common Stock if he or
she has or shares voting power or investment power with respect to such
shares, or has the right to acquire beneficial ownership of such shares at
any time within 60 days of February 15, 1997.
(2) Computed on the basis of 5,135,230 of outstanding shares.
(3) The address of Banc Funds is 208 South LaSalle Street, Suite 200, Chicago,
Illinois 60604. The Company has relied upon information set forth in the
Schedule 13D filed July 11, 1996 with the Securities and Exchange
Commission.
(4) Includes 3,158 shares owned by certain of Mr. Caffrey's family members, as
to which Mr. Caffrey disclaims beneficial ownership, and 77 shares owned by
a professional corporation. Also includes 1,200 shares which Mr. Caffrey
has the right to acquire under options granted pursuant to Andover's Stock
Option Plan.
(5) Includes 12,000 shares beneficially owned by a trust of which Mr. Elias is
a trustee and shares voting and investment power and 5,765 shares owned by
his wife, as to which Mr. Elias disclaims beneficial ownership.
17
<PAGE> 21
(6) Includes 4,780 shares owned by certain of Mrs. Gardner's family members as
to which Mrs. Gardner disclaims beneficial ownership. Also includes 1,200
shares which Mrs. Gardner has the right to acquire under options granted
pursuant to Andover's Stock Option Plan.
(7) Includes 4,207 shares beneficially owned by C.J. McCarthy Insurance Agency,
Inc., of which Mr. McCarthy is president and sole stockholder, and 6,400
shares owned by the retirement trust of C.J. McCarthy Insurance Agency, of
which Mr. McCarthy is trustee and has sole voting and investment power.
Also includes 1,200 shares which Mr. McCarthy has the right to acquire
under options granted pursuant to Andover's Stock Option Plan.
(8) Includes 1,200 shares which Mr. Scribner has the right to acquire under
options granted pursuant to Andover' Stock Option Plan.
(9) Includes 17,940 shares owned by Shaheen Brothers, Inc., of which Mr.
Shaheen is Treasurer and 50% owner and shares voting and investment power
with his partner. Also includes 1,200 shares which Mr. Shaheen has the
right to acquire under options granted pursuant to Andover's Stock Option
Plan.
(10) Includes 129,998 shares which Mr. Mulligan has the right to acquire under
options previously granted pursuant to Andover's Stock Option Plan and
12,357 owned by his wife. Also includes 3,465 shares allocated to Mr.
Mulligan's account under the Andover Bank Employee Stock Ownership Plan
("ESOP") as to which he may direct the vote.
(11) Includes 34,988 shares which Mr. Heerwagen has the right to acquire under
options granted pursuant to Andover's Stock Option Plan. Also includes
2,289 shares allocated to Mr. Heerwagen's account under the ESOP as to
which he may direct the vote.
(12) Includes 35,400 shares which Mr. Ecker has the right to acquire under
options granted pursuant to Andover's Stock Option Plan. Also includes
2,251 shares allocated to Mr. Ecker's account under the ESOP as to which he
may direct the vote. Also includes 360 shares owned by one of Mr. Ecker's
family members.
(13) Includes 33,412 shares which Mr. Casey has the right to acquire under
options granted pursuant to Andover's Stock Option Plan. Also includes
2,764 shares allocated to Mr. Casey's account under the ESOP as to which he
may direct the vote.
(14) Includes 18,000 shares which Mr. Smith has the right to acquire under
options granted pursuant to Andover's Stock Option Plan. Also includes 289
shares allocated to Mr. Smith's account under the ESOP as to which he may
direct the vote.
(15) Includes a total of 15,693 shares allocated to the accounts of Named
Executive Officers and all other executive officers under the ESOP as to
which he or she may direct the vote. Also includes a total of 328,813
shares which the Nominees, Continuing Directors, Named Executive Officers
and all other executive officers have the right to acquire under options
granted pursuant to Andover's Stock Option Plan.
18
<PAGE> 22
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's Directors, executive officers and beneficial owners of more
than 10% of its Common Stock are required under Section 16(a) of the Securities
and Exchange Act of 1934, as amended, to file reports of ownership and changes
in ownership with the SEC. Copies of those reports must also be furnished to the
Company. Based solely on a review of reports furnished to the Company and
written representations that no other reports were required, the Company
believes that during fiscal 1996 no person who was a Director, executive officer
or greater than 10% beneficial owner of the Company's Common Stock failed to
file on a timely basis all reports required by Section 16(a).
SUBMISSION OF SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Proposals of shareholders intended to be presented at Andover's 1997 Annual
Meeting must be received in writing by Andover at its principal executive
offices on or before November 24, 1997, for inclusion in Andover's proxy
statement and form of proxy for that meeting.
In addition, Andover's By-laws provide that any Director nominations and
new business submitted by shareholders must be filed with the Secretary of
Andover at least 60 days, but not more than 150 days, prior to the date of the
scheduled annual meeting, and that no other nominations or proposals by
shareholders shall be acted upon at the meeting; provided, however, that if less
than 70 days' notice or prior public disclosure of the date of the scheduled
annual meeting is given or made, notice by the shareholder must be so delivered
or received not later than the close of business on the tenth day following the
earlier of the day on which such notice of the date of the scheduled meeting was
mailed or the day on which such public disclosure was made.
Any such proposals should be mailed to: Secretary, Andover Bancorp, Inc.,
61 Main Street, Andover, Massachusetts 01810.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of no
matters to be brought before the Annual Meeting other than those specifically
listed in the Notice of Annual Meeting of Shareholders. However, if further
business is properly presented, the persons named as proxies in the accompanying
proxy will vote such proxy in their discretion.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE. IF YOU DESIRE TO VOTE YOUR STOCK IN PERSON AT THE MEETING, YOUR PROXY
MAY BE REVOKED.
Andover, Massachusetts
March 14, 1997
19
<PAGE> 23
0685ps97
<PAGE> 24
ANDOVER BANCORP, INC.
61 MAIN STREET
ANDOVER, MASSACHUSETTS 01810
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
ON APRIL 24, 1997 THIS PROXY IS SOLICITED BY
THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Gerald T. Mulligan and
Joseph F. Casey, and each of them, as Proxies of the undersigned, each with full
power to appoint his substitute. The undersigned hereby authorizes each of such
persons to represent and to vote all shares of Common Stock of Andover Bancorp,
Inc. ("Andover") held of record by the undersigned at the close of business on
March 3, 1997, at the Annual Meeting of Shareholders to be held at the Andover
Town House, 20 Main Street, Andover, Massachusetts on April 24, 1997 at 10:00
a.m., local time, and at any adjournments or postponements thereof.
When properly executed, this proxy will be voted in the manner directed
herein by the undersigned shareholder(s). IF NO DIRECTION IS GIVEN THIS PROXY
WILL BE VOTED FOR THE ELECTION TO ANDOVER'S BOARD OF DIRECTORS OF THE TWO
NOMINEES SET FORTH ON THE REVERSE SIDE AND FOR THE RATIFICATION OF THE
APPOINTMENT OF KPMG PEAT MARWICK LLP AS ANDOVER'S INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 1997 AND IN THE DISCRETION OF THE PERSONS NAMED
AS PROXIES AS TO SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. A
shareholder wishing to vote in accordance with the Board of Directors'
recommendations need only sign and date this proxy and return it in the enclosed
envelope.
(PLEASE DATE AND SIGN ON REVERSE SIDE AND MAIL
YOUR PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE)
<TABLE>
<CAPTION>
<S> <C>
Please mark The undersigned hereby acknowledge(s) receipt of a
votes as in notice of Annual Meeting of Shareholders and related
this example Proxy Statement and hereby revoke(s) any proxy or
proxies heretofore given. This proxy may be
revoked at any time before it is exercised.
1. PROPOSAL TO ELECT THE FOLLOWING INDIVIDUALS
AS CLASS I DIRECTORS TO SERVE UNTIL THE 2000
ANNUAL MEETING OF SHAREHOLDERS AND UNTIL THEIR
RESPECTIVE SUCCESSORS ARE DULY ELECTED AND MARK HERE
QUALIFIED. FOR ADDRESS
CHANGE AND
Nominees: Thomas F. Caffrey and NOTE AT LEFT
Cornelius J. McCarthy
FOR WITHHELD
BOTH FROM BOTH
NOMINEES NOMINEES
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD PROMPTLY IN THE
FOR BOTH EXCEPT: ENCLOSED ENVELOPE. When signing as an
attorney, administrator, executor, guardian or
trustee, please add your title as such. If executed
- -------------------------------------------------- by a corporation, the proxy should be signed by a
2. PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG PEAT duly authorized person, stating his or her title or
MARWICK LLP AS ANDOVER'S INDEPENDENT AUDITORS FOR authority.
THE CURRENT FISCAL YEAR ENDING DECEMBER 31, 1997.
FOR AGAINST ABSTAIN ------------------------ -----------
Signature of Shareholder Date
3. IN THEIR DISCRETION, THE PROXIES ARE EACH ------------------------ -----------
AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY Signature of Shareholder Date
PROPERLY COME BEFORE THE ANNUAL MEETING AND ANY (if held jointly)
ADJOURNMENTS OR POSTPONEMENTS THEREOF.
</TABLE>
