<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 of Registration Statement no.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
ANDOVER BANCORP, INC.
61 MAIN STREET
ANDOVER, MASSACHUSETTS 01810
(978) 749-2000
March 20, 2000
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 27, 2000, 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 three Class
I Directors for a three-year term; ratifying the appointment of KPMG LLP as
Andover's independent auditors for 2000; and considering and voting upon such
other business as may properly come before the meeting and any adjournments or
postponements thereof.
The Board of Directors of Andover (the "Andover Board") has fixed the close
of business on March 6, 2000, 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
three nominees as Class I Directors and FOR the ratification of the appointment
of KPMG 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. YOU CAN ALSO
VOTE OVER THE INTERNET OR BY TELEPHONE USING THE INSTRUCTIONS ON THE ENCLOSED
PROXY CARD. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU
WISH, EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD OR VOTED OVER THE
INTERNET OR BY TELEPHONE.
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: (978) 749-2000
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 27, 2000
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 27, 2000 (together with all adjournments and postponements
thereof, the "Annual Meeting"), for the following purposes:
1. To elect three Class I Directors, each for a three-year term, to serve
until the 2003 annual meeting of shareholders and until his successor
is duly elected and qualified;
2. To ratify the appointment of KPMG LLP as Andover's independent
auditors for the fiscal year ending December 31, 2000; 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 6, 2000, 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 record of shares
of common stock, par value $0.10 per share, of Andover 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 20, 2000
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 OR VOTE OVER THE INTERNET OR BY TELEPHONE. YOU MAY STILL VOTE IN PERSON
IF YOU ATTEND THE MEETING EVEN IF YOU HAVE PREVIOUSLY EXECUTED YOUR PROXY.
<PAGE> 4
ANDOVER BANCORP, INC.
61 MAIN STREET
ANDOVER, MA 01810
TELEPHONE: (978) 749-2000
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON THURSDAY, APRIL 27, 2000
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 27, 2000, 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 20, 2000.
At the Annual Meeting, the shareholders of Andover will be asked to
consider and vote upon the following matters:
1. the election of three Class I Directors, each for a three-year term to
continue until the 2003 Annual Meeting of Shareholders and until his
successor is duly elected and qualified;
2. the ratification of the appointment of KPMG LLP as Andover's
independent auditors for the fiscal year ending December 31, 2000; and
3. such other business as may properly come before the Annual Meeting and
any adjournments of postponements thereof.
The Board of Directors of Andover (the "Andover Board") has fixed the close
of business on March 6, 2000, 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
6,393,172 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 of Common Stock 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.
At least a majority of the total number of outstanding shares of Common
Stock entitled to vote must be represented at the Annual Meeting, in person or
by proxy, 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
LLP as Andover's independent auditors for the fiscal year ending December 31,
2000, will be ratified by a majority of the shares present in person or
represented 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 of 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 Annual 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
of or withheld from the nominee; there is no ability to abstain. Accordingly,
all shares of Common Stock represented by proxy that withhold authority to vote
for a particular nominee or nominees and all 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. Shareholders also have
a choice of voting over the Internet or by using a toll-free telephone number.
The telephone and Internet voting procedures are designed to authenticate the
votes cast by use of a personal identification number. The procedure allows
shareholders to appoint a proxy to vote their shares and to confirm their
instructions have been properly recorded. Specific instructions to be followed
are set forth in the enclosed proxy card. Shares represented by proxies will be
voted as shareholders direct. Proxies that contain no directions to the contrary
will be voted FOR the election of the three nominees of the Board of Directors
to serve as Class I Directors of Andover and FOR ratification of the appointment
of KPMG 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 will have the
authority to vote the shares of Common Stock represented by such proxy card in
their discretion on any such matter.
Any properly completed proxy (including an Internet or telephone vote) 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 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, a wholly-owned subsidiary of
Andover, 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
Georgeson Shareholder Communications, Inc., a proxy soliciting firm, to assist
in solicitation of proxies at a fee estimated to be approximately $3,000, plus
reimbursement of certain out-of-pocket expenses.
ANNUAL REPORT TO SHAREHOLDERS
Andover's Annual Report for the fiscal year ended December 31, 1999 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 twelve 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, three Class I Directors are to be elected for a
three-year term to serve until the 2003 Annual Meeting of shareholders and until
their successors are duly elected and qualified. The Andover Board has nominated
John P. Bachini, Thomas F. Caffrey and Cornelius J. McCarthy to serve as Class I
Directors (the "Nominees"). With the exception of John P. Bachini, 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 EACH OF THE THREE 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 9 meetings during 1999. With the
exception of John E. Fenton, Jr. who was on medical leave, 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
Compensation and Option Committee and the Nominating Committee.
The members of the Audit Committee, a joint committee of Andover and
Andover Bank, are Fred P. Shaheen (Chairman), Naomi A. Gardner, Paul J. Donahue,
Sr. and Irving E. Rogers, III. 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 auditors. The Audit Committee held four meetings
in 1999.
The members of the Compensation and Option Committee, a joint committee of
Andover and Andover Bank, are Cornelius J. McCarthy (Chairman), Robert J.
Scribner, Thomas F. Caffrey and Clifford E. Elias. The Compensation and Option
Committee selects the officers and other employees to whom stock options and
rights under Andover's Stock Incentive Plan are granted and determines
compensation for the officers and other employees of Andover. The Compensation
and Option Committee held four meetings in 1999.
The members of the Nominating Committee, a joint committee of Andover and
Andover Bank, are Clifford E. Elias (Chairman), Naomi A. Gardner, and Frank D.
Goldstein. The Nominating Committee considers and recommends nominees for
election as officers and Directors of Andover. The Nominating Committee held one
meeting in 1999. 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 $6,000 annually and $600 for
each Board meeting they attend. The Directors of Andover Bank receive a fee of
$6,000 annually, $1,200 for each regular monthly Board meeting and $600 for each
special Board meeting they attend. Committee members of Andover and Andover Bank
currently receive an additional fee of $3,000 annually and $600 for each
Committee meeting they attend. The Committee Chairman receives 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 services as a Director
of Andover or Andover Bank.
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.
4
<PAGE> 8
Set forth below is certain information regarding the Directors of the
Company, including the three Class I Directors who have been nominated to the
Board, based on information furnished by them to the Company.
<TABLE>
<CAPTION>
DIRECTOR/ DIRECTOR/
OFFICER OF OFFICER OF
NAME AND POSITION ANDOVER BANK ANDOVER
WITH ANDOVER AGE SINCE SINCE
------------ --- ----- -----
<S> <C> <C> <C>
(Nominees for Class I term to Expire in 2003)
John P. Bachini..............................................54 * *
Thomas F. Caffrey, Director..................................60 1983 1987
Cornelius J. McCarthy, Director..............................63 1983 1987
(Continuing Directors - Class II, Term to Expire in 2001)
Paul J. Donahue, Sr., Director...............................64 1995 1999
John E. Fenton, Jr., Director................................69 1994 1999
Naomi A. Gardner, Director...................................58 1983 1992
Irving E. Rogers, III, Director..............................39 1996 1999
Robert J. Scribner, Director.................................71 1975 1987
(Continuing Directors - Class III Term to Expire in 2002)
Clifford E. Elias, Director..................................69 1983 1987
Frank D. Goldstein, Director.................................57 1983 1999
Gerald T. Mulligan...........................................54 1991 1991
Director, President and Chief Executive Officer
Fred P. Shaheen, Director....................................56 1983 1994
</TABLE>
* Mr. Bachini is not currently a Director of Andover or Andover Bank. He was a
former Director of Andover Bank NH which was merged with and into Andover Bank
during 1999.
The principal occupation and business experience during at least the last
five years for each Continuing Director and Nominee follows:
John P. Bachini is a partner in the accounting firm of Bachini Olbricht &
Associates, PC in Salem, New Hampshire.
Thomas F. Caffrey is an attorney in private practice in Lawrence,
Massachusetts.
Paul J. Donahue, Sr., is President of Weston Associates, Inc., Boston, MA.
Clifford E. Elias is Professor of Law at Suffolk University, Boston,
Massachusetts and General Counsel of Holy Family Hospital, Methuen,
Massachusetts.
John E. Fenton, Jr., is a Distinguished Professor of Law at Suffolk Law
School, Boston, Massachusetts.
Naomi A. Gardner is the Director of Public Relations for Northeast
Rehabilitation Hospital in Salem, New Hampshire.
Frank D. Goldstein is President of Pacific Packaging Products, Inc. in
Wilmington, Massachusetts.
Cornelius J. McCarthy is President of C.J. McCarthy Insurance Agency, Inc.,
Wilmington, Massachusetts.
5
<PAGE> 9
Gerald T. Mulligan is President and Chief Executive Officer of Andover and
Andover Bank.
Irving E. Rogers, III, is Publisher of the Eagle-Tribune, Andover Townsman,
Haverhill Gazette, and Derry, NH News, North Andover, MA.
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.
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............................54 President and Chief Executive Officer
John R. Heerwagen.............................49 Senior Vice President
Michael J. Ecker..............................48 Senior Vice President
Joseph F. Casey...............................39 Chief Financial Officer and Treasurer
Raymond P. Smith..............................51 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 - 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, a position he has held since 1991. Mr. Casey is a certified public
accountant.
Raymond P. Smith is Senior Vice President - Corporate Banking of Andover
and 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,
which was merged with and into Andover Bank in 1999.
6
<PAGE> 10
OTHER EXECUTIVE OFFICERS
The following sets forth certain information, as of February 1, 2000, with
respect to the principal officers of Andover and Andover Bank, other than the
Named Executive Officers.
Octavio C. Bolivar is Senior Vice President of Systems and Operations of
Andover and Andover Bank, a position he has held since January, 1994. He is 56
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. Ms. Conti is 45 years of age.
Gerald C. Woodworth, Jr. is Senior Vice President of 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 59 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,
1999, 1998, and 1997, the cash compensation paid by Andover Bank, as well as the
value of long-term compensation and other compensation, to the Named Executive
Officers during 1999.
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation (1) Awards
--------------------------------- --------------
Name and Securities All Other
Principal Underlying Compensa-
Position Year Salary($) Bonus($) Options (#)(2) tion ($)(3)
- -------- ---- --------- -------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Gerald T. Mulligan, 1999 $383,769 $70,000 6,500 $ 8,500 (4)
President and Chief 1998 $342,692 $60,000 11,250 $ 9,805 (4)
Executive Officer of 1997 $312,692 $55,000 11,250 $12,435 (4)
Andover and Andover Bank
John R. Heerwagen, 1999 $156,769 $40,000 5,800 $ 8,413 (5)
Senior Vice President of 1998 $141,231 $24,000 5,625 $ 9,433 (5)
Andover and Andover Bank 1997 $131,192 $22,000 5,625 $11,889 (5)
Michael J. Ecker, 1999 $140,922 $45,000 5,800 $ 8,352 (6)
Senior Vice President of 1998 $127,385 $32,000 5,625 $ 9,313 (6)
Andover and Andover Bank 1997 $119,461 $30,000 5,625 $11,710 (6)
Joseph F. Casey, 1999 $142,769 $32,000 5,800 $ 8,240 (7)
Chief Financial Officer 1998 $127,385 $23,000 5,625 $ 8,754 (7)
and Treasurer of Andover 1997 $119,154 $20,000 5,625 $10,782 (7)
and Andover Bank
Raymond P. Smith, 1999 $139,692 $32,000 5,800 $ 8,217 (8)
Senior Vice President of 1998 $121,538 $16,000 5,625 $ 7,821 (8)
Andover and Andover Bank 1997 $115,077 $15,000 5,625 $ 9,457 (8)
</TABLE>
(1) The amount of perquisites did not exceed 10% of salary and bonus as to any
of the Named Executive Officers.
(2) All option data for 1997 has been adjusted to reflect a five for four stock
split declared on April 23, 1998.
(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 as
reported by the Nasdaq National Market on the date of allocation of the
shares to the employees' account. Such closing prices were $29.25 at
October 29, 1999, $31.25 at October 30, 1998, and $29.40 at October 31,
1997. The amount does not include the cash value of dividends declared in
1999 but paid in 2000. All ESOP data for 1997 has been adjusted to reflect
a five for four stock split declared on April 23, 1998.
8
<PAGE> 12
(4) Includes (i) Andover Bank's contribution of $2,007, $2,024 and $1,910 in
1999, 1998 and 1997, respectively, to Mr. Mulligan's 401(k) account, and
(ii) the cash value of 222 shares, 249 shares and 358 shares, allocated to
Mr. Mulligan under the ESOP at October 29, 1999, October 30, 1998 and
October 31, 1997, respectively.
(5) Includes (i) Andover Bank's contribution of $1,920, $1,652 and $1,481 in
1999, 1998 and 1997, respectively, to Mr. Heerwagen's 401(k) account, and
(ii) the cash value of 222 shares, 249 shares and 354 shares, allocated to
Mr. Heerwagen under the ESOP, at October 29, 1999, October 30, 1998 and
October 31, 1997, respectively.
(6) Includes (i) Andover Bank's contribution to Mr. Ecker's 401(k) account of
$1,859, $1,594 and $1,449 in 1999, 1998 and 1997, respectively, and (ii)
the cash value of 222 shares, 247 shares and 349 shares, allocated to Mr.
Ecker under the ESOP, at October 29, 1999, October 30, 1998 and October 31,
1997, respectively.
(7) Includes (i) Andover Bank's contribution of $1,747, $1,504 and $1,345 in
1999, 1998 and 1997, respectively, to Mr. Casey's 401(k) account, and (ii)
the cash value of 222 shares, 232 shares and 321 shares, allocated to Mr.
Casey under the ESOP, at October 29, 1999, October 30, 1998 and October 31,
1997, respectively.
(8) Includes (i) Andover Bank's contribution of $1,724, $1,133 and $1,078 in
1999, 1998 and 1997, respectively, to Mr. Smith's 401(k) account, and (ii)
the cash value of 222, 214 and 285 shares allocated to Mr. Smith under the
ESOP, at October 29, 1999, October 30, 1998 and October 31, 1997,
respectively.
9
<PAGE> 13
II. OPTION GRANTS TABLE
Set forth below is a chart showing the option grants made to the Named
Executive Officers during 1999. No stock appreciation rights ("SARs") have been
granted.
Option Grants in Last Fiscal Year
---------------------------------
<TABLE>
<CAPTION>
Potential Realizable Value
At Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term (1)
----------------------------------------------------------------------------- -------------------
Percent
Number of of Total
Securities Options
Underlying Granted to
Options Employees in Exercise or Base
Name Granted (#)(2) Fiscal Year (3) Price ($/Sh) Expiration Date 5% ($) 10% ($)
- ---- -------------- --------------- ----------- --------------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Gerald T. Mulligan 6,500 9.55% $28.00 12/31/2009 $114,459.00 $290,061.00
John R. Heerwagen 5,800 8.52% $28.00 12/31/2009 $102,132.00 $258,824.00
Michael J. Ecker 5,800 8.52% $28.00 12/31/2009 $102,132.00 $258,824.00
Joseph F. Casey 5,800 8.52% $28.00 12/31/2009 $102,132.00 $258,824.00
Raymond P. Smith 5,800 8.52% $28.00 12/31/2009 $102,132.00 $258,824.00
</TABLE>
(1) The amounts shown as potential realizable values are based on arbitrarily
assumed annualized rates of appreciation of five percent and ten percent of
the Common Stock over the full ten year term of the options, as required by
applicable Securities and Exchange Commission regulations. No gain for the
optionee is possible without an increase in the price of the Common Stock
which will benefit all shareholders proportionately. Actual gains, if any,
on options exercised are dependent on the future performance of the Common
Stock and overall stock market conditions. There can be no assurance that
the potential realizable values shown in this table will be achieved.
(2) The options are granted pursuant to the Andover Bancorp, Inc. Stock
Incentive Plan and are immediately exercisable.
(3) Percentages are based on a total of 68,050 shares of Common Stock
underlying all options granted to Directors and employees of the Company
during 1999.
10
<PAGE> 14
III. OPTION EXERCISES AND YEAR-END TABLE
Set forth below is a chart showing the aggregated exercised and unexercised
options held by the Named Executive Officers during 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND OPTION VALUE AT
-------------------------------------------------------------------
DECEMBER 31, 1999
-----------------
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Options at
December 31, 1999 (#) December 31, 1999 ($)
------------------ ---------------------
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($)(1) Unexercisable Unexercisable (2)
- ---- --------------- --------------- ------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Gerald T. Mulligan 1,000 $14,656 203,018/6,000 $2,565,601/$77,500
John R. Heerwagen 2,000 $47,833 51,961/--- $ 530,544/---
Michael J. Ecker 2,000 $41,167 47,464/--- $ 446,808/---
Joseph F. Casey -0- -0- 42,940/--- $ 395,380/---
Raymond P. Smith -0- -0- 20,800/--- $ 40,625/---
</TABLE>
(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, 1999, is the
difference between its exercise price and the fair market value of the
underlying stock on December 31, 1999, which was $28.00 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.
IV. PENSION PLAN
The Board of Directors of Andover Bank voted to terminate the Defined
Benefit Pension Plan effective April 30, 1999. Accordingly, there are no future
benefits available under the Plan. As a result of the termination of the Defined
Benefit Pension Plan, a distribution was made to Andover Bank employees who were
vested under the Plan including the Named Executive Officers. The amounts
distributed to the Named Executive Officers are: $163,158 to Gerald T. Mulligan,
$120,631 to John R. Heerwagen, $112,600 to Michael J. Ecker, $117,536 to Joseph
F. Casey, and $56,964 to Raymond P. Smith.
11
<PAGE> 15
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 of
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 special termination agreement and his employment
agreement (described in the following paragraph), 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 seventeen 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
seventeen thrift institutions located in New England selected by Advest, Inc.
Some of these institutions have comparable market capitalizations to 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.
[FIVE YEAR CUMULATIVE TOTAL RETURN GRAPH]
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
S&P 500 Index $100.00 $134.11 $161.29 $211.30 $267.55 $319.91
- ---------------------------------------------------------------------------------------------
Industry Peer Group Index $100.00 $150.46 $189.26 $331.97 $276.04 $252.84
- ---------------------------------------------------------------------------------------------
Andover Bancorp, Inc. $100.00 $151.61 $225.77 $361.97 $397.14 $330.49
- ---------------------------------------------------------------------------------------------
</TABLE>
*The peer group consists of Abington Bancorp, Inc., Alliance Bancorp of New
England, Inc., American Bank of Connecticut, Andover Bancorp, Inc., Bancorp
Connecticut, Inc., BostonFed Bancorp, Inc., Central Bancorp, Inc., First Essex
Bancorp, Inc., First Federal Savings and Loan of East Hartford, Hingham
Institution for Savings, Lawrence Savings Bank, MASSBANK Corp., MECH Financial,
Inc., Medford Bancorp, Inc., MetroWest Bank, Peoples Bancshares, and Warren
Bancorp, Inc.
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, Clifford E. Elias,
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
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
Incentive 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 1999 were Andover Bank's
overall profitability, the performance of Andover Bank's core banking business,
and regulatory validation of strong fiscal 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 PROGRAM
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 Common 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
14
<PAGE> 18
Company. The stock option awards made in 1999 through the Stock Incentive Plan
reflect Andover's commitment to this principle. Stock options are intended to
reward officers for long-term appreciation in the value of Andover's Common
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 1999 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 and the
performance of Andover Bank's core banking business. Andover Bank returned to
profitability in 1992 and continued that trend with improved earnings through
1999. By focusing on strengthening Andover Bank's core banking business, Mr.
Mulligan was instrumental in this return to consistent profitability and the
record earnings achieved in 1999.
Compensation and Option Committee: Thomas F. Caffrey
Clifford E. Elias
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 most of its
commercial insurance coverage, which management believes is on substantially the
same terms as comparable coverage with unaffiliated persons. The amounts paid by
Andover to C.J. McCarthy Insurance Agency, Inc. in connection which such
commercial insurance coverage totaled $200,383 in fiscal year 1999.
Irving E. Rogers, III, Director of Andover and Andover Bank, is the General
Manager and Publisher of the Eagle-Tribune, Publisher of the Andover Townsman,
and Publisher of the Derry N.H. News, all of which are local newspapers. Andover
Bank, in the normal course of business, advertises in local newspapers,
including the Eagle-Tribune, the Andover Townsman, and the Derry N.H. News. The
amounts paid by Andover to the Andover Townsman, Eagle-Tribune, and the Derry
N.H. News totaled $117,835 in fiscal year 1999.
During 1999, Thomas F. Caffrey, Esq., Director of Andover and Andover Bank,
represented Andover Bank on two mortgage loans which were closed under Andover
Bank's no point/no fee program. Andover Bank pays the attorney fee under this
program. Mr. Caffrey was paid $880.39 during 1999 for legal work that he
performed on these closings.
15
<PAGE> 19
PROPOSAL 2
RATIFICATION OF INDEPENDENT AUDITORS
The firm of KPMG LLP has been selected by the Board of Directors to be the
Company's independent auditors for the 2000 fiscal year. The firm of KPMG 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 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 LLP as the independent auditors of the Company for the
2000 fiscal year. Should the selection of KPMG 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 LLP AS INDEPENDENT AUDITORS OF THE COMPANY
FOR THE 2000 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, 2000 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 Named Executive
Officers, and (iv) all of the Company's executive officers and Directors as a
group.
<TABLE>
<CAPTION>
Shares
Beneficially Percent of
Directors, Named Executive Officers and 5% Shareholders Owned (1) Class (2)
- ------------------------------------------------------- --------- ---------
<S> <C> <C>
Private Capital Management, Inc............................ 539,151 (3) 8.01%
Dimensional Fund Advisors, Inc............................. 337,700 (4) 5.25%
Banc Funds................................................. 271,000 (5) 4.22%
John P. Bachini............................................ 75 *
Thomas F. Caffrey.......................................... 12,058 (6) *
Paul J. Donahue, Sr........................................ 4,450 (7) *
Clifford E. Elias.......................................... 41,215 (8) *
John E. Fenton, Jr......................................... 3,400 (9) *
Naomi A. Gardner........................................... 11,241 (10) *
Frank D. Goldstein......................................... 26,896 (11) *
Cornelius J. McCarthy...................................... 11,872 (12) *
Irving E. Rogers, III...................................... 2,900 (13) *
Robert J. Scribner......................................... 19,000 (14) *
Fred P. Shaheen............................................ 28,095 (15) *
Gerald T. Mulligan......................................... 296,039 (16) 4.61%
John R. Heerwagen.......................................... 68,375 (17) 1.06%
Michael J. Ecker........................................... 66,609 (18) 1.04%
Joseph F. Casey............................................ 51,296 (19) *
Raymond P. Smith........................................... 22,342 (20) *
All Nominees, continuing Directors,
Named Executive Officers and executive
officers of Andover and Andover Bank
as a group (19 persons).................................... 798,254 (21) 12.42%
- ---------------------------------------------------------------------------------------
*Less than 1%
</TABLE>
(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, 2000.
(2) Computed on the basis of 6,428,672 of outstanding shares.
(3) The address of Private Capital Management, Inc. is 3003 Tamiami Trail
North, Naples, Florida 34103. The Company has relied upon information set
forth in the Schedule 13G dated February 15, 2000.
(4) The address of Dimensional Fund Advisors, Inc. is 1299 Ocean Avenue, 11th
Floor, Santa Monica, California 90461. The Company has relied upon
information set forth in the Schedule 13G dated February 11, 2000.
17
<PAGE> 21
(5) 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. The Company believes this does not reflect shares issued
pursuant to the six for five stock split declared on October 17, 1996, nor
the five for four stock split declared on April 23, 1998.
(6) Includes 4,141 shares owned by certain of Mr. Caffrey's family members, as
to which Mr. Caffrey disclaims beneficial ownership, and 104 shares owned
by a professional corporation. Also includes 3,250 shares which Mr. Caffrey
has the right to acquire under options granted pursuant to Andover's Stock
Incentive Plan.
(7) Includes 2,500 shares which Mr. Donahue has the right to acquire under
options granted pursuant to Andover's Stock Incentive Plan.
(8) Includes 15,000 shares beneficially owned by a trust of which Mr. Elias is
a trustee and shares voting and investment power and 7,726 shares owned by
his wife, as to which Mr. Elias disclaims beneficial ownership. Also
includes 1,750 shares which Mr. Elias has the right to acquire under
options granted pursuant to Andover's Stock Incentive Plan.
(9) Includes 2,500 shares which Mr. Fenton has the right to acquire under
options granted pursuant to Andover's Stock Incentive Plan.
(10) Includes 6,294 shares owned by Mrs. Gardner's spouse as to which Mrs.
Gardner disclaims beneficial ownership. Also includes 3,250 shares which
Mrs. Gardner has the right to acquire under options granted pursuant to
Andover's Stock Incentive Plan.
(11) Includes 5,724 shares owned by certain members of Mr. Goldstein's family,
as to which Mr. Goldstein disclaims beneficial ownership. Also includes
2,500 shares which Mr. Goldstein has the right to acquire under options
granted pursuant to Andover's Stock Incentive Plan.
(12) Includes 36 shares beneficially owned by C.J. McCarthy Insurance Agency,
Inc., of which Mr. McCarthy is president and sole stockholder, and 8,395
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 3,250 shares which Mr. McCarthy has the right to acquire
under options granted pursuant to Andover's Stock Incentive Plan.
(13) Includes 1,125 shares which Mr. Rogers has the right to acquire under
options granted pursuant to Andover's Stock Incentive Plan.
(14) Includes 3,250 shares which Mr. Scribner has the right to acquire under
options granted pursuant to Andover's Stock Incentive Plan.
(15) Includes 22,425 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 3,250 shares which Mr. Shaheen has the
right to acquire under options granted pursuant to Andover's Stock
Incentive Plan.
(16) Includes 203,018 shares which Mr. Mulligan has the right to acquire under
options previously granted pursuant to Andover's Stock Incentive Plan and
21,696 owned by his wife. Also includes 5,174 shares allocated to Mr.
Mulligan's account under the Andover Bank Employee Stock Ownership Plan
("ESOP") as to which he may direct the vote.
18
<PAGE> 22
(17) Includes 51,961 shares which Mr. Heerwagen has the right to acquire under
options granted pursuant to Andover's Stock Incentive Plan. Also includes
3,699 shares allocated to Mr. Heerwagen's account under the ESOP as to
which he may direct the vote.
(18) Includes 47,464 shares which Mr. Ecker has the right to acquire under
options granted pursuant to Andover's Stock Incentive Plan. Also includes
3,645 shares allocated to Mr. Ecker's account under the ESOP as to which he
may direct the vote. Also includes 450 shares owned by one of Mr. Ecker's
family members.
(19) Includes 42,940 shares which Mr. Casey has the right to acquire under
options granted pursuant to Andover's Stock Incentive Plan. Also includes
4,241 shares allocated to Mr. Casey's account under the ESOP as to which he
may direct the vote.
(20) Includes 20,800 shares which Mr. Smith has the right to acquire under
options granted pursuant to Andover's Stock Incentive Plan. Also includes
1,092 shares allocated to Mr. Smith's account under the ESOP as to which he
may direct the vote.
(21) Includes a total of 25,554 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 498,958
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 Incentive Plan.
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 Securities and Exchange Commission. 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 1999, 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 any reports required by Section 16(a).
SUBMISSION OF SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Proposals of shareholders intended to be presented at Andover's 2001 Annual
Meeting must be received in writing by Andover at its principal executive
offices on or before November 22, 2000, 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 matters 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.
19
<PAGE> 23
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 20, 2000
20
<PAGE> 24
0685PS00
<PAGE> 25
AB122B DETACH HERE
PROXY
ANDOVER BANCORP, INC.
61 MAIN STREET
ANDOVER, MASSACHUSETTS 01810
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 27, 2000
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 the Proxies (each having full power to act without the other) to represent
and to vote (as designated herein) all shares of Common Stock of Andover
Bancorp, Inc. ("Andover") held of record by the undersigned at the close of
business on March 6, 2000, at the Annual Meeting of Shareholders to be held at
the Andover Town House, 20 Main Street, Andover, Massachusetts on April 27, 2000
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 (i) FOR THE ELECTION TO ANDOVER'S BOARD OF DIRECTORS OF THE THREE
NOMINEES SET FORTH ON THE REVERSE SIDE (PROPOSAL 1), (ii) FOR THE RATIFICATION
OF THE APPOINTMENT OF KPMG LLP AS ANDOVER'S INDEPENDENT AUDITORS FOR THE FISCAL
YEAR ENDING DECEMBER 31, 2000 (PROPOSAL 2) AND (iii), IN THE DISCRETION OF THE
PERSONS NAMED AS PROXIES, AS TO SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE
THE MEETING AND ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF. 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. Except
if voted by telephone or over the Internet, shares cannot be voted by the
Proxies unless this Proxy Card is signed and returned.
- ----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ----------- -----------
<PAGE> 26
ANDOVER BANCORP, INC.
C/O EQUISERVE
P.O. BOX 9398
BOSTON, MA 02205-9398
<TABLE>
<S> <C>
----------------- ----------------
VOTE BY TELEPHONE VOTE BY INTERNET
----------------- ----------------
It's fast, convenient, and immediate! It's fast, convenient, and your vote is immediately
Call Toll-Free on a Touch-Tone Phone confirmed and posted.
1-877-PRX-VOTE (1-877-779-8683)
Follow these four easy steps: Follow these four easy steps:
1. Read the accompanying Proxy 1. Read the accompanying Proxy
Statement/Prospectus and Proxy Card. Statement/Prospectus and Proxy Card.
2. Call the toll-free number 2. Go to the Website
1-877-PRX-VOTE (1-877-779-8683). http://www.eproxyvote.com/andb
3. Enter the 14-digit Control Number located 3. Enter your 14-digit Voter Control Number
on your Proxy Card above your name. located on your Proxy Card above your name.
4. Follow the recorded instructions. 4. Follow the instructions provided.
YOUR VOTE IS IMPORTANT! YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE to vote anytime prior to Go to http://www.eproxyvote.com/andb to vote
3:00 p.m. on April 26, 2000. anytime prior to 3:00 p.m. on April 26, 2000.
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DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET
AB122A DETACH HERE
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
THE UNDERSIGNED HEREBY ACKNOWLEDGE(S) RECEIPT OF A NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS AND RELATED PROXY STATEMENT AND HEREBY REVOKE(S) ANY PROXY OR
PROXIES HERETOFORE GIVEN. THIS PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS
EXERCISED.
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<S> <C>
1. Proposal to elect (01) John P. Bachini, (02) Thomas F. Caffrey and
(03) Cornelius J. McCarthy as Class I Directors to serve until the 2003
Annual Meeting of Shareholders and until their respective successors are 2. Proposal to ratify the FOR AGAINST ABSTAIN
duly elected and qualified. appointment of KPGM LLP [ ] [ ] [ ]
as Andover's independent
[ ] FOR [ ] WITHHELD auditors for the current
ALL FROM ALL fiscal year ending
NOMINEES NOMINEES December 31, 2000.
3. In their discretion, the Proxies are each
[ ] ---------------------------------------- authorized to vote upon such other business as
For all nominees except as noted above may properly come before the Annual Meeting and
any adjournments or postponements thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
PLEASE DATE, SIGN AND MAIL YOUR PROXY CARD PROMPTLY
IN THE 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 duly authorized person,
stating his or her title or authority.
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Signature: Date: Signature: Date:
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