<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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
MADISON BANCSHARES GROUP, LTD.
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
<PAGE>
April 20, 1998
Dear Fellow Shareholder:
You are cordially invited to attend the 1998 Annual Meeting of
the shareholders of Madison Bancshares Group, Ltd. (the "Corporation") to be
held on Tuesday, May 19, 1998 at 3:00 p.m., prevailing local time, at the
Madison Bank Building, 1767 Sentry Parkway West, Blue Bell, PA 19422.
This year's proposals for the Annual Meeting relate to (i) the
election of directors, and (ii) the ratification of the selection of
independent accountants.
The Board of Directors is excited about the progress we made in
1997 and looks forward with enthusiasm and optimism to meeting the challenges
that await us in 1998 and beyond.
A copy of the Corporation's 1997 Annual Report to Shareholders
is enclosed for your review.
We look forward to seeing you at the Annual Meeting.
Sincerely,
Peter D. DePaul
Chairman of the Board
<PAGE>
MADISON BANCSHARES GROUP, LTD.
MADISON BANK BUILDING
1767 SENTRY PARKWAY WEST
BLUE BELL, PENNSYLVANIA 19422
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 19, 1998
-----------------
TO OUR SHAREHOLDERS:
NOTICE IS HEREBY GIVEN THAT the 1998 Annual Meeting of
Shareholders (the "Annual Meeting") of Madison Bancshares Group, Ltd. (the
"Corporation") will be held on May 19, 1998 at 3:00 p.m., prevailing local
time, at Madison Bank Building, 1767 Sentry Parkway West, Blue Bell, PA 19422
to consider and act upon:
1. The election of three (3) Class III Directors to serve until
the Annual Meeting of Shareholders in 2001;
2. The ratification of the selection of Deloitte & Touche LLP
as the Corporation's auditors for the 1998 fiscal year; and,
3. The transaction of such other business as may be properly
brought before the Annual Meeting or any adjournment
thereof.
Shareholders of record of the Corporation at the close of
business on April 8, 1998 will be entitled to notice of and to vote at the
Annual Meeting and any adjournment or postponement thereof.
All shareholders are cordially invited to attend the Annual
Meeting. Whether or not you plan to attend the Annual Meeting, please complete
and sign the enclosed proxy card and return it promptly to the Corporation in
the enclosed envelope, which requires no postage if mailed in the United
States. At any time prior to their being voted, your proxy is revocable by
delivering written notice to the Corporation in accordance with the
instructions set forth in the Proxy Statement or by voting at the Annual
Meeting in person.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE
ACCOMPANYING ENVELOPE PROMPTLY, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING.
April 20, 1998
Philip E. Hughes, Jr.
Secretary
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
PROXY STATEMENT...................................................................................................1
General Information................................................................................1
Voting and Revocability of Proxies.................................................................1
Solicitation of Proxies............................................................................1
Voting Securities and Holders Thereof..............................................................2
Shareholder Proposals for the 1999 Annual Meeting..................................................2
Nominations for Directors for the 1999 Annual Meeting..............................................2
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934...............................2
PROPOSAL I
ELECTION OF DIRECTORS..............................................................................3
Information Concerning Nominees and Continuing Directors...........................................3
Nominees and Continuing Directors..................................................................3
NOMINEES...........................................................................................3
Class III Directors.........................................................................3
Continuing Directors...............................................................................3
Class I Directors...........................................................................3
Class II Directors..........................................................................4
RECOMMENDATION OF THE CORPORATION'S BOARD OF DIRECTORS.............................................5
VOTING SECURITIES AND PRINCIPAL HOLDERS...........................................................................6
Security Ownership of Management and Beneficial Owners.............................................6
Board Committees...................................................................................7
Executive Committee................................................................................7
Audit Committee....................................................................................7
Executive Compensation/Stock Option Committee......................................................7
EXECUTIVE COMPENSATION; RELATED PARTY TRANSACTIONS; AND
CERTAIN INFORMATION CONCERNING OFFICERS............................................................8
Executive Compensation.............................................................................8
SUMMARY COMPENSATION TABLE.........................................................................8
Employment Agreements.............................................................................10
Related Party Transactions........................................................................10
Other Officers....................................................................................11
PROPOSAL II
PROPOSAL TO RATIFY SELECTION OF DELOITTE & TOUCHE LLP
AS INDEPENDENT PUBLIC ACCOUNTANT..................................................................12
RECOMMENDATION OF THE CORPORATION'S BOARD OF DIRECTORS............................................12
OTHER MATTERS ..................................................................................................13
</TABLE>
i
<PAGE>
MADISON BANCSHARES GROUP, LTD.
MADISON BANK BUILDING
1767 SENTRY PARKWAY WEST
BLUE BELL, PENNSYLVANIA 19422
-----------------
ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 19, 1998
---------------
PROXY STATEMENT
---------------
General Information
-------------------
This Proxy Statement has been prepared and is being distributed
in connection with the solicitation by the Board of Directors of Madison
Bancshares Group, Ltd. (the "Corporation") of proxies in the enclosed form for
use at the Annual Meeting of Shareholders of the Corporation to be held on May
19, 1998 at 3:00 p.m., prevailing local time, at the Madison Bank Building,
1767 Sentry Parkway West, Blue Bell, PA 19422, and at any adjournment or
postponement thereof. (Such meeting and any adjournment or postponement
thereof will be hereinafter referred to as the "Annual Meeting.") This Proxy
Statement is being first given or sent to Shareholders of the Corporation on
or about April 20, 1998.
Voting and Revocability of Proxies
----------------------------------
Unless contrary instructions are indicated on the proxy, all
shares represented by valid proxies received pursuant to this solicitation
(and not revoked before they are voted) will be voted FOR the election of the
nominees for Directors named herein, and FOR the ratification of the selection
of Deloitte & Touche LLP as the Corporation's outside auditors described in
this Proxy Statement in the manner stated in the accompanying proxy. As of the
date of this Proxy Statement, the Board of Directors knows of no business that
will be presented for consideration at the Annual Meeting other than that
referred to above. If any other business properly comes before the Annual
Meeting, the persons designated in the enclosed proxy will vote on such
business in accordance with their best judgment.
Any shareholder who executes and returns a proxy may revoke it
at any time before it is exercised by (i) delivering to E. Cheryl Hinkle,
Assistant Secretary of the Corporation, at the principal executive offices of
the Corporation at 1767 Sentry Parkway West, Blue Bell, PA 19422, either an
instrument revoking the proxy, or a duly executed proxy bearing a later date,
or (ii) by attending the Annual Meeting and voting in person.
Solicitation of Proxies
-----------------------
The enclosed proxy is being solicited by the Board of Directors
of the Corporation for use in connection with the Annual Meeting. The cost of
such solicitation will be borne by the Corporation. Proxies may be solicited
in person or by mail, telephone, telegram, mailgram or other means by
directors, officers, employees and management of the Corporation; however,
such persons will not receive any fees for such solicitation. Brokers,
nominees, fiduciaries and other custodians have been requested to forward such
soliciting material to the beneficial owners of shares held of record by them,
and such custodians may be reimbursed for their expenses.
<PAGE>
Voting Securities and Holders Thereof
-------------------------------------
As of the close of business on April 8, 1998, the record date
for voting at the Annual Meeting, the Corporation had 1,252,773 shares of
Common Stock outstanding, par value $1.00 per share (the "Common Stock"), held
by approximately 276 shareholders of record. The actual number of beneficial
holders of the Corporation's Common Stock is believed to be higher. Holders of
Common Stock are entitled to one vote per share on all matters to be voted
upon at the Annual Meeting. As of the date hereof, there are no other classes
of the Corporation's capital stock issued or outstanding.
Shareholder Proposals for the 1999 Annual Meeting
-------------------------------------------------
Any stockholder who intends to present a proposal for
consideration at the Corporation's 1999 Annual Meeting of stockholders must,
on or before December 19, 1998, submit his proposal to the Corporation and
notify the Corporation that he intends to appear personally at the 1999 Annual
Meeting to present his proposal in order to have the Corporation consider the
inclusion of such proposal in the Corporation's 1999 Proxy Statement and form
of proxy relating to the 1999 Annual Meeting. Reference is made to Rule 14a-8
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
for information concerning the content and form of such proposal and the
manner in which such proposal must be made.
Nominations for Directors for the 1999 Annual Meeting
-----------------------------------------------------
Nominations for election to the Board of Directors at the 1999
Annual Meeting may be made only in writing by a Shareholder entitled to vote
at the 1999 Annual Meeting of Shareholders. Such nominations must be sent to
the Chairman or President of the Corporation at the following address: Madison
Bancshares Group, Ltd., 1767 Sentry Parkway West, Blue Bell, Pennsylvania
19422. Nominations for the 1999 Annual Meeting must be received not less than
14 days nor more than 50 days prior to the date of the 1999 Annual Meeting. To
the extent known by the nominating Shareholder, the nomination shall contain
(i) the name and address of the nominee; (ii) the principal occupation of each
proposed nominee; (iii) the total number of shares of capital stock of the
Corporation that will be voted for each proposed nominee; (iv) the name and
residence of the nominating Shareholder; and, (v) the number of shares of the
Corporation's capital stock owned by the nominating Shareholder. In the event
that less than twenty-one days notice of the 1999 Annual Meeting is given to
Shareholders, Shareholder nominations to the Board of Directors shall be
mailed or delivered to the Chairman or President of the Corporation not later
than the close of business on the seventh day following the date on which the
notice of the Annual Meeting was mailed to Shareholders.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
- --------------------------------------------------------------------
Section 16(a) of the Exchange Act requires the Corporation's
directors, certain of its officers and persons who own more than ten percent
of the Corporation's Common Stock (collectively, the "Reporting Persons") to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission and to furnish the Corporation with copies of these
reports.
Based on the Corporation's review of the copies of these
reports received by it, and representations received from Reporting Persons,
the Corporation believes that, with the exception of Ms. King, who
inadvertently failed to file a Form 4 regarding one transaction in a timely
manner, all filings required to be made by the Reporting Persons for the
period January 1, 1997 through December 31, 1997 were made on a timely basis.
The Corporation will provide, without charge, to each person or
shareholder, upon written request of any such person, a copy of the
Corporation's 1997 Annual Report on Form 10-KSB, including any exhibits
thereto and the Financial Statements thereto. Any such request shall be
delivered to E. Cheryl Hinkle, Assistant Secretary, Madison Bancshares Group,
Ltd., 1767 Sentry Parkway West, Blue Bell, PA 19422.
2
<PAGE>
PROPOSAL I
ELECTION OF DIRECTORS
Information Concerning Nominees and Continuing Directors
--------------------------------------------------------
The Corporation's By-Laws provide for the classification of
Directors into three classes, as nearly equal in number as possible, with
approximately one-third of the Directors to be elected annually for three-year
terms. At the Annual Meeting, there will be three (3) persons elected as Class
III Directors, for terms expiring in 2001. All three (3) of the persons
nominated for election as Class III Directors are presently serving as
Directors of the Corporation.
At each annual meeting subsequent to the Annual Meeting, one
class of Directors will be elected for a 3-year term, with Class II Directors
to be elected in 1999 and Class I Directors to be elected in 2000.
Nominees and Continuing Directors
---------------------------------
Set forth below is certain information with respect to each of
the nominees for election to the Board of Directors at the Annual Meeting as
well as each of the other continuing Directors, including name, age, the
period during which such person has served as a Director of the Corporation,
such person's principal occupation and employment during the past five years
and the amount and percentage of the Corporation's Common Stock (based upon
1,252,773 shares of Common Stock issued and outstanding as of April 8, 1998)
beneficially owned (as determined in accordance with Rule 13d-3 of the
Exchange Act) by such person as of April 8, 1998. It is the intention of the
persons named in the accompanying form of proxy to vote for all those nominees
listed below.
Each of the persons listed below as nominees has agreed to be
named as a nominee for Director in this Proxy Statement and has consented to
serve as a Director if elected. The Corporation expects all nominees to be
willing and able to serve. The Board of Directors may designate a substitute
nominee to replace any bona fide nominee who was nominated and who, for any
reason, becomes unavailable for election as a Director. If any of the nominees
shall become unable to serve, the persons designated in the enclosed Proxy
Card will vote for the election of such other person or persons as the Board
of Directors may recommend. Alan Schiffman, who is currently a Class III
Director and whose term expires on the date of the Annual Meeting, is not
standing for re-election. The Board of Directors, on March 17, 1998 passed a
resolution, effective as of the date of the Annual Meeting, reducing the
number of seats on the Board of Directors to eleven.
NOMINEES
Class III Directors:
Vito A. DeLisi, age 49, has served as a Director and Executive
Vice President of the Corporation since 1988 and President and Chief Executive
Officer of Madison Bank, a wholly-owned subsidiary of the Corporation (the
"Bank"), since 1989. Mr. DeLisi also serves as chairman of the Executive
Committee.
Francis R. Iacobucci, age 68, has served as a Director of the
Corporation since 1988 and the Bank since 1989. Mr. Iacobucci also serves as a
member of the Executive Compensation/Stock Option Committee. Mr. Iacobucci is
President and co-founder of the Iacobucci Organization and Consolidated
Carpenters, Inc., builder of residential housing and commercial and industrial
complexes.
Donald J. Reape, age 60, has been a Director of the Corporation
and the Bank since 1994. Mr. Reape is President of Donald J. Reape and
Associates, a real estate company specializing in appraisals, mortgage banking
and development.
Continuing Directors
Class I Directors:
Gary E. Daniels, age 44, has served as a Director of the
Corporation since 1988 and the Bank since 1989. Mr. Daniels also serves as a
member of the Corporation's Audit and Executive Compensation/Stock Option
Committees. Mr. Daniels is President of Creative Financial Group Ltd., a full
service financial planning firm, and is a Chartered Life Underwriter and
Chartered Financial Consultant. Mr. Daniels is the founder of the Creative
Financial Charitable Foundation, which sponsors the Variety Club of
Philadelphia and other charitable institutions.
3
<PAGE>
Philip E. Hughes, Jr., age 49, has served as a Director of the
Corporation since 1988 and the Bank since 1989. Mr. Hughes also serves as
Secretary/Treasurer and Chief Financial Officer of the Corporation, Vice
Chairman and Treasurer of the Bank and a member of the Executive and Executive
Compensation/Stock Option Committee. Mr. Hughes is an attorney at law, a
certified public accountant and Director of Taxation of Schiffman Hughes
Brown, a regional certified public accounting firm. Mr. Hughes serves on the
Board of the Philadelphia Senior Center and formerly served on the Board of
Trustees of LaSalle University and Chairman of the board of Trustees of the
Roxborough YMCA.
Kathleen A. Kucer, M.D., age 46, has been a Director of the
Corporation since 1988 and the Bank since 1989. Dr. Kucer also serves as a
member of the Executive and Audit Committees. Dr. Kucer is Chairman of the
Department of Dermatology at Grandview Hospital and the author of scholarly
articles on the subject of Dermatology. Dr. Kucer conducts skin cancer
prevention screenings for the Grand View Community and is an active
participant in Norristown's Habitat for Humanity projects.
Blaine W. Scott, III, age 71, has been a Director of the
Corporation since 1988 and the Bank since 1989. Mr. Scott also serves as a
member of the Corporation's Executive, Audit and Executive Compensation/Stock
Option Committees. Mr. Scott is President of International Medical Insurance
Services, Ltd. and President and Chief Executive Officer of Upper Merion
Investment Corporation, a real estate and restaurant management company. Mr.
Scott is also Secretary/Treasurer and Chief Financial Officer of Baron's Inne.
Mr. Scott was formerly a Trustee of Valley Forge Military Academy and College
and Temple University and a member of the Pennsylvania Republican State
Committee. Mr. Scott is a Director Emeritus of the King of Prussia Chamber of
Commerce.
Class II Directors:
Peter DePaul, age 70, has served as a Director of the
Corporation since 1988 and the Bank since 1989. Since March, 1996, he has
served as Chairman of the Board of Directors of the Corporation and since
April , 1996, as President and Chief Executive Officer of the Corporation and
Chairman of the Bank. Mr. DePaul also serves as a member of the Corporation's
Executive, Audit and Executive Compensation/Stock Option Committees. Mr.
DePaul is the Managing Partner of the DePaul Group of Companies, headquartered
in Blue Bell, Pennsylvania, specializing in the real estate, construction,
health care and hospitality industries. In addition, Mr. DePaul serves on the
Board of Trustees of Temple University, the Board of Directors of the
Philadelphia Heart Institute of Presbyterian Hospital and the Board of
Directors of Independence Blue Cross. Mr. DePaul is the brother-in law of
Michael O'Donoghue, who is a Director of the Corporation.
Arnold M. Katz, CLU, age 58, has served as a Director of the
Corporation since 1988 and the Bank since 1989. Mr. Katz also serves as a
member of the Corporation's Executive Committee. Mr. Katz is President of
Brokerage Concepts, Inc., a distributor of life and health insurance and the
largest privately held third party administrator in America . Mr. Katz is
Chairman of the Board of Brokers Service, Inc. and the president of several
companies in the life and health insurance field. Mr. Katz serves as a member
of the executive committee of the Police Athletic League, the Board of
Trustees of Albert Einstein Health Care Foundation and the Golden Slipper
Foundation.
Lorraine C. King, M.D., age 56, has served as a Director of the
Corporation since 1988 and the Bank since 1989. Dr. King serves as a member of
the Audit and Executive Compensation/Stock Option Committees. Dr. King
specializes in the field of reproductive endocrinology and infertility and is
President of L.C. King M.D., P.C. and Diagnostic Endocrinology Associates. Dr.
King is a member of the Philadelphia College of Physicians and an Associate
Professor of OB/GYN. Dr. King is also a staff physician at Thomas Jefferson
University Hospital and the author of scholarly articles on the subject of
reproductive endocrinology.
Michael O'Donoghue, age 55, has served as a Director of the
Corporation and the Bank since 1991. Mr. O'Donoghue serves as Chairman of the
Audit Committee, member of the Executive Committee and Executive
Compensation/Stock Option Committee. Mr. O'Donoghue is a senior partner in the
law firm of Wisler, Perlstein, Talone, Craig, Garity and Potash located in
Blue Bell, Pennsylvania. Mr. O'Donoghue serves as a member of the Board of
Directors of the Southeastern Pennsylvania Transportation Authority (SEPTA).
Mr. O'Donoghue formerly served on the Board of Directors of the Montgomery
County Bar Association and as editor of the Montgomery County Law Reporter.
Mr. O'Donoghue is the brother-in-law of Peter DePaul, who is the Chairman,
President and Chief Executive Officer of the Corporation and Chairman of the
Bank.
4
<PAGE>
RECOMMENDATION OF THE CORPORATION'S BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THESE NOMINEES.
5
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS
Security Ownership of Management and Beneficial Owners
The following table sets forth information as of April 8, 1998
with respect to the shares of the Corporation's Common Stock beneficially
owned by each director and executive officer of the Corporation, by all
directors and executive officers as a group and by each person who is known by
the Corporation to own beneficially 5% or more of the Corporation's Common
Stock (based on 1,252,773 shares of the Corporation's Common Stock outstanding
as of April 8, 1998). The information in the table concerning persons known by
the Corporation to own beneficially 5% or more of the Corporation's Common
Stock is derived, without independent investigation on the part of the
Corporation, from the most recent filings made by such persons on Schedule 13D
and Schedule 13G pursuant to Rule 13d-3 of the Exchange Act.
<TABLE>
<CAPTION>
Shares Beneficially Percentage of
Name Owned (1) Class (1)
- ---- --------- ---------
<S> <C> <C>
Gary E. Daniels (2) 14,346 1.1%
Vito A. DeLisi (3) 78,942 6.0%
Peter D. DePaul (4) 119,649 9.5%
Philip E. Hughes, Jr. (5) 27,305 2.2%
Francis R. Iacobucci (6) 24,515 1.9%
Arnold M. Katz (7) 59,975 4.8%
Lorraine C. King, M.D. (8) 24,201 1.8%
Kathleen A. Kucer, M.D. (9) 14,081 1.1%
Michael O'Donoghue 7,870 *
Donald J. Reape 18,138 *
Blaine W. Scott, III (10) 12,773 *
Alan Schiffman (11) 103,557 8.0%
All Directors and executive officers as
a group (13 persons) (12) 418,182 30.4%
</TABLE>
* Less than one (1%) percent.
(1) Calculated in accordance with Rule 13d-3 of the Exchange Act. The address
for all persons listed in the above table, except for Mr. Schiffman, is
c/o Madison Bancshares Group, Ltd., Madison Bank Building, 1767 Sentry
Parkway West, Blue Bell, Pennsylvania 19422.
(2) Includes 4,973 immediately exercisable warrants to purchase shares of the
Corporation's Common Stock ("Warrants").
(3) Includes 64,294 immediately exercisable options to purchase shares of the
Corporation's Common Stock ("Options").
(4) Includes 10,459 immediately exercisable Warrants.
(5) Includes 4,278 immediately exercisable Warrants.
(6) Includes 6,343 immediately exercisable Warrants.
(7) Includes 5,070 immediately exercisable Warrants.
(8) Includes 4,529 immediately exercisable Warrants.
(9) Includes 2,914 immediately exercisable Warrants.
(10) Includes 3,159 immediately exercisable Warrants.
(11) Includes 41,193 immediately exercisable Options and Warrants. Mr.
Schiffman's address is 107 East Mill Road, Flourtown, Pennsylvania 19031.
(12) Includes 119,781 immediately exercisable Options and Warrants.
6
<PAGE>
Board Committees
----------------
The Corporation's Board of Directors has standing Executive,
Audit and Executive Compensation/Stock Option committees.
Executive Committee. The Executive Committee is composed of the
following Directors: Messrs. DeLisi (Chairman), DePaul, Hughes, Katz,
O'Donoghue, Scott and Dr. Kucer. The Executive Committee is authorized by the
entire Board of Directors to exercise all of the authority of the Board in the
management of the Corporation between Board meetings, unless otherwise
provided in the Corporation's by-laws. The Executive Committee held twelve
meetings during 1997.
Audit Committee. The Audit Committee is composed of the
following independent Directors: Messrs. O'Donoghue (Chairman), Daniels,
DePaul, and Scott and Drs. King and Kucer. The Audit Committee provides
general financial oversight in financial reporting and the adequacy of the
Corporation's internal controls through periodic meetings with the
Corporation's management and its independent auditors. The Audit Committee
held one meeting during 1997.
Executive Compensation/Stock Option Committee. The Executive
Compensation/Stock Option Committee is composed of the following Directors:
Messrs. DePaul, Iacobucci, Hughes, Scott, O'Donoghue, Katz and Drs. King and
Kucer. The Executive Compensation/Stock Option Committee provides general
oversight in all employee personnel matters through periodic meetings with
management of the Corporation. The Executive Compensation/Stock Option
Committee held two meetings during 1997.
The Corporation does not have a standing nominating committee.
During 1997, the Corporation's Board of Directors held twelve
meetings. Of the continuing directors and nominees, no director attended fewer
than 75% of the aggregate number of meetings of the Board of Directors of the
Corporation and the Bank and meetings of the committees on which such director
served.
7
<PAGE>
EXECUTIVE COMPENSATION; RELATED PARTY TRANSACTIONS; AND
CERTAIN INFORMATION CONCERNING OFFICERS
Executive Compensation
The following table shows the annual compensation of the Chief
Executive Officer of each of the Corporation and the Bank and the
Corporation's most highly compensated executive officers for the fiscal years
1997, 1996 and 1995.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation Awards
------------------- -------------------
Other
Annual
Name & Principal Compen- Securities
Position (a) sation Underlying All other
Year Salary ($) Bonus ($) ($) Options/SARs (#) Compensation
(b) (c) (d) (e)(1) (g) ($) (i)
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Vito A. DeLisi 1997 $175,000 $60,000 $4,200 0 $8,278 (2)
Executive Vice President and 1996 175,000 50,000 4,725 0 8,646 (3)
Director of the Corporation; 1995 175,000 55,000 3,900 3,000 7,482 (4)
President, Chief Executive
Officer and Director of the
Bank
Thomas J. Coletti, 1997 $107,500 $18,000 0 0 $2,550 (5)
Executive Vice President of the 1996 102,300 15,000 0 0 2,446 (6)
Bank 1995 102,300 16,500 0 4,000 1,790 (7)
E. Cheryl Hinkle 1997 $95,000 $15,000 2,400 0 $1,737 (8)
Senior Vice President and Chief 1996 90,000 10,000 2,600 0 1,074 (9)
Financial Officer of the Bank; 1995 90,000 8,000 1,650 750 2,389(10)
Vice President, Assistant
Secretary and Assistant
Treasurer of the Corporation
</TABLE>
(1) All amounts listed in this column represent amounts paid to the listed
person for their services as a member of the Board of Directors or, in
the case of Ms. Hinkle, amounts paid for services in connection with
attending meetings of the Board of Directors.
(2) Includes $5,519 paid by the Bank for premium on life and disability
insurance policies for the benefit of Mr. DeLisi and $2,759 contributed
by the Corporation to a defined contribution plan for the benefit of Mr.
DeLisi.
(3) Includes $5,292 paid by the Bank for premium on life and disability
insurance policies for the benefit of Mr. DeLisi and $3,354 contributed
by the Corporation to a defined contribution plan for the benefit of Mr.
DeLisi.
(4) Includes $5,292 paid by the Bank for premium on life and disability
insurance policies for the benefit of Mr. DeLisi and $2,190 contributed
by the Corporation to a defined contribution plan for the benefit of Mr.
DeLisi.
(5) Includes $404 paid by the Bank for premiums on a life insurance policy
for the benefit of Mr. Coletti and $2,146 contributed by the Bank to a
defined contribution plan for the benefit of Mr. Coletti.
8
<PAGE>
(6) Includes $296 paid by the Bank for premiums on a life insurance policy
for the benefit of Mr. Coletti and $2,150 contributed by the Bank to a
defined contribution plan for the benefit of Mr. Coletti.
(7) Includes $296 paid by the Bank for premiums on a life insurance policy
for the benefit of Mr. Coletti and $1,494 contributed by the Bank to a
defined contribution plan for the benefit of Mr. Coletti.
(8) Includes $687 paid by the Bank for premiums on a life insurance policy
for the benefit of Ms. Hinkle and $1,050 contributed by the Bank to a
defined contribution plan for the benefit of Ms. Hinkle.
(9) Includes $674 paid by the Bank for premiums on a life insurance policy
for the benefit of Ms. Hinkle and $400 contributed by the Bank to a
defined contribution plan for the benefit of Ms. Hinkle.
(10) Includes $664 paid by the Bank for premiums on a life insurance policy
for the benefit of Ms. Hinkle and $1,725 contributed by the Bank to a
defined contribution plan for the benefit of Ms. Hinkle.
No options were granted by the Corporation during 1997.
The following table shows the options exercised during 1997 and the value of
unexercised in-the-money options at the end of 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options
FY-End(#) at FY-End ($)(1)
Shares ------------------------ -------------------------
Acquired on Value
Name Exercise Realized (1) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Vito A. DeLisi.............. 0 0 32,411 0 $298,686 0
Thomas J. Coletti........... 0 0 8,038 0 76,505 0
E.Cheryl Hinkle............. 0 0 4,324 0 39,407 0
</TABLE>
- -------------
(1) Values are calculated by subtracting the exercise price from the fair
market value as of the exercise date or fiscal year end, as appropriate.
Values are reported before any taxes associated with exercise or
subsequent sale of the underlying stock.
During 1997, members of the Boards of Directors of the Corporation
and the Bank were compensated at the following rates for their services: the
Chairman of the Board received $500 per Board meeting and $250 per Committee
meeting attended; each other Director received $350 per Board meeting and $250
per Committee meeting attended.
During 1997, an aggregate of $107,025 was paid to directors for
their services. No director received more than $20,400.
9
<PAGE>
Employment Arrangements
-----------------------
Vito A. DeLisi. Mr. DeLisi serves as President of the Corporation and
President and Chief Executive Officer of the Bank. Mr. DeLisi receives an
annual base salary of $175,000, a car allowance, four (4) weeks of paid
vacation, reimbursement of expenses reasonably incurred in the performance of
his duties and life insurance in the face amount of $1,000,000. During the
term of Mr. DeLisi's service with the Corporation and the Bank and for a
further period of one (1) year following termination of such service, Mr.
DeLisi will be prohibited from associating in any capacity (other than as a
less than 5% shareholder or a customer) with any corporation or bank which
competes with the Corporation and/or with the Bank in the counties of
Philadelphia, Bucks, Montgomery, Delaware or Chester, Pennsylvania or in the
areas of New Jersey or Delaware in which the Bank competes.
In the event that Mr. DeLisi's services were terminated due to
disability, he will be entitled to the continuation of his annual salary
and/or the payment to him of benefits under any disability insurance policy up
to the aggregate amount of $200,000. Mr. DeLisi will be granted stock options
to purchase an aggregate number of shares of the Common Stock of the
Corporation equal to 5% of the issued and outstanding Common Stock immediately
prior to any merger or acquisition. Such options will only be exercisable by
Mr. DeLisi in the event of such a merger or acquisition where the Corporation
would not be the surviving entity (including, for this purpose, any change in
the ownership of a majority of the Corporation's issued and outstanding Common
Stock or a sale of all or substantially all of the Corporation's assets)
(collectively, a "Change of Control") and his employment were terminated by
him or the surviving entity failed to agree to retain his services for a
period of one year following such Change of Control. Such options would be
exercisable for a period of 5 years at an exercise price equal to the highest
per share price to be paid by the surviving or acquiring entity. In addition,
Mr. DeLisi would be entitled to receive a lump sum payment equal to the total
compensation paid to him or earned by him for the twelve month period
preceding the termination of his services to the Corporation, up to an
aggregate amount of $200,000.
Thomas J. Coletti. Mr. Coletti serves as Executive Vice President of
the Bank at an annual salary of $107,500. Mr. Coletti will be granted stock
options to purchase an aggregate number of shares of the Common Stock of the
Corporation equal to 1% of the issued and outstanding Common Stock immediately
prior to any Change of Control. Such options will only be exercisable in the
event of a Change of Control and Mr. Coletti's employment were terminated by
him or the surviving entity failed to agree to retain his services for a
period of one year following such Change of Control. Such options would be
exercisable for a period of 5 years at an exercise price equal to the highest
per share price to be paid by the surviving or acquiring entity. In addition,
Mr. Coletti would be entitled to receive a lump sum payment equal to one-half
the total compensation paid to him or earned by him for the twelve month
period preceding the termination of his services to the Corporation, up to an
aggregate amount of $100,000.
E. Cheryl Hinkle. Ms. Hinkle serves as Senior Vice President and
Chief Financial Officer of the Bank and Vice President, Assistant Secretary
and Assistant Treasurer of the Corporation at an annual salary of $95,000. Ms.
Hinkle will be granted stock options to purchase an aggregate number of shares
of the Common Stock of the Corporation equal to 1% of issued and outstanding
Common Stock. Such options will only be exercisable in the event of a Change
of Control and Ms. Hinkle's employment were terminated by her or the surviving
entity failed to agree to retain her services for a period of one year
following such Change of Control. Such options would be exercisable for a
period of 5 years at an exercise price equal to the highest per share price to
be paid by the surviving or acquiring entity. In addition, Ms. Hinkle would be
entitled to receive a lump sum payment equal to one-half the total
compensation paid to her or earned by her for the twelve month period
preceding the termination of her services to the Corporation, up to an
aggregate amount of $100,000.
Related Party Transactions
--------------------------
Except as set forth below, there are no other existing or proposed
direct or indirect material transactions between the Corporation or the Bank
and any of its officers, directors, promoters, or any associates of the
foregoing, outside the ordinary course of the Bank's and the Corporation's
business.
Certain of the Directors, including Peter D. DePaul, and Philip E.
Hughes, Jr., executive officers of the Corporation, and Alan T. Schiffman, own
the Madison Bank Building (the "Building") where the Corporation and the Bank
have maintained their principal offices since 1989. The Corporation and the
Bank were advised by an independent real estate firm at the outset of the
lease for such principal office (the "Lease") that the Lease was on terms
which are commercially reasonable and typical of those found for similar
leases in the Blue Bell, Pennsylvania area. The Corporation currently leases
approximately 13,381 square feet. This total includes 3,381 square feet leased
by the Corporation on February 1, 1996 on the first floor of the Building and
10
<PAGE>
1,400 square feet leased by the Corporation on January 21, 1997 on the first
floor of the Building. This 1,400 square feet of additional feet was included
in the Lease originally, but the Corporation subsequently surrendered
possession. The leased space is occupied by both the Corporation and the Bank
and serves as the Bank's primary banking location. The space contains a
banking area, lobby, operations center and a vault together with
administrative and executive offices. The initial term of the Lease expired on
August 31, 1994, and the Corporation exercised the first of two five year
renewal options. Annual base rental payments are $142,092 during the current
option term. For the second five-year option period, beginning January 1,
2000, the amount of the base rental payments will increase to $164,700 per
annum. In addition to the base rents referred to above, the Corporation is
required to pay its pro rata share of the Building's operating costs,
including real estate taxes, water and sewer charges, equipment maintenance
charges, exterior maintenance and upkeep, common area electric charges, trash
removal, and certain other similar items. For 1997, the amount of such
expenses was $32,640. The minimum allocable portion of the Building's
operating costs will ultimately increase to $51,684 for the final year of the
second option period. The additional 3,381 square feet are leased at an annual
rate of approximately $60,689. The additional 1,400 square feet were leased
for approximately $28,078 during 1997.
Certain of the directors and officers of the Bank, and companies with
which they are associated, have and will enter into banking relationships and
transactions with the Bank in the ordinary course of business. Any loans to
such persons or commitments to make such loans are required by law to be made
on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons of
similar creditworthiness. At December 31, 1997, the aggregate amount of such
loans was $5,872,726 or 68% of total shareholder's equity. When appropriate,
each such banking relationship and transaction has been or will be approved by
the Bank's Board of Directors or an appropriate committee thereof with any
interested director not voting on such transaction.
Other Officers
--------------
Set forth below is certain information with respect to Thomas J.
Coletti and E. Cheryl Hinkle, the officers of the Corporation or the Bank who
are not also directors of the Corporation or the Bank, including such
officers' ages, positions with the Corporation and the amount and percentage
of the Corporation's Common Stock, if any, beneficially owned as of April 8,
1998.
<TABLE>
<CAPTION>
Corporation's Common Stock
Beneficially Owned
Position with the Directly or Indirectly,
Name Age Corporation on April 8, 1998
- ---- --- ----------- ----------------
Percent of
Amount Outstanding
------ -----------
<S> <C> <C> <C> <C>
Thomas J. Coletti 44 Executive Vice President of the 12,996(1) *
Bank.
E. Cheryl Hinkle 43 Senior Vice President and Chief 4,891(2) *
Financial Officer of the Bank; Vice
President, Assistant Secretary and
Assistant Treasurer of the
Corporation
</TABLE>
- ------------------------
(1) Includes 8,938 immediately exercisable Options.
(2) Includes 4,824 immediately exercisable Options.
* Less than one (1%) percent
11
<PAGE>
PROPOSAL II
PROPOSAL TO RATIFY SELECTION OF
DELOITTE & TOUCHE LLP AS
INDEPENDENT PUBLIC ACCOUNTANT
The Board of Directors has selected Deloitte & Touche LLP ("Deloitte
& Touche") as independent public accountants to examine and verify the
accounts of the Corporation for the 1998 fiscal year, and to report thereon to
the Board of Directors and the Shareholders. This selection will be submitted
for ratification or rejection at the 1998 Annual Meeting.
The Corporation's financial statements for the year ended December
31, 1997, were examined by Deloitte & Touche, independent public accountants.
The Audit Committee of the Corporation's Board of Directors meets with
representatives of Deloitte & Touche periodically to review the nature and
scope of services performed by that firm.
Deloitte & Touche has no interest in or relationship with the
Corporation except in the capacity of independent public accountants, nor has
that firm had any other interest or relationship with the Corporation in the
past.
Representatives of Deloitte & Touche are expected to be present at
the 1998 Annual Meeting. Such representatives will have the opportunity at the
Annual Meeting to make a statement if they so desire and will be available to
respond to appropriate shareholder questions.
RECOMMENDATION OF THE CORPORATION'S BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THIS PROPOSAL.
12
<PAGE>
OTHER MATTERS
Management does not know of any other matters to come before the
meeting. However, if any other matters properly come before the meeting, it is
the intention of the persons designated as proxies to vote in accordance with
their best judgment.
PLEASE COMPLETE, SIGN AND MAIL THE ENCLOSED WHITE PROXY CARD IN THE
ACCOMPANYING ENVELOPE PROMPTLY, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING.
By Order of the Board of Directors,
Philip E. Hughes, Jr.
. Secretary
13
<PAGE>
MADISON BANCSHARES GROUP, LTD.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
Annual Meeting of Shareholders - May 19, 1998
The undersigned shareholder of MADISON BANCSHARES GROUP, LTD. (the
"Company"), revoking all previous proxies, hereby constitutes and appoints E.
Cheryl Hinkle and Thomas J. Coletti, and each of them acting individually, as
the attorney and proxy of the undersigned, with full power of substitution, for
and in the name and stead of the undersigned, to attend the Annual Meeting of
Shareholders of the Company to be held on Tuesday, May 19, 1998 at 3:00 P.M. at
the Madison Bank Building, 1767 Sentry Parkway West, Blue Bell, Pennsylvania,
19422, and to vote all shares of Common Stock of the Company which the
undersigned would be entitled to vote if personally present at such Annual
Meeting, and at any adjournment or postponement thereof; provided, that said
proxies are authorized and directed to vote as indicated with respect to the
following matters:
1. / / FOR all nominees for director named below.
/ / WITHHOLD AUTHORITY to vote for all nominees for director named below.
/ / FOR all nominees for director named below, except WITHHOLD AUTHORITY to
vote for the nominee(s) whose name(s) is (are) lined through.
Nominees: Vito A. DeLisi; Francis R. Iacobucci; and Donald J. Reape.
2. / / FOR the ratification of the selection of Deloitte & Touche L.L.P. as the
Company's independent accountant for 1998.
/ / AGAINST
/ / ABSTAIN
3. / / In their discretion, the proxies will vote on such other business as may
properly come before the meeting.
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholders. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED "FOR" THE NOMINEES FOR DIRECTOR AND "FOR" THE RATIFICATION OF THE
SELECTION OF ACCOUNTANT. This proxy also delegates discretionary authority to
vote with respect to any other business which may properly come before the
meeting or any adjournment or postponement thereof.
(Continued and to be signed on opposite side)
<PAGE>
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE ANNUAL REPORT, NOTICE
OF SAID MEETING AND THE PROXY STATEMENT FURNISHED IN CONNECTION THEREWITH. The
undersigned also hereby ratifies all that the said attorneys and proxies may do
by virtue hereof and hereby confirms that this proxy shall be valid and may be
voted whether or not the shareholder's name is signed as set forth below or a
seal is affixed or the description, authority or capacity of the person signing
is given or other defect of signature exists.
NOTE: PLEASE MARK, DATE AND SIGN THIS PROXY CARD AND RETURN IT IN THE
ENCLOSED ENVELOPE. Please sign this proxy exactly as it appears in address
below. If shares are registered in more than one name, all owners should sign
full title. Corporations please sign with full corporate name by a duly
authorized officer and affix the corporate seal.
Date______________________, 1998
__________________________(SEAL)
(Shareholder's Signature)
__________________________(SEAL)
(Shareholder's Signature)
__________________________SHARES
