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 240.14a-11(c) or 240.14a-12
NORWICH FINANCIAL CORP.
(Name of Registrant as Specified in Its Charter)
Daphne P. Cannata
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fees (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14-A.
[ ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and O-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 O-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:
[ ] 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>
NOTICE OF 1996 ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS OF NORWICH FINANCIAL CORP.:
Notice is hereby given that the 1996 annual meeting
of the stockholders of Norwich Financial Corp. will be held at
the Ramada Hotel, 10 Laura Boulevard, Norwich, Connecticut, at
10:00 a.m. on May 10, 1996, for the purpose of considering and
voting upon the following matters:
1. Election of three directors who, with the five directors whose terms of
office do not expire at this meeting, will constitute the full Board of
Directors.
2. Ratification of the appointment of KPMG Peat Marwick LLP as independent
public accountants for the fiscal year ending December 31, 1996.
3. Such other business as may properly be brought before the meeting.
Only stockholders of record at the close of business on March 26, 1996,
are entitled to notice of and to vote at the meeting.
By the order of the Board of Directors
Daphne P. Cannata
Secretary
April 8, 1996
WE URGE YOU TO SIGN AND RETURN THE ENCLOSED PROXY AS
PROMPTLY AS POSSIBLE WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING IN PERSON. IF YOU DO ATTEND THE MEETING, YOU MAY THEN
REVOKE YOUR PROXY AND VOTE IN PERSON.
<PAGE>
NORWICH FINANCIAL CORP.
4 Broadway
Norwich, Connecticut 06360
(860) 889-2621
PROXY STATEMENT
1996 ANNUAL MEETING OF STOCKHOLDERS - MAY 10, 1996
INFORMATION CONCERNING THE SOLICITATION
This Proxy Statement is furnished in connection
with the solicitation of proxies by the Board of Directors of
Norwich Financial Corp. (the "Company") for the 1996 Annual
Meeting of Stockholders of the Company to be held at the Ramada
Hotel, 10 Laura Boulevard, Norwich, Connecticut, on May 10, 1996
(the "Meeting"), and any adjournments thereof. This Proxy
Statement and the enclosed proxy card are first being given or
sent to stockholders on or about April 8, 1996.
The Company will bear the costs of soliciting proxies from its
stockholders. In addition to this solicitation by mail, proxies
may be solicited by the directors, officers and employees of the
Company by personal interview, telephone or telegram. Arrangements
will also be made with brokerage houses and other custodians, nominees
and fiduciaries for payment of reasonable out-of-pocket expenses incurred
in connection therewith. The Company also has engaged Chemical Mellon
Shareholder Service, L.L.C. ("Chemical") to assist in the
solicitation of proxies. The estimated cost of such solicitation services to
be provided by Chemical is $4,000, plus expenses.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only holders of common stock of the Company ("Common
Stock") of record at the close of business on March 26, 1996
(the "Record Date") will be entitled to vote at the Meeting. On
the Record Date, there were 5,604,152 shares of Common Stock
issued and outstanding. All shares of Common Stock carry equal
voting rights and all stockholders are entitled to cast one vote
for each share they hold. Shares represented by properly
executed proxies will be voted in accordance with any
specification made therein. Proxies that contain no directions
to the contrary will be voted FOR the election of nominees for
director named in Proposal 1, and FOR the ratification of the
appointment of KPMG Peat Marwick LLP as independent public
accountants for the fiscal year ending December 31, 1996 as
described in Proposal 2, and in the discretion of the proxy
holders as to any other matter that may properly come before the
Meeting or any adjournments thereof. If a proxy indicates that
a stockholder abstains from voting or that shares are not to be
voted on a particular proposal, the shares will not be counted
as having been voted on that proposal, and those shares will not
be reflected in the final tally of votes cast with respect to
that proposal. Those shares will be counted as in attendance at
the Meeting for purposes of determining a quorum. Pursuant to
the Company's Bylaws, a majority of the outstanding shares
present in person or by proxy will constitute a quorum for
transacting business at the Meeting.
As of March 14, 1996, no person (including any
"group" as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "1934 Act")) is
known to the Company to be the beneficial owner of more than
five percent (5%) of the Common Stock.
REVOCABILITY OF PROXY
A stockholder who executes and returns a proxy in
the enclosed form may revoke it at any time before it is voted
at the meeting by filing with Daphne P. Cannata, the Secretary
of the Company, at the above address, an instrument revoking it,
or a duly executed proxy bearing a later date, or by attending
the Meeting and voting in person. Attendance at the Meeting
will not in and of itself constitute the revocation of a proxy.
Voting by those present during the conduct of the Meeting will
be by ballot.
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The Certificate of Incorporation and the Bylaws of
the Company provide for the election of directors by the
stockholders. For this purpose, the Board of Directors is
divided into three classes as nearly equal in number as
possible. The terms of office of the members of one class
expire, and a successor class is to be elected, at each annual
meeting of the stockholders. Vacancies in directorships may be
filled, until the expiration of the term of the vacated
directorship, by the vote of a majority of the directors then in
office.
The terms of three directors expire at the Meeting.
Each of the three incumbent directors, Paul R. Duevel, Robert T.
Ramsdell and Richard P. Reed, is nominated to be re-elected at
the Meeting for a three-year term, expiring at the annual
meeting in 1999. In the event that any nominee for director is
unable or declines to serve, which the Board of Directors has no
reason to expect, the persons named in the proxy will vote for a
substitute designated by the Board of Directors. The terms of
the remaining two classes of directors expire at the annual
meetings in 1997 and 1998, respectively, or when their
successors are elected and qualified.
Nominations of persons for election to the Board of
Directors may be made at a meeting of stockholders by or at the
direction of the Board of Directors or by any stockholder of the
Company entitled to vote for the election of directors at the
meeting who complies with certain notice procedures set forth in
the Bylaws. Such nominations, other than those made by or at
the direction of the Board of Directors, must be made pursuant
to timely notice in writing to the Secretary of the Company. To
be timely, a stockholder's notice must be delivered to or mailed
and received at the principal executive offices of the Company
not less than 60 days nor more than 90 days prior to the
meeting; provided, however, that in the event that less than 50
days notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the
stockholder to be timely must be mailed or given to the
Secretary of the Company not later than the close of business on
the seventh day following the day on which such notice of the
date of the meeting was mailed or such public disclosure was
made. A stockholder's notice must set forth (a) as to each
person whom the stockholder proposes to nominate for election or
re-election as a director, (i) the name, age, business address
and residence address of such person, (ii) the principal
occupation or employment of such person, (iii) the class and
number of shares of the Company which are beneficially owned by
such person and (iv) any other information relating to such
person that is required to be disclosed in solicitation of
proxies for election of directors, or is otherwise required, in
each case pursuant to Regulation 14A under the 1934 Act
(including without limitation such person's written consent to
being named in the proxy statement as nominee and to serving as
a director if elected); and (b) as to the stockholder giving the
notice (i) the name and address, as they appear on the Company's
books, of such stockholder, and (ii) the class and number of
shares of the Company that are beneficially owned by such
stockholder.
<PAGE>
The following tables set forth certain
information regarding the nominees for re-election as directors
at the Meeting, and directors whose terms of office do not
expire at the Meeting. Except as indicated in the notes
following the tables below, the nominees and the directors
continuing in office have sole voting and investment powers with
respect to the shares listed as being beneficially owned by
them. Each nominee and director continuing in office also
serves as a director of the Bank and, with the exception of Mr.
Halsey, who has served as a director of the Company since 1995,
has served as a director of the Company since its incorporation
in December 1987.
<TABLE>
NOMINEES FOR ELECTION AT THIS MEETING FOR A THREE-YEAR TERM
<CAPTION>
Shares of Percent of
Positions Held With the Company Common Stock Common
and the Bank; Principal Beneficially Stock
Occupation During the Past Owned as of Beneficially
Name Five Years and Directorships Age March 14, 1996 Owned
Class III
Terms Expiring in 1996 (or, if re-elected, in 1999)
<S> <C> <C> <C> <C>
Paul R. Duevel Director; Retired Senior Vice President 61 21,095(a) .38%
for Corporate Affairs, Backus
Corporation, a hospital holding company.
Robert T. Ramsdell Director; Chairman, President and Chief 60 14,500(b) .26%
Executive Officer, New London County
Mutual Insurance Company and Thames
Insurance Company.
Richard P. Reed Director; President, WICH, Inc., a 68 19,891(a) .35%
radio station; Executive Vice President,
Hall Communications, Inc.
DIRECTORS CONTINUING IN OFFICE
Class II
Terms Expiring in 1997
Daniel R. Dennis, Jr. Director; Chairman, President and 51 82,840(c) 1.46%
Chief Executive Officer of the Company
and the Bank.
Jeremiah J. Lowney, Director; Orthodontist. 59 23,628(b) .42%
Jr., D.D.S.
Anthony P. Halsey Director; Past Chairman, President and 65 42,547 .76%
Chief Executive Officer of The Bank
of Mystic, Inc.
<PAGE>
Class I
Terms Expiring in 1998
Michael J. Hartl Director; Executive Vice President, 54 58,650(d) 1.04%
Treasurer, and Chief Financial Officer
of the Company and the Bank.
Martin C. Shapiro Director; Retired President and Chief 56 51,770(a) .92%
Executive Officer, M.S. Chambers
& Son, Inc., a rotogravure engraving and
other graphic arts tooling company.
All directors and executive officers as a group (13 persons) 423,301(e)(f) 7.23%
</TABLE>
(a) Includes 10,000 shares subject to options granted
pursuant to the 1986 Stock Option Plan for Outside Directors
that are exercisable within 60 days of the Record Date, and
7,000 shares subject to options granted pursuant to the 1994
Stock Option Plan for Outside Directors that are exercisable
within 60 days of the Record Date.
(b) Includes 5,000 shares subject to options granted
pursuant to the 1986 Stock Option Plan for Outside Directors
that are exercisable within 60 days of the Record Date, and
7,000 shares subject to options granted pursuant to the 1994
Stock Option Plan for Outside Directors that are exercisable
within 60 days of the Record Date.
(c) Includes 41,200 shares subject to options granted
pursuant to the 1986 Stock Option and Incentive Plan and the
1994 Stock Option and Incentive Plan that are exercisable within
60 days of the Record Date, 12,500 shares subject to options
granted pursuant to the 1994 Stock Option and Incentive Plan
which were granted in March, 1996 that are exercisable 6 months
after the date of grant, and 23,798 shares held by the Bank's
Thrift Plan for Mr. Dennis' benefit.
(d) Includes 30,400 shares subject to options granted
pursuant to the 1986 Stock Option and Incentive Plan and the
1994 Stock Option and Incentive Plan that are exercisable within
60 days of the Record Date, 6,500 shares subject to options
granted pursuant to the 1994 Stock Option and Incentive Plan
which were granted in March, 1996 that are exercisable 6 months
after the date of grant, and 21,750 shares held by the Bank's
Thrift Plan for Mr. Hartl's benefit.
(e) Includes 25,737 shares beneficially owned by
James R. Brown, Senior Vice President, Lending of the Bank,
representing .46% of Common Stock outstanding as of March 26,
1996. Such shares include 21,600 shares subject to options
granted pursuant to the 1986 Stock Option and Incentive Plan and
the 1994 Stock Option and Incentive Plan that are exercisable
within 60 days of the Record Date, 4,000 shares subject to
options granted pursuant to the 1994 Stock Option and Incentive
Plan which were granted in March, 1996 that are exercisable 6
months after the date of grant, and 137 shares held by the
Bank's Thrift Plan for Mr. Brown's benefit.
(f) Includes 217,400 shares subject to options
granted pursuant to the 1986 Stock Option and Incentive Plan and
the 1986 Stock Option Plan for Outside Directors, and the 1994
Stock Option Plan for Outside Directors that are exercisable
within 60 days of the Record Date, and 36,000 shares subject to
options granted pursuant to the 1994 Stock Option and Incentive
Plan which were granted in March, 1996 that are exercisable 6
months after the date of grant.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
During 1995, each director of the Company attended
at least 75 percent of the combined total of the meetings of the
Board of Directors and any committee(s) of which he was a
member.
The Board of Directors of the Company held 14
regular meetings and 10 special meetings during the year ended
December 31, 1995. Committees of the Board of Directors are the
Audit Committee and the Stock Option and Incentive Compensation
Committee. The Board of Directors does not have a Nominating
Committee; nominations are made by the entire Board of
Directors. The Bank has a Loan Committee that monitors the
Bank's loan portfolio, an Investment Committee that is
responsible for the Bank's investment activities, and a
Compensation Committee that recommends the compensation level of
the Bank's officers and employees.
The Audit Committee causes suitable examinations to
be made at least annually of the affairs of the Company in the
manner recommended by State and Federal bank regulatory
authorities. The Audit Committee also
<PAGE>
reviews the examination reports of the State and Federal
regulatory authorities, the quarterly reports of the Company's
internal auditor and the annual reports of the independent
public accountants, and reviews the adequacy of the Bank's
accounting, financial and operating controls. The Audit
Committee met 4 times during 1995. The members of the Audit
Committee are Directors Halsey, Lowney, Ramsdell and Reed.
The Stock Option and Incentive Compensation
Committee is responsible for administering the Stock Option Plan
for Outside Directors, the Stock Option and Incentive Plan and
other forms of incentive compensation. The Stock Option and
Incentive Compensation Committee met 4 times during 1995. The
members of the Stock Option and Incentive Compensation Committee
are Directors Duevel, Lowney, Reed and Shapiro.
COMPENSATION AND RELATED MATTERS
With the exception of directors who are also
officers of the Company or the Bank, directors were compensated
$400 for each meeting of the Board of Directors they attended,
and $400 for each committee meeting they attended, in addition
to an annual retainer fee of $6,000. Non-employee directors of
the Company who are directors of the Bank did not receive
additional compensation for any Bank Board of Directors or
committee meeting they attended, unless such meeting occurred on
a date other than the date of a meeting of the Company Board of
Directors. Each director of the Company is also a director of
the Bank. Directors could defer their fees pursuant to a
deferred compensation plan for directors in effect from 1991
through June 30, 1995. Under this plan, deferred amounts are
credited with an annual rate of return of 11% and the
accumulated deferred amounts are available for distribution to
the director, either in a lump sum or in ten (10) annual
installments, upon his retirement or disability, or to his
beneficiary upon his death. The Bank invested the amounts
allocated to deferred accounts under this plan after June 30,
1995. Compensation amounts that were deferred under this plan
remain subject to the plan's terms as described above.
Effective July 1, 1995, the Bank adopted a new
non-qualified deferred compensation plan known as the
Non-Qualified Deferred Compensation Plan (the "Deferred
Compensation Plan") for the benefit of directors and certain key
employees of the Company and the Bank. Deferred amounts are
invested, at the participant's direction, in investment funds
held by a grantor trust which the Bank has established to
satisfy its obligation with respect to benefits promised under
the terms of the Deferred Compensation Plan. Each participant's
contribution is credited with investment income equal to the
earnings or losses attributable to the applicable investment
funds held by the grantor trust. The accumulated deferred
amounts are payable to the participant in ten (10) annual
installments. A participant may designate an irrevocable
payment commencement date at the time he or she elects to
participate in the Deferred Compensation Plan. If the
participant does not indicate a payment commencement date,
payment begins at age 65 or, in the case of an employee, such
earlier date as the participant terminates employment. A
participant may petition to receive a single lump sum
distribution. The decision to grant such request will be made
by the Board of Directors or its delegate. Benefits also are
payable to a participant's beneficiaries or estate if a
participant dies prior to receiving his entire Deferred
Compensation Plan interests.
Employment Agreements. Messrs. Dennis, Hartl and
Brown (the "Executive" or "Executives") entered into employment
agreements with the Bank in October of 1986 which were amended
and restated in 1995 at which time the Company also became a
party to the agreements of Messrs. Dennis and Hartl. Under the
agreements (the "Agreement" or "Agreements"), the terms of
employment for Messrs. Dennis, Hartl and Brown are continuously
renewing periods of 3 years, 2 years and 1 year, respectively
(the "Term" or "Terms"). A Term automatically ends if the
Executive is terminated for Cause, as defined in the Agreement;
voluntarily resigns other than for Good Reason, as defined in
the Agreement; suffers a Disability, also as defined in the
Agreement; retires in accordance with the retirement policy of
the Bank; dies, or attains the age of 65.
At any time during the Term, the Company and/or the
Bank, depending on the Executive affected, may give written
notice to the Executive of the desire to modify or amend the
Agreement. If the Agreement has not been modified or amended
within 60 days of such written notice, the Term of the
Agreement will automatically be converted to a fixed period
ending after the expiration of the 60 days. The fixed periods
for Mr. Dennis, Mr. Hartl and Mr. Brown are 3 years, 2 years and
1 year, respectively. In addition, the Terms of Messrs. Hartl
and Brown automatically extend for 1 year, to 3 years and 2
years, respectively, on the date of a Change-in-Control of the
Bank as defined in the Agreements. The automatic extension,
however, would not be effective for any subsequent or successive
Change-in-Control.
<PAGE>
The Agreements provide that if the Executive's
employment is terminated other than for Cause or Disability, or
if the Executive voluntarily resigns for Good Reason, the
Executive would receive, in addition to certain other benefits,
severance pay equal to his then base salary to the remainder of
the Term. From the Executive's severance pay would be
subtracted amounts payable to the Executive under any Bank
severance pay plan if there is such a plan in effect at that
time. Amounts due to the Executive under the Agreement are
payable, at the Bank's options, in installments in accordance
with the normal payroll practices of the Bank or in a lump sum
equal to the commuted value of such salary determined by
discounting all payments at a rate equal to the bond equivalent
yield of the latest 2-year Treasury Note auction. If the
Executive's termination were to occur after a Change-in-Control,
the severance payment would be in a lump sum calculated without
the previously described discount. The Agreements also contain
confidentiality provisions effective following termination of
employment, as well as non-competition provisions prohibiting
each of the Executives from obtaining employment in a competing
business in the Bank's market area for a period of 2 years for
Messrs. Dennis and Mr. Hartl and 1 year for Mr. Brown.
The Executives are obligated under the Agreements to
perform the duties of their offices and to serve the Bank, and
also the Company in the cases of Mr. Dennis and Mr. Hartl,
faithfully, diligently and competently. Under the Agreements,
base salaries for Messrs. Dennis, Hartl and Brown were set at
$200,000, $157,500 and $100,100, respectively. The Agreements
also provide for periodic salary increases based on performance
reviews pursuant to the Bank's policies and practices, and
further provide that the Executive may be entitled to an annual
bonus which may be conditional upon the achievement of stated
individual or corporate goals.
<PAGE>
Summary Compensation Table. The following Summary
Compensation Table shows the compensation for the past three
years of the Company's Chairman, President and Chief Executive
Officer, Daniel R. Dennis, Jr., and of its Executive Vice
President, Treasurer, and Chief Financial Officer, Michael J.
Hartl, and of the Bank's Senior Vice President of Lending, James
R. Brown. No other officer of the Company or executive officer
of the Bank received annual compensation exceeding $100,000 in
1995.
<TABLE>
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Annual Compensation Awards
<CAPTION>
Securities
Underlying All Other
Name and Salary Bonus Options Compensation
Principal Position Year ($) ($) (#) ($)
<S> <C> <C> <C> <C> <C>
Daniel R. Dennis, Jr. 1995 196,538 32,200 (1) 15,000 3,082 (3)
Chairman,
President and 1994 182,519 27,500 (1) 6,000 2,847 (3)
Chief Executive
Officer 1993 174,250 15,000 (1) 10,200 (2) 1,631 (3)
Michael J. Hartl 1995 156,092 16,000 (1) 8,000 2,402 (4)
Executive Vice
President, Treasurer 1994 149,739 13,500 (1) 4,000 2,290 (4)
and Chief Financial
Officer 1993 144,200 8,000 (1) 8,400 (2) 2,183 (4)
James R. Brown 1995 99,315 7,000 (1) 5,000 1,325 (5)
Senior Vice President,
Lending 1994 95,846 6,000 (1) 3,000 2,133 (5)
1993 93,000 4,000 (1) 5,600 (2) 2,031 (5)
</TABLE>
(1) The 1995 bonus was received in 1996 for services
performed in 1995, the 1994 bonus was received in 1995 for
services performed in 1994, and the 1993 bonus was received in
1994 for services performed in 1993.
(2) Includes options for 5,200 shares for Mr. Dennis,
4,400 shares for Mr. Hartl and 2,600 shares for Mr. Brown
granted in exchange for options canceled as referred to in the
Ten Year Option Repricings Table on page 9.
(3) Mr. Dennis' Other Compensation consists of group
term life insurance contributions.
(4) Mr. Hartl's Other Compensation consists of group
term life insurance contributions.
(5) Mr. Brown's Other Compensation consists of group
term life insurance contributions.
<PAGE>
Exercisable Option and Year-End Option Value Table.
The following table shows the number and value of unexercised
options held by Mr. Dennis, Mr. Hartl, and Mr. Brown at
December 31, 1995 to acquire shares of the Common Stock
of the Company. All options held by each of
them currently are exercisable.
<TABLE>
AGGREGATE OPTIONS OUTSTANDING AND EXERCISABLE
IN 1995 AND 12/31/95 OPTION VALUE
<CAPTION>
Value of
Number of Number of Unexercised
Shares Acquired Value Unexercised In-the-Money
Name On Exercise Received Options at 12/31/95 Options at 12/31/95(1)
<S> <C> <C> <C> <C>
Daniel R. Dennis, Jr 24,600 $61,500 47,200 $248,425
Michael J. Hartl 10,277 $29,546 42,923 $210,842
James R. Brown 0 0 32,600 $142,211
</TABLE>
(1) Market value of underlying securities at
year-end, minus the exercise price.
Options Granted in 1995. The following table
shows the number and value of options granted to Mr. Dennis, Mr.
Hartl and Mr. Brown in 1995.
<TABLE>
OPTION GRANTS IN 1995
<CAPTION>
Potential Realizable Value
at Assumed Annual
Rates of Stock Price
Individual Grants Appreciation For Option Term
Number of % of Total
Securities Options
Underlying Granted to Exercise or
Options Employees Base Price Expiration
Name Granted in 1995 ($/Share) Date 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
Daniel R. Dennis, Jr. 15,000 14.53% 10.1250 3/08/05 95,512 242,049
Michael J. Hartl 8,000 7.75% 10.1250 3/08/05 50,940 129,092
James R. Brown 5,000 4.84% 10.1250 3/08/05 31,837 80,683
</TABLE>
On November 22, 1993, certain options held by
officers of the Company were canceled and new options were
issued as described below. The exchange was offered in order to
provide the officers a more favorable market position. The
executive officers of the Company and the Bank who held affected
options are listed below:
<PAGE>
<TABLE>
TEN YEAR OPTIONS REPRICINGS
<CAPTION>
Number of Length of
Securities Market Price Exercise Original
Underlying of Stock at Price at Option Term
Options/ Time of Time of Remaining at
SARs Repricing or Repricing or New Date of
Repriced or Amendment Amendment Exercise Repricing or
Name Date Amended (#)(a) ($) ($) Price ($) Amendment
<S> <C> <C> <C> <C> <C> <C>
Daniel R. 11/22/93 2,400 8.5625 10.75 8.5625 4.167 years
Dennis, Jr. 11/22/93 2,800 8.5625 13.00 8.5625 6.25 years
Michael J. 11/22/93 2,000 8.5625 10.75 8.5625 4.167 years
Hartl 11/22/93 2,400 8.5625 13.00 8.5625 6.25 years
James R. 11/22/93 1,200 8.5625 10.75 8.5625 4.167 years
Brown 11/22/93 1,400 8.5625 13.00 8.5625 6.25 years
Daphne P. 11/22/93 1,200 8.5625 10.75 8.5625 4.167 years
Cannata 11/22/93 1,400 8.5625 13.00 8.5625 6.25 years
James F. 11/22/93 1,200 8.5625 10.75 8.5625 4.167 years
Dewey 11/22/93 1,400 8.5625 13.00 8.5625 6.25 years
</TABLE>
(a) Outstanding options were canceled and new options
were issued. In each case, the number of shares covered by the
new options issued was 80% of the number of shares covered by
the canceled options.
<PAGE>
COMPENSATION COMMITTEE REPORT
Overview. The Compensation Committee of the Bank
recommends the compensation levels of the Company's executive
officers, which are then finally voted upon by the Board of
Directors of the Bank. The Compensation Committee also
recommends overall compensation and incentive and benefit
programs for the employees of the Bank. As a member of the
Compensation Committee, Mr. Dennis does not participate in
recommendations as to his own compensation as Chairman,
President and Chief Executive Officer. The Compensation
Committee met 8 times in 1995, and the following summarizes its
report on executive compensation.
The objectives of the Compensation Committee
regarding executive compensation are to 1) attract and retain
highly-qualified executives critical to the Company's long term
success, 2) sponsor a competitive executive compensation
program, 3) reward its executives for enhancement of stockholder
value as reflected in the Company's annual earnings performance
and the market price of the Common Stock, and 4) encourage
ownership in the Company through grants under the stock option
and incentive plan.
The Committee considers several factors when
determining executive compensation. The first factor is the
financial performance of the Company and the Bank. The
Committee evaluates the performance of the Company and the Bank
relative to other financial institutions and to their own
history. The Committee reviews several standard factors such as
capital position, return on average equity, and return on
assets. The second factor is the individual job performance of
the executive and achievement of specific objectives as
evaluated by the Board of Directors. The third factor the
Committee considers is competitiveness with industry peer group.
The Committee examines various reports and statistical surveys
to determine compensation paid to executives of companies
similar in size and located in the northeastern section of the
United States.
In addition to recommending the salary of the
executive officers, the Committee also recommends the bonuses to
be paid to them. The Committee relies heavily on the same
criteria used to recommend salary levels to recommend bonuses.
The Committee also reviews the operating expenses of the Company
to determine the funds available to support bonuses.
CEO Compensation. Compensation paid to the
Chief Executive Officer, Daniel R. Dennis, Jr. in 1995 was
determined after the factors discussed above were considered.
During 1995, the Company continued its positive trend in core
earnings which improved by 49% over core earnings in 1994.
Nonperforming assets, exclusive of "loans and foreclosed
properties held for sale", represented 1.39% of total assets
compared to 1.67% of total assets at the end of 1994. Mr.
Dennis led an aggressive campaign to expand the Company's market
presence in Eastern Connecticut through two successful
acquisitions and by increasing the branch and ATM network to
cover all of New London County. The Bank of Mystic, Inc.
("Mystic") acquisition was completed on April 1, 1995, adding
$66.0 million in assets, including net loans of $49 million.
Deposits of Mystic at the time of the acquisition were $60.2
million. In July, 1995, the Company announced the signing of an
agreement to acquire Seconn Holding Company, the holding company
for The Bank of Southeastern Connecticut ("Southeastern"). This
acquisition was completed on January 2, 1996, and added $47.0
million in assets, including $28.9 million in loans. Deposits
of Southeastern at the time of the acquisition were $44.4 million.
Additionally, the Company's regular quarterly dividend of $.08
per share was increased to $.10 per share in July, 1995 and, due
to the continued improvement in earnings, the Board of Directors
in January, 1996 declared a special dividend of $.15 per share
to its stockholders. Based upon the Company's performance and
the Committee's recommendation, which focused heavily on this
performance, Mr. Dennis was compensated as indicated in the
Summary Compensation Table on page 7.
COMPENSATION COMMITTEE MEMBERS
Daniel. R. Dennis, Jr.
Paul R. Duevel
Jeremiah J. Lowney, Jr.
Richard P. Reed
Martin C. Shapiro
<PAGE>
EMPLOYEE BENEFIT PLANS
Pension Plans. The Bank maintains a noncontributory
defined benefit pension plan that is qualified under the
Employee Retirement Income Security Act of 1974, as amended (the
"Pension Plan"). The Pension Plan covers employees who have
attained the age of 21 years (or 24 1/2 years for employees who
became participants of the Pension Plan prior to July 1, 1985)
and have completed one year of service. Participants in the
plan receive credit for benefit purposes for each year in which
they complete at least 1,000 hours of service with the Bank.
The Pension Plan provides in general for monthly payments to or
on behalf of each covered employee upon such employee's
retirement at age 65. Annual payments are based upon the
employee's average annual compensation for the five
highest-salary consecutive years of employment. The Pension
Plan provides for optional early retirement benefits provided a
participant has attained age 55 and completed at least 10 years
of service with the Bank. It also provides for disability
retirement benefits and for Social Security integration.
Officers are entitled to benefits on the same basis as other
employees. Contributions to the fund and expenses of
administering the Pension Plan are paid by the Bank.
Effective July 1, 1995, the Bank adopted a pension
restoration plan entitled the Executive Non-Qualified Pension
Restoration Plan (the "Pension Restoration Plan") for highly
compensated employees of the Bank affected by legal restrictions
on Pension Plan payments. The present participants are Mr.
Dennis and Mr. Hartl. Under the Pension Restoration Plan, the
Bank contributes, for the benefit of participants, an amount
equal to the prorated portion of any pension or pension-related
benefit which cannot be provided through the Pension Plan
because of limitations imposed by federal law on the benefits
that may be accrued under the terms of a tax-qualified defined
benefit retirement plan. The Bank's contributions under the
Pension Restoration Plan are invested, at the participant's
directions, in investment funds held by a trust which the Bank
has established to satisfy its obligation with respect to the
Pension Restoration Plan. A participant's interests are
accounted for separately by investment fund and are equal to the
total of contributions on behalf of that participant adjusted
for earnings and losses based on the performance of the
applicable investment funds. Benefits under the Pension
Restoration Plan are payable in ten (10) annual installments
commencing, in the case of retirement, at age 65 or such earlier
date as the participant might early retire under the terms of
the Bank's retirement program. If a participant's employment
terminates prior to retirement, benefits begin at age 65, or
earlier if the participant is eligible for and elects to receive
early retirement benefits. In the event of a participant's
death, benefits are payable to the participant's beneficiaries
and commence when the participant would have attained the age of
65. A participant may petition the plan administrator to
receive his entire plan interest in a lump sum. The decision to
grant such request will be made by the Board of Directors or its
delegate.
<PAGE>
The following table illustrates annual pension
benefits under the Pension Plan and Pension Restoration Plan for
retirement in 1995 at age 65 under the most advantageous
provisions available for various levels of compensation and
years of service:
<TABLE>
ANNUAL PENSION BENEFIT BASED ON YEARS OF SERVICE
<CAPTION>
Average Years of Service(a)
Final Earnings 15 20 25 30(b)
<C> <C> <C> <C> <C>
$ 15,000 2,300 3,100 3,900 4,700
25,000 5,500 7,300 9,100 10,900
35,000 8,700 11,500 14,400 17,300
50,000 13,600 18,100 22,600 27,200
75,000 22,000 29,300 36,700 44,000
100,000 30,400 40,600 50,700 60,900
125,000 38,900 51,800 64,800 77,700
150,000 47,300 63,100 78,800 94,600
175,000 55,700 74,300 92,900 111,500
200,000 64,200 85,600 107,000 128,400
225,000 72,600 96,800 121,000 145,200
250,000 81,100 108,100 135,100 162,100
275,000 89,500 119,300 149,200 179,000
300,000 97,900 130,600 163,200 195,900
</TABLE>
(a) As of December 31, 1995, Mr. Dennis had 14 years
of credited service, Mr. Hartl had 16 years of credited
service and Mr. Brown had 10 years of credited service. If they
remain in the employ of the Bank through age 65, they will have
29, 27 and 15 years of credited service, respectively, under the
Plan. The compensation of Mr. Dennis, Mr. Hartl and Mr. Brown
listed as "Salary" and "Bonus" in the Summary Compensation Table
above, including amounts contributed to the 401(k) plan, count
as annual compensation for purposes of the Plan.
(b) The maximum number of years of credited service
under the Pension Plan is 30.
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the
cumulative total stockholder return on the Company's Common
Stock based on the market price of the Common Stock and assuming
the reinvestment of dividends, with the cumulative total return
of companies on the NASDAQ Market Index and the reported total
return of companies on the KBW New England Savings Bank Index.
FIVE YEAR TOTAL RETURN COMPARISON*
AMONG NORWICH FINANCIAL CORP., NASDAQ
AND KBW NEW ENGLAND SAVINGS BANK INDEX
The graph assumes a $100 investment on January 1,
1991 in the Company's Common Stock, the NASDAQ Market Index and
the KBW New England Savings Bank Index.
[ GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
<S> <C> <C> <C> <C> <C> <C>
Norwich Financial Corp. 100 211 244 416 479 629
KBW New England Savings
Bank Index 100 176 308 412 414 647
NASDAQ Market Index 100 161 187 215 210 296
</TABLE>
*Total return assumes reinvestment of all dividends.
<PAGE>
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Some of the directors and officers of the Company
and the Bank, and associates of such directors and officers, are
and have been customers of the Bank and have had banking
transactions with the Bank both before and since January 1,
1995. Loans made to such persons and their associates (a) were
made in the ordinary course of the Bank's business, (b) were
made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable
transactions with other persons, and (c) did not involve more
than the normal risk of collectiblity or present other
unfavorable features.
As a matter of policy, loans are made to directors,
officers and employees of the Company and the Bank in compliance
with Regulation O of the Federal Reserve Board regulations and
Section 36-101a of the Connecticut General Statutes (superseded
on January 1, 1995 by Section 36a-263 of the Connecticut General
Statutes) on substantially the same terms, including interest
rates, as those of comparable transactions prevailing at the
time and do not involve more than the normal risk of
collectiblity or present other unfavorable features. The
Company and the Bank had no loans outstanding as of December 31,
1995 to any person known by the Company to be a beneficial owner
of more than five percent (5%) of the Common Stock.
Any business transactions of the Company or the Bank
with officers, directors, employees, principal stockholders or
affiliates of the Company or the Bank have been and will be on
terms no less favorable to the Company or the Bank than could
have been or could be obtained from third parties. If a
director of the Company also was an executive officer or 10%
stockholder of another entity during 1995, then the Company
neither paid to nor received from such entity for property or
services an amount in excess of 5% of either (1) the Company's
gross consolidated revenues or (2) the entity's gross
consolidated revenues, unless the amounts paid for such property
or services were determined by competitive bids. Furthermore,
neither the Company, nor its subsidiaries were indebted to any
such entity in an aggregate amount exceeding 5% of the Company's
total consolidated assets.
COMPLIANCE WITH SECTION 16(a) OF THE 1934 ACT
Section 16(a) of the 1934 Act requires the Company's
officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity
securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the
"SEC") and the NASD. Officers, directors and greater than ten
percent stockholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review
of the copies of such reports furnished to the Company and
written representations that no other reports were required,
during the fiscal year ended December 31, 1995, all Section
16(a) filing requirements were complied with applicable to its
officers, directors and greater than ten percent (10%)
beneficial owners with the following exceptions: Mr. Halsey
inadvertently failed to disclose on a timely basis Common Stock
acquired by his spouse in 1995. Only one transaction was
involved in this incident. In addition, Mr. McGill, a director
of the Bank, and James F. Dewey, an executive officer of the
Bank, inadvertently failed to timely report Common Stock
acquired by their respective spouses during 1994. Only one
transaction was involved in each of these incidents.
THE NOMINEES FOR DIRECTOR MUST BE ELECTED BY THE
AFFIRMATIVE VOTE OF A MAJORITY OF THE VOTES CAST BY THE
STOCKHOLDERS OF THE COMPANY AT THE ANNUAL MEETING. THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE ELECTION OF THE NOMINEES FOR DIRECTOR.
<PAGE>
PROPOSAL 2
RATIFICATION OF THE APPOINTMENT OF
KPMG PEAT MARWICK LLP
AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR
ENDING DECEMBER 31, 1996
The Board of Directors of the Company has renewed
the Company's arrangements with KPMG Peat Marwick LLP,
Independent Certified Public Accountants, to be the Company's
independent public accountants for the fiscal year ending
December 31, 1996, subject to ratification by the Company's
stockholders. Representatives of KPMG Peat Marwick LLP will be
present at the Annual Meeting where they will be available to
make a statement if they desire to do so and will be available
to respond to stockholders' questions.
THE APPOINTMENT OF KPMG PEAT MARWICK LLP MUST BE
RATIFIED BY A MAJORITY OF THE VOTES CAST BY THE STOCKHOLDERS OF
THE COMPANY AT THE ANNUAL MEETING. THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS
INDEPENDENT PUBLIC ACCOUNTANTS.
STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company intended to
be presented at the 1997 annual meeting of the Company must be
received by the Company not later than December 9, 1996 to be
included in the Company's proxy statement and form of proxy
relating to that meeting. Any such proposal must comply with
Rule 14a-8 promulgated by the Securities and Exchange Commission
under the 1934 Act.
OTHER MATTERS
At the time of preparation of this Proxy Statement,
the Board of Directors of the Company knows of no matter to be
presented for action at the meeting other than as set forth in
the Notice of Annual Meeting of Stockholders and described in
this Proxy Statement. If any other matters properly come before
the meeting, proxies have discretionary authority to vote their
shares according to their best judgment.
By order of the Board of Directors
Daphne P. Cannata
Secretary
April 8, 1996
<PAGE>
APPENDIX
PROXY NORWICH FINANCIAL CORP.
1996 ANNUAL MEETING OF STOCKHOLDERS - MAY 10 ,1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of NORWICH FINANCIAL CORP. hereby appoints
Daniel R. Dennis, Jr. and Daphne P. Cannata and each of them the proxies
of the undersigned with full power of substitution to vote at the Annual
Meeting of Stockholders of the Company to be held at the Ramada Hotel, 10
Laura Boulevard, Norwich, Connecticut, at 10:00 a.m. on Friday, May 10, 1996,
and at any adjournment or adjournments thereof, with all the power which the
undersigned would have if personally present, hereby revoking any proxy
heretofore given. A majority of said proxies or their substitutes who attend
the meeting (or if only one shall be present, then that one) may exercise all
of the powers hereby granted. The undersigned hereby acknowledges receipt
of the proxy statement for the meeting and instructs the proxies to vote.
(Continued and to be signed on other side)
THIS PROXY WHEN PROPERLY SIGNED WILL BE VOTED IN THE MANNER DIRECTED.
IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE
PROPOSALS SET FORTH BELOW AND FOR THE ELECTION OF ALL NOMINEES
LISTED BELOW.
Please mark your votes as this [X]
The Board of Directors recommends a vote "FOR"
Proposals 1 and 2.
FOR all
nominees
for WITHHOLD
Director (except AUTHORITY to vote
as marked to for all nominees
the contrary) for Director
1. To elect the nominees for director: [_] [_]
Paul R. Duevel, Robert T. Ramsdell
and Richard P. Reed
Withhold for the following only:
(INSTRUCTION: To withhold authority to vote for any
individual, write that nominee's name on the space provided
below.)
____________________________________________________
FOR AGAINST ABSTAIN
2. To ratify the appointment of KPMG Peat [_] [_] [_]
Marwick LLP as independent public
accountants for the fiscal year
ending December 31, 1996.
3. With discretionary authority upon such other
matters as may properly come before the meeting.
I plan to attend the Annual Meeting [_]
Signature(s) _______________________________________ Date ___________, 1996
NOTE: Please sign exactly as your name appears on
this proxy card. When signing as attorney, executor, trustee or
guardian, please give your full title.
