SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SLADE'S FERRY CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(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:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
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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:
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April 10, 2006
Dear Shareholder,
You are cordially invited to attend the Annual Meeting of
Shareholders of Slade's Ferry Bancorp. to be held on Wednesday, May 17,
2006 at 10:00 a.m. at the Advanced Technology and Manufacturing Center
(ATMC), 151 Martine Street, Fall River, Massachusetts 02723.
The attached Notice of Annual Meeting and Proxy Statement describe
the formal business that we will transact at the annual meeting. In
addition to the formal items of business, management will report on the
operations and activities of Slade's Ferry Bancorp., and you will have an
opportunity to ask questions.
The Board of Directors of Slade's Ferry Bancorp. has determined that
a vote for the election of each of the nominees as directors is in the best
interests of Slade's Ferry Bancorp. and its shareholders and unanimously
recommends a vote "FOR" each of the nominees.
Please complete, sign and return the enclosed proxy card promptly,
whether or not you plan to attend the annual meeting. Your vote is
important regardless of the number of shares you own. Voting by proxy will
not prevent you from voting in person at the annual meeting but will assure
that your vote is counted if you cannot attend.
On behalf of the Board of Directors and the employees of Slade's
Ferry Bancorp., we thank you for your continued support and look forward to
seeing you at the annual meeting.
Sincerely,
/s/ Mary Lynn D. Lenz
Mary Lynn D. Lenz
Interim Chair of the Board,
President and Chief Executive Officer
SLADE'S FERRY BANCORP., 100 Slades Ferry Avenue, Somerset, Massachusetts 02726
TEL (508) 675-2121 *** FAX (508) 675-1751 *** www.sladesferry.com
SLADE'S FERRY BANCORP.
100 Slades Ferry Avenue
Somerset, Massachusetts 02726
(508) 675-2121
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Date: Wednesday, May 17, 2006
Time: 10:00 a.m., Eastern Time
Place: Advanced Technology and Manufacturing Center (ATMC)
151 Martine Street
Fall River, Massachusetts 02723
At our 2006 annual meeting, we will ask you to:
1. Elect three Class Two Directors, each to hold office for a term
set to expire in 2009.
2. Transact any other business as may properly be brought before
the annual meeting or any adjournment thereof.
You may vote at the annual meeting if you were a shareholder of
Slade's Ferry Bancorp. at the close of business on March 17, 2006, the
record date. Shareholders who are unable to be present personally may
attend the meeting by proxy. Such shareholders are requested to date, sign,
and return the enclosed proxy card, which may be revoked at any time before
it is voted.
By Order of the Board of Directors,
/s/ Peter G. Collias
Peter G. Collias, Clerk/Secretary
Somerset, Massachusetts
April 10, 2006
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You are cordially invited to attend the annual meeting. It is important
that your shares be represented regardless of the number of shares you own.
The Board of Directors urges you to sign, date and mark the enclosed proxy
card promptly and return it in the enclosed envelope. Returning the proxy
card will not prevent you from voting in person if you attend the annual
meeting.
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SLADE'S FERRY BANCORP.
100 Slades Ferry Avenue
Somerset, Massachusetts 02726
(508) 675-2121
PROXY STATEMENT
FOR THE
2006 ANNUAL MEETING OF SHAREHOLDERS
May 17, 2006
GENERAL INFORMATION
GENERAL
Slade's Ferry Bancorp. is a Massachusetts corporation that is
registered as a bank holding company and owns all of the capital stock of
Slade's Ferry Trust Company. The term "annual meeting," as used in this
Proxy Statement, includes any adjournment or postponement of such meeting.
We have sent you this Proxy Statement and enclosed proxy card because
the Board of Directors is soliciting your proxy to vote at the annual meeting.
This Proxy Statement summarizes the information you will need to know to
cast an informed vote at the annual meeting. You do not need to attend the
annual meeting to vote your shares. You may simply complete, sign and
return the enclosed proxy card and your votes will be cast for you at the
annual meeting. This process is described below in the section entitled
"Voting Rights."
We began mailing this Proxy Statement, the Notice of Annual Meeting
and the enclosed proxy card on or about April 10, 2006 to all shareholders
entitled to vote. If you owned common stock of Slade's Ferry Bancorp. at
the close of business on March 17, 2006, the record date, you are entitled
to vote at the annual meeting. On the record date, there were 4,150,248
shares of common stock outstanding.
QUORUM
A quorum of shareholders is necessary to hold a valid meeting. If the
holders of at least a majority of the total number of the outstanding
shares of common stock entitled to vote are represented in person or by
proxy at the annual meeting, a quorum will exist. We will include proxies
marked as abstentions and broker non-votes to determine the number of
shares present at the annual meeting.
VOTING RIGHTS
You are entitled to one vote at the annual meeting for each share of
the common stock of Slade's Ferry Bancorp. that you owned as of the close
of business on March 17, 2006, the record date. The number of shares you
own (and may vote) is listed at the top of the back of the proxy card.
You may vote your shares at the annual meeting in person or by proxy.
To vote in person, you must attend the annual meeting and obtain and submit
a ballot, which we will provide to you at the annual meeting. To vote by
proxy, you must complete, sign and return the enclosed proxy card. If you
properly complete your proxy card and send it to us in time to vote, your
"proxy" (one of the individuals named on your proxy card) will vote your
shares as you have directed. If you sign the proxy card but do not make
specific choices, your proxy will vote your shares "FOR" the election of
each of the nominees named on the proxy card as directors.
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If any other matter is properly presented at the annual meeting, your
proxy will vote the shares represented by all properly executed proxies on
such matters as a majority of the Board of Directors determines. As of the
date of this Proxy Statement, we know of no other matters that may be
presented at the annual meeting, other than the proposal listed in the
Notice of Annual Meeting.
VOTE REQUIRED
Proposal 1: Election of The nominees for director who receive the most
Class Two Directors votes will be elected. So, if you do not vote
for a nominee, or you indicate "withhold authority"
for any nominee on your proxy card, your vote will
not count "for" or "against" the nominee. You
may not vote your shares cumulatively for the
election of director nominees.
EFFECT OF BROKER NON-VOTES
If your broker holds shares that you own in "street name," the broker
may vote your shares on the proposal listed above even if the broker does
not receive instructions from you. If your broker does not vote on a
proposal, this will constitute a "broker non-vote." Here is the effect of a
"broker non-vote:
* Proposal 1: Election of Class Two Directors. A broker non-vote
would have no effect on the outcome of this proposal because
only a plurality of votes cast is required to elect a director.
REVOKING YOUR PROXY
You may revoke your grant of proxy at any time before it is voted by:
* filing a written revocation of the proxy with our
Clerk/Secretary;
* submitting a signed proxy card bearing a later date; or
* attending and voting in person at the annual meeting, but you
also must file a written revocation with the Clerk/Secretary of
the annual meeting prior to the voting.
If your shares are not registered in your own name, you will need
appropriate documentation from your shareholder of record to vote
personally at the annual meeting. Examples of such documentation include a
broker's statement, letter or other document that will confirm your
ownership of shares of Slade's Ferry Bancorp.
SOLICITATION OF PROXIES
The expenses of this solicitation, including the costs of preparing
and mailing this Proxy Statement and accompanying material, will be borne
by Slade's Ferry Bancorp. Regular employees of Slade's Ferry Bancorp. or
Slade's Ferry Trust Company may solicit proxies in person, by mail, or by
telephone, but no employee will receive any compensation for solicitation
activities in addition to his or her regular compensation. In addition, we
have engaged Georgeson Shareholder to solicit proxies on our behalf for a
fee of $5,000 plus reasonable out-of-pocket expenses. Expenses may also
include the charges and expenses of brokerage houses, nominees, custodians,
and fiduciaries for forwarding proxies and proxy materials to beneficial
owners of shares.
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OBTAINING AN ANNUAL REPORT ON FORM 10-K
If you would like an additional copy of our Annual Report on Form 10-
K and audited financial statements for the fiscal year ended December 31,
2005, we will send you one (without exhibits) free of charge. Please write
to Deborah A. McLaughlin, Executive Vice President, Chief Financial
Officer, Chief Operations Officer and Treasurer, Slade's Ferry Bancorp.,
100 Slades Ferry Avenue, Somerset, Massachusetts 02726.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information about the shares of
Slade's Ferry Bancorp.'s common stock beneficially owned by each director
and nominee for director, by each named executive officer identified in the
Summary Compensation Table included elsewhere in this Proxy Statement and
by all executive officers and directors as a group as of March 17, 2006. We
know of no person who beneficially owned more than 5% of the outstanding
shares of our common stock as of as of March 17, 2006 based upon filings
with the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934, as amended. For purposes of the table below, in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, a person is deemed to be the beneficial owner, for purposes of any
shares of common stock: (1) over which he or she has or shares, directly or
indirectly, voting or investment power; or (2) of which he or she has the
right to acquire beneficial ownership at any time within 60 days after
March 17, 2006. As used in this Proxy Statement, "voting power" is the
power to vote or direct the voting of shares, and "investment power"
includes the power to dispose or direct the disposition of shares.
Amount and Nature of
Name of Beneficial Owner Beneficial Ownership Percent of Class
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Peter G. Collias, Director 24,869(1) *
Anthony F. Cordeiro, Director 30,284(2) *
Scott W. Costa, Director 5,100 *
Paul C. Downey, Director 6,000(3) *
Melvyn A. Holland, Director 12,897(4) *
Mary Lynn D. Lenz, Director, 26,504(5) *
Interim Chair, President and
Chief Executive Officer
Jean F. MacCormack, Director 50 *
Francis A. Macomber, Director 123,418(6) 2.97
Deborah A. McLaughlin, 7,432(7) *
Executive Vice President, Chief
Financial Officer, Chief
Operations Officer and Treasurer
Joan Parkos Moran, Director 1,075 *
Majed Mouded, MD, Director 75,647(8) 1.82
Shaun O'Hearn, Sr., Director 25,902(9) *
Lawrence J. Oliveira, DDS, Director 49,133(10) 1.18
Carl Ribeiro, Director 3,500(11) *
William J. Sullivan, Director 53,859(12) 1.34
Manuel J. Tavares, Senior Vice 12,245(13) *
President
David F. Westgate, Director, Vice 16,859(14) *
Chair
All Executive Officers and 471,275 -
Directors as a Group (17 persons)
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* Less than 1.00% of outstanding shares of common stock.
Includes 8,785 shares held jointly with spouse and 8,000 options.
Includes 1,860 shares held by spouse and 4,000 options.
Includes 4,000 options.
Includes 8,000 options.
Includes 24,000 options.
Includes 4,512 shares held by a pension trust of LeComte's Dairy of
which Mr. Macomber is President and a Director, 98,493 shares held in
revocable trust, and 7,103 shares held as custodian for other family
members, and 8,000 options.
Includes 7,125 options.
Includes 60,544 shares held jointly with spouse, 5,655 shares held
jointly by spouse and child, and 8,000 options.
Includes 376 shares held jointly with spouse, 10,958 shares
beneficially owned as trustee for business profit sharing plan and
8,000 options.
Includes 36,856 shares beneficially owned as trustee for business
profit sharing plan and 10,000 options.
Includes 1,000 shares held in a SEP IRA, 1,000 shares held with
spouse, and 500 shares held in son's name.
Includes 20,507 shares held jointly with spouse, 635 shares held
jointly with children, and 8,000 options.
Includes 4,843 shares held jointly with spouse and children, 67 as
custodian for family members and 7,335 options.
Includes 8,000 options.
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DISCUSSION OF PROPOSAL RECOMMENDED BY BOARD
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PROPOSAL ONE
ELECTION OF CLASS TWO DIRECTORS
___________________________________________
Our bylaws provide that the Board of Directors must consist of at
least seven but not more than twenty-five members. The Board of Directors
is divided into three approximately equal classes which serve staggered
three-year terms such that only one class (approximately one-third of the
directors) is elected each year.
At the 2006 annual meeting, shareholders are being asked to elect the
following Class Two directors:
Nominees Term to Expire
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Peter G. Collias 2009
Melvyn A. Holland 2009
Jean F. MacCormack 2009
Shaun O'Hearn, Sr. 2009
Carl Ribeiro 2009
William J. Sullivan 2009
Directors Collias, Holland, MacCormack, O'Hearn, Ribeiro and Sullivan
are currently serving on Slade's Ferry Bancorp.'s Board of Directors. If
you elect the nominees above, they will hold office until the annual
meeting in 2009 or until their successors have been elected or qualified.
Each of the nominees has consented to being named in this Proxy
Statement and to serve if elected. If any of the nominees is unable to
serve, your proxy may vote for another nominee proposed by the Board. If
for any reason any nominee proves unable or unwilling to stand for
election, the Board will nominate alternates or reduce the size of the
Board of Directors to eliminate the vacancy. The Board has no reason to
believe that any of its nominees would prove unable to serve if elected.
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The Board of Directors unanimously recommends a vote "FOR" all of the
nominees for election as directors.
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INFORMATION ABOUT THE BOARD OF DIRECTORS AND MANAGEMENT
Nominees and Continuing Directors
Position(s) Held
Term with Slade's Ferry
Nominees Age (1) Expires Class Bancorp. Director Since (2)
------------------- ------- ------- ----- ------------------ ------------------
Peter G. Collias 74 2006 Two Director 1973
Melvyn A. Holland 68 2006 Two Director 1997
Jean F. MacCormack 59 2006 Two Director 2005
Shaun O'Hearn, Sr. 60 2006 Two Director 1997
Carl Ribeiro 59 2006 Two Director 2005
William J. Sullivan 66 2006 Two Director 1985
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At March 31, 2006.
Includes years of service as a director of Slade's Ferry Trust
Company.
Position(s) Held
Term with Slade's Ferry
Continuing Directors Age (1) Expires Class Bancorp. Director Since(2)
------------------------- ------- ------- ----- ------------------------ -----------------
Anthony F. Cordeiro 44 2008 One Director 2003
Scott W. Costa 50 2008 One Director 2005
Paul C. Downey 42 2007 Three Director 2003
Mary Lynn D. Lenz 51 2007 Three Director, Interim Chair, 2002
President and Chief
Executive Officer
Francis A. Macomber 76 2007 Three Director 1980
Joan Parkos Moran 54 2008 One Director 2005
Majed Mouded, MD 64 2007 Three Director 1993
Lawrence J. Oliveira, DDS 61 2008 One Director 1997
David F. Westgate 65 2007 Three Vice Chair 1997
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At March 31, 2006.
Includes years of service as a director of Slade's Ferry Trust
Company.
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Biographical Information
The principal occupation and business experience of each nominee for
election as director and each continuing director are set forth below.
Unless otherwise indicated, each of the following persons has held the
position described for the last five years.
Nominees
Peter G. Collias: Principal Attorney of the Law Offices of Peter G.
Collias in Fall River, Massachusetts.
Melvyn A. Holland, CPA: Partner and Treasurer of Rosenfield Raymon
Restivo PC, Certified Public Accountants in New Bedford, Massachusetts
until his retirement on January 1, 2004.
Jean F. MacCormack: Chancellor serving as Chief Executive Officer of
the University of Massachusetts, Dartmouth from 1999 to present. Previously
served as Chancellor and Chief Financial Officer of the University of
Massachusetts, Boston.
Shaun O'Hearn, Sr.: President of Bolger & O'Hearn, Inc., a color and
chemicals company in Fall River, Massachusetts.
Carl Ribeiro: Owner and President of Carlson Southcoast Corporation
of New Bedford; Chair of Famous Foods of New Bedford.
William J. Sullivan: President and a director of Sullivan Funeral
Homes, Inc. of Fall River and Somerset, Massachusetts.
Continuing Directors
Anthony F. Cordeiro: President and Managing Partner of Anthony F.
Cordeiro Insurance Agency, LLC since 1988 and Vice President of The Roasted
Bean Coffee House in Fall River, Massachusetts since 1996.
Scott W. Costa: Treasurer and co-owner of Bufftree Building Co., Inc,
a general contractor overseeing design and business development from 1993
to present, and co-owner of Kirsam LLC, an investment partnership.
Paul C. Downey: President of Sakonnet Properties, Inc., a real estate
development firm in New Bedford, Massachusetts.
Mary Lynn D. Lenz: Interim Chair of Slade's Ferry Bancorp. since
January 25, 2006, President and Chief Executive Officer of Slade's Ferry
Trust Company since September 9, 2002 and President and Chief Executive
Officer of Slade's Ferry Bancorp. since November 12, 2002. Executive Vice
President, Director of Retail Banking at Citizens Bank of Massachusetts
from 1998 to 2002.
Francis A. Macomber: President, Treasurer and a director of LeComte's
Dairy in Somerset, Massachusetts.
Joan Parkos Moran: Chairperson, Chief Executive Officer and Owner of
Alga Plastics Company in Cranston, Rhode Island, a manufacturer of
protective packaging for medical, electronics, and
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consumer industries, from 2002 to present. President and Chief Operations
Officer of Alga Plastics Company from 1998 to 2002.
Majed Mouded, MD: Physician and endocrinologist, on active staff at
St. Anne's Hospital in Fall River, Massachusetts.
Lawrence J. Oliveira, DDS: Orthodontist with practices in New Bedford
and Mattapoisett, Massachusetts.
David F. Westgate: President of Quequechan Management Corp., a
management consulting firm in Fall River, Massachusetts. Vice Chair of
Slade's Ferry Bancorp. since October 14, 2003.
Executive Officers Who Are Not Directors
Deborah A. McLaughlin: Chief Financial Officer and Chief Operations
Officer of Slade's Ferry Bancorp. and Slade's Ferry Trust Company since
June 2003. Treasurer since 2004 and Executive Vice President since 2005.
Executive Vice President of NSTAR, a utility provider in Boston,
Massachusetts, from 1999 to 2001. NSTAR is a publicly owned utility with
revenues of $2.6 billion that transmits and delivers electricity and
natural gas to 1.3 million residential and business customers in more than
200 communities. NSTAR was formed by the merger of Boston Edison and
Commonwealth Energy System in 1999.
Manuel J. Tavares: Senior Vice President of Slade's Ferry Bancorp.
and Senior President and Senior Lending Officer of Slade's Ferry Trust
Company since 1989.
INFORMATION ABOUT THE BOARD OF DIRECTORS AND MANAGEMENT
Meetings of the Board of Directors
Regular meetings of the Board of Directors of Slade's Ferry Bancorp.
are held quarterly and special meetings are held when necessary. Regular
meetings of the Board of Directors of Slade's Ferry Trust Company are held
monthly and special meetings are held when necessary. During 2005, the
Board of Directors of Slade's Ferry Bancorp. held four regular quarterly
meetings and seven special meetings. The Board of Directors of Slade's
Ferry Trust Company held 12 regular monthly meetings and three special
meetings. In addition to membership on the Board, members may also serve on
one or more standing committees.
All of the directors attended at least 75% of the total meetings of
the Slade's Ferry Bancorp. Board of Directors and their assigned committees
except for William J. Sullivan who attended 72%.
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Committees of the Board of Directors
The standing committees of the Slade's Ferry Bancorp. Board of
Directors are the Executive Committee, Compensation Committee, Audit
Committee, and Corporate Governance/Nominating Committee.
Executive Committee The Executive Committee met twenty-six times
in 2005, and generally acts on most matters
between regular Board meetings. Its members
are Mary Lynn D. Lenz, Interim Chair, Anthony
F. Cordeiro, Lawrence J. Oliveira DDS, William
J. Sullivan, David F. Westgate, and one
rotating member. In the event of extended
absences occurring on the Executive Committee,
other directors serve as temporary
replacements.
Compensation Committee The Compensation Committee reviews the
compensation and benefits of our executives
and officers and sets salaries and bonuses
subject to the approval of the Board of
Directors. The Compensation Committee held 10
meetings during the past year. Its members are
Paul C. Downey, Chair, Joan Parkos Moran,
William J. Sullivan and David F. Westgate. All
of the members of the Compensation Committee
qualify as "independent" under the definition
set forth in Rule 4200(a)(15) of the National
Association of Securities Dealers.
Audit Committee The Audit Committee oversees and monitors our
financial reporting process and internal
control system, reviews the Audit Plan,
reviews and evaluates the audit performed by
the outside auditors, reviews the practices
and findings of the internal audit department
and reports any substantive issues found
during the audit to the Board. The Board of
Directors has adopted a written charter for
the Audit Committee, which is attached as
Appendix A to this Proxy Statement. The Audit
Committee is directly responsible for the
appointment, compensation and oversight of the
work of our independent registered public
accounting firms. The Audit Committee also
reviews and approves all transactions with
affiliated parties. The Audit Committee held
ten meetings during the past year. Its members
are Melvyn A. Holland, Chair, Paul C. Downey,
Shaun O'Hearn, Sr., Lawrence J. Oliveira, DDS
and Carl Ribeiro. All of the members of the
Audit Committee qualify as "independent" under
the definition set forth in Rule 4200(a)(15)
of the National Association of Securities
Dealers. The Board of Directors has determined
that Mr. Holland qualifies as an "audit
committee financial expert" as the term is
defined by SEC regulations.
Corporate Governance & The Corporate Governance/Nominating Committee,
Nominating Committee which held six meetings during the past year,
provides advice and guidance to the Board of
Directors regarding the number, qualifications
and performance of the directors, and
recommends individuals to the Board for
election as directors. The Committee also
monitors the adequacy of the Board's
structure, communications, and procedures and
ensures that each director is informed and
diligent regarding the fulfillment of his/her
duties. It is the responsibility of the
Corporate
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Governance/ Nominating Committee to recruit
individuals to serve as directors whose
qualifications meet the organization's needs,
and to recommend these individuals to the
Board for election as Directors. Its members
are David F. Westgate, Chair; Paul C. Downey,
Shaun O'Hearn Sr., and Lawrence J. Oliveira,
DDS. All members qualify as "independent"
under the definition set forth in Rule
4200(a)(15) of the National Association of
Securities Dealers.
The Board of Directors has adopted a written
charter for the Corporate Governance/
Nominating Committee, which was attached to
our Proxy Statement for the 2005 Annual
Meeting of Shareholders. It is the policy of
the Corporate Governance/Nominating Committee
that shareholders may recommend nominees for
election to the Board, in a manner consistent
with our bylaws. Shareholder nominations must
be made by notice in writing to the Clerk/
Secretary not less than 60 days in advance of
the date of the our Proxy Statement was
released to shareholders in connection with
the previous year's annual meeting. Such
notice must set forth: (i) as to each person
whom such stockholder proposes to nominate for
election as a director, all information
relating to such person that is required to be
disclosed in solicitations of proxies for the
election of directors, or is otherwise
required, in each case pursuant to Regulation
14A under the Securities Exchange Act of 1934
(including such person's written consent to
being named in the Proxy Statement as a
nominee and to serving as a director if
elected); and (ii) as to the shareholder
giving notice (x) the name and address of such
shareholder and (y) the class and number of
shares of Slade's Ferry Bancorp. capital stock
that are beneficially owned by such
stockholder.
It is the policy of the Committee to recommend
individuals as director nominees who shall
have the highest personal and professional
integrity, who shall have demonstrated
exceptional ability and judgment and who shall
be most effective, in conjunction with the
other nominees to the Board, in collectively
serving the long-term interests of the
shareholders. Shareholder nominees are
analyzed by the Committee in the same manner
as nominees that are identified by the
Committee. The Nominating Committee may also
hire a third party to assist in identifying or
evaluating potential nominees.
Nominees Peter G. Collias, Melvyn A. Holland,
Jean F. MacCormack, Shaun O'Hearn Sr., Carl
Ribeiro and William J. Sullivan were each
recommended to the Board for nomination by the
Corporate Governance/Nominating Committee.
Shareholder Communications
Shareholders may contact our Board of Directors by contacting Peter
G. Collias, Clerk/Secretary, Slade's Ferry Bancorp., 100 Slades Ferry
Avenue, Somerset, Massachusetts 02726. All comments will be forwarded
directly to the Board of Directors.
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It is our policy that all directors and nominees should attend the
annual meeting. At the 2005 annual meeting, all members of the Board of
Directors were in attendance.
AUDIT COMMITTEE CHARTER AND REPORT
Audit Committee Charter
The Audit Committee was established in accordance with section
3(a)(58)(A) of the Securities Exchange Act of 1934, as amended, and
operates pursuant to a Charter approved by the Board of Directors, a copy
of which is attached as Appendix A to this Proxy Statement. The Charter
sets out the responsibilities, authority, and duties of the Audit
Committee. The Charter specifies, among other things, the structure,
membership requirements, and the relationship of the Audit Committee to the
independent registered public accounting firms and internal auditor.
Audit Committee Report
The following Audit Committee Report is provided in accordance with
the rules and regulations of the Securities and Exchange Commission (the
"SEC"). Pursuant to such rules and regulations, this report shall not be
deemed "soliciting materials," filed with the SEC, subject to Regulation
14A or 14C of the SEC or subject to the liabilities of Section 18 of the
Securities Exchange Act of 1934, as amended.
During the 2005 fiscal year, the Audit Committee met ten times to
discuss matters consistent with its duties. The Audit Committee's
membership was comprised of Directors Holland, Downey, O'Hearn, Oliveira,
and Ribeiro, with Melvyn A. Holland serving as Chair.
Each member of the Audit Committee is independent as defined under
the Nasdaq listing standards. We believe that Director Holland qualifies as
an Audit Committee Financial Expert, as that term is defined by SEC
regulations, and our Board of Directors has designated Director Holland as
such. The Audit Committee operates under a written charter approved by the
Board, a copy of which is attached as Appendix A to this Proxy Statement.
The Audit Committee assists the Board by overseeing the audit scope
and monitoring the accounting, financial reporting, data processing,
regulatory and internal control environments. The primary duties and
responsibilities of the Audit Committee are to: (1) serve as an independent
and objective party to monitor Slade's Ferry Bancorp.'s financial reporting
process and internal control systems; (2) select and monitor the
independent registered public accounting firm; (3) pre-approve all audit
and permissible non-audit services performed by external auditors; (4)
review and appraise the audit efforts of Slade's Ferry Bancorp.'s
independent registered public accounting firms and internal audit
department; (5) review Slade's Ferry Bancorp.'s quarterly financial
performance, as well as its compliance with laws and regulations; (6)
oversee management's establishment and enforcement of financial policies;
(7) provide an open avenue of communication among the independent
registered public accounting firms, financial and senior management, the
internal audit department, and the Board; and (8) establish procedures for
the receipt, retention and treatment of complaints or concerns, including
confidential employee submissions about accounting, internal accounting
controls or auditing matters.
The Audit Committee has reviewed and discussed the audited financial
statements of Slade's Ferry Bancorp. for the fiscal year ended December 31,
2005 with management and Wolf & Company, P.C. , a registered public
accounting firm and Slade's Ferry Bancorp.'s independent registered public
accounting firms for the fiscal year ended December 31, 2005. The Audit
Committee has discussed the matters required to be discussed by Statement
on Auditing Standards No. 61 (Communication with Audit Committees) with
Wolf & Company, P.C.
-12-
The Audit Committee has received the written disclosures and the
letter from Wolf & Company, P.C. required by Independence Standards Board
Standard No. 1 (entitled "Independence Discussions with Audit Committees"),
as may be modified or supplemented, has discussed with Wolf & Company, P.C.
the independence of Wolf & Company, P.C., and considered whether the
provision of non-audit services by Wolf & Company, P.C. is compatible with
maintaining the auditor's independence.
Based on the review and discussions noted above, the Audit Committee
recommended to the Board that Slade's Ferry Bancorp.'s audited financial
statements be included in Slade's Ferry Bancorp.'s Annual Report on Form
10-K for the fiscal year ended December 31, 2005 for filing with the SEC.
Audit Committee:
Melvyn A. Holland, Chair
Paul C. Downey
Shaun O'Hearn, Sr.
Lawrence J. Oliveira, DDS
Carl Ribeiro
Appointment of Independent Registered Public Accounting Firm
The Audit Committee of the Board of Directors of the Corporation has
appointed Wolf & Company, P.C. to continue as the Corporation's independent
registered public accountanting firm for 2006. Wolf & Company, P.C. is
expected to have a representative available at the Annual Meeting, who will
have the opportunity to make a statement if desired and will be available
to respond to appropriate questions.
Effective March 14, 2005, the Audit Committee of the Board of
Directors dismissed Shatswell, MacLeod & Company, P.C. as the Corporation's
independent registered public accounting firm. Pursuant to the
Corporation's Audit Committee Charter, the Audit Committee has sole
authority to terminate and to appoint the Corporation's independent
registered public accounting firms. Accordingly, the dismissal of Shatswell
was approved solely by the Audit Committee.
The audit reports of Shatswell, MacLeod & Company, P.C. on the
Corporation's consolidated financial statements as of and for the years
ended December 31, 2004 and 2003 did not contain an adverse opinion or
disclaimer of opinion and was not qualified or modified as to uncertainty,
audit scope, or accounting principles. During 2004 and 2003, there were no
disagreements with Shatswell, MacLeod & Company, P.C. on any matter of
accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements, if not resolved to
Shatswell, MacLeod & Company's satisfaction, would have caused it to make
reference in connection with its report to the subject matter of the
disagreement. The Corporation provided Shatswell, MacLeod & Company, P.C.
with a copy of the foregoing disclosure and requested Shatswell, MacLeod &
Company, P.C. furnish the Corporation with a letter addressed to the
Securities and Exchange Commission stating whether it agrees with these
statements made by the Corporation and, if not, stating the respects in
which it does not agree. Copies of the confirming letters from Shatswell,
MacLeod, P.C., dated March 18, 2005 and March 30, 2005, were attached as
Exhibits 16.1 to the Corporation's Form 8-K filed with the Securities and
Exchange Commission on March 18, 2005 and Form 8-K/A filed with the
Securities and Exchange Commission on March 30, 2005, respectively.
On March 14, 2005, the Audit Committee recommended, approved and
appointed Wolf & Company, P.C. as the Corporation's independent registered
public accounting firm for the purpose of auditing the Corporation's
consolidated financial statements for the year ended December 31, 2005.
-13-
During the years ended December 31, 2004 and 2003, and through the period
preceeding the engagement of Wolf & Company, P.C., the Corporation did not
consult with Wolf & Company, P.C. regarding either the application of
accounting principles to a specified transaction either completed or
proposed, the type of audit opinion that might be rendered on our financial
statements, or any matter that was either the subject of a disagreement or
a reportable event as described in Item 304(a)(1) of Regulation S-K, and
neither a written report nor oral advice was provided to the Corporation
that was an important factor considered by the Corporation in reaching a
decision as to an accounting, auditing or financial reporting issue.
Audit Fees
For the fiscal years ended December 31, 2005 and 2004, Slade's Ferry
Bancorp. retained as its principal independent accountant Wolf & Company,
P.C. and Shatswell, MacLeod & Company, P.C., respectively, to provide audit
and other services.
The following table displays the aggregate fees for professional
services for the audit of the financial statements for the years ended
December 31, 2005 and 2004 and fees billed for other services during those
periods by our principal independent accountants.
2005 2004
-------- -------
Audit fees (1) $104,500 $80,075
Audit-related fees (2) 19,000 -
Audit-related fees (3) 37,000 6,000
Tax fees (4) 13,000 10,700
All other fees (5) - -
-------- -------
Total $151,953 $96,775
======== =======
--------------------
Audit fees relate to the audit of the Corporation's annual
consolidated financial statements as well as reviews of consolidated
financial statements included in the Corporation's Form 10-Q filings.
Audit-related fees pertain to services related to the Corporation's
filing on Form 8-K in connection the restatement of previously issued
financial statements.
Audit-related fees pertain to services provided by Shatswell, MacLeod
& Company, P.C. in connection with audits of the Pension Plan and
401(k) Plan in 2004 and the Corporation's restatement of previously
issued financial statements in 2005.
Tax fees consisted of assistance with matters related to tax
compliance and consulting.
None.
Pre-approval of Policies and Procedures
Pre-approval of Services. The Audit Committee shall pre-approve all
auditing services and permitted non-audit services (including the fees and
terms) to be performed for us by our independent registered public
accounting firm, subject to the de minimis exception for non-audit services
described below which, if not pre-approved, are approved by the committee
prior to completion of the audit.
-14-
Exception. The pre-approval requirement set forth above, shall not be
applicable with respect to non-audit services if:
(i) The aggregate amount of all such services provided constitutes
no more than five percent of the total amount of revenues paid by us to our
auditor during the fiscal year in which the services are provided;
(ii) Such services were not recognized by us at the time of the
engagement to be non-audit services; and
(iii) Such services are promptly brought to the attention of the
committee and approved prior to the completion of the audit by the
committee or by one or more members of the committee who are members of the
Board of Directors to whom authority to grant such approvals has been
delegated by the committee.
During the year ended December 31, 2005, the Audit Committee pre-
approved 100% of the services performed by Wolf & Company, P.C.
Delegation. The Audit Committee may delegate to one or more
designated members of the committee the authority to grant required pre-
approvals. The decisions of any member to whom authority is delegated under
this paragraph to pre-approve activities under this subsection shall be
presented to the full committee at its next scheduled meeting.
DIRECTOR COMPENSATION
Meeting Fees
Directors are paid $500 for each Board meeting attended. In addition,
Executive Committee members are paid $350 for each Executive Committee
meeting attended. The Chair of the Board of the Company and the Bank is
paid an annual retainer of $3,500 for each position and the Vice Chair of
the Company and the Bank is paid an annual retainer of $1,500 for each
position. Our current Interim Chair receives no additional compensation for
serving in this capacity. The Corporate Clerk/Secretary of the Bank is paid
an annual fee of $5,000 and an additional fee of $2,000 for holding the
same position for the Company. Members of all other committees receive $300
per meeting attended, a $300 annual fee for serving on such committees and
an annual retainer of $1,500 for serving on the Board. The chairs of the
Audit Committee and the Compensation Committee each receive $2,000
annually. The chairs of other committees receive $500 annually for chairing
such committees. The aggregate amount of fees paid to such directors for
the year ended December 31, 2005 was $244,000.
Stock Option Grants
Each non-employee director receives an automatic grant each year of
an option for 2,000 shares of the Company's common stock under the
Automatic Grant Program of the Company's 2004 Equity Incentive Plan (the
"Plan"). Options granted under the Automatic Grant Program are subject to
the terms and conditions of the Plan and all options previously granted
under the Automatic Grant Program are exercisable immediately at a price
per share equal to the market price on the date of grant.
Life Insurance
The Bank provides for each insurable member of the Board of Directors
an endorsement method split dollar plan with title and ownership residing
with the Bank. The insured has the right to designate a
-15-
beneficiary to receive the insured Director's share of the proceeds payable
upon the death of the insured Director. The Bank is responsible for the
payment of the premiums, and annually the insured receives a taxable
benefit equal to the assumed cost of insurance as required by the IRS. The
agreement terminates if the insured Director leaves the service of the Bank
prior to five full years of service, or if the insured Director is
terminated for cause. The amount of the death benefit is based on
insurability and age of each director. The death benefit declines annually
based on a projected schedule, which is also conditional on the Bank's
after tax cost of money and policy income.
Directors' Retirement Plan
The Bank established the Slade's Ferry Trust Company Director
Supplemental Retirement Program which was designed to provide an annual
benefit upon retirement from the board based on years of service. The
program provides a pre-retirement index benefit, and a post-retirement
index benefit. The indexed pre-retirement benefit is the difference between
the Bank's annual after tax cost of money and policy income from a bank-
owned life insurance policies. The annual pre-retirement index benefit is
credited to the benefit account of directors. The estimated post-retirement
index benefit is accrued over each director's required service period. The
benefit is paid annually during the Director's lifetime.
EXECUTIVE OFFICER COMPENSATION
Compensation Committee Report on Executive Compensation
The Compensation Committee is composed of Directors Paul C. Downey,
Joan Parkos Moran, William J. Sullivan, and David F. Westgate with Director
Downey serving as Chair of the Slade's Ferry Bancorp. Compensation
Committee. None of the members of the Compensation Committee were officers
or employees of Slade's Ferry Bancorp. or its subsidiaries during 2005 or
in prior years.
The following Report of Slade's Ferry Bancorp.'s Compensation
Committee is provided in accordance with the rules and regulations of the
SEC. Pursuant to such rules and regulations, this Report shall not be
deemed "soliciting material," filed with the SEC subject to Regulation 14A
or 14C of the SEC or subject to the liabilities of Section 18 of the
Exchange Act of 1934, as amended.
The Compensation Committee provides advice and recommendations to the
Board of Directors in the areas of employee salaries and benefit programs.
The committee reviews the compensation and benefits programs for all
executive officers on an annual basis. Compensation of the President and
Chief Executive Officer and other executive officers of the Bank for the
fiscal year ended 2005 was paid by the Bank and determined by the Board of
Directors. Ms. Lenz did not participate in the committee's decisions
regarding her own compensation review and recommendation in 2005 or in
prior years.
The Bank's compensation program for executive officers consists of:
base salary, annual bonuses and long-term incentive awards. These elements
are intended to provide an overall compensation package that is
commensurate with the Bank's financial resources, that is appropriate to
assure the retention of experienced management personnel, and that aligns
their financial interests with those of the Corporation's shareholders.
A structured compensation system is in place at the Bank. Each position
has been scored using a point factor analysis system. Jobs with similar point
totals, indicating similar levels of responsibility and authority, have
been grouped together. Salary ranges have been assigned to these job
groupings. Officers' evaluations are based upon performance to established
standards, the standards having been written into each job description.
This measurement to standards then dictates the level of merit increase
proposed for each officer within guidelines set forth annually.
-16-
The Compensation Committee strives to provide a compensation program
that assures both the motivation and retention of the executive officers,
proper alignment with the financial interests of the Corporation's
shareholders, and competitiveness with the external marketplace. To this
end, the Compensation Committee reviewed the compensation practices of a
peer group of companies with similar size and business mix to that of the
Bank in order to develop recommendations for the Bank's executive officers.
In order to ensure competitive compensation levels, the adequacy of
the salary ranges and each officer's current compensation level is tested
annually through the use of competitive market data. The Bank currently
uses a Banking Compensation Report, produced by an independent consulting
company. In 2005, there were in excess of 100 participants in the entire
survey. The Bank's current peer group are those institutions with assets of
$300 million to $599.9 million. The Bank's data is included in this survey,
along with twenty-five other institutions.
Each officer position is reviewed annually and compared against
competitive market data. This information is analyzed by the Compensation
Committee whereby each officer's performance and merit increase
recommendations are presented.
The Compensation Committee reviews the performance of the
President/Chief Executive Officer of the Bank. This review is qualitative
in nature and takes into consideration such factors as overall performance
of the Bank, improvement in shareholder value, preservation and constant
enhancement of the corporate image, including the Bank's leadership and
involvement in the community, efficient use of financial and human
resources, and the overall financial performance of the Bank.
Base Salaries
As noted above, salary levels recommended by the Compensation
Committee are intended to be competitive with salary levels of the
companies in the Bank's peer groups, commensurate with the executive
officers' respective duties and responsibilities, and reflect the financial
performance of the Bank. The President's salary is tested against the
market data noted above.
Bonuses
Bonuses are predicated on the achievement of the current year's
budgeted earnings as established independently by the Compensation
Committee. The bonus is applied if the target earnings level is obtained
and adjusted incrementally if the earnings fall below target. The target
excludes extraordinary income and expense items and gains or losses
recognized on the sale of securities.
Stock Options
The Compensation Committee also awards stock options to officers as
provided under the discretionary grant program of the Corporation's Stock
Option Plan and the Equity Incentive Plan. In making any determinations as
to persons to whom options are granted and the number of stock options
granted, the Compensation Committee takes into account the duties of the
respective individual, their contribution to the success of the Corporation
during the year, and such other factors as the Compensation Committee deems
relevant.
Chief Executive Officer's Compensation
The Bank's Chief Executive Officer's compensation in 2005 reflected
the overall performance of Ms. Lenz during 2005, and is supported by the
expansion of the Bank's customer base, earnings per share
-17-
attainment, and the overall quality and growth of the Corporation's assets.
Based on the foregoing criteria, Ms. Lenz's base salary was adjusted to
$315,000 effective January 1, 2006 and she was awarded a bonus of $60,000
payable in January 2006 for services rendered in calendar year 2005.
Slade's Ferry Bancorp.
Compensation Committee
Paul C. Downey, Chair
Joan Parkos Moran
William J. Sullivan
David F. Westgate
Compensation Committee Interlocks and Insider Participation
During 2005 there were no interlocking relationships between members
of the Compensation Committee or executive officers of Slade's Ferry
Bancorp. and corporations with respect to which such persons are
affiliated.
-18-
SLADE'S FERRY BANCORP. PERFORMANCE GRAPHS
The following graph compares the performance of the Company for the
periods indicated with the performance of the NASDAQ Stock Market and the
performance of a group of banks in the $250 million to $500 million, in the
$500 million to $1 billion and New England Bank indices assuming
reinvestment of dividends.
Years Ended
--------------------------------------------------------------------
Index 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04 12/31/05
--------------------------------------------------------------------------------------------------
Slade's Ferry Bancorp. 100.00 169.60 154.97 266.58 242.58 242.17
NASDAQ Composite 100.00 79.18 54.44 82.09 89.59 91.54
SNL $250M-$500M Bank Index 100.00 142.07 183.20 264.70 300.43 318.97
SNL $500M-$1B Bank Index 100.00 129.74 165.63 238.84 270.66 282.26
SNL New England Bank Index 100.00 95.31 71.89 118.62 125.46 125.32
Source : SNL Financial LC, Charlottesville, VA (c) 2006
-19-
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and certain other
compensation paid by Slade's Ferry Bancorp. for services rendered in all
capacities during the fiscal years ended December 31, 2005, 2004, and 2003
to its Chief Executive Officer and to the other most highly compensated
executive officers whose annual salary and bonus for fiscal 2005 was at
least $100,000. We refer to these individuals as "named executive officers"
in this Proxy Statement.
Annual Compensation Long Term Compensation
--------------------------------------- ----------------------------
Other Annual Restricted Securities All Other
Name and Principal Compensation Stock Underlying Compensation
Position Year Salary ($) Bonus ($) ($)(1) Awards ($) Options/Shares ($)
------------------------- ---- ---------- --------- ------------ ---------- -------------- ------------
Mary Lynn D. Lenz 2005 300,000 60,000 - - 38,442(2)
President/CEO 2004 304,808(7) 65,500 - - 40,000 25,802
2003 237,135 100,000 - - 4,000 6,694
Manuel J. Tavares 2005 128,772 38,937 - - 19,749(3)
Senior Vice President 2004 127,303(7) 38,000 - - 9,000 14,487
2003 121,509 36,000 - - 1,335 7,281
Deborah A. McLaughlin 2005 138,946 42,120 7,700 - 18,382(4)
Executive Vice President, 2004 135,751(7) 41,000 2,100 - 9,000 9,113
Chief Financial Officer, 2003 56,616 15,000 40,100(6) - 1,125 112
Chief Operation Officer
and Treasurer(5)
--------------------
Does not include perquisites and other personal benefits, the
aggregate of which is less than the lesser of $50,000 or 10% of such
person's combined salary and bonus for the applicable year.
Includes $9,482 accrual in 2005 in connection with the Supplemental
Executive Retirement Plan (SERP); executive life insurance premium of
$1,054 for 2005; long-term disability insurance premium of $720 for
2005; $11,263 for the use of a company owned automobile, and $15,923
in contributions to the 401(k) and profit sharing plans.
Includes $7,737 accrual in 2005 in connection with the Supplemental
Executive Retirement Plan (SERP); executive life insurance premium of
$505 for 2005; long-term disability insurance premium of $389 for
2005; $9,261 in contributions to the 401(k) and profit sharing plans,
and $1,857 for the use of a company owned automobile.
Includes executive life insurance premium of $336 for 2005; and long-
term disability insurance premium of $421 for 2005, $14,000 in
contributions to the 401(k) and profit sharing plans, and $3,625 for
the use of a company owned automobile.
Deborah A. McLaughlin became Executive Vice President in 2005 in
addition to Chief Financial Officer and Chief Operations Officer in
2003 and Treasurer in 2004.
Includes $39,600 for consulting services provided from 3/03 to 6/03
and $500 of benefit for opting out of the Corporation's health
insurance coverage.
During 2004, salaries for Ms. Lenz, Mr. Tavares and Ms. McLaughlin
were $300,000; $124,884 and $133,155, respectively. Amounts shown
reflect the fact that salaries were paid bi-weekly and calendar year
2004 contained an additional payment date.
-20-
The following table presents certain information for the named
executive officers relating to the exercise of stock options and stock
appreciation rights ("SARs") during 2005 and, in addition, information
relating to the value of unexercised stock options as of the fiscal year-
end.
Aggregated Option/SAR Exercises in the Last Fiscal Year
and Fiscal Year-end Option/SAR Values
#Securities Number of Securities Underlying Value of Unexercised In-The-
Underlying Unexercised Options at 12/31/05 Money Options at 12/31/05 (1)
Options/SARs Value -------------------------------- --------------------------------
Name Exercised Realized ($) Exercisable # Unexercisable # Exercisable $ Unexercisable $
--------------------- ------------ ------------ ------------- --------------- ------------- ---------------
Mary Lynn D. Lenz - - 24,000 20,000 $23,440 $3,000
Manuel J. Tavares - - 7,335 3,000 2,435 450
Deborah A. McLaughlin - - 7,125 3,000 2,194 450
--------------------
The value of unexercised in-the-money Options is expressed as the
market value of the common stock at December 31, 2005 at the closing
price of $19.70 per share less the exercise price of each option.
BENEFIT PLANS
Defined Benefit Pension Plan
Prior to 1998, the Company maintained a defined benefit pension plan
which provided retirement benefits to each established officer and
employee. An employee must have been age 21 and have served with the
Company one (1) full year of service to have been eligible. The annual
benefits formula for normal retirement age of 65 provided for 1.5% of total
salary plus 0.5% of compensation in excess of $9,000 per year of service to
a maximum of 35 years.
The following table illustrates the estimated retirement benefit
payable to eligible officers and employees upon retirement at age 65 in
various salary groups with various years of services.
Years of Service
Average ---------------------------------------------------
Compensation 15 Yrs 20 Yrs 25 Yrs 30 Yrs 35 Yrs
------------ ------ ------ ------ ------ -------
$100,000 $29,325 $39,100 $48,875 $58,650 $ 68,425
$125,000 $36,825 $49,100 $61,375 $73,650 $ 85,925
$150,000 $44,325 $59,100 $73,875 $88,650 $103,425
$175,000 $47,325 $63,100 $78,875 $94,650 $110,425
$200,000 $47,325 $63,100 $78,875 $94,650 $110,425
$225,000 $47,325 $63,100 $78,875 $94,650 $110,425
$250,000 $47,325 $63,100 $78,875 $94,650 $110,425
-21-
Annual compensation for benefits is capped at $160,000, per Internal
Revenue Code Section 401(a)(17), and is computed using a consecutive three
year average. Benefits shown are payable as a life annuity at age 65 and
will not be subject to reductions because of social security benefits.
Benefit accruals and Plan participation were frozen by amendment effective
December 31, 1997. The years of credited service as of January 1, 1998 for
the executive officers named on the Summary Compensation Table who are
eligible for retirement benefits are as follows: Manuel J. Tavares - 11
years.
As of December 31, 1997, the Company elected to curtail the
employees' defined benefit pension plan. This decision was based on the
costs associated with the defined benefit plan, and the complexities of the
marketability of the Plan to its employees. The Company in turn has
established a profit sharing type retirement plan effective January 1,
1998, which provides the employee with full investment direction of the
funds allocated to his or her account. The contribution by the Company to
the new profit sharing plan is an amount to be fixed each year by the Board
of Directors. In 2004, a large contribution was made to the defined benefit
plan so that it is now in a favorable funding position. Although dependent
on market conditions and the future experience of the defined benefit
plan's assets, we expect to be able to terminate the defined benefit plan
in the next few years without significant additional funding. Upon plan
termination, participants will be given the choice of a deferred annuity
payable at their retirement date or a lump sum payment in lieu of that
annuity. Any lump sum payment made in connection with the termination of
the defined benefit plan can be rolled over into the profit sharing plan if
the participant so elects.
401(k) Plan
The Company has a 401(k) plan in which substantially all employees
who attain the age of 21 and complete three months of service are eligible
to participate. Employees may contribute up to 100 percent of their
compensation subject to certain limits imposed by federal tax law. The
Company makes matching contributions equal to 3 percent of the first 6
percent of an employee's compensation contributed to the plan. Matching
contributions vest to the employee after a one-year period.
Employees who attain age 21 and complete one year of service (1,000
hours) are also eligible to receive profit sharing contributions under the
401(k) plan. The Company contributes amounts at the Company's discretion.
2004 Equity Incentive Plan
The Company has an equity incentive plan in effect which was approved
by shareholders on May 10, 2004 at the 2004 Annual Meeting of Shareholders.
The maximum number of shares of stock reserved and available for issuance
under the 2004 Plan is 300,000 shares, subject to adjustment as provided in
the plan (through the application of certain anti-dilution provisions);
provided that not more than 100,000 shares shall be issued in the form of
unrestricted stock awards, restricted stock awards or deferred stock
awards.
Stock options granted under the 2004 Plan may be either incentive
stock options or non-qualified stock options. The exercise price for
incentive stock options granted to employees shall not be less than 100
percent of the fair market value at grant date. No stock option shall be
exercisable more than 10 years after the date the stock option is granted.
Each non-employee director who is serving as director of the Company
on the day after each annual meeting of shareholders or any special meeting
in lieu thereof, beginning with the 2004 annual meeting, shall
automatically be granted on such day a non-qualified stock option to
acquire 2,000 shares
-22-
of stock, exercise price to be fair market value on date of grant. No stock
option shall be exercisable more than 10 years after the grant date.
Unrestricted stock awards may be granted in respect of past services
or other valid consideration. Restricted stock awards entitle the recipient
to acquire, at such purchase price as determined by the Company, shares of
stock subject to such restrictions and conditions as the Company may
determine at time of grant. A deferred stock award is an award of
restricted unit to a grantee, subject to restrictions and conditions as the
Company may determine at time of grant. If any restricted stock award or
deferred stock award granted is intended to qualify as "performance-based
compensation", such sward shall comply with provisions as set forth in the
2004 Plan.
EMPLOYMENT CONTRACTS AND SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS
Supplemental Executive Retirement Plans
In 1996, Slade's Ferry Trust Company entered into a Supplemental
Executive Retirement Agreement (SERP) with Mr. Tavares, which provides a
payment to Mr. Tavares of $1,500 per month for 120 months upon his
retirement. Slade's Ferry Bancorp. entered into a SERP with Ms. Lenz in
2003, substantially similar to the agreement with Mr. Tavares which
provides a payment to Ms. Lenz of $3,000 per month for 120 months upon her
retirement and further provides for the provision of life time medical
insurance for Ms. Lenz and her spouse. The SERPs also contain certain non-
competition restrictions applicable to the executives.
Employment Agreements
The Company has entered into employment agreements with Ms. Lenz, Mr.
Tavares, and Ms. McLaughlin. The employment agreement with Ms. Lenz has a
fixed term of three (3) years, while the employment agreements with Mr.
Tavares and Ms. McLaughlin are for a fixed term of two (2) years. These
agreements may be renewed annually after a review of the executive's
performance. These agreements currently provide for minimum annual salaries
of $315,000, $129,789 and $140,400, respectively, discretionary cash
bonuses, and participation on generally applicable terms and conditions in
other compensation and fringe benefit plans. They also guarantee customary
corporate indemnification and errors and omissions insurance coverage
throughout the employment term and for as long as the executives are
subject to suit for the performance of services thereafter. The employment
agreements provide for customary non-competition, confidentiality and non-
solicitation provisions during the period of employment and continuing for
a period of two (2) years thereafter.
The Company may terminate each executive's employment, and each
executive may resign, at any time with or without cause. However, in the
event of termination during the term without cause, the Company will owe
the executive severance benefits generally equal to the value of the cash
compensation, value of employer contributions to employer-provided benefit
plans and fringe benefits that the executive would have received if he or
she had continued working for the remaining unexpired term of the
agreement. In addition, the severance benefits of Ms. Lenz and Mr. Tavares
would provide for full vesting in the SERPs in place with such executives,
provides for transfer to Ms. Lenz of her employer-provided vehicle at no
cost and provides Mr. Tavares with the right to purchase his employer-
provided vehicle at fair market value. The same severance benefits would be
payable if the executive resigns during the term following: a loss of
title, office or membership on the board of directors; material reduction
in duties, functions or responsibilities; involuntary relocation of the
executive's principal place of employment to a location over fifty (50)
miles in distance from the Bank's principal office or other material breach
of contract which is not cured within thirty (30) days.
-23-
For ninety (90) days after a change in control, each executive may
resign for any reason and collect severance benefits as if he or she had
been discharged without cause. If the Company or the Bank experiences a
change in ownership, a change in effective ownership or control or a change
in the ownership of a substantial portion of their assets as contemplated
by section 280G of the Internal Revenue Code ("Code"), a portion of any
severance payments under the employment agreements might constitute an
"excess parachute payment" under current federal tax laws. Federal tax laws
impose a 20% excise tax, payable by the executive, on excess parachute
payments.
Under the employment agreement with Ms. Lenz, the Company would
reimburse the executive for the amount of this excise tax and would make an
additional gross-up payment so that, after payment of the excise tax and
all income and excise taxes imposed on the reimbursement and gross-up
payments, the executive will retain approximately the same net-after tax
amounts under the employment agreement that she would have retained if
there were no 20% excise tax. The effect of this provision is that the
Company, rather than the executive, bears the financial cost of the excise
tax. Neither the Company nor the Bank could claim a federal income tax
deduction for an excess parachute payment, excise tax reimbursement payment
or gross-up payment. Under the employment agreements with Mr. Tavares and
Ms. McLaughlin, the amounts payable under their respective employment
agreements shall be reduced to result in no portion of the amounts payable
under the employment agreements being non-deductible to the Bank or Company
(or any successor thereto) by reason of Section 280G of the Code.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers, and persons who
own more than 10% of the Company's common stock, to report to the
Securities and Exchange Commission their initial ownership of the Company's
common stock and any subsequent changes in that ownership. Specific due
dates for these reports have been established by the Securities and
Exchange Commission and the Company is required to disclose in this Proxy
Statement any late filings or failures to file.
Based solely on its 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, 2005, all Section 16(a) filing
requirements applicable to the executive officers and directors during
fiscal 2005 were met, with the exception of the following: a Form 4 filing
for Director Lawrence J. Oliveira reflecting shares of common stock
purchased on May 19, 2005 was filed late on May 24, 2005; and a Form 4
filing for Director and Corporate Secretary/Clerk Peter G. Collias
reflecting the exercise of options to purchase common stock and the
subsequent sale of the common stock acquired on March 4, 2005 was filed
late on March 9, 2005.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Slade's Ferry Trust Company makes loans to its directors and
executive officers in the ordinary course of business. At December 31,
2005, loans and open lines of credit to executive officers, directors and
their associates totaled $16,255,000. These loans 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 did not involve more than the normal risk of collectability or present
other unfavorable features. None of these loans have been disclosed as
nonaccrual, past due, restructured or potential problems.
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ADDITIONAL INFORMATION
Information About Shareholder Proposals
If you wish to submit proposals to be included in our Proxy Statement
for the 2007 Annual Meeting of Shareholders of Slade's Ferry Bancorp., we
must receive them on or before December 12, 2006, pursuant to the proxy
soliciting regulations of the SEC. Nothing in this paragraph shall be
deemed to require Slade's Ferry Bancorp. to include in its Proxy Statement
and proxy card for such meeting any shareholder proposal which does not
meet the requirements of the SEC in effect at the time. Any such proposal
will be subject to 17 C.F.R. [SECTION]240.14a-8 of the Rules and Regulations
promulgated by the SEC under the Exchange Act. If a shareholder wishes to
submit a proposal to the 2007 Annual Meeting without including such
proposal in the Proxy Statement for that meeting, that proposal will be
considered untimely, and the proxies solicited by your Board of Directors
will confer discretionary authority to vote on the proposal as the proxy
holders see fit, if the company is not notified of such proposal by
February 18, 2007.
By Order of the Board of Directors,
/s/ Peter G. Collias
Peter G. Collias
Clerk/Secretary
Dated: April 10, 2006
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APPENDIX A
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SLADE'S FERRY BANCORP.
AUDIT COMMITTEE CHARTER
Audit Committee
The Audit Committee of the Board of Directors shall be composed of at a
minimum three Directors who are independent of Management and are free of
any relationship that, in the opinion of the Board of Directors, would
interfere with their exercise of independent judgment as a Committee
member. Each Audit Committee member must be able to read and understand
fundamental financial statements. At least one Committee member must be a
"financial expert", i.e., have past employment experience in finance or
accounting, requisite professional certification in accounting, or other
comparable experience or background. Audit Committee members may enhance
their familiarity with finance and accounting by participating in
educational programs conducted by the Company or outside programs. Audit
Committee members and the Committee Chairman shall be appointed by the
Chairman of the Board on the recommendation of the Nominating and Board
Development Committee. If an Audit Committee Chair is not designated or
present, the members of the Committee may designate a Chair by majority
vote of the Committee membership.
INDEPENDENCE
A director will not be considered "Independent" if, among other things, the
director is an affiliated person of the Company or any of its subsidiaries
or has:
* Been employed by the Company or its affiliates in the past three
years.
* Accepted any compensation, including consulting and advisory fees,
from the Company or its affiliates during the previous fiscal year
(except for board services, retirement plan benefits, or non-
discretionary compensation).
* An immediate family member who is, or has been in the past three
years, employed by the Company or its affiliates as an executive
officer.
* Been a partner, controlling shareholder or an executive officer of
any for profit business to which the Company made or from which it
received, payments (other than those which arise solely from
investments in the Company's securities) that exceed five percent
of the Company's consolidated gross revenues for that year, or
$200,000, whichever is more, in any of the past three years.
* Been employed as an executive of another entity where any of the
Company's executives serve on that entity's compensation
committee.
Authority to Engage Advisors
The Audit Committee shall have the authority and funding to engage
independent counsel and other advisers, as it deems necessary to carry out
its duties.
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II. STATEMENT OF POLICY
It is the Committee's responsibility to provide oversight of the Company's
accounting and financial reporting processes, including oversight of the
Company's Independent registered public accounting firms and the Internal
Auditors. In so doing, it is the responsibility of the Audit Committee to
maintain free and open means of communications between the Board of
Directors, the Independent registered public accounting firms, the Internal
Audit Agent, and the financial management of the Company.
Meetings
The Audit Committee shall meet at least four times annually, or more
frequently as circumstances dictate. The Audit Committee may meet in a
separate executive session with the Internal Auditors. At least annually,
the Committee will meet with the Independent registered public accounting
firms to discuss any matters that the Committee believes should discuss
privately. A majority of the Committee shall constitute a quorum for the
conduct of business. At the discretion of the Chairman, a member may attend
a meeting by telephone conference in which he can hear each person in
attendance and all such persons can hear the person attending by telephone
conference.
Responsibilities
1. Appoint and oversee the Company's Independent registered public
accounting firms. The Audit Committee is also solely
responsible, and shall have the necessary funding, for
compensation of the Independent registered public accounting
firms.
2. Review and pre-approve all audit and non-audit services to be
performed by the Company's Independent registered public
accounting firms, including but not limited to requests for any
management consulting engagement to be performed by the
Company's Independent registered public accounting firms. The
Audit Committee may delegate to one or more Audit Committee
members the responsibility to approve such services, provided
timely reports are made to the full Audit Committee. In
addition, the Audit Committee may establish pre-approval
categories of services, as provided by applicable rules and
regulations.
3. Evaluate the Independent registered public accounting firms on
an at least an annual basis. Such evaluation shall include a
report from the independent registered public accounting firm
which includes:
* The auditor's internal quality-control procedures.
* Any material issues raised by the most recent internal
quality-control review or peer review of the firm, or by
any inquiry or investigation by governmental or
professional authorities, within the last five years,
respecting independent audits carried out by the firm,
and any steps taken by the firm to address such issues.
* A formal written statement delineating all relationships
between the independent registered public accounting firm
and the Company as contemplated by Independence Standards
Board Standard No. 1, Independence Discussions with Audit
Committees.
4. Review and update this Charter annually and ascertain that it
is reported in the Company's proxy statement at least once
every three years.
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5. Periodically report to the Board of Directors on significant
results of the following activities.
a) Appointment of the Independent registered public
accounting firms to audit the financial statements of the
Company and subsidiaries and determination of the
compensation for such services.
b) Approval of all audit and non-audit services to be
provided by the Independent registered public accounting
firms
c) Resolution of any disagreements that may arise between
the Independent registered public accounting firms and
management.
d) Evaluation of the performance of the Independent
registered public accounting firms and, where
appropriate, recommendation that the Board replace the
Independent registered public accounting firms.
6. Review the Independent registered public accounting firm's
engagement letter setting forth the scope and approach of the
proposed audit, the estimated fees for performing the annual
audit, FDICIA controls audit, and quarterly reviews of Form 10-Q.
The Committee will also meet with the Independent registered
public accounting firms to review findings, including comments
or recommendations.
7. Review the effectiveness of the Internal Audit function of the
Company including the independence and authority of its
reporting obligations, the proposed audit plan for the current
internal audit cycle, and the coordination of such plans with
the Independent registered public accounting firms.
8. Review with the Independent registered public accounting firms
and the Internal Audit Agent the integrity of the Company's
financial reporting processes and compliance with section 12
USC 1831 p-1 (Federal Deposit Insurance Act).
9. Inquire as to the Independent registered public accounting
firms' judgments about the quality and appropriateness of the
Company's accounting principles as applied in its financial
statements.
10. Consider and approve, if appropriate, major changes to the
Company's auditing and accounting principles and practices as
suggested by the Independent registered public accounting
firms, Management or the Internal Auditors.
11. Review and approve the required reports to be included in the
Company's annual report to shareholders and proxy statement.
12. Review, at the Committee's discretion, quarterly financial
statements and review with management and the Independent
registered public accounting firms any significant matters that
arise out of the Company's quarterly financial statements
review, based upon the auditors' limited review procedures.
Discuss any significant changes to the Company's accounting
principles and any items required to be communicated by the
Independent registered public accounting firms in accordance
with SAS 61 as amended by SAS 90.
13. Review and discuss with the Independent registered public
accounting firms annually all relationships the Independent
registered public accounting firms have with the Company
-28-
which might adversely affect their objectivity and independence
and review a written statement from the Auditors as to their
independence. The Committee shall take, or recommend that the
full Board take, appropriate action to oversee the independence
of the Independent registered public accounting firms.
14. Review the scope and general extent of the independent
registered public accounting firm's annual audit. The
Committee's review should include a report from the Independent
registered public accounting firm addressing the following:
* Audit staffing and supervision, and scope of audit;
* Critical accounting policies and practices, alternative
accounting treatments, the reasons for selecting such
policies, and their impact on the fairness of the
Company's financial statements;
* Significant estimates made by management in the
preparation of financial reports;
* The nature and content of communications between auditors
and management;
* Off-balance sheet transactions, joint ventures,
contingent liabilities, or derivative transactions, and
their impact on the fairness of financial statements;
* Auditor proposed adjustments - both those recorded by
management and those not recorded by management;
* Difficulties encountered with management during the
audit;
* Disagreements with management regarding accounting
reporting issues;
* Material legal matters that may impact the financial
statements; and
* The independent registered public accounting firm's
opinion on the overall fairness of the financial
statements.
15. Discuss the results of the audit with the Independent
registered public accounting firms prior to releasing the year-
end earnings and annual report to regulatory agencies. Discuss
those matters that are required to be communicated to audit
committees in accordance with SAS 61 as amended by SAS 90.
16. It is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements
are complete and accurate and are in accordance with generally
accepted accounting principles. This is the responsibility of
Management and the Independent registered public accounting
firms.
Other Duties
1. Inquire of the Company's chief executive officer and chief
financial officer as to the existence of any significant
deficiencies or material weaknesses in the design or operation
of internal control over financial reporting which are
reasonably likely to adversely affect the Company's ability to
record, process, summarize and report financial information,
and as to the existence of any fraud, whether or not material,
that involves management or other employees who have a significant
role in the Company's internal control over financial reporting.
-29-
2. Review the appointment, replacement, reassignment, or dismissal
of the Internal Auditors.
3. Review internal and external reports concerning the Loan
Review, Compliance, and Information Technology functions of the
Company.
4. In consultation with the Board of Directors, review and follow-
up on regulatory examination findings and recommendations.
5. Conduct or authorize investigations into any matters within the
Committee's scope of responsibilities. The Committee is
empowered to retain Independent Counsel and other professional
advisors to assist in the conduct of any investigation or as
may be necessary in the fulfillment of its responsibilities.
6. Establish procedures for receipt, retention and treatment of
complaints regarding internal accounting controls, and auditing
matters.
7. Establish procedures for confidential, anonymous employee
submissions of concerns regarding questionable accounting or
auditing matters.
8. Review and approve all related party transactions. For such
purpose, "related party transaction" shall mean any transaction
required to be disclosed pursuant to SEC Regulation S-K, Item
404.
-30-
[X] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE SLADE'S FERRY BANCORP.
PROXY SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS
ANNUAL STOCKHOLDERS MEETING
MAY 17, 2006
The undersigned hereby appoint(s) Paul C. Downey, Lawrence J.
Oliveira, DDS and David F. Westgate, or any one of them as my/our true and
lawful attorney, with full power of substitution, for me/us and in my/our
name to vote, as designated below, all the shares of common stock of
Slade's Ferry Bancorp. held of record by the under-signed on March 17,
2006, at the Annual Meeting of shareholders of Slade's Ferry Bancorp. to be
held at the Advanced Technology and Manufacturing Center, 151 Martine
Street, Fall River, Massachusetts 02723 on Wednesday, May 17, 2006 at 10:00
a.m. or at any adjournment thereof, with all powers I/we should possess if
personally present, hereby revoking all previous proxies
The Board of Directors of Slade's Ferry Bancorp. recommends that you
vote "For" the proposal set forth below.
With- For All
For hold Except
(1) To elect Peter G. Collias, Melvyn A. [ ] [ ] [ ]
Holland, Jean F. McCormack, Shaun O'Hearn, Sr.,
Carlos Ribeiro and William J. Sullivan as Class
Two Directors for a term of three years.
(Authority to vote for the election of a
specifically named individual may be withheld
by crossing out the name of such individual.)
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Except" and write that nominee's name in the space provided below.
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In their discretion, the proxies are authorized to consider and act upon
such other business matters or proposals as may properly come before the
meeting.
The shares represented by the proxy will be voted as directed by the
undersigned. It is the intention of proxies to vote "FOR" the proposal set
forth under Item 1 and in their discretion upon such business as may
properly come before the meeting if no contrary instruction is indicated.
PLEASE CHECK BOX IF YOU PLAN TO ATTEND [ ]
THE MEETING.
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Please be sure to sign and date Date
this Proxy in the box below.
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Stockholder sign above Co-holder (if any) sign above
Detach above card, sign, date and mail in
postage paid envelope provided.
SLADE'S FERRY BANCORP.
SOMERSET, MASSACHUSETTS
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In signing, please write name(s) exactly as appearing in the imprint on
this proxy. If signing as Executor, or in any other representative
capacity, or as an officer of a corporation, please indicate your full
title as such.
Please date, sign and return this proxy
in the enclosed envelope promptly.
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IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE
PROVIDED BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE
PROVIDED.
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