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 BANCORP.
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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, 2007
Dear Shareholder,
You are cordially invited to attend the Annual Meeting of Shareholders of
Slade's Ferry Bancorp. to be held on Wednesday, May 16, 2007 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/ Paul C. Downey
Paul C. Downey
Lead Independent Director
SLADE'S FERRY BANCORP., 100 Slades Ferry Avenue, Somerset, Massachusetts 02726
TEL (508) 675-2121 *** FAX (508) 675-1751 *** www.sladesbank.com
SLADE'S FERRY BANCORP.
100 Slades Ferry Avenue
Somerset, Massachusetts 02726
(508) 675-2121
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Date: Wednesday, May 16, 2007
Time: 10:00 a.m., Eastern Time
Place: Advanced Technology and Manufacturing
Center (ATMC)
151 Martine Street
Fall River, Massachusetts 02723
At our 2007 annual meeting, we will ask you to:
1. Elect five Class Three Directors, each to hold office for a term set
to expire in 2010.
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 16, 2007, 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, 2007
===============================================================================
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
2007 ANNUAL MEETING OF SHAREHOLDERS
May 16, 2007
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. As used in this Proxy
Statement, the term "Company" means Slade's Ferry Bancorp. and the term "Bank"
means Slade's Ferry Trust Company.
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 in the section below entitled "Voting Rights."
We began mailing this Proxy Statement, the Notice of Annual Meeting and
the enclosed proxy card on or about April 10, 2007 to all shareholders entitled
to vote. If you owned common stock of Slade's Ferry Bancorp. at the close of
business on March 16, 2007, the record date, you are entitled to vote at the
annual meeting. On the record date, there were 4,050,291 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 16, 2007, 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
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specific choices, your proxy will vote your shares "FOR" the election of each of
the nominees named on the proxy card as directors.
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 Five The nominees for director who receive the most
Class Three 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:
o Proposal 1: Election of Five Class Three 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 proxy at any time before it is voted by:
o filing a written revocation of the proxy with our Clerk/Secretary;
o submitting a signed proxy card bearing a later date; or
o 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 materials, 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 Inc., a proxy soliciting firm, to solicit proxies on our behalf for a
fee of $5,000 plus reasonable out-of-pocket expenses. Expenses may include
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the charges and expenses of brokerage houses, nominees, custodians, and
fiduciaries for forwarding proxies and proxy materials to beneficial owners of
shares.
OBTAINING AN ANNUAL REPORT ON FORM 10-K
If you would like an additional copy of our Annual Report on Form 10-K,
including our audited financial statements for the fiscal year ended December
31, 2006, 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. 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 16, 2007. We know of no person who
beneficially owned more than 5% of the outstanding shares of our common stock as
of as of March 16, 2007 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 16, 2007. 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
------------------------ -------------------- ----------------
Peter G. Collias, Director 29,299 (1) *
Anthony F. Cordeiro, Director 33,046 (2) *
Scott W. Costa, P.E., Director 7,100 (3) *
Paul C. Downey, Lead Director 14,000 (4) *
Melvyn A. Holland, Director 16,920 (5) *
Mary Lynn D. Lenz, Director, 47,003 (6) 1.16
President and Chief Executive
Officer
Jean F. MacCormack, Ed.D, Director 2,050 (7) *
Francis A. Macomber, Director 125,377 (8) 3.10
Deborah A. McLaughlin, 10,669 (9) *
Executive Vice President, Chief
Financial Officer, Chief Operations
Officer and Treasurer
Joan Parkos Moran, Director 3,575 (10) *
Majed Mouded, MD, Director 81,369 (11) 2.01
Shaun O'Hearn, Sr., Director 31,668 (12) *
Lawrence J. Oliveira, DDS, Director 53,959 (13) 1.33
William J. Piccerelli, CPA, CVA, 100 *
Director
Carl Ribeiro, Director 5,500 (14) *
William J. Sullivan, Director 58,868 (15) 1.45
Manuel J. Tavares, Senior
Vice President 15,199 (16) *
David F. Westgate, Director 21,074 (17) *
All Executive Officers and
Directors as a Group (18 persons) 556,774 13.75
(footnotes on following page)
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* Less than 1.00% of outstanding shares of common stock.
(1) Includes 9,009 shares held jointly with spouse and 10,000 options.
(2) Includes 1,860 shares held by spouse and 8,000 options.
(3) Includes 2,000 options.
(4) Includes 2,000 shares held jointly with spouse, 2,000 shares owned as
trustee for business profit sharing plan and 8,000 options.
(5) Includes 12,000 options.
(6) Includes 44,000 options.
(7) Includes 2,000 options.
(8) Includes 2,372 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, 7,103 shares held as custodian for other family members, and 12,000
options.
(9) Includes 10,125 options.
(10) Includes 2,000 options.
(11) Includes 62,085 shares held jointly with spouse, 5,799 shares held jointly
by spouse and child, and 12,000 options.
(12) Includes 12,564 shares beneficially owned as trustee for business profit
sharing plan and 12,000 options.
(13) Includes 37,625 shares beneficially owned as trustee for business profit
sharing plan and 12,000 options.
(14) Includes 1,000 shares held in a SEP IRA, 1,000 shares held jointly with
spouse, 500 shares held in son's name, and 2,000 options.
(15) Includes 600 shares held jointly with spouse, 522 shares held jointly with
children, 16,040 shares held in a revocable trust, 16,040 shares held in a
revocable trust for his spouse, and 12,000 options.
(16) Includes 4,796 shares held jointly with spouse and children, 68 as
custodian for family members and 10,335 options.
(17) Includes 12,000 options.
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-----------------------------------------
PROPOSAL ONE
ELECTION OF CLASS THREE 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 2007 annual meeting, shareholders are being asked to elect the
following Class Three directors:
Nominees Term to Expire
------------------------------- --------------
Paul C. Downey 2010
Mary Lynn D. Lenz 2010
Majed Mouded, MD 2010
William J. Piccerelli, CPA, CVA 2010
David F. Westgate 2010
Each of the nominees is 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 2010 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 of Directors. If
for any reason any nominee proves unable or unwilling to stand for election, the
Board of Directors will nominate alternates or reduce the size of the Board of
Directors to eliminate the vacancy. The Board of Directors has no reason to
believe that any of its nominees would prove unable to serve if elected.
===============================================================================
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
Term Position(s) Held
Nominees Age (1) Expires Class with Slade's Ferry Bancorp. Director Since (2)
------------------------------- ------- ------- ----- --------------------------- ------------------
Paul C. Downey 43 2007 Three Lead Independent Director 2003
Mary Lynn D. Lenz 52 2007 Three Director, President and 2002
Chief Executive Officer
Majed Mouded, MD 65 2007 Three Director 1993
William J. Piccerelli, CPA, CVA 63 2007 Three Director 2006
David F. Westgate 66 2007 Three Director 1997
Term Position(s) Held
Continuing Directors Age (1) Expires Class with Slade's Ferry Bancorp. Director Since (2)
------------------------------- ------- ------- ----- --------------------------- ------------------
Peter G. Collias 75 2009 Two Director 1973
Anthony F. Cordeiro 45 2008 One Director 2003
Scott W. Costa, P.E. 51 2008 One Director 2005
Jean F. MacCormack, Ed.D 60 2009 Two Director 2005
Joan Parkos Moran 55 2008 One Director 2005
Shaun O'Hearn, Sr. 61 2009 Two Director 1997
Lawrence J. Oliveira, DDS 62 2008 One Director 1997
Carl Ribeiro 60 2009 Two Director 2005
William J. Sullivan 67 2009 Two Director 1985
Term Position(s) Held
Retiring Directors Age (1) Expires Class with Slade's Ferry Bancorp. Director Since (2)
------------------------------- ------- ------- ----- --------------------------- ------------------
Melvyn A. Holland, CPA (3) 69 2009 Two Director 1997
Francis A. Macomber (3) 77 2007 Three Director 1980
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(1) At March 31, 2007.
(2) Includes years of service as a director of Slade's Ferry Trust Company.
(3) Both Directors to retire following the Annual Meeting.
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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
Paul C. Downey: Lead Independent Director of Slade's Ferry Bancorp. since
June 2006. President of Sakonnet Properties, Inc., a real estate development
firm in New Bedford, Massachusetts.
Mary Lynn D. Lenz: 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.
Majed Mouded, MD: Physician and endocrinologist, on active staff at St.
Anne's Hospital in Fall River, Massachusetts.
William J. Piccerelli, CPA, CVA: Certified Public Accountant since August
1966 and Certified Valuation Analyst since December 1977. One of the Founders
and Partner of Piccerelli, Gilstein & Co., LLP in Providence, Rhode Island.
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 2003.
Continuing Directors
Peter G. Collias: Principal Attorney of the Law Offices of Peter G.
Collias in Fall River, Massachusetts.
Anthony F. Cordeiro: President and Managing Partner of Anthony F. Cordeiro
Insurance Agency, LLC since 1988.
Scott W. Costa, P.E.: 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.
Jean F. MacCormack, Ed.D: Chancellor serving as Chief Executive Officer of
the University of Massachusetts, Dartmouth since 1999. Previously served as
Chancellor and Chief Financial Officer of the University of Massachusetts,
Boston.
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 consumer industries, from 2002 to
present. President and Chief Operations Officer of Alga Plastics Company from
1998 to 2002.
Shaun O'Hearn, Sr.: President of Bolger & O'Hearn, Inc., a color and
chemicals company in Fall River, Massachusetts.
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Lawrence J. Oliveira, DDS: Orthodontist with practices in New Bedford and
Mattapoisett, Massachusetts.
Carl Ribeiro: Owner and President of Carlson Southcoast Corporation, a
holding company for several food entities in New Bedford, Massachusetts, Chair
of Famous Foods, a internet food distributor in New Bedford, Massachusetts and
President of Advanced Antenna Technologies, an antenna development company in
New Bedford, Massachusetts.
William J. Sullivan: President and a director of Sullivan Funeral Homes,
Inc. of Fall River and Somerset, Massachusetts.
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.
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 2006, the Board of Directors of
Slade's Ferry Bancorp. held four regular quarterly meetings and four special
meetings. The Board of Directors of Slade's Ferry Trust Company held 12 regular
monthly meetings and fourteen 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 Melvyn A. Holland, CPA, Majed Mouded, MD and William J. Sullivan.
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 thirty times in 2006, and
generally acts on most matters between regular Board
meetings. Its members are Anthony F. Cordeiro, Paul C.
Downey, Mary Lynn D. Lenz, Shaun O'Hearn, Sr., Lawrence
J. Oliveira DDS, William J. Sullivan, and David F.
Westgate. In the event of extended absences occurring
on
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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 Board of
Directors has adopted a written charter for the
Compensation Committee which may be found on our
website at www.sladesbank.com under the caption
"Shareholder Services".
The Compensation Committee held fifteen meetings during
the past year. Its members are Paul C. Downey, Chair,
Jean F. MacCormack, Ed.D., 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 internal audit plan, reviews and evaluates the
audit performed by our independent registered public
accounting firm, reviews the practices and findings of
the internal audit department and reports any
substantive issues found during the audit to the Board
of Directors. The Board of Directors has adopted a
written charter for the Audit Committee which may be
found on our website at www.sladesbank.com under the
caption "Shareholder Services".
The Audit Committee is directly responsible for the
appointment, compensation and oversight of the work of
our independent registered public accounting firm. The
Audit Committee also reviews and approves all
transactions with affiliated parties. The Audit
Committee held seven meetings during the past year. Its
members are Carl Ribeiro, Chair, Paul C. Downey, Melvyn
A. Holland, Shaun O'Hearn, Sr., William J. Piccerelli,
CPA, CVA, and Lawrence J. Oliveira, DDS. 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. Piccerelli
qualifies as an "audit committee financial expert" as
the term is defined by Securities and Exchange
Commission regulations.
Corporate Governance/ The Corporate Governance/Nominating Committee, which
Nominating Committee held seven 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
Governance/Nominating Committee to recruit individuals
to serve as directors whose qualifications meet the
organization's needs, and to
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recommend these individuals to the Board for election
as directors. Its members are Lawrence J. Oliveira,
DDS, Chair; Paul C. Downey, Shaun O'Hearn, Sr., Carl
Ribeiro, Scott W. Costa, P.E., and David F. Westgate.
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
may be found on our website at www.sladesbank.com under
the caption "Shareholder Services".
It is the policy of the Corporate Governance Nominating
Committee that shareholders may recommend nominees for
election to the Board of Directors, 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 have the highest
personal and professional integrity, who have
demonstrated exceptional ability and judgment and who
will 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 Nominating/Corporate
Governance Committee in the same manner as nominees
that are identified by the Nominating/Corporate
Governance Committee. The Nominating/Corporate
Governance Committee may also hire a third party to
assist in identifying or evaluating potential nominees.
Nominees Paul C. Downey, Mary Lynn D. Lenz, Majed
Mouded, MD, William J. Piccerelli, CPA, CVA, and David
F. Westgate were each recommended to the Board of
Directors for nomination by the Corporate
Governance/Nominating Committee.
Shareholder Communications
Shareholders may contact our Board of Directors, our independent directors
as a group or an individual director by contacting the Clerk/Secretary, Slade's
Ferry Bancorp., 100 Slades Ferry Avenue,
13
Somerset, Massachusetts 02726. All comments will be forwarded directly to the
Board of Directors, our independent directors as a group or an individual
director as indicated.
It is our policy that all directors and nominees should attend the annual
meeting. At the 2006 annual meeting, twelve members of the Board of Directors
were in attendance.
AUDIT COMMITTEE REPORT
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 2006 fiscal year, the Audit Committee met seven times to
discuss matters consistent with its duties. The Audit Committee's membership was
comprised of Directors Downey, Holland, O'Hearn, Oliveira, Piccerelli, and
Ribeiro, with Carl Ribeiro serving as Chair.
Each member of the Audit Committee is independent as defined under NASDAQ
stock market listing standards. We believe that Director Piccerelli qualifies as
an Audit Committee Financial Expert, as that term is defined by SEC regulations,
and our Board of Directors has designated Director William J. Piccerelli, CPA,
CVA as such. The Audit Committee operates under a written charter approved by
the Board of Directors. The Audit Committee Charter may be found on our website
at www.sladesbank.com under the caption "Shareholder Services".
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 firm 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 firm, financial and senior management, the internal audit department,
and the Board of Directors; 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, 2006
with management and Wolf & Company, P.C., Slade's Ferry Bancorp.'s independent
registered public accounting firm for the fiscal year ended December 31, 2006.
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.
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
14
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 of Directors 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, 2006 for filing with the SEC.
Audit Committee:
Carl Ribeiro, Chair
Paul C. Downey
Melvyn A. Holland
Shaun O'Hearn, Sr.
Lawrence J. Oliveira, DDS
William J. Piccerelli CPA, CVA
Appointment of Independent Registered Public Accounting Firm
The Audit Committee of the Board of Directors has appointed Wolf &
Company, P.C. to continue as Slade's Ferry Bancorp.'s independent registered
public accounting firm for 2007. 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. ("Shatswell") as the Company's
independent registered public accounting firm. Pursuant to its charter, the
Audit Committee has sole authority to terminate and to appoint the Company's
independent registered public accounting firm. Accordingly, the dismissal of
Shatswell was approved solely by the Audit Committee.
The audit reports of Shatswell on the Company's consolidated financial
statements as of and for the year ended December 31, 2004 did not contain an
adverse opinion or a disclaimer of opinion and was not qualified or modified as
to uncertainty, audit scope, or accounting principles. During 2004, there were
no disagreements with Shatswell on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to Shatswell's satisfaction, would have caused it
to make reference in connection with its report to the subject matter of the
disagreement.
The Company provided Shatswell with a copy of the foregoing disclosure and
requested that Shatswell furnish the Company with a letter addressed to the SEC
stating whether it agrees with these statements. Copies of the confirming
letters from Shatswell dated March 18, 2005 and March 30, 2005 were attached as
Exhibits 16.1 to the Company's Form 8-K filed with the SEC on March 18, 2005 and
Form 8-K/A filed with the SEC on March 30, 2005, respectively.
On March 14, 2005, the Audit Committee appointed Wolf & Company, P.C. as
the Company's independent registered public accounting firm for the purpose of
auditing the Company's consolidated financial statements for the year ended
December 31, 2005.
15
Audit Fees
For the fiscal years ended December 31, 2006 and 2005, Slade's Ferry
Bancorp. retained as its registered public accounting firm Wolf & Company, P.C.,
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, 2006
and 2005 and fees billed for other services during those periods by Wolf &
Company, P.C.
2006 2005
-------- --------
Audit fees (1)................ $160,000 $104,500
Audit-related fees (2)........ 12,000 19,000
Tax fees (3).................. 19,000 13,000
All other fees .............. - -
-------- --------
Total $191,000 $136,500
======== ========
------------------
(1) Audit fees relate to the audit of the Company's annual consolidated
financial statements as well as reviews of consolidated financial
statements included in the Form 10-Q filings.
(2) Audit-related fees pertain to services related to the Company's filing
Form 8-K pertaining to defined benefit plan accounting in 2005 and fees
related to the audit of the Company's defined benefit plan in 2006.
(3) Tax fees consist of tax return preparation and other tax matters.
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.
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, 2006, 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
16
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. During 2006, the Chair of the Board of the Slade's Ferry Bancorp. and
Slade's Ferry Trust Company was paid an annual retainer of $3,500 for each
position and the Vice Chair of Slade's Ferry Bancorp. and Slade's Ferry Trust
Company was paid an annual retainer of $1,500 for each position. Going forward,
the Lead Independent Director will be paid an annual retainer of $5,000 for each
position. The 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 Slade's Ferry
Bancorp. 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, 2006 was $311,150. Executive
officers are not compensated separately for their services as director.
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 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
directors' required service period. The benefit is paid annually during the
Director's lifetime. The
17
Bank has amended this program for all directors as of December 2006, each
director was paid out in January 2007.
The following table sets forth information regarding compensation earned
by the non-employee directors of the Company during the last fiscal year.
Change in Pension Value
Fees Earned and Nonqualified
or Paid Option Awards Deferred Compensation All Other
Name in Cash ($)(1) ($)(2) ($)(3) Compensation ($) Total ($)
------------------------------- -------------- ------------- ----------------------- ---------------- ---------
Peter G. Collias $23,000 $10,140 $ - $- $33,140
Anthony F. Cordeiro 27,050 10,140 3,452 - 40,642
Scott W. Costa, P.E. 17,025 10,820 - - 27,845
Paul C. Downey 34,500 10,140 3,547 - 48,187
Melvyn A. Holland 11,900 10,140 3,016 - 25,056
Jean F. MacCormack, Ed.D. 14,775 10,820 - - 25,595
Francis A. Macomber 13,500 10,140 13,008 - 36,648
Joan Parkos Moran 24,125 10,820 - - 34,945
Majed Mouded, MD 12,700 10,140 - - 22,840
Shaun O'Hearn, Sr. 25,750 10,140 - - 35,890
Lawrence J. Oliveira, DDS 28,700 10,140 - - 38,840
William J. Piccerelli, CPA, CVA 3,000 - - - 3,000
Carl Ribeiro 20,125 10,820 - - 30,945
William J. Sullivan 16,800 10,140 4,515 - 31,455
David F. Westgate 38,200 10,140 - - 48,340
------------------
(1) Includes retainer payments, meeting fees, and committee and/or chairmanship fees earned during the fiscal year, whether
such fees were paid currently or deferred.
(2) Represents the compensation cost recognized for the fiscal year for options to purchase shares of the Company common
stock outstanding to the director, regardless of the year in which granted and calculated in accordance with FAS 123R for
financial statement purposes. For more information concerning the assumptions used for these calculations, please refer
to the discussion under the caption "Slade's Ferry Bancorp. 2004 Equity Incentive Plan (2004 Plan)" in Footnotes 15,
"Stock Compensation Plans" to the audited financial statements, included in the 2006 Annual Report on Form 10-K.
(3) Reflects for each individual the increase (if any) for the fiscal year in the present value of the individual's accrued
benefit (whether or not vested) under each tax-qualified and non-qualified actuarial or defined benefit plan calculated
by comparing the present value of each individual's accrued benefit under each such plan in accordance with Accounting
Principals Board Opinion No. 12.
18
Compensation Discussion and Analysis
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, Mary Lynn D. Lenz, and other executive officers for the fiscal year
2006 was determined by the Board of Directors. Ms. Lenz did not participate in
the committee's decisions regarding her own compensation review and
recommendation in 2006 or in prior years.
Our compensation program for executive officers consists of: base salary,
annual bonuses, long-term incentive awards and supplemental executive retirement
plans. These elements are intended to provide an overall compensation package
that is commensurate with our financial resources, that is appropriate to assure
the retention of experienced management personnel, and that aligns their
financial interests with those of the Company's shareholders.
Under our structured compensation system, 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 on 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.
Relation to Business Strategy
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 our 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 us in order to develop recommendations for 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. We currently use a Banking
Compensation Report, produced by an independent consulting company, Pearl Meyer
& Partners. In 2006, the data collected was from three sources: Wyatt Financial
Services Survey, Clark Banking Survey, and a proxy peer group consisting of 35
publicly traded banks with assets from $300M to $1.0B in New York,
Massachusetts, Connecticut, Maine, and New Hampshire.
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 and
Chief Executive Officer. This review is qualitative in nature and takes into
consideration such factors as overall performance, improvement in shareholder
value, preservation and constant enhancement of the corporate image, including
our leadership and involvement in the community, efficient use of financial and
human resources, and our overall financial performance.
19
Elements of the Compensation Program
Each individual element of the compensation program echoes the overall
expectations of the compensation program as it relates to our business strategy.
Our compensation program aims to attract and retain the most qualified
professionals, while motivating current employees to excel. 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 our
peer groups, commensurate with the executive officers' respective duties and
responsibilities, and reflect our financial performance. The President and Chief
Executive Officer's salary is tested against the market data noted above. The
purpose of this compensation element is to provide a fair and competitive base
salary to assure retention of experienced personnel.
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. The
purpose of this compensation element is to provide a motivational force for
personnel.
Stock Options
The Compensation Committee also awards stock options to officers as
provided under the discretionary grant program of the Slade's Ferry Bancorp.
2004 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 our success during the year, and such other factors as the
Compensation Committee deems relevant. The purpose of this compensation element
is two-fold: it seeks to both retain and motivate employees.
Employment Agreements
The Company has entered into employment agreements with Ms. Lenz, Mr.
Tavares, and Ms. McLaughlin in order to secure the services of each named
executive officer in their respective positions, to safeguard against
recruitment of the named executive officers by competitors, and to generally
provide stability during solicited or unsolicited merger or takeover
negotiations. 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, $138,383, and $175,000,
respectively, discretionary cash bonuses, and participation on generally
applicable terms and conditions in other compensation and fringe benefit plans.
They are 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 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
20
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
50 miles in distance from the Bank's principal office or other material breach
of contract which is not cured within 30 days.
For 90 days after a change in control, each executive may resign for any
reason and collect severance benefits as if he or she has 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.
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.
Reasons for Compensation Decisions
Chief Executive Officer's Compensation
The Chief Executive Officer's compensation in 2006 reflected the overall
performance of Ms. Lenz during 2006, and is supported by the expansion of our
customer base, earnings per share attainment, and the overall quality and growth
of our assets. Based on the foregoing criteria, Ms. Lenz received a salary
adjustment on January 1, 2006. This adjustment brought her base salary to
$315,000. Ms. Lenz was also awarded a bonus of $49,140 which was paid in
February of 2007 for services rendered during the
21
calendar year 2006. In addition, a specialized market study of peer institution
proxies and salary surveys completed during 2006 revealed the competitiveness of
Ms. Lenz's compensation.
Executive Vice President's Compensation
The Executive Vice President's compensation in 2006 reflected the overall
performance of Ms. McLaughlin during 2006, and is supported by our growth and
success during this period. On April 1, 2006, Ms. McLaughlin received a salary
adjustment to $150,400 based on her performance. During 2006, a market study was
completed to assure the competitiveness of Ms. McLaughlin's compensation. This
study, comprised of information from peer institutions with similar asset size,
as well as salary surveys, revealed that Ms. McLaughlin's compensation was below
the industry average. Based on this information, Ms. McLaughlin's salary was
adjusted to $175,000 effective October 1, 2006. Ms. McLaughlin was also awarded
a bonus of $52,500 which was paid in February of 2007 for services rendered
during the calendar year 2006.
Senior Vice President's Compensation
The Senior Vice President's compensation during 2006 reflected Mr.
Tavares' overall performance during 2006, and is supported by the overall growth
and quality of our assets. On April 1, 2006, Mr. Tavares received a salary
adjustment to $134,980 based on his performance. On September 30, 2006, Mr.
Tavares' salary was adjusted to $84,363 due to a decrease in scheduled hours,
from 40 hours per week to 25 hours per week. Mr. Tavares was also awarded a
bonus of $36,990 which was paid in February of 2007 for services rendered during
the calendar year 2006.
Compensation Committee Report
The Compensation Committee has reviewed the Compensation Discussion and
Analysis included in this proxy statement and has discussed it with management.
Based on such review and discussion, the Compensation Committee recommended to
the Board of Directors that the Compensation Discussion and Analysis be included
in this proxy statement
Slade's Ferry Bancorp.
Compensation Committee
Paul C. Downey, Chair
Jean F. MacCormack, Ed.D
Joan Parkos Moran
William J. Sullivan
David F. Westgate
22
The table below sets forth for 2006 the compensation of each of our named
executive officers.
SUMMARY COMPENSATION TABLE
Change in
Pension Value
and
Non-Equity Nonqualified
Option Incentive Plan Deferred All Other
Name & Principal Salary Bonus Awards Compensation Compensation Compensation
Positions Year (1)($) (1)($) (2)($) ($) Earnings (3)($) (4)($) Total ($)
------------------------ ---- ------ ------ ------ -------------- --------------- ------------ ---------
Mary Lynn D. Lenz, 2006 $315,000 $49,140 $72,000 $- $ - $40,981 $477,121
President & Chief
Executive Officer
Deborah A. McLaughlin, 2006 $153,385 $52,500 $ 7,200 $- $ - $23,506 $236,591
Executive Vice President
Chief Financial Officer,
Chief Operation Officer
and Treasurer
Manual J. Tavares, 2006 $120,864 $36,990 $ 7,200 $- $7,172 $23,129 $195,355
Senior Vice President
------------------
(1) The figures shown for salary and bonus represent amounts earned for the fiscal year, whether or not actually paid during such
year, and include amounts deferred pursuant to applicable compensation plans.
(2) Represents the compensation cost recognized for the fiscal year for options to purchase shares of common stock outstanding to
the named executive officer, regardless of the year in which granted and calculated in accordance with FAS 123R for financial
statement purposes. For more information concerning the assumptions used for these calculations, please refer to the
discussion under the caption "Slade's Ferry Bancorp. 2004 Equity Incentive Plan (2004 Plan)" in Footnotes 15, "Stock
Compensation Plans" to the audited financial statements, included in the 2006 Annual Report on Form 10-K.
(3) Reflects for each named executive officer the increase (if any) for the fiscal year in the present value of the individual's
accrued benefit (whether not vested) under each tax-qualified and non-qualified actuarial or defined benefit plan calculated
by comparing the present value of each individual's accrued benefit under each such plan in accordance with Statement of
Financial Accounting Standards 87 ("FAS 87") as of the plan's measurement date in such fiscal year to the present value of
the individual's accrued benefit as of the plan's measurement date in the prior fiscal year.
(4) The named executive officers participate in certain group life, health, disability insurance and medical reimbursement plans,
not disclosed in the Summary Compensation Table, that are generally available to salaried employees and do not discriminate
in scope, terms and operation. The figure shown for each named executive officer includes the following items for Ms. Lenz,
Ms. McLaughlin, and Mr. Tavares, respectively: (a) automobile: $12,783, $11,253, and $2,524; (b) SERP: $9,482, $0, and
$7,739; (c) company contributions to 401(k) and profit sharing plans: $15,304, $11,354, and $10,301; and (d) life,
post-retirement medical and long-term disability insurance premiums: $2,817, $899, and $2,576. We provide certain non-cash
perquisites and personal benefits to each named executive officer that do not exceed $10,000 in the aggregate for any
individual, and are not included in the reported figures.
23
Compensation Decision-Making Policies and Procedures.
Decision-Making and Policy-Making. As a NASDAQ Stock Market listed
company, we must observe governance standards that require executive officer
compensation decisions to be made or recommended to the Board of Directors by
the independent director members of our board or by a committee of independent
directors. Consistent with these requirements, our Board of Directors has
established a Compensation Committee all of whose members are independent
directors.
The Compensation Committee has been delegated authority from our board to
oversee executive compensation by approving salary increases and by reviewing
general personnel matters such as staff performance evaluations. The
Compensation Committee has established a compensation program that consists of
three components: (1) base salary; (2) bonus; (3) long-term incentives (e.g.,
stock options, restricted stock, deferred compensation, and fringe benefits);
and (4) supplemental executive retirement plans.
During the 2006 fiscal year, the Compensation Committee met 15 times to
discuss matters consistent with its duties. It considers the expectations of the
Chief Executive Officer with respect to her own compensation and her
recommendations with respect to the compensation of more junior executive
officers, as well as empirical data and the recommendations of advisors. The
Compensation Committee does not delegate its duties to others.
Use of Outside Advisors and Survey Data. The Compensation Committee uses
its own criteria coupled with peer group comparisons of similar size and
business mix as well as with a Banking Compensation Report produced by an
independent consulting company, Pearl Meyer & Partners, to establish the Chief
Executive Officer and the Chief Financial Officer's base salary.
Compensation Committee Interlocks and Insider Participation
During 2006 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.
24
2004 Equity Incentive Plan
The Company has an equity incentive plan, the ("2004 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 otherwise 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 of the underlying stock 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 of stock, the
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 may also be granted and
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, also permissible
under the terms of the plan, 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.
25
The following tables set forth information regarding stock options and
similar equity compensation outstanding at December 31, 2006, whether granted in
2006 or earlier, including awards that have been transferred other than for
value.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE
Option Awards
--------------------------------------------------------------------------------------------
Number of
Securities
Number of Securities Underlying
Underlying Unexercised
Unexercised Options Options (#) Option Expiration
Name (#) Exercisable Unexercisable (1) Option Exercise Price ($) Date
--------------------- -------------------- ----------------- ------------------------- -----------------
Mary Lynn D. Lenz 4,000 - $14.59 04/14/2008
30,000 10,000 $19.55 11/08/2014
Deborah A. McLaughlin 1,125 - $18.55 09/30/2008
9,000 - $19.55 11/08/2014
Manuel J. Tavares 1,335 - $18.55 09/30/2008
9,000 - $19.55 11/08/2014
------------------
(1) Options will be exercisable on 05/26/2007.
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.
Post-Employment Compensation
Pension Benefits
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.
Annual compensation for benefits is capped at $160,000, per Internal
Revenue Code Section 401(a)(17), and is computed using a consecutive three year
average. Benefits shown are payable as a life annuity at age 65 and will not be
subject to reductions because of social security benefits. Benefit accruals and
Plan participation were frozen by amendment effective December 31, 1997. As of
January 1, 1998,
26
Manuel J. Tavares had 11 years of credited service attributable to his benefits
under the defined contribution plan reflected in the Summary Compensation Table.
As of December 31, 1997, the Company elected to curtail the employees'
defined benefit pension plan. This decision was based on the costs associated
with the defined benefit plan, and the complexities of the marketability of the
Plan to its employees. The Company in turn has established a profit sharing type
retirement plan effective January 1, 1998, which provides the employee with full
investment direction of the funds allocated to his or her account. The
contribution by the Company to the new profit sharing plan is an amount to be
fixed each year by the Board of Directors. In 2004, a large contribution was
made to the defined benefit plan so that it is now in a favorable funding
position. Upon plan termination, participants will be given the choice of a
deferred annuity payable at their retirement date or a lump sum payment in lieu
of that annuity. Any lump sum payment made in connection with the termination of
the defined benefit plan can be rolled over into the profit sharing plan if the
participant so elects.
The following table sets forth information regarding pension benefits
accrued by the named executive officers during the last fiscal year.
PENSION BENEFITS TABLE
Number of
Years of Present Value Payments
Credited of Accumulated During Last
Name Plan Name Service (#)(1) Benefit ($)(1) Fiscal Year ($)
--------------------- --------------- -------------- -------------- ---------------
Mary Lynn D. Lenz SERP N/A $127,082 $ -
Deborah A. McLaughlin N/A N/A N/A N/A
Manuel J. Tavares Retirement Plan 11 $151,714 -
SERP N/A $ 80,272 -
------------------
(1) The figures shown are determined as of the plan's measurement date during 2006 under FAS
87 for purposes of the Company's audited financial statements. For more information
concerning the assumptions used for these calculations, please refer to the discussion
under the caption "Pension Plan" in Footnote 14, "Employee Benefit Plans" to the audited
financial statements, included in the 2006 Annual Report on Form 10-K.
27
Termination and Change in Control Benefits
The Company provides additional benefits, not included in the previous
tables, to the named executive officers in the event of retirement or
termination of employment in certain circumstances and in the event of a change
in control. The following table provides an estimate of the value of such
benefits, assuming termination of employment or a change in control occurred on
December 31, 2006.
Mary Lynn D. Lenz Deborah A. McLaughlin Manuel J. Tavares
----------------- --------------------- -----------------
Retirement
Retiree Health (1) $ 83,605 $ - $ 71,470
Early Retirement
Early Retirement Subsidy - - -
Retiree Health (1) - - -
Disability
Disability Retirement Subsidy - - -
Stock Option Vesting (2) - - -
Death
Stock Option Vesting (2) - - -
Discharge w/o Cause or Resignation w/o
Good Reason - no Change in Control
Lump Sum Cash Payment (3) 931,289 374,860 304,676
Health Insurance/LTD (4) 17,986 695 9,592
Other in-kind benefits (5) 205,425 74,076 75,740
Discharge w/o Cause or Resignation w/o
Good Reason - Change in Control
Stock Option Vesting (2) - - -
Lump Sum Cash Payment (3) 931,289 374,859 304,676
Health Insurance/LTD (4) 17,986 695 9,592
Other in-kind benefits (5) 205,425 74,076 75,740
Golden Parachute Excise Tax
Gross-up Payment (6) 630,453 - -
Change in Control - No Termination
of Employment
Stock Option Vesting (2) - - -
------------------
(1) The named executives, and their respective spouses, are entitled to health insurance coverage for
life. The reported figure reflects the estimated present value of the future premium cost of such
benefits for the named individual.
(2) All stock options granted under the stock option plans provide for full vesting upon death,
disability, or change in control. The figures shown reflect the in-the-money value of those stock
options that would accelerate, calculated based on the positive difference between the option
exercise price and $17.454, which is the closing sales price for a share of our common stock on
December 29, 2006.
(3) The employment agreements provide for a lump sum cash payment equal to the present value of the
salary payments, estimated cash incentives and additional qualified and non-qualified benefit plan
benefits that would be earned during the remaining contract term.
(4)(5) The employment agreements in effect provide for continued health, life and other insurance
benefits for the remaining contract term, with an offset for benefits provided by a subsequent
employer. The figure shown represents the present value of continued insurance benefits for a
fixed period of three years and assumes no offset for benefits provided by a subsequent employer,
calculated on the basis of the assumptions used by The Company in measuring its liability for
retiree benefits other than pensions for financial statement purposes under FAS 106.
(6) The employment agreements in effect for Ms. Lenz provides that the company will indemnify her, on
a net after-tax basis, against the effects of a 20% federal excise tax that is applied to payments
that are contingent on a change in control, where the aggregate value of such payments equals or
exceeds 3 times the individual's average 5-year W-2 earnings for the period of five consecutive
calendar years ending prior to the date of the change in control. The figure shown reflects an
estimate of the indemnification payment that would be due.
28
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, 2006, all Section 16(a) filing requirements
applicable to the executive officers and directors during fiscal 2006 were met,
with the exception of the following: Form 4 filings for directors Scott Costa,
Jean MacCormack, Joan Parkos Moran, and Carl Ribeiro reflecting shares of stock
options granted under the 2004 Plan on May 17, 2006 were filed late on May 24,
2006.
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, 2006, loans and
open lines of credit to executive officers, directors and their associates
totaled $11,288,000. 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.
It is the written policy of the Board of Directors that a majority of the
disinterested members of the entire Board of Directors must approve in advance
any and all extensions of credit to any executive officer, director, or
principle shareholder and their related interests regardless of the amount of
the loan. The interested party may not participate either directly or indirectly
in the voting on such an extension of credit.
In addition, if an officer or director has an interest in a matter or
transaction before the Board of Directors, such individual must disclose to the
Board of Directors all material non-privileged information relevant to the Board
of Directors' decision on the matter or transaction, including: (1) the
existence, nature and extent of their interest; and (2) the facts known to the
individual as to the matter or transaction under consideration. The individual
must also refrain from participating in the discussion of the matter or
transaction and may not vote on the matter or transaction.
29
ADDITIONAL INFORMATION
Information About Shareholder Proposals
If you wish to submit proposals to be included in our Proxy Statement for
the 2008 Annual Meeting of Shareholders of Slade's Ferry Bancorp., we must
receive them on or before December 11, 2007, 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.
ss.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 2008 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 25, 2008.
By Order of the Board of Directors,
/s/ Peter G. Collais
Peter G. Collias
Clerk/Secretary
Dated: April 10, 2007
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 SHAREHOLDERS MEETING MAY 16, 2007
The undersigned hereby appoint(s) Peter G. Collias, Shaun O'Hearn, Sr.
and Carl Ribeiro, 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 sharesof common stock of Slade's Ferry Bancorp. held of record
by the undersigned on March 16, 2007, 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
16, 2007 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 theproposal set forth below.
With- For All
For hold Except
(1) To elect Paul C. Downey, Mary Lynn D. Lenz, [ ] [ ] [ ]
Majed Mouded, MD, William J. Piccerelli, CPA, CVA, and
David F. Westgate as Class Three Directors for a term
of three years.
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"For All Except" and write the nominee(s)'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.
Please be sure to sign and date ___________________________
this Proxy in the box below. |Date |
____________________________________|___________________________|
| |
| |
| |
| |
___Shareholder 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
_____________________________________________________________________________
|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. |
______________________________________________________________________________
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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