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. )
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Filed by a party other than the Registrant [ ]
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[ ] 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)
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[X] No fee required
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0-11.
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April 11, 2005
Dear Shareholder,
You are cordially invited to attend the Annual Meeting of the
Shareholders of Slade's Ferry Bancorp to be held on Wednesday, May 11, 2005
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
an affirmative vote on each matter to be considered at the annual meeting
is in the best interests of Slade's Ferry Bancorp and its shareholders and
unanimously recommends a vote "FOR" each of these matters.
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/ Kenneth R. Rezendes, Sr.
Kenneth R. Rezendes, Sr.
Chairman of the Board
SLADE'S FERRY BANCORP, 100 Slade's Ferry Avenue, Somerset, Massachusetts
02726 TEL (508) 675-2121 *** FAX (508) 675-1751 *** www.sladesferry.com
SLADE'S FERRY BANCORP
100 Slade's Ferry Avenue
Somerset, Massachusetts 02726
(508) 675-2121
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Date: Wednesday, May 11, 2005
Time: 10:00 a.m., Eastern Time
Place: Advanced Technology and
Manufacturing Center (ATMC)
151 Martine Street
Fall River, Massachusetts 02723
At our 2005 annual meeting, we will ask you to:
1. Elect three Class One Directors, each to hold office for a term
set to expire in 2008.
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 18, 2005, 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, 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 11, 2005
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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 Slade's Ferry Avenue
Somerset, Massachusetts 02726
(508) 675-2121
PROXY STATEMENT
FOR THE
2005 ANNUAL MEETING OF SHAREHOLDERS
May 11, 2005
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 11, 2005 to all shareholders
entitled to vote. If you owned common stock of Slade's Ferry Bancorp at the
close of business on March 18, 2005, the record date, you are entitled to
vote at the annual meeting. On the record date, there were 4,080,333 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 18, 2005, 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" each of the
proposals identified in the Notice of Annual Meeting.
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If any other matter is presented, 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 those listed in the Notice of Annual Meeting.
VOTE REQUIRED
Proposal 1: Election of The nominees for director who receive the most
Class One 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 proposals 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 One 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 financials for the fiscal year ended December 31, 2004, filed
with the Securities and Exchange Commission, we will send you one (without
exhibits) free of charge. Please write to Peter G. Collias,
Clerk/Secretary, Slade's Ferry Bancorp, 100 Slade's 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 18, 2005. We
know of no person who beneficially owned more than 5% of the outstanding
shares of our common stock as of as of March 18, 2005 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 18, 2005. 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 24,622(1) *
Anthony F. Cordeiro, Director 27,926(2) *
Paul C. Downey, Director 4,000(3) *
Melvyn A. Holland, Director 10,884(4) *
Mary Lynn D. Lenz, Director, 15,805(5) *
President and Chief Executive
Officer
Francis A. Macomber, Director 120,669(6) 2.96
Deborah A. McLaughlin 4,318(7) *
Chief Financial Officer and
Chief Operations Officer
Majed Mouded, MD, Director 72,772(8) 1.78
Shaun O'Hearn, Sr., Director 22,283(9) *
Lawrence J. Oliveira, DDS, 39,968(10) *
Director
Peter Paskowski, Director 33,152(11) *
Kenneth R. Rezendes, Sr., 165,775(12) 4.05
Director, Chairman of the Board
William J. Sullivan, Director 53,246(13) 1.30
Manuel J. Tavares, Senior 9,088(14) *
Vice President
Charles Veloza, Director 138,010(15) 3.38
David F. Westgate, Director, 14,767(16) *
Vice Chairman
All Executive Officers and
Directors as a Group (16 persons) 757,285 17.99
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* Less than 1.00% of outstanding shares of common stock.
Includes 8,656 shares held jointly with Mr. Collias' wife and 8,000
options.
Includes 1,860 shares held by spouse and 2,000 options.
Includes 2,000 options.
Includes 10,000 options.
Includes 14,000 options.
Includes 4,489 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 4,125 options.
Includes 59,427 shares held jointly with Dr. Mouded's wife, 5,655
shares held jointly by Dr. Mouded's wife and child, and 6,000
options.
Includes 370 shares held jointly with Mr. O'Hearn's wife, 9,397
shares beneficially owned as trustee for business profit sharing plan
and 10,000 options.
Includes 29,735 shares beneficially owned as trustee for business
profit sharing plan and 10,000 options.
Includes 16,537 shares held jointly with Mr. Paskowski's wife and
10,000 options.
Includes 78,898 shares held in IRA and 10,000 options.
Includes 20,207 shares held jointly with Mr. Sullivan's wife, 625
shares held jointly with Mr. Sullivan's children, and 10,000 options.
Includes 1,481 shares held jointly with spouse and children, 75 as
custodian for family members and 4,335 options.
Includes 10,000 options.
Includes 10,000 options.
DISCUSSION OF PROPOSALS RECOMMENDED BY BOARD
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PROPOSAL ONE
ELECTION OF CLASS ONE DIRECTORS
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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.
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At the 2005 annual meeting, shareholders are being asked to elect the
following Class One directors:
Nominees Term to Expire
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Anthony F. Cordeiro 2008
Lawrence J. Oliveira, DDS 2008
Kenneth R. Rezendes, Sr. 2008
Directors Cordeiro, Oliveira and Rezendes 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 2008 or until
their successors have been elected or qualified.
We know of no reason why any nominee may be unable to serve as
director. 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)
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Anthony F. Cordeiro 43 2005 One Director 2003
Lawrence J. Oliveira, DDS 60 2005 One Director 1997
Kenneth R. Rezendes, Sr. 71 2005 One Chairman of the Board 1978
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At March 31, 2005.
Includes years of service as a director of Slade's Ferry Trust
Company.
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Position(s) Held
Term with Slade's Ferry
Continuing Directors Age (1) Expires Class Bancorp Director Since (2)
------------------------- ------- ------- ----- ----------------------- ------------------
Peter G. Collias 73 2006 Two Director 1973
Melvyn A. Holland 67 2006 Two Director 1997
Shaun O'Hearn, Sr. 59 2006 Two Director 1997
William J. Sullivan 65 2006 Two Director 1985
Paul C. Downey 41 2007 Three Director 2003
Mary Lynn D. Lenz 50 2007 Three Director, President and 2002
Chief Executive Officer
Francis A. Macomber 75 2007 Three Director 1980
Majed Mouded, MD 63 2007 Three Director 1993
David F. Westgate 64 2007 Three Vice Chairman 1997
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At March 31, 2005.
Includes years of service as a director of Slade's Ferry Trust
Company.
Honorary Directors
William Q. MacLean, Jr.
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
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.
Lawrence J. Oliveira, DDS: Orthodontist with practices in New Bedford
and Mattapoisett, Massachusetts.
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Kenneth R. Rezendes, Sr.: Chairman of the Board of Slade's Ferry
Bancorp since October 14, 2003. Vice Chairman of Slade's Ferry Bancorp from
November 12, 2002 to October 14, 2003. Chairman of the Board of K. R.
Rezendes, Inc., a heavy construction firm, since 1967. President and Chief
Executive Officer of Slade's Ferry Bancorp from March 12, 1996 to November
12, 2002.
Continuing Directors
Peter G. Collias: Principal Attorney of the Law Offices of Peter G.
Collias in Fall River, Massachusetts.
Paul C. Downey: President of Sakonnet Properties, Inc., a real estate
development firm in New Bedford, 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.
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.
Francis A. Macomber: President, Treasurer and a director of LeComte's
Dairy in Somerset, Massachusetts.
Majed Mouded, MD: Physician and endocrinologist, on active staff at
St. Anne's Hospital in Fall River, Massachusetts.
Shaun O'Hearn, Sr.: President of Bolger & O'Hearn, Inc., a color and
chemicals company in Fall River, Massachusetts.
Peter Paskowski: President of Slade's Ferry Trust Company from
January 1, 1988 until his retirement on June 30, 1988 and Executive Vice
President of Slade's Ferry Trust Company from 1984 to 1987.
William J. Sullivan: President and a director of Sullivan Funeral
Homes, Inc. of Fall River and Somerset, Massachusetts.
Charles Veloza: Past President and a director of Charlie's Oil Co., a
heating and fuel oil distribution business in Fall River, Massachusetts.
David F. Westgate: President of Quequechan Management Corp., a
management consulting firm in Fall River, Massachusetts; Vice Chairman 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 and Treasurer since 2004. Executive Vice President of NSTAR, a utility
provider in Boston, Massachusetts, from 1999 to 2001.
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.
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INFORMATION ABOUT THE BOARD OF DIRECTORS AND MANAGEMENT
Meetings of the Board of Directors
Regular meetings of the Board of Directors are held quarterly and
special meetings are held when necessary. During 2004, the Board of
Directors held four regular quarterly 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 Board of Directors and their assigned committees except for Director
Mouded who attended 50% and Director O'Hearn who attended 63%.
Committees of the Board of Directors
The standing committees of the Board of Directors are the Executive
Committee, Compensation Committee, Audit Committee, and Corporate
Governance/Nominating Committee.
Executive Committee The Executive Committee met twenty-four times
in 2004, and generally acts on most matters
between regular Board meetings. Its members
are Kenneth R. Rezendes, Chairman, Mary Lynn
D. Lenz, Peter Paskowski, 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, Chairman, Kenneth R. Rezendes,
Sr., 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 audit
function 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
auditors. The Audit Committee also reviews and
approves all transactions with affiliated
parties. The Audit Committee held six meetings
during the past year. Its members are Melvyn
A. Holland, Chairman, Paul C. Downey, Shaun
O'Hearn, Sr., and Lawrence J. Oliveira, DDS.
All of the members of the Audit
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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 a "financial
expert" as the term is defined by SEC
regulations.
Corporate Governance/ The Corporate Governance/Nominating Committee
Nominating Committee held eight 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 recommend these individuals to
the Board for election as Directors. It's
members are Lawrence J. Oliveira, Chairman,
Kenneth R. Rezendes Sr., 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 is attached as Appendix B to
this Proxy Statement.
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.
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. We do not pay a fee to any third
party to identify or evaluate nominees.
Nominees Anthony F. Cordeiro, Lawrence J.
Oliveira, DDS and Kenneth R. Rezendes, Sr.
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 Slade's Ferry
Avenue, Somerset, Massachusetts 02726. All comments will be forwarded
directly to the Board of Directors.
It is our policy that all directors and nominees should attend the
annual meeting. At the 2004 annual meeting, all members of the Board of
Directors, except Mr. Macomber, were in attendance.
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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 auditors 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 2004 fiscal year, the Audit Committee of Slade's Ferry
Bancorp met six times to discuss matters consistent with its duties. The
Audit Committee's membership was comprised of Directors Holland, Downey,
MacLean prior to his retirement in November 2004, O'Hearn, and Oliveira,
with Melvyn A. Holland serving as Chairperson.
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
coverage 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 auditor; (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 auditors 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
auditors, 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,
2004 with management and Shatswell, MacLeod & Company, P.C. ("Shatswell"),
a registered public accounting firm, and Slade's Ferry Bancorp's
independent auditors for the fiscal year ended December 31, 2004. The Audit
Committee has discussed the matters required to be discussed by Statement
on Auditing Standards No. 61 (Communication with Audit Committee) with
Shatswell.
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The Audit Committee has received the written disclosures and the
letter from Shatswell required by Independence Standards Board Standard No.
1 (entitled "Independence Discussions with Audit Committees"), as may be
modified or supplemented, has discussed with Shatswell the independence of
Shatswell and considered whether the provision of non-audit services by
Shatswell 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, 2004 for filing with the SEC.
Audit Committee:
Melvyn A. Holland, Chairman
Paul C. Downey
Shaun O'Hearn, Sr.
Lawrence J. Oliveira, DDS
Appointment of Independent Accountants
Effective March 14, 2005, our Audit Committee dismissed Shatswell,
MacLeod & Company, P.C. as our independent auditors. On the same date, the
Audit Committee recommended, approved and appointed Wolf & Company, P.C. as
our independent auditors for the purpose of auditing our consolidated
financial statements for the year ended December 31, 2005. Representatives
of both Shatswell, MacLeod & Company, P.C. and Wolf & Company, P.C. are
expected to be present at the annual meeting to answer questions concerning
the financial statements presented and will be permitted to make a
statement at the meeting.
The audit reports of Shatswell, MacLeod & Company, P.C. on our
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. We
provided Shatswell, MacLeod & Company, P.C. with a copy of the foregoing
disclosure and requested Shatswell, MacLeod & Company, P.C. furnish us with
a letter addressed to the Commission stating whether it agrees with these
statements made by us and, if not, stating the respects in which it does
not agree. A copy of the confirming letter from Shatswell, MacLeod, P.C.,
dated March 28, 2005, was attached as Exhibit 16.1 to our Form 10-K for the
fiscal year ended December 31, 2004.
Audit Fees
During the fiscal year ended December 31, 2004, Slade's Ferry Bancorp
retained and paid Shatswell, MacLeod & Company, P.C. to provide audit and
other services. The following table displays the aggregate fees for
professional audit services for the audit of the financial statements for
the years
-13-
ended December 31, 2004 and 2003 and fees billed for other services during
those periods by our independent auditors.
2004 2003
------- -------
Audit fees (1) $80,075 $74,450
Audit-related fees (2) 6,000 12,000
Tax fees (3) 10,700 11,600
All other fees 0 0
------- -------
Total $96,775 $98,050
======= =======
--------------------
Audit fees consisted of audit work performed in the preparation of
financial statements as well as work generally only the independent
auditors can reasonably be expected to provide, such as statutory
audits.
Audit-related fees consisted of audits of the Corporation's Pension
Plan and 401(k) Plan.
Tax fees consisted of assistance with matters related to tax
compliance and consulting.
Preapproval Policies and Procedures
Preapproval of Services. The Audit Committee shall preapprove all
auditing services and permitted non-audit services (including the fees and
terms) to be performed for us by our independent auditor, 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 preapproval 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, 2004, the Audit Committee pre-
approved 100% of the services performed by Shatswell MacLeod & Company,
P.C. for Slade's Ferry Bancorp.
Delegation. The Audit Committee may delegate to one or more
designated members of the committee the authority to grant required
preapprovals. The decisions of any member to whom authority
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is delegated under this paragraph to preapprove activities under this
subsection shall be presented to the full committee at its next scheduled
meeting.
DIRECTOR COMPENSATION
Meeting Fees
Directors are paid $400 for each Board meeting attended. In addition,
Executive Committee members are paid $350 for each Executive Committee
meeting attended, and the Executive Committee Clerk, Mr. Collias, is paid
an annual fee of $2,000. The Chairman of the Board is paid $3,500 and the
Vice Chairman is paid $1,500 for holding such position. The Corporate
Clerk/Secretary is paid an annual fee of $750. 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 chairman of each committee receives $500 annually for chairing
such committees. The aggregate amount of fees paid to such directors for
the year ended December 31, 2004 was $241,000.
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
Through the purchase of $1.6 million of directors paid-up life
insurance policies in 1999, each insurable member of the Board of Directors
is provided a death benefit of $100,000 providing the member has served 10
years or more on the board, and $50,000 to members that have less than 10
years of service. The policy also provides a retirement benefit to members
of the Board for each year following the director's retirement.
EXECUTIVE OFFICER COMPENSATION
Compensation Committee Report on Executive Compensation
The Compensation Committee is composed of Directors Paul C. Downey,
Kenneth R. Rezendes, Sr., William J. Sullivan, and David F. Westgate with
Director Downey serving as the Chairperson of Slade's Ferry Bancorp
Committee. None of the members of the Compensation Committee were officers
or employees of Slade's Ferry Bancorp or its subsidiaries during 2004 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.
-15-
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 2004 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 2004 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 that 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.
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 2004, there were 138 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 forty-eight 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.
-16-
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 for by the Equity Incentive Plan under the discretionary grant
program of the Corporation's stock option 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 2004 reflected
the overall performance of Ms. Lenz during 2004, and is supported by the
expansion of the Bank's customer base, and the overall quality and growth
of the Corporation's assets. Based on the foregoing criteria, for the
fiscal year ended December 31, 2004, Ms. Lenz's base salary was $304,808
and she was awarded a bonus of $60,000 payable in 2005.
Slade's Ferry Bancorp
Compensation Committee
Paul C. Downey, Chairperson
Kenneth R. Rezendes, Sr.
William J. Sullivan
David F. Westgate
Compensation Committee Interlocks and Insider Participation
During 2004 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.
-17-
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.
Period Ending
--------------------------------------------------------------------
Index 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04
--------------------------------------------------------------------------------------------------
Slade's Ferry Bancorp 100.00 91.51 155.20 141.81 243.94 221.98
NASDAQ Composite 100.00 60.82 48.16 33.11 49.93 54.49
SNL $250M-$500M Bank Index 100.00 96.28 136.80 176.39 254.86 289.27
SNL $500M-$1B Bank Index 100.00 95.72 124.18 158.54 228.61 259.07
SNL New England Bank Index 100.00 131.88 125.69 94.81 156.43 165.45
Source : SNL Financial LC, Charlottesville, VA (c) 2005
-18-
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, 2004, 2003, and 2002
to its Chief Executive Officer and to the other most highly compensated
executive officers whose annual salary and bonus for fiscal 2004 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 2004 304,808 65,500 40,000 25,802(2)
President/CEO 2003 237,135 100,000 4,000 6,694
2002(3) 59,231 15,000 27,287(4) 6,785
Manuel J. Tavares 2004 127,303 38,000 9,000 14,487(5)
Senior Vice President 2003 121,509 36,000 1,335 7,281
2002 119,940 6,000 6,529
Deborah A. McLaughlin 2004 135,751 41,000 2,100 9,000 9,113(6)
Chief Financial Officer, 2003(7) 56,616 15,000 40,100(8) 1,125 112
Chief Operation Officer
and Treasurer
--------------------
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 $6,000 accrual in 2004 in connection with the Supplemental
Executive Retirement Plan (SERP); executive life insurance premium of
$1,609 for 2004; long-term disability insurance premium of $589 for
2004; $4,604 for legal services regarding employment issues; and
$13,000 in contributions to the 401(k) and profit sharing plans.
Mary Lynn D. Lenz became President and Chief Executive Officer in
2002.
Includes $26,100 for consulting services provided from 8/02 to 9/02;
$335 for personal use of bank owned automobile and $852 tax-effected
value of Slade's Ferry Preferred Capital Corporation preferred stock.
Includes $7,164 accrual in 2004 in connection with the Supplemental
Executive Retirement Plan (SERP); executive life insurance premium of
$903 for 2004; long-term disability insurance premium of $217 for
2004; and $6,203 in contributions to the 401(k) and profit sharing
plans.
Includes executive life insurance premium of $501 for 2004; and long-
term disability insurance premium of $232 for 2004, and $8,380 in
contributions to the 401(k) and profit sharing plans.
Deborah A. McLaughlin became 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 $500 of benefit for opting out of the Corporation's health
insurance coverage.
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STOCK OPTIONS GRANTED IN 2004
The following table illustrates certain information for the Executive
Officers named regarding stock option grants made in 2004 under the
Company's Stock Option Plan (the "Plan").
Individual Grants
Potential Realizable Value
At Assumed Annual Rate of
Number of % of Total Exercise Stock Price Appreciation for
Securities Options Granted Price Per Option Term
Underlying Options to Employees in Share Expiration ----------------------------
Name Granted 2004 ($/sh)(1) Date 5% 10%
---- ------------------ --------------- --------- ---------- -- ---
Mary Lynn D. Lenz 40,000(1) 57.9% $19.55 11/08/14 $491,796 $1,246,307
Manuel J. Tavares 9,000(1) 13.0% $19.55 11/08/14 $110,654 $ 280,419
Deborah A. McLaughlin 9,000(1) 13.0% $19.55 11/08/14 $110,654 $ 280,419
--------------------
Granted in November of 2004.
The following table presents certain information for the named
executive officers relating to the exercise of stock options and stock
appreciation rights ("SARs") during 2004 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
Number of Securities
# Securities Underlying Unexercised Value of Unexericsed In-The-
Underlying Options at 12/31/04 Money Options at 12/31/04 (1)
Options/SARs Value -------------------------------- --------------------------------
Name Exercised Realized ($) Exercisable # Unexercisable # Exercisable $ Unexercisable $
---- ------------ ------------ ------------- --------------- ------------- ---------------
Mary Lynn D. Lenz - - 14,000 30,000 $27,680 $16,800
Manuel J. Tavares - - 4,335 6,000 $ 3,763 $ 3,360
Deborah A. McLaughlin - - 4,125 6,000 $ 3,435 $ 3,360
--------------------
The value of unexercised In-The-Money Options is expressed as the
market value of the common stock at December 31, 2004 at the closing
price of $20.11 per share less the exercise price of each option.
-20-
BENEFIT PLANS
Defined Benefits 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
The benefits shown in the Pension Plan Table are based on a formula
of 1.5% of compensation per year plus .5% of compensation in excess of
$9,000 per year. The maximum years of service considered for benefit
purposes is 35. 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. The life annuity is the Normal Form as defined by the
Plan document. Employees who had worked over 1000 hours in the twelve-month
period beginning on their date of hire and had attained age twenty-one were
eligible to participate in the Plan as of the next January 1 or July 1, the
Plan entry dates. The Plan covered all employees who met the eligibility
provisions, except employees covered by a collective bargaining agreement
and non-resident aliens. In addition, 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.
-21-
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 also provides a 401(k) Plan which is available to
eligible employees who attain age 21 and complete three months of service.
The Company contributes a discretionary amount as determined by the Board
of Directors to the 401(k) Plan.
2004 Equity Incentive Plan
The Company has an Equity Incentive Plan in effect which was approved
by the shareholders on May 10, 2004 at the 2004 Annual Meeting of
Shareholders. The purpose of the Equity Incentive Plan is to promote growth
and profitability of the Company and its shareholders, to provide certain
officers, directors and employees of the Company and its affiliates with an
incentive to achieve corporate objectives, to attract and retain
individuals of outstanding competence and to provide such individuals with
an equity interest in the Company. The Equity Incentive Plan is not subject
to ERISA and is not a tax-qualified plan. The Company has reserved an
aggregate of 300,000 shares of common stock for issuance upon the exercise
of stock options granted under the Equity Incentive 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 $304,808, $127,303 and $135,751, 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
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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.
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, 2004, all Section 16(a) filing
requirements applicable to the executive officers and directors during
fiscal 2004 were met, with the exception of the following: Form 4 filings
for directors Rezendes, Sullivan, Westgate and Veloza reflecting options
granted on May 11, 2004 were filed a day late on May 14, 2004. In addition,
director Sullivan's Form 4 filing on May 14, 2004 reported 2,100 shares
acquired by exercise of options on April 9, 2004 and director Veloza's Form
4 filing on May 14, 2004 reported 2,100 shares acquired by exercise of
options of April 1, 2004. An amended Form 4 was filed by Director Cordeiro
on May 13, 2004 to include dividend reinvestment shares obtained on January
16, 2004. An amended Form 4 was filed on April 7, 2004 for Mr. Holland to
report the sequential breakdown of the exercise and sale of expiring
options. Lecomte's Dairy, a dairy business owned by Director Macomber,
submitted a late
-23-
filing of a Form 4 on March 22, 2004 to report the 1,500 shares sold on
January 15, 2004. Each filing was late because of inadvertent
administrative oversights.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain directors, executive officers, and members of their families
are at present, as in the past, customers of Slade's Ferry Trust Company,
our wholly-owned subsidiary, and have transactions with Slade's Ferry Trust
Company in the ordinary course of business. During 2004, none of these
relationships or transactions involved an amount of over $60,000 or in
excess of 5% of the Slade's Ferry Trust Company's consolidated gross
revenues.
In addition, certain of the directors are at present, as in the past,
also directors, officers, or shareholders of corporations, trustees of
trusts, or members of partnerships which are customers of Slade's Ferry
Trust Company, and which have loans from Slade's Ferry Trust Company in the
ordinary course of business. Such 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 normal risk of collectibility or present other unfavorable
features. All future loans to officers and directors and their affiliates
will be made on the same terms and conditions as made to unaffiliated third
parties.
ADDITIONAL INFORMATION
Information About Shareholder Proposals
If you wish to submit proposals to be included in our proxy statement
for the 2006 Annual Meeting of Shareholders of Slade's Ferry Bancorp, we
must receive them on or before December 16, 2005, 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 2006 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 24, 2006.
Mailings to Same Household
Pursuant to a notice sent by Slade's Ferry Bancorp to its eligible
shareholders, we sent only one copy of this Proxy Statement, Annual Report
and Report on Form 10-K for the year ended December 31, 2004 to those
households in which multiple shareholders shared the same address, unless
we received instructions from a shareholder requesting that they receive
separate copies of these materials. If you are a shareholder who shares the
same address as other shareholders of the Company and would like to receive
a separate copy of this Proxy Statement, Annual Report or Report on Form
10-K for the year ended December 31, 2004, or of future proxy statements,
information statements, and annual reports, please contact Shareholder
Services at (800) 643-7537 (MA and RI only) or (508) 675-2121, or by
writing to Slade's Ferry Bancorp, Shareholder Services, 100 Slade's Ferry
Avenue, Somerset, MA 02726. If you are a shareholder that shares an address
with other shareholders to which multiple copies of annual reports
-24-
and proxy statements are delivered and you would like to only request a
single copy in the future, you may also contact Shareholder Services that
request.
By Order of the Board of Directors,
/s/ Peter G. Collias
Peter G. Collias
Clerk/Secretary
Dated: April 11, 2005
-25-
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.
A-1
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 Auditors and Internal Audit function. 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
Auditors, the Internal Auditors, 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 will normally meet
in a separate executive session with the Internal Auditors. At least
annually, the Committee will meet with the Independent Auditors to discuss
any matters that the Committee believes should discussed privately. The
Internal Auditor shall serve as the clerk of the Committee and keep minutes
of the proceedings of each Committee meeting. 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 Auditors. The
Audit Committee is also solely responsible, and shall have the
necessary funding, for compensation of the Independent
Auditors.
2. Review and pre-approve all audit and non-audit services to be
performed by the Company's Independent Auditors, including but
not limited to requests for any management consulting
engagement to be performed by the Company's Independent
Auditors. 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 my establish pre-approval
categories of services, as provided by applicable rules and
regulations.
3. Evaluate the Independent Auditors on an at least an annual
basis. Such evaluation shall include a report from the
independent auditor 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 auditor 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.
A-2
5. Periodically report to the Board of Directors on significant
results of the following activities.
a) Appointment of the Independent Auditors 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 Auditors
c) Resolution of any disagreements that may arise between
the Independent Auditors and management.
d) Evaluation of the performance of the Independent Auditors
and, where appropriate, recommendation that the Board
replace the Independent Auditors.
6. Review the Independent Auditor'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 Auditors 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 Auditors.
8. Review with the Independent Auditors and Internal Auditors 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 Auditors' 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 Auditors, 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
Auditors 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 Auditors in
accordance with SAS 61 as amended by SAS 90.
13. Review and discuss with the Independent Auditors annually all
relationships the Independent Auditors have with the Company
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 Auditors.
A-3
14. Review the scope and general extent of the independent
auditor's annual audit. The Committee's review should include a
report from the Independent Auditor 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 auditor's opinion on the overall fairness of
the financial statements.
15. Discuss the results of the audit with the Independent Auditors
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 Auditors.
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.
2. Appoint and supervise the Internal Audit Director.
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.
A-4
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 Internal Audit's adherence to its audit plan and make
adjustments as necessary.
9. 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.
A-5
APPENDIX B
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SLADE'S FERRY BANCORP
NOMINATING & CORPORATE GOVERNANCE COMMITTEE CHARTER
Purpose
The purpose of the Nominating & Corporate Governance Committee (the
"Committee") shall be to assist the board of directors (the "Board") of
Slade's Ferry Bancorp (the "Company") in identifying qualified individuals
to become Board members and officers of the Company, in determining the
composition of the Board and its committees, in developing and implementing
a process to assess Board effectiveness and in developing and implementing
the Company's corporate governance guidelines.
Membership and Appointment
The Committee shall consist of no fewer than three members, each of whom
shall meet the criteria for independence established by the rules and
regulations of the NASDAQ and who the Board has affirmatively determined
does not have a material relationship which, in the opinion of the Board,
would interfere with the exercise of independent judgment in carrying out
the responsibilities of a director. Members of the Committee shall be
appointed annually by the Board and shall serve at the pleasure of the
Board. Notwithstanding the foregoing, no director shall serve on the
Committee in any capacity in any year during which such director's term as
a director is scheduled to expire.
Meetings and Procedures
The Committee shall have a chairperson who must, and a secretary who may
but need not be, a member of the Committee. The Board shall designate the
chairperson of the Committee and the Committee shall designate the
secretary for the Committee. If the Board does not designate a chairperson,
or if the chairperson shall not be present at a meeting, the Committee
shall select its own chairperson.
The Committee shall establish its own rules of procedure, which shall be
consistent with the Bylaws of the Company and this Charter. The Committee
shall meet at least two times annually in conjunction with regularly
scheduled meetings of the Board at regularly scheduled times and places
determined by the Committee's chairperson, and may meet more frequently, or
take action by unanimous written consent, as circumstances require. A
meeting may be called by the chairperson of the Committee or by majority of
the members of the Committee. Notice of any meeting shall be given by the
person or persons calling the meeting given to each other member of the
Committee at least 48 hours prior to the meeting. Notice may be given in
the same fashion as permitted for notice of Board meetings pursuant to the
Company's Bylaws and applicable law. A meeting shall be deemed properly
called if each member of the Committee shall have received notice given as
aforesaid or, prior to the conclusion of the meeting, shall have signed a
written waiver of notice.
A quorum shall consist of at least a majority of the voting members of the
Committee. The vote of a majority of the voting members present at any
meeting at which a quorum exists, including the chairperson of the
committee who shall be eligible to vote, shall constitute the action of the
Committee.
B-1
The Committee may request that any directors, officers or employees of the
Company, or other persons whose advice and counsel are sought by the
Committee, attend any meeting of the Committee to provide such pertinent
information as the Committee requests.
Following each of its meetings, the Committee shall report its actions and
recommendations to the Board. The secretary of the Committee shall keep
written minutes of its meetings, which minutes shall be subject to approval
by the members of the Committee and, once approved, shall be maintained
with the books and records of the Company.
The Committee shall have the authority to delegate any of its
responsibilities to subcommittees, as the committee may deem appropriate in
its sole discretion.
Nominations by Shareholders
Shareholders may recommend nominees for election to the Board, in a manner
consistent with the Company's Bylaws.
Committee Authority and Responsibilities
The Committee shall have the following authority and responsibilities:
1. The Committee shall develop criteria, to be approved by the full
Board, for the selection of new directors and, when appropriate,
conduct the search for individuals qualified to become members of the
Board.
2. The Committee shall develop criteria for the evaluation of incumbent
Board members.
3. The Committee shall evaluate the performance of current Board members
proposed for reelection, and recommend to the Board whether such
members should stand for reelection.
4. The Committee shall annually assess the performance of the Board as a
whole, discuss such assessment with the full Board and, as
appropriate, recommend changes, including, but not limited to,
changes in Board size and composition and in Board policies and
procedures.
5. The Committee shall develop and recommend to the Board for its
approval an annual self-evaluation process of the Board and its
committees. The Committee shall oversee the annual self-evaluation of
the Board and report its findings to the Board.
6. The Committee shall select, and recommend to the Board for its
approval, nominees for election as directors by the shareholders of
the Company, taking into account the criteria approved by the Board.
7. The Committee shall consider and evaluate any shareholder nominees
for election as director in compliance with the Company's Bylaws and
in accordance with the criteria approved by the Board.
8. The Committee shall review the Board's committee structure and
annually recommend to the Board, for its approval, directors to serve
as members of each committee. The Committee shall recommend to the
Board additional committee members to fill vacancies as needed,
taking into account the criteria approved by the Board. The Committee
shall recommend to the Board individual directors to be designated as
chairpersons of the Board committees. Notwithstanding
B-2
the foregoing, the members of the Committee shall be appointed by the
full Board, without recommendation by the Committee, and the members
of the Executive Committee shall be appointed as set forth in Article
IV, Section 3 of the Company's bylaws. The Board shall also, without
recommendation by the Committee, be responsible for filling vacancies
in, and appointing chairpersons of, the Committee.
9. Together with the Compensation Committee, the Committee shall develop
criteria for the identification and recruitment of executive officers
of the Company.
10. Together with the Compensation Committee, the Committee shall develop
criteria for the evaluation of the executive officers of the Company.
11. The Committee shall annually recommend to the Board for its approval
the slate of officers for the Company.
12. The Committee shall develop and recommend to the Board for its
approval a set of corporate governance guidelines. The Committee
shall review the guidelines on an annual basis, or more frequently if
appropriate, and recommend changes as necessary.
13. The Committee shall establish procedures for the Committee to
exercise oversight of the evaluation of the Board and management.
14. The Committee may retain or terminate, in its sole discretion, any
search firm to be used to identify director and executive officer
candidates and to approve the search firm's fees and other retention
terms. The Committee shall also have authority to retain outside
counsel and any other advisors as the Committee may deem appropriate
in its sole discretion.
15. The Committee shall review and assess the adequacy of this charter at
least annually and, as appropriate, adopt and recommend changes to
the Board for its approval.
16. The Committee shall periodically review and assess the Company's
Articles of Organization and Bylaws and, as appropriate, recommend
changes to the Board for its approval.
17. The Committee shall consider any other corporate governance issues
that may arise from time to time, and to develop appropriate
recommendations for the Board.
B-3
[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 11, 2005
The undersigned hereby appoint(s) Paul C. Downey, Majed Mouded MD, and
Shaun O'Hearn, Sr., 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 undersigned on March 18, 2005, at the Annual Meeting
of shareholders of Slade's Ferry Bancorp. to be held at The Advanced
Technology Manufacturing Center, 151 Martine Street, Fall River,
Massachusetts 02723 on Wednesday, May 11, 2005 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" each of the proposals set forth hereon.
With- For All
For hold Except
(1) To elect Anthony F. Cordeiro, Lawrence J. [ ] [ ] [ ]
Oliveira DDS, and Kenneth R. Rezendes, Sr. as
Class One Directors for a term of three years.
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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(2) 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 proposals 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 date, sign and return this proxy Date
in the enclosed envelope promptly.
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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 be sure to sign and date
this Proxy in the box below.
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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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